<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 27, 1996
FILE NO. 2-76990
FILE NO. 811-3447
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 40 [x]
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 42 [x]
SEI TAX EXEMPT TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
c/o CT CORPORATION
2 OLIVER STREET
BOSTON, MASSACHUSETTS 02109
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (800) 342-5734
DAVID G. LEE
C/O SEI CORPORATION
680 E. SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPIES TO:
RICHARD W. GRANT, ESQUIRE JOHN H. GRADY, JR., ESQUIRE
MORGAN, LEWIS & BOCKIUS LLP MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE 1800 M STREET, N.W.
PHILADELPHIA, PENNSYLVANIA 19103 WASHINGTON, D.C. 20036
<TABLE>
<CAPTION>
============================================================================================================
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE OFFERING AMOUNT OF
BEING REGISTERED REGISTERED PER UNIT PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of Beneficial Interest . . $269,515,134 $1.00 $269,515,134 $100
============================================================================================================
</TABLE>
(1) Registrant has calculated the maximum aggregate offering price
pursuant to Rule 24e-2 under the Investment Company Act of 1940 (the
"1940 Act") for fiscal year ended August 31, 1996. Registrant had
actual aggregate redemptions of $7,901,103,555. For its fiscal year
ended August 31, 1996; has used $7,631,918,421 of available
redemptions for reductions pursuant to Rule 24f-2(c) under the 1940
Act and has previously used no available redemptions for reductions
pursuant to Rule 24e-2(a) of the 1940 Act during the current year.
Registrant elects to use redemptions in the aggregate amount of
$269,185,134. For reductions in its current amendment.
IT IS PROPOSED THAT THE FILING WILL BECOME EFFECTIVE (CHECK
APPROPRIATE BOX)
[x] IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b), OR
[ ] ON [DATE] PURSUANT TO PARAGRAPH (b), OR
[ ] 60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a), OR
[ ] ON [DATE] PURSUANT TO PARAGRAPH (a) OF RULE 485
DECLARATION PURSUANT TO RULE 24f-2: PURSUANT TO RULE 24f-2 UNDER THE
INVESTMENT COMPANY ACT OF 1940 THE REGISTRANT HAS REGISTERED AN INDEFINITE
NUMBER OR AMOUNT OF ITS SHARES OF BENEFICIAL INTEREST UNDER THE SECURITIES ACT
OF 1933. THE RULE 24f-2 NOTICE FOR THE REGISTRANT'S FISCAL YEAR ENDING AUGUST
31, 1996 WAS FILED ON OCTOBER 30, 1996.
<PAGE> 2
SEI TAX EXEMPT TRUST
POST-EFFECTIVE AMENDMENT NO. 40
CROSS REFERENCE SHEET
PART A -- ALL FUNDS (EXCEPT TAX FREE PORTFOLIO CLASS D SHARES)
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- ------------- --------
<S> <C>
Item 1. Cover page . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . Annual Operating Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . Financial Highlights
Item 4. General Description of Registrant . . . . . . . . . . . The Trust; Investment Objective and Policies; General
Investment Policies; Investment Limitations; General
Information--The Trust
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . The Manager and Shareholder Servicing Agent; The
Adviser; General Information--Trustees of the Trust;
General Information--Custodian and Wire Agent
Item 5A. Management's Discussion of Fund Performance . . . . . . **
Item 6. Capital Stock and Other Securities . . . . . . . . . . . Taxes; General Information--Voting Rights; General
Information--Shareholder Inquiries; General
Information--Dividends; Taxes
Item 7. Purchase of Securities Being Offered . . . . . . . . . . Purchase and Redemption of Shares
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . *
PART A -- TAX FREE PORTFOLIO CLASS D SHARES
- -------------------------------------------
N-1A ITEM NO. LOCATION
- ------------- --------
Item 1. Cover page . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . Annual Operating Expenses
Item 3. Condensed Financial Information . . . . . . . . . . . . Financial Highlights
Item 4. General Description of Registrant . . . . . . . . . . . The Trust; Investment Objective and Policies; General
Investment Policies; Risk Factors; Investment
Limitations; General Information--The Trust
Item 5. Management of the Fund . . . . . . . . . . . . . . . . . The Manager and Shareholder Servicing Agent; The
Adviser; General Information--Trustees of the Trust;
General Information--Custodian and Wire Agent
Item 5A. Management's Discussion of Fund Performance . . . . . . **
Item 6. Capital Stock and Other Securities . . . . . . . . . . . Taxes; General Information--Voting Rights, General
Information--Shareholder Inquiries; General
Information--Dividends
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Item 7. Purchase of Securities Being Offered . . . . . . . . . . Purchase and Redemption of Shares
Item 8. Redemption or Repurchase . . . . . . . . . . . . . . . . Purchase and Redemption of
Shares
Item 9. Pending Legal Proceedings . . . . . . . . . . . . . . . *
<CAPTION>
PART B -- ALL FUNDS
- -------------------
N-1A ITEM NO. LOCATION
- ------------- --------
<S> <C> <C>
Item 10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . . . . . . . . . . Table of Contents
Item 12. General Information and History . . . . . . . . . . . . *
Item 13. Investment Objectives and Policies . . . . . . . . . . . The Trust; Description of Permitted Investments;
Investment Limitations
Item 14. Management of the Registrant . . . . . . . . . . . . . . The Manager and Shareholder
Servicing Agent; Trustees and Officers of the Trust
Item 15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . . . . . . . . Trustees and Officers of the Trust
Item 16. Investment Advisory and Other Services . . . . . . . . . The Manager and Shareholder Servicing Agent; The
Advisers; Experts
Item 17. Brokerage Allocation and Other Practices . . . . . . . . Portfolio Transactions
Item 18. Capital Stock and Other Securities . . . . . . . . . . . Description of Shares
Item 19. Purchase, Redemption, and Pricing of Securities
Being Offered . . . . . . . . . . . . . . . . . . . . Determination of Net Asset
Value; Purchase and Redemption of Shares
Item 20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . Taxes
Item 21. Underwriters . . . . . . . . . . . . . . . . . . . . . . Distribution
Item 22. Calculation of Performance Data . . . . . . . . . . . . Calculation of Yield and Total
Return
Item 23. Financial Statements . . . . . . . . . . . . . . . . . . Financial Statements
</TABLE>
PART C -- Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of this Registration Statement.
- ------------------------
* Not Applicable
** Information required by Item 5A is contained in the 1996 Annual Report to
Shareholders
ii
<PAGE> 4
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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
expenses and minimum investment amounts. This Prospectus offers Class A and
Class B 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
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> 5
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) CLASS A CLASS B
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .29% .29%
12b-1 Fees None None
Total Other Expenses .04% .34%
Shareholder Servicing Fees (after fee waiver) (2) .00% .25%
- -------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (3) .33% .63%
- -------------------------------------------------------------------------------------------------------------------
</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 fee waiver, Management/Advisory Fees for Class A and
Class B shares of the Portfolio would be .40%.
(2) The Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee, and the Shareholder Servicing Fees shown reflect
this waiver. The Distributor reserves the right to terminate its waiver at
any time in its sole discretion. Absent such waiver, Shareholder Servicing
Fees for Class A and Class B shares of the Portfolio would be .25%.
(3) Absent these fee waivers, Total Operating Expenses of the Portfolio would
be .69% for Class A shares and .74% for the Class B shares. Additional
information may be found under "The Adviser" and "The Manager."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 yr. 3 yrs. 5 yrs. 10 yrs.
----- ------- ------- --------
<S> <C> <C> <C> <C>
An investor in Class A shares of the Portfolio would pay the following expenses on a
$1,000 investment assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
Class A $3 $11 $19 $42
Class B $6 $20 $35 $79
- ---------------------------------------------------------------------------------------------------------------------
</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 in the Portfolio's Class A and Class B shares. The Portfolio
also offers Class C shares, which are subject to the same expenses, except that
Class C shares bear different shareholder servicing costs. A person who
purchases shares through an account with a financial institution may be charged
separate fees by that institution. Additional information may be found under
"The Manager," "Distribution and Shareholder Servicing" and "The Adviser."
2 +
<PAGE> 6
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734.
FOR CLASS A SHARES OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ----- --------------------- Gain (Loss) on Net
Value, Net Net Net Investments Asset Value
Beginning Investment Investment Realized Total and Capital End Total
of Period Income Income Gain Distributions Transactions of Period Return
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ----------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31:
1996 $1.00 $0.035 $ (0.035) -- $(0.035) -- $1.00 3.52%
1995 1.00 0.036 (0.036) -- (0.036) -- 1.00 3.70%
1994 1.00 0.025 (0.025) -- (0.025) -- 1.00 2.51%
1993 1.00 0.026 (0.026) -- (0.026) -- 1.00 2.59%
1992 1.00 0.036 (0.036) -- (0.036) -- 1.00 3.66%
1991 1.00 0.049 (0.049) -- (0.049) -- 1.00 5.20%
1990 (1) 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.32%+
FOR THE YEARS ENDED JANUARY 31:
1990 $1.00 $0.059 $ (0.059) -- $(0.059) -- $1.00 6.11%
1989 1.00 0.048 (0.048) -- (0.048) -- 1.00 5.05%
1988 1.00 0.042 (0.042) -- (0.042) -- 1.00 4.28%
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
Ratio of Ratio of Investment
Expenses Net Income to
Net Ratio of to Average Investment Average
Assets, End Expenses Net Assets Income to Net Assets Portfolio
of Period to Average (Excluding Average (Excluding Turnover
(000) Net Assets Fee Waivers) Net Assets Fee Waivers) Rate
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
- ----------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ----------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31:
1996 $ 835,388 0.33% 0.49% 3.46% 3.30% --
1995 788,877 0.33% 0.52% 3.64% 3.45% --
1994 835,516 0.33% 0.50% 2.48% 2.31% --
1993 763,040 0.33% 0.49% 2.55% 2.39% --
1992 623,689 0.33% 0.51% 3.54% 3.36% --
1991 448,390 0.33% 0.53% 4.91% 4.71% --
1990 (1) 226,658 0.33%(#) 0.56%* 5.64%* 5.41%* --
FOR THE YEARS ENDED JANUARY 31:
1990 $ 177,342 0.52% 0.60% 5.90% 5.82% --
1989 99,774 0.55% 0.57% 4.80% 4.78% --
1988 223,653 0.55% 0.56% 4.20% 4.19% --
- -----------
- -----------
* 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.
</TABLE>
3
<PAGE> 7
FOR CLASS B SHARES OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ---------- -------------------------------------- Gain (Loss) on Net
Value, Net Net Net Investments Asset Value
Beginning Investment Investment Realized Total and Capital End Total
of Period Income Income Gain Distributions Transactions of Period Return
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ----------------------------------
Class B
FOR THE YEARS ENDED AUGUST 31:
1996 $1.00 $0.032 $(0.032) -- $(0.032) -- $1.00 3.21%
1995 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.39%
1994 1.00 0.022 (0.022) -- (0.022) -- 1.00 2.21%
1993 1.00 0.023 (0.023) -- (0.023) -- 1.00 2.29%
1992 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.35%
1991(2) 1.00 0.038 (0.038) -- (0.038) -- 1.00 3.89%+
=================================================================================================================================
<CAPTION>
Ratio of
Net
Ratio of Ratio of Investment
Expenses Net Income to
Net Ratio of to Average Investment Average
Assets, End Expenses Net Assets Income to Net Assets Portfolio
of Period to Average (Excluding Average (Excluding Turnover
(000) Net Assets Fee Waivers) Net Assets Fee Waivers) Rate
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ----------------------------------
Class B
FOR THE YEARS ENDED AUGUST 31:
1996 $14,156 0.63% 0.80% 3.16% 2.99% --
1995 15,084 0.63% 0.82% 3.32% 3.13% --
1994 21,725 0.63% 0.81% 2.31% 2.13% --
1993 3,040 0.63% 0.79% 2.22% 2.06% --
1992 686 0.63% 0.81% 3.22% 3.04% --
1991(2) 1,515 0.63%* 0.84%* 4.34%* 4.13%* --
=================================================================================================================================
* Annualized
+ Return is for the period indicated and has not been annualized.
(1) The Institutional Tax-Free Portfolio-Class B commenced operations on October 15, 1990.
</TABLE>
4
<PAGE> 8
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 Institutional Tax Free Portfolio (the "Portfolio"). As
of September 30, 1996, the aggregate net assets of all classes of the
Institutional Tax Free Portfolio was $836,115,973. Investors may also purchase
Class C shares of the Portfolio. Each class provides for variation in
shareholder servicing expenses, 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, Pennsylvania 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 that the Portfolio will
meet 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"). 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 federal
alternative minimum tax.
The Portfolio may purchase municipal bonds,
municipal notes and tax-exempt commercial paper, but only
if such securities, at the time of purchase, either meet
rating requirements imposed by Rule 2a-7 or, if not rated,
are determined to be of comparable quality by Weiss, Peck
& Greer, L.L.C., the Portfolio's investment adviser (the
"Adviser or "WPG"). See "General Investment Policies."
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
5
<PAGE> 9
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. Non-first tier 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, variable and floating rate
obligations 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 federal 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
6
<PAGE> 10
U.S. branches of foreign banks) that are members of the
Federal Reserve System or 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.
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 of, and 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 fundamental
investment limitations are set forth in the Statement of
Additional Information.
7
<PAGE> 11
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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 and not more
than .63% of the average daily net assets of the Class B
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, 1996, the Portfolio paid
management fees, after waivers, of .25% of its average
daily net assets.
THE ADVISER
Weiss, Peck & Greer, L.L.C. 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 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, 1996, total assets under management were
approximately $13 billion. The principal business address
of the Adviser is One New York Plaza, New York, New York
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, 1996 the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
8
<PAGE> 12
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company
("SEI"), serves as the Portfolio's distributor pursuant to
a distribution agreement (the "Distribution Agreement")
with the Trust.
The Portfolio has adopted plans under which firms,
including the Distributor, that provide shareholder and
administrative services may receive compensation therefor.
The Class A, B and C plans differ in a number of ways,
including the amounts that may be paid. Under each plan,
the Distributor may provide those services itself or may
enter into arrangements under which third parties provide
such services and are compensated by the Distributor.
Under such arrangements the Distributor may retain as a
profit any difference between the fee it receives and the
amount it pays such third party. In addition, the
Portfolio may enter into such arrangements directly.
Under the Class A plan, the Portfolio will pay the
Distributor a fee at an annual rate of up to .25% of the
average daily net assets of the Portfolio attributable to
Class A shares, in return for provision of a broad range
of shareholder and administrative services. Administrative
services include sub-accounting, providing information on
share positions to clients, forwarding shareholder
communications to clients, processing purchase, exchange
and redemption orders, and processing divided payments.
Under the Class B shareholder service plan, the
Portfolio will pay shareholder service fees to the
Distributor at an annual rate of up to .25% of average
daily net assets in return for the Distributor's (or its
agent's) efforts in maintaining client accounts; arranging
for bank wires; responding to client inquiries concerning
services provided or investment; and assisting clients in
changing dividend options, account designations and
addresses. In addition, under its administrative services
plan, Class B shares will pay administrative services fees
at specified percentages of the average daily net assets
of the shares of the Class (up to .05%). Administrative
services include sub-accounting; providing information on
share positions to clients; forwarding shareholder
communications to clients; processing purchase, exchange
and redemption orders and processing dividend payments.
It is possible that an institution may offer
different classes of shares to its customers and differing
services to the Classes of the Portfolio and thus receive
compensation with respect to different classes. These
financial institutions may also charge separate fees to
their customers. Certain financial institutions offering
shares to their customers may be required to register as
dealers pursuant to state laws.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
9
<PAGE> 13
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid by the Distributor from its
own resources. Under any such program, the Distributor
will provide promotional incentives, in the form of cash
or other compensation, including merchandise, airline
vouchers, trips and vacation packages, to all dealers
selling shares of the Portfolios. Such promotional
incentives will be offered uniformly to all dealers and
predicated upon the amount of shares of the Portfolio sold
by the 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 (or its
authorized 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.
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
10
<PAGE> 14
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. 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 (or its authorized 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 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
11
<PAGE> 15
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 of Class A shares will normally be
higher than that of Class B and Class C shares because of
the additional administrative services 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 The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies 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 Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. Exempt-interest
12
<PAGE> 16
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 also will not qualify for the dividends received
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 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.
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
13
<PAGE> 17
Municipal Portfolio, Kansas Tax Free Income 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 Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential 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 Inquiries Shareholder inquiries should be directed to the Manager.
SEI Fund Management, 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.
14
<PAGE> 18
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 administrative services
expenses charged to Class B and Class C shares.
Counsel and Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian
and Wire Agent CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent of
the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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,
15
<PAGE> 19
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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
Variable and Floating
Rate
Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes
16 +
<PAGE> 20
in specified market rates or indices. The interest rates
on these securities may be reset daily, weekly, quarterly
or at some other interval, and may have a floor or ceiling
on interest rate changes. There is a risk that the current
interest rate on such obligations may not accurately
reflect existing market interest rates. A demand
instrument with a demand notice period exceeding seven
days may be considered illiquid if there is no secondary
market for such security.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
17
<PAGE> 21
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses................... 2
Financial Highlights........................ 3
The Trust................................... 5
Investment Objective and Policies........... 5
General Investment Policies................. 6
Investment Limitations...................... 7
The Manager................................. 8
The Adviser................................. 8
Distribution and Shareholder Servicing...... 9
Purchase and Redemption of Shares........... 10
Performance................................. 11
Taxes....................................... 12
General Information......................... 13
Description of Permitted Investments and
Risk Factors.............................. 15
</TABLE>
18
<PAGE> 22
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 23
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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
expenses and minimum investment amounts. This Prospectus offers 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
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> 24
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) CLASS C
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .29%
12b-1 Fees None
Total Other Expenses .54%
Shareholder Servicing Fees .25%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (2) .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 fee waiver, Management/Advisory Fees for the
Portfolio would be .40%.
(2) Absent this fee waiver, Total Operating Expenses of the Portfolio would be
.94%. Additional information may be found under "The Adviser" and "The
Manager."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor in Class C shares of the Portfolio would pay the following
expenses on a $1,000 investment assuming (1) a 5% annual return and
(2) redemption at the end of each time period:
Class C $8 $26 $46 $103
- ---------------------------------------------------------------------------------------------------------------------
</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 in the Portfolio Class C shares. The Portfolio also offers
Class A and Class B shares, which are subject to the same expenses, except that
Class A and Class B shares bear different shareholder servicing costs. A person
who purchases shares through an account with a financial institution may be
charged separate fees by that institution. Additional information may be found
under "The Manager," "Distribution and Shareholder Servicing" and "The Adviser."
2
<PAGE> 25
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734.
FOR CLASS C SHARES OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
and
Net Investment Distributions Unrealized
Asset Activities: ----------------------------------------- Gain (Loss) on Net
Value, Net Net Net Investments Asset Value,
Beginning Investment Investment Realized Total and Capital End Total
of Period Income Income Gain Distributions Transactions of Period Return
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ----------------------------------
Class C
FOR THE YEARS ENDED AUGUST 31,
1996 (1) $ 1.00 $0.029 $(0.029) -- $(0.029) -- $ 1.00 2.92%+
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
of Expenses Ratio of Investment
Net to Average Net Income to
Assets, Ratio of Net Assets Investment Average
End Expenses (Excluding Income to Net Assets Portfolio
of Period to Average Fee Average (Excluding Turnover
(000) Net Assets Waivers) Net Assets Fee Waivers) Rate
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- ----------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ----------------------------------
Class C
FOR THE YEARS ENDED AUGUST 31,
1996 (1) $ 19,208 0.83%* 0.96%* 2.89%* 2.76%* --
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
* Annualized
+ Return is for the period indicated and has not been annualized.
(1) The Institutional Tax Free Portfolio - Class C commenced operations on September 11, 1995.
</TABLE>
3
<PAGE> 26
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 Institutional Tax Free Portfolio (the "Portfolio"). As of September
30, 1996, the aggregate net assets of all classes of the Institutional Tax Free
Portfolio was $836,115,973. Investors may also purchase Class A and Class B
shares of the Portfolio. Each class provides for variations in shareholder
servicing expenses, 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, Pennsylvania 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 that the Portfolio will
meet 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"). 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 federal
alternative minimum tax.
The Portfolio may purchase municipal bonds,
municipal notes and tax-exempt commercial paper, but only
if such securities, at the time of purchase, either meet
the rating requirements imposed by Rule 2a-7 or, if not
rated, are determined to be of comparable quality by
Weiss, Peck & Greer, L.L.C., the Portfolio's investment
adviser (the "Adviser" or "WPG"). See "General Investment
Policies."
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
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<PAGE> 27
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. Non-first tier 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 federal 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
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<PAGE> 28
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 or 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.
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 fundamental
investment limitations are set forth in the Statement of
Additional Information.
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") provides the Trust with overall management
services, regulatory reporting, all necessary office
space,
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<PAGE> 29
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 .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, 1996, the
Portfolio paid management fees, after waivers, of .25% of
its average daily net assets.
THE ADVISER
Weiss, Peck & Greer, L.L.C. 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 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, 1996, total assets under management were
approximately $13 billion. The principal business address
of the Adviser is One New York Plaza, New York, New York
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, 1996 the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly owned subsidiary of SEI Investment Company ("SEI")
serves as the Portfolio's distributor pursuant to a
distribution agreement (the "Distribution Agreement") with
the Trust.
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<PAGE> 30
The Portfolio has adopted plans under which firms,
including the Distributor, that provide shareholder and
administrative services may receive compensation therefor.
The Class A, B and C plans differ in a number of ways,
including the amounts that may be paid. Under each plan,
the Distributor may provide those services itself or may
enter into arrangements under which third parties provide
such services and are compensated by the Distributor.
Under such arrangements the Distributor may retain as a
profit any difference between the fee it receives and the
amount it pays such third party. In addition, the
Portfolio may enter into such arrangements directly.
Under the Class C shareholder service plans, the
Portfolio will pay shareholder service fees to the
Distributor at an annual rate of up to .25% of average
daily net assets in return for the Distributor's (or its
agent's) efforts in maintaining client accounts; arranging
for bank wires; responding to client inquiries concerning
services provided or investment; and assisting clients in
changing dividend options, account designations and
addresses. In addition, under their administrative
services plans, Class C shares will pay administrative
services fees at specified percentages of the average
daily net assets of the shares of the Class (up to .25%).
Administrative services include sub-accounting; providing
information on share positions to clients; forwarding
shareholder communications to clients; processing
purchase, exchange and redemption orders and processing
divided payments.
It is possible that an institution may offer
different classes of shares to its customers and differing
services to the Classes of the Portfolio and thus receive
compensation with respect to different classes. These
financial institutions may also charge separate fees to
their customers. Certain financial institutions offering
shares to their customers may be required to register as
dealers pursuant to state laws.
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 by the Distributor from its
own resources. Under any such program, the Distributor
will provide promotional incentives, in the form of cash
or other compensation, including merchandise, airline
vouchers, trips and vacation packages, to all dealers
selling shares of the Portfolios. Such promotional
incentives will be offered uniformly to all dealers and
predicated upon the amount of shares of the Portfolio sold
by the dealer.
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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 (or its
authorized 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.
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 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. 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 (or its authorized 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
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<PAGE> 32
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 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),
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<PAGE> 33
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 of Class A shares will normally be
higher than that of Class B and Class C shares because of
the additional administrative services 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 The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies 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 Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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
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<PAGE> 34
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 the
dividends received 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 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.
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, 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
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<PAGE> 35
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Trustees of the Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential 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 Inquiries Shareholder inquiries should be directed to the Manager.
SEI Fund Management, 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 B and Class C
shares because of the additional administrative services
expenses charged to Class B and Class C shares.
Counsel and Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian
and Wire Agent CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire
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<PAGE> 36
agent of the Trust. The Custodian holds cash, securities
and other assets of the Trust as required by the 1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of
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<PAGE> 37
days from the date of purchase. Repurchase agreements are
considered loans under the 1940 Act.
Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
Variable and Floating
Rate
Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
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When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
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<PAGE> 39
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................................. 6
The Adviser................................. 7
Distribution and Shareholder Servicing...... 7
Purchase and Redemption of Shares........... 9
Performance................................. 10
Taxes....................................... 11
General Information......................... 12
Description of Permitted Investments and
Risk Factors.............................. 14
</TABLE>
17
<PAGE> 40
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<PAGE> 41
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<PAGE> 43
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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
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.
- --------------------------------------------------------------------------------
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> 44
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) CLASS A
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Management/Advisory Fees .40%
12b-1 Fees None
Total Other Expenses .05%
Shareholder Servicing Fees (after fee waiver) (1) .01%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver) (2) .45%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee, and the Shareholder Servicing Fees shown reflect
this waiver. The Distributor reserves the right to terminate its waiver at
any time in its sole discretion. Absent such waiver, Shareholder Servicing
Fees for the Portfolio would be .25%.
(2) Absent this fee waiver, Total Operating Expenses for Class A shares of the
Portfolio would be .69%. Additional information may be found under "The
Adviser" and "The Manager."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
------ -------- -------- ---------
<S> <C> <C> <C> <C>
An investor in Class A shares of the
Portfolio would pay the following
expenses on a $1,000 investment
assuming (1) a 5% annual return and
(2) redemption at the end of each
time period: $5 $14 $25 $57
</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 in the Portfolio's Class A shares. 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. A person who
purchases shares through a financial institution may be charged separate fees by
that institution. Additional information regarding these differences may be
found under "The Manager," "Distribution and Shareholder Servicing" and "The
Adviser."
2
<PAGE> 45
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 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
and
Investment Unrealized
Activities Distributions Gain
Net Asset ---------- --------------------------------------- (Loss) on Net Asset
Value, Net Net Net Investments Value,
Beginning Investment Investment Realized Total and Capital End Total
of Period Income Income Gain Distributions Transactions of Period Return*
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------
TAX FREE PORTFOLIO
- -------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1996 $1.00 $0.033 $ (0.033) -- $(0.033) -- $1.00 3.35%
1995 1.00 0.034 (0.034) -- (0.034) -- 1.00 3.48%
1994 1.00 0.022 (0.022) -- (0.022) -- 1.00 2.20%
1993 1.00 0.023 (0.023) -- (0.023) -- 1.00 2.29%
1992 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.32%
1991 1.00 0.047 (0.047) -- (0.047) -- 1.00 4.81%
1990 (1) 1.00 0.032 (0.032) -- (0.032) -- 1.00 3.20%+
FOR THE YEARS ENDED JANUARY 31,
1990 $1.00 $0.059 $ (0.059) -- $(0.059) -- $1.00 5.97%
1989 1.00 0.049 (0.049) -- (0.049) -- 1.00 4.98%
1988 1.00 0.042 (0.042) -- (0.042) -- 1.00 4.34%
==============================================================================================================================
<CAPTION>
Ratio of
Ratio of Net
Net Investment
Ratio of Investment Income
Expenses Income to Average
Ratio of to Average to Average Net Assets
Net Assets, Expenses Net Assets Net Assets (Excluding Portfolio
End of Period to Average (Excluding (Excluding Fee Turnover
(000) Net Assets Waivers) Waivers) Waivers) Rate
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------
TAX FREE PORTFOLIO
- ------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1996 $ 339,906 0.45% 0.50% 3.30% 3.25% --
1995 377,152 0.45% 0.51% 3.43% 3.37% --
1994 358,299 0.45% 0.53% 2.17% 2.09% --
1993 414,975 0.45% 0.53% 2.24% 2.16%
1992 293,982 0.45% 0.55% 3.30% 3.20% --
1991 343,300 0.37% 0.55% 4.70% 4.52% --
1990 (1) 356,814 0.45%* 0.56%* 5.46%* 5.35%* --
FOR THE YEARS ENDED JANUARY 31,
1990 $ 464,389 0.54% 0.59% 5.90% 5.85% --
1989 790,629 0.46% 0.58% 4.90% 4.78% --
1988 938,484 0.53% 0.54% 4.20% 4.19% --
===============================================================================================================
* 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.
</TABLE>
3
<PAGE> 46
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"). Investors may also purchase
Class D shares of the Portfolio. Additional information pertaining to the Trust
may be obtained by writing to SEI Financial Services Company, 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling 1-800-342-5734.
INVESTMENT
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 that the Portfolio will
meet 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 federal alternative
minimum tax.
The Portfolio may purchase municipal bonds,
municipal notes and tax-exempt commercial paper, but only
if such securities, at the time of purchase, either meet
the rating requirements imposed by Rule 2a-7 or, if not
rated, are determined to be of comparable quality by
Weiss, Peck & Greer, L.L.C., the Portfolio's investment
adviser (the "Adviser"). See "General Investment
Policies."
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
4
<PAGE> 47
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. Non-first tier 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 or
5
<PAGE> 48
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.
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 of, and 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.
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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.
6
<PAGE> 49
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, 1996, the Portfolio paid
management fees, after waivers, of .36% of its average
daily net assets.
THE ADVISER
Weiss, Peck & Greer, L.L.C. 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, 1996, total assets under management were
approximately $13 billion. The principal business address
of the Adviser is One New York Plaza, New York, New York
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, 1996, the Portfolio
paid advisory fees, after waivers, of .04% of its relative
daily net assets.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company ("SEI")
serves as the Portfolio's distributor pursuant to a
distribution agreement with the Trust. The Portfolio has
adopted a distribution plan for its Class D shares (the
"Class D Plan") pursuant to Rule 12b-1 under the 1940 Act.
7
<PAGE> 50
The Portfolio has adopted a shareholder servicing
plan for Class A shares (the "Service Plan") under which a
shareholder servicing fee of up to .25% of average daily
net assets attributable to Class A shares will be paid to
the Distributor. Under the Service Plan, the Distributor
may perform, or may compensate other service providers for
performing, the following shareholder and administrative
services: maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services
provided on investments; assisting clients in changing
dividend options, account designations and addresses; sub-
accounting; providing information on share positions to
clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and
processing dividend payments. Under the Service Plan, the
Distributor may retain as a profit any difference between
the fee it receives and the amount it pays to third
parties.
It is possible that an institution may offer
different classes of shares to its customers and thus
receive different compensation with respect to different
classes. These financial institutions may also charge
separate fees to their customers.
The Trust may also execute brokerage or other
agency transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
In addition, the Distributor may, from time to time
in its sole discretion, institute one or more promotional
incentive programs, which will be paid by the Distributor
from its own resources. 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 dealers and
predicated upon the amount of shares of the Portfolio sold
by the 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
8
<PAGE> 51
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 (or its
authorized 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 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. 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 (or its authorized 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 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.
9
<PAGE> 52
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 of Class A shares will normally be
higher than that of the Class D 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.
Tax Status
of the Portfolio The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies
10
<PAGE> 53
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 Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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 also will not qualify for the dividends received
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 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.
11
<PAGE> 54
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, 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 Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential 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 Inquiries Shareholder inquiries should be directed to the Manager.
SEI Fund Management, 680 E. Swedesford Road, Wayne,
Pennsylvania, 19087.
12
<PAGE> 55
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 Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian and
Wire Agent CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent of
the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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.
13
<PAGE> 56
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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
Standby Commitments
and Puts
Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury
(e.g.,Federal Farm Credit Bank securities), while still
others are supported only by the credit of the
instrumentality (e.g., Federal National Mortgage
14
<PAGE> 57
Association securities). Guarantees of principal by
agencies or instrumentalities of the U.S. Government may
be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to
maturity there might not be a market and thus no means of
realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not
extend to the value or yield of these securities not to
the value of the Fund's shares.
Variable and Floating
Rate Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
15
<PAGE> 58
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................................. 6
The Adviser................................. 7
Distribution and Shareholder Servicing...... 7
Purchase and Redemption of Shares........... 8
Performance................................. 10
Taxes....................................... 10
General Information......................... 12
Description of Permitted Investments and
Risk Factors.............................. 13
</TABLE>
16
<PAGE> 59
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<PAGE> 60
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<PAGE> 61
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 62
PROSPECTUS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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 expenses and minimum investment
amounts. 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> 63
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.
[DELTA SYMBOL IN CIRCLE]
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
OBJECTIVE AND
POLICIES The Tax Free Portfolio seeks to preserve principal value
and maintain a high degree of liquidity while providing
current income exempt from federal income taxes. See
"Investment Objective and
Policies" and "Description of
Permitted Investments and
Risk Factors."
UNDERSTANDING RISK The Portfolio invests in U.S.
dollar denominated municipal
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 PROFILE Weiss, Peck & Greer, L.L.C.
(the "Adviser") serves as the
investment adviser of the
Portfolio. SEI Fund
Management serves as the
manager and shareholder
servicing agent of the Trust
(the "Manager"). DST Systems,
Inc. ("DST") serves as
transfer agent (the "Transfer
Agent") and dividend
disbursing agent for the
Class D shares of the Trust.
SEI Financial Services
Company acts as distributor
("Distributor") of the
Trust's shares. See "The
Manager and Shareholder
Servicing Agent," "The
I,2 Adviser" and "Distribution."
TABLE OF
CONTENTS
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.................14
Additional Information
About Doing Business
With Us...............16
General Information...19
Description of Permitted
Investments and Risk
Factors.............21
2
<PAGE> 64
YOUR ACCOUNT
AND DOING BUSINESS
WITH US You may open an account with just $1,000, and make
additional investments with as little as $100. Redemptions
of the Portfolio's shares are made at net asset value per
share. See "Your Account and Doing Business With Us."
DIVIDENDS Substantially all of the net
investment income (exclusive [DELTA SYMBOL IN CIRCLE]
of capital gains) of the
Portfolio is
distributed in the form of INVESTMENT
dividends that will be PHILOSOPHY
declared daily and paid Believing that no single
monthly on the first Business investment adviser can
Day of each month. Any deliver outstanding
realized net capital gain is performance in every
distributed at least investment category, only
annually. Distributions are those advisers who have
paid in additional shares distinguished themselves
unless the shareholder elects within their areas of
to take the payment in cash. specialization are selected
See "General Information-- to advise our mutual funds.
Dividends."
INFORMATION/ For more information about Class D Shares, call
SERVICE CONTACTS 1-800-437-6016.
3
<PAGE> 65
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.
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price) Class D
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <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
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) Class D
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Management/Advisory Fees .40%
12b-1 Fees (after fee waiver) (2) .20%
Other Expenses .20%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver) (3) .80%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A charge, currently $10.00, is imposed on wires of redemption proceeds.
(2) The Distributor has waived, on a voluntary basis, all or a portion of its
12b-1 fee, and the 12b-1 fees shown reflect this waiver. The Distributor
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, 12b-1 fees would be .25% for the Portfolio.
(3) Absent this fee waiver, Total Operating Expenses for Class D shares of the
Portfolio would be .85%. Additional information may be found under "The
Adviser" and "The Manager and Shareholder Servicing Agent."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 yr. 3 yrs. 5 yrs. 10 yrs.
------ -------- -------- ---------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment in the Class D shares
assuming
(1) a 5% annual return and (2) redemption at the end of each time period: $8 $26 $44 $99
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSE.
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 D shares. 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 shareholder servicing and
transfer agent costs. A person that purchases shares through an account with a
financial institution may be charged separate fees by the financial 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 permitted by the Conduct Rules of the National
Association of Securities Dealers, Inc.
4
<PAGE> 66
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 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>
Net Realized
Investment and
Net Activities: Distributions: Unrealized Net
Asset ---------- ----------------------------------------- Gain (Loss) on Asset
Value, Net Net Net Investments Value,
Beginning Investment Investment Realized Total and Capital End
of Period Income Income Gain Distributions Transactions of Period
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
- -------------------
TAX FREE PORTFOLIO
- -------------------
Class D
FOR THE YEAR ENDED AUGUST 31,
1996 $1.00 $0.030 $ (0.030) $ -- $ (0.030) $-- $1.00
1995 (1) 1.00 0.026 (0.026) -- (0.026) -- 1.00
======================================================================================================================
<CAPTION>
Ratio of
Expenses Ratio of Income to
to Average Net Average
Ratio of Net Assets Investment Net Assets
Net Assets, Expenses (Excluding Income to (Excluding Portfolio
Total End of Period to Average Fee Average Fee Turnover
Return (000) Net Assets Waivers) Net Assets Waivers) Rate
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
- -------------------
TAX FREE PORTFOLIO
- -------------------
Class D
FOR THE YEAR ENDED AUGUST 31,
1996 2.99% $ 6 0.80% 0.88% 3.18% 3.10% --
1995 (1) 2.68%+ 272 0.80%* 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> 67
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 Transfer Agent, DST Systems, Inc. Shares may
also be purchased through financial institutions, broker-dealers, or other
organizations which have established a dealer agreement or other arrangement
with SEI Financial Services Company ("Intermediaries"). For more information
about the following topics, see "Additional Information About Doing Business
with Us."
- --------------------------------------------------------------------------------
HOW TO BUY, SELL
AND EXCHANGE
SHARES THROUGH
INTERMEDIARIES Class D shares of the Portfolio may be purchased through
Intermediaries which provide various levels of shareholder
services to their customers. Contact your Intermediary for
information about the services available to you and for
specific
instructions on how to buy, [DELTA SYMBOL IN CIRCLE]
sell and exchange shares. To
allow for processing and WHAT IS AN
transmittal of orders to the INTERMEDIARY?
Transfer Agent on the same Any entity, such as a
day, Intermediaries may bank, broker-dealer,
impose earlier cut-off times other financial
for receipt of purchase institution, association
orders. Certain or organization which
Intermediaries may charge has entered into an
customer account fees. arrangement with the
Information concerning Distributor to sell
shareholder services and any Class D shares to its
charges will be provided to customers.
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 SHARES Account application forms may be obtained by calling
FROM THE TRANSFER 1-800-437-6016. Class D shares of the Portfolio are
AGENT offered only to residents of states in which the shares
are eligible for purchase.
Opening an Account You may buy Class D shares by mailing a completed
By Check application and a check (or other negotiable bank
instrument or money order) to the Transfer Agent. All
purchases made by check should be in U.S. dollars and made
payable to "Class D Shares (Tax Free Portfolio)". If you
send a check that does not clear, the purchase will be
canceled and you could be liable for any losses or fees
incurred. Third-party checks, credit cards, credit card
checks and cash will not be accepted. When shares are
purchased by check, redemption proceeds will be forwarded
only upon collection of payment for such shares;
collection of payment may take up to 15 days.
6
<PAGE> 68
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
Investment Plan deductions from your checking or savings accounts,
("AIP") provided these accounts are maintained through banks which
are part of the Automated Clearing House ("ACH") system.
You may purchase shares on a fixed schedule (semi-monthly
or monthly) with amounts as low as $25, or as high as
$100,000. Upon notice, the amount you commit to the AIP
may be changed or canceled at any time. The AIP is subject
to account minimum initial purchase amounts and minimum
balance maintenance requirements.
EXCHANGING SHARES Once good payment for your shares has been received and
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
Exchange Shares? 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 Charges SEI Funds' portfolios that
Apply to an Exchange? are not money market [DELTA SYMBOL IN CIRCLE]
portfolios currently impose HOW DOES AN
a sales charge on Class D EXCHANGE TAKE
shares. If you exchange into PLACE?
one of these "non-money When making an exchange,
market" portfolios, you will you authorize the sale
have to pay a sales charge of your shares of one or
on any portion of your more Portfolios in order
exchanged Class D shares for to purchase the shares
which you have not previously of another Portfolio. In
paid a sales charge. other words, you are
If you previously paid executing a sell order
a sales charge on your Class and then a buy order.
D shares, no additional sales This sale of your shares
charge will be assessed when is a taxable event which
you exchange those Class D could result in a
shares for other Class D taxable gain or loss.
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
Exchange of Shares instructions in writing to the Transfer Agent. Telephone
exchanges will also be accepted if you previously elected
this option on your account application.
7
<PAGE> 69
In the case of shares held "of record" by an
Intermediary but beneficially owned by you, you should
contact the Intermediary who will contact the Transfer
Agent and effect the exchange on your behalf.
HOW TO SELL SHARES To sell your shares, a written request for redemption in
THROUGH THE good order must be received by the Transfer Agent. Valid
TRANSFER AGENT written redemption requests will be effective on receipt.
All shareholders of record must sign the redemption
request. The Transfer Agent may require that the
signatures on written requests be guaranteed.
By Mail For information about the proper form of redemption
requests, call 1-800-437-6016. You may also have the
proceeds mailed to an address of record or mailed (or sent
by ACH) to a commercial bank account previously designated
on the Account Application or specified 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 [DELTA SYMBOL IN CIRCLE]
most circumstances, payments
will be transmitted on the WHAT IS A
next Business Day following SIGNATURE
receipt of GUARANTEE?
a valid telephone request for A signature guarantee
redemption. Wire redemption verifies the
requests may be made by authenticity of your
calling 1-800-437-6016, who signature and may be
will subtract a wire obtained from any of the
redemption charge (presently following: banks,
$10.00) from the amount of brokers, dealers,
the redemption. certain credit unions,
securities exchange or
association, clearing
Systematic You may establish a agency or savings
Withdrawal Plan systematic withdrawal plan association. A notary
("SWP") for an account with a $10,000 public cannot provide a
minimum balance. Under the signature guarantee.
plan, redemptions can be
automatically processed from
accounts (monthly, quarterly, semi-annually or annually)
by check or by ACH with a minimum redemption amount of
$50.
Check-Writing Check-Writing Service is offered free of charge to Class D
shareholders 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
8
<PAGE> 70
request or if the check cannot be honored because of insufficient funds or other
valid reasons.
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 that the Portfolio will
meet its investment objective.
The Portfolio invests in U.S. dollar denominated
municipal securities of
issuers located in all fifty
states, the District of [DELTA SYMBOL IN CIRCLE]
Columbia, Puerto Rico and
other U.S. territories and WHAT ARE
possessions (collectively, INVESTMENT
"Municipal Securities"). At OBJECTIVES AND
least 80% of the Portfolio's POLICIES?
net assets will be invested
in securities the interest on The Portfolio's
which is exempt from federal investment objective is
income taxes, based on a statement of what it
opinions from bond counsel seeks to achieve. It is
for the issuers. This important to make sure
investment policy is a that the investment
fundamental policy of the objective matches your
Portfolio. Under normal own financial needs and
conditions, the Portfolio circumstances. The
will invest at least 80% of investment policies
its net assets in securities section spells out the
the interest on which is not types of securities in
a preference item for which the Portfolio
purposes of the federal invests.
alternative minimum tax.
The Portfolio may purchase municipal bonds,
municipal notes and tax-exempt commercial paper, but only
if such securities, at the time of purchase, either meet
the rating requirements imposed by Rule 2a-7 or, if not
rated, are determined to be of comparable quality by
Weiss, Peck & Greer, L.L.C., the Portfolio's investment
adviser (the "Adviser"). See "General Investment
Policies."
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
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<PAGE> 71
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. Non-first tier 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
federal 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
U.S. Government; obligations of U.S. commercial banks or
savings and loan institutions (not including foreign
branches of U.S. banks or
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<PAGE> 72
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 the foregoing
obligations.
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 of, and 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 fundamental
investment limitations are set forth in the Statement of
Additional Information.
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<PAGE> 73
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT
SEI Fund Management (the "Manager") 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, 1996, the
Portfolio paid management fees, after waivers, of .36% of
its average daily net assets.
The Trust and DST Systems, Inc., 1004 Baltimore
Street, 2nd Floor, 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 [DELTA SYMBOL IN CIRCLE]
Weiss, Peck & Greer, L.L.C. INVESTMENT
acts as the Portfolio's ADVISER
investment adviser under an
advisory agreement with the The Portfolio's
Trust (the "Advisory investment adviser
Agreement"). Under the manages the investment
Advisory Agreement, the activities and is
Adviser invests the assets of responsible for the
the Portfolio, and performance of the
continuously reviews, Portfolio. The adviser
supervises and administers conducts investment
the Portfolio's investment research, executes
program. The Adviser is investment strategies
independent of the Manager based on an assessment
and SEI, and discharges its of economic and market
responsibilities subject to conditions, and
the supervision of, and determines which
policies set by, the Trustees securities to buy, hold
of the Trust. or sell.
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, 1996, total assets under
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<PAGE> 74
management were approximately $13 billion. The principal
business address of the Adviser is One New York Plaza, New
York, New York 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, 1996, 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, Investments Company
("SEI") serves as each Portfolio's distributor pursuant to
a distribution agreement (the "Distribution Agreement")
with the Trust. The Trust has adopted a distribution plan
for its Class D shares (the "Class D Plan,"), pursuant to
Rule 12b-1 under the 1940 Act.
The Class D Plan 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 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 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
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.
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
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<PAGE> 75
from the sales charge it receives or from its own resources. 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 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 of Class D shares will normally be
lower than that of 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
14
<PAGE> 76
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 The Portfolio is treated as a [DELTA SYMBOL IN CIRCLE]
of the Portfolio: separate entity for federal
income tax purposes and is TAXES
not combined with the Trust's You must pay taxes on
other portfolios. The your Portfolio's
Portfolio intends to continue earnings whether you
to qualify for the special take your payments in
tax treatment afforded cash or additional
regulated investment shares.
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.
Tax Status The Portfolio intends to [DELTA SYMBOL IN CIRCLE]
of Distributions: distribute substantially all
of its net investment income DISTRIBUTIONS
(including net short-term The Portfolio
capital gain) to distributes income
shareholders. If, at the dividends and capital
close of each quarter of its gains. Income dividends
taxable year, at least 50% of represent the earnings
the value of the Portfolio's from the Portfolio's
total assets consists of investments; capital
obligations the interest on gains distributions
which is excludable from occur when investments
gross income, the Portfolio in the Portfolio are
may pay "exempt-interest sold for more than the
dividends" to its original purchase price.
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 of net capital gains of the Portfolio also
will not qualify for the dividends received deduction and
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
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<PAGE> 77
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.
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 (or its authorized 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 of the
Portfolio.
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<PAGE> 78
If an exchange request [DELTA SYMBOL IN CIRCLE]
is for shares of a portfolio
whose net asset value is BUY, EXCHANGE AND
calculated as of a time SELL REQUESTS ARE
earlier than 2:00 p.m., IN "GOOD ORDER"
Eastern time, the exchange WHEN:
request will not be effective
until the next Business Day. - The account number and
Anyone who wishes to make an portfolio name are
exchange must have received a shown
current prospectus of the - The amount of the
portfolio into which the transaction is
exchange is being made before specified in dollars
the exchange will be or shares
effected. - Signatures of all
Minimum Investments The minimum initial owners appear exactly
investment in the Portfolio's as they are registered
Class D shares is $1,000; on the account
however, the minimum - Any required signature
investment may be waived at guarantees (if
the Distributor's discretion. applicable) are
All subsequent purchases must included
be at least $100 ($25 for - Other supporting legal
payroll deductions authorized documents (as
pursuant to pre-approved necessary) are present
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 Account investments, the Portfolio reserves the right to redeem,
Balance at net asset value, the shares of any shareholder if,
because of redemptions of shares by or on behalf of the
shareholder, the account of such shareholder in the
Portfolio has a value of less than $1,000, the minimum
initial purchase amount. Accordingly, an investor
purchasing shares of the Portfolio in only the minimum
investment amount may be subject to such involuntary
redemption if he or she thereafter redeems any of these
shares. Before the Portfolio exercises its right to redeem
such shares and to send the proceeds to the shareholder,
the shareholder will be given notice that the value of the
shares in his or her account is less than the minimum
amount and will be allowed 60 days to make an additional
investment in the Portfolio in an amount that will
increase the value of the account to at least $1,000. See
"Purchase and Redemption of Shares" in the Statement of
Additional Information for examples of when the right of
redemption may be suspended.
At various times, the Portfolio may receive a
request to redeem shares for which it has not yet received
good payment. In such circumstances, redemption proceeds
will be forwarded upon collection of payment for the
shares; collection of payment may take up to 15 days. The
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.
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<PAGE> 79
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 The net asset value per share of the Portfolio is
Net Asset Value determined by dividing the total market value of its
is Determined investments and 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 Guarantees The Transfer Agent may require that the signatures on the
written request be guaranteed. You should be able to
obtain a signature guarantee from a bank, broker, dealer,
certain credit unions, securities exchange or association,
clearing agency or savings association. Notaries public
cannot guarantee signatures. The signature guarantee
requirement will be waived if all of the following
conditions apply: (1) the redemption is for not more than
$5,000 worth of shares, (2) the redemption check is
payable to the shareholder(s) of record, and (3) the
redemption check is mailed to the shareholder(s) at his or
her address of record. The Trust and the Transfer Agent
reserve the right to amend these requirements without
notice.
Telephone/Wire Redemption orders may be placed by telephone. Neither the
Instructions Trust nor the Transfer Agent will be responsible for any
loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received
by telephone and recording telephone instructions. If
market conditions are extraordinarily active, or other
extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone, 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,
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<PAGE> 80
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 An account may be closed by providing written notice to
Close your Account the Transfer Agent. You may also close your account by
telephone if you have previously elected telephone options
on your account application.
GENERAL
INFORMATION
The Trust SEI 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, New York Intermediate-Term Municipal Portfolio
and Pennsylvania Tax Free Portfolio. Additional
information pertaining to the Trust may be obtained by
writing to SEI Fund Management, 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.
Trustees of the Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class of the
Trust will vote separately on matters relating solely to
that 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
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<PAGE> 81
Trust and for the election of Trustees under certain circumstances. In addition,
a Trustee may be removed by the remaining Trustees or by shareholders at a
special meeting called upon written request of shareholders owning at least 10%
of the outstanding shares of the Trust. In the event that such a meeting is
requested the Trust will provide appropriate assistance and information to the
shareholders requesting the meeting.
Reporting The Trust issues unaudited financial statements
semi-annually and audited financial statements annually.
The Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Inquiries Shareholder inquiries should be directed to the Transfer
Agent, DST Systems, Inc., 1004 Baltimore Street, 2nd
Floor, 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
Independent Trust. Arthur Andersen LLP serves as the independent
Public Accountants public accountants of the Trust.
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Wire Agent Box 7618, Philadelphia, Pennsylvania 19101, serves as
custodian of the Trust's assets and acts as wire agent 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:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligation issued
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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
21
<PAGE> 83
Standby Commitments Securities subject to standby commitments or puts permit
and Puts the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government Obligations issued by the U.S. Treasury or issued or
Obligations guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
Variable and Floating Certain of the obligations purchased by the Portfolio may
Rate Instruments carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
22
<PAGE> 84
When-issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery Securities place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
23
<PAGE> 85
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 86
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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
expenses and minimum investment amounts. This Prospectus offers Class A, Class B
and 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 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> 87
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) CLASS A CLASS B CLASS C
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Management/Advisory Fees (after fee waiver) (1) .24% .24% .24%
12b-1 Fees None None None
Total Other Expenses .04% .34% .54%
Shareholder Servicing Fees (after fee waiver) .00%(2) .25% .25%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (3) .28% .58% .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 Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee, and the Shareholder Servicing Fees shown reflect
this waiver. The Distributor reserves the right to terminate its waiver at
anytime in its sole discretion. Absent such waiver, Shareholder Servicing
Fees would be .25% for Class A shares of the Portfolio.
(3) Absent these fee waivers, Total Operating Expenses of the Class A, B and C
shares of the Portfolio would be .56%, .61% and .81%, respectively.
Additional information may be found under "The Adviser" and "The Manager."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor in a Portfolio would pay the following expenses on a $1,000 investment
assuming (1) a 5% annual return and (2) redemption at the end of each time period:
Class A $ 3 $ 9 $ 16 $36
Class B $ 6 $ 19 $ 32 $73
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 in the Portfolio's Class A, Class B and Class C shares. The
Portfolio also offers Class G shares, which are subject to the same expenses,
except for different distribution and shareholder servicing expenses. 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," "The Adviser" and "Distribution and Shareholder Servicing."
Long-term shareholders may pay more than the economic equivalent of the maximum
front end sales charges permitted the Conduct Rules of the National Association
of Securities Dealers, Inc.
2
<PAGE> 88
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734. As of
August 31, 1996, the Class C shares of the California Tax Exempt Portfolio had
not commenced operations.
FOR A CLASS A AND CLASS B SHARE OUTSTANDING THROUGHOUT THE PERIOD**
<TABLE>
<CAPTION>
Investment Net Realized
Activities Distributions and Unrealized
Net Asset ---------- --------------------------------------- Gain (Loss)
Value Net Net Net on Investments Net Asset
Beginning Investment Investment Realized Total and Capital Value End Total
of Period Income Income Gain Distributions Transactions of Period Return
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -----------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1996 $1.00 $ 0.034 $ (0.034) -- $(0.034) -- $1.00 3.41%
1995 $1.00 0.033 (0.033) -- $(0.033) -- $1.00 3.49%
1994 $1.00 0.023 (0.023) -- $(0.023) -- $1.00 2.32%
1993 $1.00 0.024 (0.024) -- $(0.024) -- $1.00 2.41%
1992 $1.00 0.034 (0.034) -- $(0.034) -- $1.00 3.44%
1991 $1.00 0.047 (0.047) -- $(0.047) -- $1.00 4.92%
1990 (1) $1.00 0.016 (0.016) -- $(0.016) -- $1.00 1.81%+
Class B
FOR THE YEARS ENDED AUGUST 31,
1995 (2) $1.00 0.027 (0.027) -- $(0.027) -- $1.00 2.65%+
1994 (3) $1.00 0.013 (0.013) -- $(0.013) -- $1.00 2.07%*
=================================================================================================================================
<CAPTION>
Ratio of
Net
Ratio of Investment
Expenses Ratio of Income
Ratio of to Average Net to Average
Expenses Net Assets Investment Net Assets
Net Assets to (Excluding Income (Excluding Portfolio
End of Period Average Fee to Average Fee Turnover
(000) Net Assets Waivers) Net Assets Waivers) Rate
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- --------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1996 $ 44,729 0.28% 0.36% 3.33% 3.25% --
1995 $ 30,921 0.28% 0.42% 3.43% 3.29% --
1994 $ 32,015 0.27% 0.38% 2.28% 2.17% --
1993 $ 540,285 0.28% 0.37% 2.37% 2.28% --
1992 $ 445,936 0.28% 0.38% 3.34% 3.24% --
1991 $ 376,653 0.28% 0.40% 4.74% 4.62% --
1990 (1) $ 275,095 0.28%* 0.51%* 5.27%* 5.04%* --
Class B
FOR THE YEARS ENDED AUGUST 31,
1995 (2) $ 0 0.58%* 0.69%* 3.16%* 3.05%* --
1994 (3) $ 3,257 0.51%* 0.81%* 2.05%* 1.75%* --
==========================================================================================================
* 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) The California Tax Exempt Portfolio-Class B closed on July 12, 1995.
(3) The California Tax Exempt Portfolio-Class B commenced operations on January 5, 1994.
</TABLE>
3
<PAGE> 89
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 California Tax Exempt Portfolio (the
"Portfolio"). As of September 30, 1996, the aggregate net assets of all classes
of the California Tax Exempt Portfolio was $411,526,336. Investors may also
purchase Class G shares of the Portfolio. Each class provides for variation in
distribution, shareholder servicing and/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,
Pennsylvania 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
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 federal
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 federal 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 Weiss,
Peck & Greer, L.L.C., the Portfolio's investment adviser
(the "Adviser" or "WPG"), 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 securities (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
4
<PAGE> 90
categories: public housing authorities; general
obligations of states and localities; state and local
housing finance authorities or municipal utilities
systems.
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. Non-first tier 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 municipal bonds,
municipal notes and tax-exempt commercial paper, but only
if such securities, at the time of purchase, either meet
the rating requirements imposed by Rule 2a-7 or, if not
rated, are of comparable quality as determined by the
Adviser. See "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
will not invest more than 10% of its net assets in
securities which are considered illiquid.
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> 91
RISK
FACTORS
California Risk Factors
The Portfolio's concentration in investments in California
municipal securities involves greater risks than if their
investments were more diversified. Certain risks are
inherent in the Portfolio's investments in 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.
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.
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.
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
6
<PAGE> 92
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.
The foregoing percentage limitations will apply at the
time of the purchase of a security. Additional fundamental
investment limitations are set forth in the Statement of
Additional Information.
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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, Class B and Class C shares of the
Portfolio to not more than .28%, .58% and .78% as a
percentage of the Portfolio's average daily net assets
attributable to Class A, Class B and Class C 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, 1996, the Portfolio paid management fees,
after waivers, of .20% of its average daily net assets.
THE ADVISER
Weiss, Peck & Greer, L.L.C. 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, 1996, total assets under management were
approximately $13 billion. The principal business address
of the Adviser is One New York Plaza, New York, New York
10004.
7
<PAGE> 93
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 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, 1996, the Portfolio paid advisory fees, after
waivers, of .04% of its relative net assets.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company
("SEI"), serves as the Portfolio's distributor pursuant to
a distribution agreement (the "Distribution Agreement")
with the Trust.
The Portfolio has adopted plans under which firms,
including the Distributor, that provide shareholder and
administrative services may receive compensation therefor.
As discussed below, the Class A, B and C plans differ in a
number of ways, including the amounts that may be paid
under each plan. The Distributor may provide those
services itself or may enter into arrangements under which
third parties provide such services and are compensated by
the Distributor. Under such arrangements the Distributor
may retain as a profit any difference between the fee it
receives and the amount it pays such third party.
Under the Class A plan, the Portfolio will pay the
Distributor a fee at an annual rate of up to .25% of the
average daily net assets of the Portfolio attributable to
Class A shares, in return for provision of a broad range
of shareholder and administrative services. Under the
Class B and Class C shareholder service plans, the
Portfolio will pay shareholder service fees to the
Distributor at an annual rate of up to .25% of average
daily net assets in return for the Distributor's (or its
agent's) efforts in maintaining client accounts; arranging
for bank wires; responding to client inquiries concerning
services provided or investment; and assisting clients in
changing dividend options, account designations and
addresses. In addition, under their administrative service
plans, Class B and Class C shares also pay administrative
services fees at specified percentages of the average
daily net assets of the shares of the Class (up to .05%
and .25%, respectively). Administrative services include
sub-accounting; providing information on share positions
to clients; forwarding shareholder communications to
clients; processing purchase, exchange and redemption
orders; and processing dividend payments.
8
<PAGE> 94
It is possible that an institution may offer
different classes of shares to its customers and differing
services to the classes of each Portfolio, and thus
receive compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers. Certain financial institutions
offering shares to their customers may be required to
register as dealers pursuant to state laws.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid by the Distributor from its
own resources. 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 dealers and
predicated upon the amount of shares of the Portfolio sold
by the 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 (or its Authorized Agent)
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
9
<PAGE> 95
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. 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.
Shareholders who desire to redeem shares of the
Portfolio must place their redemption orders with the
Transfer Agent (or its authorized 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 (or its authorized
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 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
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<PAGE> 96
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 performance of Class A shares of the Portfolio
will normally be higher than that of Class B, Class C or
Class G shares because of the additional distribution
and/or shareholder servicing expenses charged to Class B,
Class C and Class G 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 The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies 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 Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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
11
<PAGE> 97
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 also will not qualify for the dividends received
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 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.
California Taxes 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.
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% 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
12
<PAGE> 98
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, 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 Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential services to the Trust.
13 +
<PAGE> 99
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 Inquiries Shareholder inquiries should be directed to the Manager.
SEI Fund Management. 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, Class C or
Class G shares because of the additional distribution
and/or shareholder servicing expenses charged to Class B,
Class C and Class G shares.
Counsel and Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian and Wire Agent
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent of
the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
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<PAGE> 100
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:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
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<PAGE> 101
Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
Variable and Floating
Rate Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
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<PAGE> 102
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
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<PAGE> 103
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses................... 2
Financial Highlights........................ 3
The Trust................................... 4
Investment Objectives and Policies.......... 4
General Investment Policies................. 5
Risk Factors................................ 6
Investment Limitations...................... 6
The Manager................................. 7
The Adviser................................. 7
Distribution and Shareholder Servicing...... 8
Purchase and Redemption of Shares........... 9
Performance................................. 10
Taxes....................................... 11
General Information......................... 13
Description of Permitted Investments and
Risk Factors.............................. 15
</TABLE>
18
<PAGE> 104
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 105
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 106
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT 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, 1996 has been filed
with the Securities and Exchange Commission, and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087 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
expenses and minimum investment amounts. This Prospectus offers Class G shares
of the Trust's California Tax Exempt 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> 107
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .24%
12b-1 Fees (after fee waiver) (2) .25%
Total Other Expenses .29%
Shareholder Servicing Fees .25%
- ---------------------------------------------------------------------------------------------------------------------
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 this voluntary waiver.
The Manager reserves the right to terminate its waiver at any time in its
sole discretion. Absent such fee waiver, Management/Advisory fees for the
Class G Shares of the Portfolio would be .27%.
(2) The Distributor has waived, on a voluntary basis, all or a portion of its
12b-1 fee, and the 12b-1 fees shown reflect this waiver. The Distributor
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, 12b-1 fees would be .50% for the Portfolio.
(3) Absent these fee waivers, Total Operating Expenses for the Portfolio would
be 1.06%. Additional information may be found under "The Adviser" and "The
Manager."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------- ------- --------
<S> <C> <C> <C> <C>
An investor in the Portfolio would pay the following expenses on a $1,000 investment
assuming (1) a 5% annual return and (2) redemption at the end of each time period:
Class G $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 in Class G shares of the Portfolio. The Portfolio also offers
Class A, Class B and Class C shares, which are subject to the same expenses,
except there are different distribution, shareholder servicing and/or transfer
agent costs. 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," "Distribution and Shareholder Servicing" and "The
Adviser."
Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charges otherwise permitted by the Conduct Rules of the National
Association of Securities Dealers, Inc.
2
<PAGE> 108
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP,
in the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734.
FOR A CLASS G SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net
Realized
and
Investment Unrealized
Net Activities Distributions Gain Net
Asset ---------- ----------------------------------------- (Loss) on Asset
Value, Net Net Net Investments Value,
Beginning Investment Investment Realized Total and Capital End Total
of Period Income Income Gain Distributions Transactions of Period Return
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -----------------------------------
Class G
FOR THE YEARS ENDED AUGUST 31,
1996 $ 1.00 $0.028 $ (0.028) -- $(0.028) -- $ 1.00 2.90%
1995 $ 1.00 $0.029 $ (0.029) -- $(0.029) -- $ 1.00 2.97%
1994(1) $ 1.00 $0.006 $ (0.006) -- $(0.006) -- $ 1.00 2.14%*
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
Net
Ratio Investment
of Expenses Ratio of Income to
to Average Net Average
Net Ratio of Net Assets Investment Net Assets
Assets, End Expenses (Excluding Income to (Excluding Portfolio
of Period to Average Fee Average Fee Turnover
(000) Net Assets Waivers) Net Assets Waivers) Rate
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -----------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -----------------------------------
Class G
FOR THE YEARS ENDED AUGUST 31,
1996 $ 350,684 0.78% 0.86% 2.84% 2.76% --
1995 $ 328,035 0.78% 0.93% 2.93% 2.78% --
1994(1) $ 318,122 0.67%* 0.87%* 2.06%* 1.86%* --
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
* Annualized
(1) The California Tax Exempt Portfolio--Class G commenced operations on May 11, 1994. Prior to May 1, 1996, Class G shares of
the Portfolio were known as Class C shares.
</TABLE>
3
<PAGE> 109
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 G shares of
the Trust's California Tax Exempt Portfolio (the "Portfolio"). Investors may
also purchase Class A, Class B and Class C shares of the Portfolio. Each class
provides for variation in distribution, shareholder servicing, 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, Pennsylvania 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
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 for the issuers, 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 federal 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, as well as municipal obligations issued by
territories or possessions of the United States. Under
normal conditions, the Portfolio may invest, in the
aggregate; up to 20% of its net assets in (1) Municipal
Securities the interest on which is a preference item for
purposes of the federal 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 Weiss, Peck & Greer,
L.L.C., the Portfolio's investment adviser (the "Adviser"
or "WPG"), determines that market conditions warrant, the
Portfolio may invest up to 100% of its assets in municipal
obligations of states other than California or in taxable
money market securities (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 the
Portfolio's assets in municipal securities the interest on
which is derived from revenues of similar type
4
<PAGE> 110
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.
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. Non-first tier 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 municipal bonds,
municipal notes and tax-exempt commercial paper, but only
if such securities, at the time of purchase, either meet
the rating requirements imposed by Rule 2a-7 or, if not
rated, are of comparable quality as determined by the
Adviser. See "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
will not invest more than 10% of its net assets in
securities which are considered illiquid.
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> 111
RISK FACTORS
California Risk Factors
The Portfolio's concentration in investments in California
municipal securities involves greater risks than if their
investments were more diversified. 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.
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.
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.
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.
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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 fundamental
investment limitations are set forth in the Statement of
Additional Information.
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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 G shares of the Portfolio (as a
percentage of the Portfolio's average daily net assets
attributable to Class G shares) to not more than .78%, on
an annualized basis. The Manager reserves the right, in
its sole discretion, to terminate its voluntary fee waiver
at any time. For the fiscal year ended August 31, 1996,
the Portfolio paid management fees, after waivers, of .20%
of its average daily net assets.
THE ADVISER
Weiss, Peck & Greer, L.L.C. 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 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, 1996, total assets under management
were approximately $13 billion. The principal business
address of the Adviser is One New York Plaza, New York,
New York 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.
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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 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, 1996, the Portfolio paid advisory fees, after
waivers, of .04% of its relative net assets.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company
("SEI"), serves as the Portfolio's distributor pursuant to
a distribution agreement (the "Distribution Agreement")
with the Trust.
The Rule 12b-1 Plan applicable to Class G shares of
the Portfolio ("Class G Plan") provides for payments to
the Distributor at an annual rate of .50% of the
Portfolio's average daily net assets attributable to Class
G shares. This payment is characterized as "compensation,"
and is not directly tied to expenses incurred by the
Distributor; the payment the Distributor receives during
any year may therefore be higher or lower than its actual
expenses. This payment compensates the Distributor for its
services in connection with distribution assistance, 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. If the Distributor's expenses are less than
its fees under the Class G 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.
The Portfolio has adopted a shareholder servicing
plan (the "Class G Service Plan") under which firms,
including the Distributor, that provide shareholder
services may receive compensation therefor. Under the
Class G Service Plan, the Portfolio will pay shareholder
service fees to the Distributor at an annual rate of up to
.25% of average daily net assets in return for the
Distributor's (or its agent's) efforts in maintaining
client accounts; arranging for bank wires; responding to
client inquiries concerning services provided or
investment; and assisting clients in changing dividend
options, account designations and addresses. In addition,
the Portfolio has adopted shareholder servicing plans for
its Class A, Class B and Class C shares that are similar
to the plan described above. The Distributor may provide
those services itself or may enter into arrangements under
which third
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parties provide such services and are compensated by the
Distributor. The Distributor may retain as a profit any
difference between the fee it receives and the amount it
pays such third party.
It is possible that an institution may offer
different classes of shares to its customers and provide
differing services to the classes of the Portfolio, and
thus receive compensation with respect to different
classes. These financial institutions may also charge
separate fees to their customers. Certain financial
institutions offering shares to their customers may be
required to register as dealers pursuant to state laws.
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 by the Distributor from its
own resources. 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 dealers and
predicated upon the amount of shares of the Portfolio sold
by the 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 that 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 (or its authorized agent)
prior to the calculation of net asset value on any
Business Day for the order to be accepted on that Business
Day.
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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.
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 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. 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 (or its authorized 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.
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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 performance of Class A shares of the Portfolio
will normally be higher than that of Class B, Class C or
Class G shares because of the additional distribution
and/or shareholder servicing expenses charged to Class B,
Class C and Class G 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 The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
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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.
Tax Status
of Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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 also will not qualify for the dividends received
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 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-
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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 Taxes 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.
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 Portfolio, the Trust
consists of the following portfolios: Tax Free Portfolio,
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Institutional Tax Free Portfolio, Intermediate-Term
Municipal Portfolio, Pennsylvania Municipal Portfolio,
Kansas Tax Free Income 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 Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential 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 Inquiries Shareholder inquiries should be directed to the Manager,
SEI Fund Management, 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.
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The dividends on Class A shares of the Portfolio
are normally higher than those on Class B, Class C or
Class G shares because of the additional distribution
and/or shareholder servicing expenses charged to Class B,
Class C and Class G shares.
Counsel and Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian
and Wire Agent CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent of
the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investments for the Portfolios, and the associated risk
factors:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks and U.S. branches of foreign banks; (ii) U.S.
Treasury obligations and obligations issued by the
agencies and instrumentalities of the U.S. Government;
(iii) high-quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a
maturity of one year or less issued by corporations that
issue high-quality commercial paper; and (v) repurchase
agreements involving any of the foregoing obligations
entered into with highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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
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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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration, and the Small Business
Administration and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
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Variable and Floating
Rate Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses................... 2
Financial Highlights........................ 3
The Trust................................... 4
Investment Objective and Policies........... 4
General Investment Policies................. 5
Risk Factors................................ 6
Investment Limitations...................... 6
The Manager................................. 7
The Adviser................................. 7
Distribution and Shareholder Servicing...... 8
Purchase and Redemption of Shares........... 9
Performance................................. 11
Taxes....................................... 11
General Information......................... 13
Description of Permitted Investments and
Risk Factors.............................. 15
</TABLE>
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SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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 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
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> 126
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .53%
12b-1 Fees None
Total Other Expenses .07%
Shareholder Servicing Fees (after fee waiver)(2) .00%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (3) .60%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) SEI Financial Management ("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 fee waiver, Management/Advisory
fees for the Portfolio would be .57%.
(2) The Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee, and the Shareholder Servicing Fees shown reflect
this waiver. The Distributor reserves the right to terminate its waiver at
anytime in its sole discretion. Absent such waiver, Shareholder Servicing
Fees would be .25%.
(3) Absent these waivers, Total Operating Expenses of the Portfolio would be
.89%. Additional information may be found under "The Advisor" and "The
Manager."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor in Class A shares of the Portfolio would pay the following expenses on a
$1,000
investment assuming (1) a 5% annual return and (2) redemption at the end of
each time period: $ 6 $ 19 $ 33 $75
- ---------------------------------------------------------------------------------------------------------------------
</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 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. A person who purchases shares through a
financial institution may be charged separate fees by that institution. Addition
information may be found under "The Manager," "The Adviser" and "Distribution
and Shareholder Servicing."
2
<PAGE> 127
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 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>
Investment Net Realized
Activities Distributions and Unrealized
Net Asset ---------- --------------------------------------- Gain (Loss) on
Value, Net Net Net Investments Net Asset
Beginning Investment Investment Realized Total and Capital Value, End Total
of Period Income Income Gain Distributions Transactions of Period Return
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- -------------------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31;
1996 $ 10.59 $0.49 $(0.53) $ -- $ (0.53) $(0.10) $10.45 3.76%
1995 10.36 0.52 (0.52) -- (0.52) 0.23 10.59 7.53%
1994 10.84 0.49 (0.49) (0.06) (0.55) (0.42) 10.36 0.65%
1993 10.49 0.49 (0.50) (0.02) (0.52) 0.38 10.84 8.62%
1992 10.20 0.56 (0.54) (0.01) (0.55) 0.28 10.49 8.56%
1991 9.98 0.61 (0.63) -- (0.63) 0.24 10.20 8.82%
1990 (2) 10.01 0.38 (0.37) -- (0.37) (0.04) 9.98 3.44%+
FOR THE YEAR ENDED JANUARY 31;
1990 (1) $ 10.00 $ 0.21 $(0.16) $ (0.002) $ (0.16) $(0.04) $10.01 1.72%+
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of Net
Expenses to Net Income to
Ratio of Average Net Investment Average Net
Net Assets, Expenses Assets Income to Assets Portfolio
End of Period to Average (Excluding Average (Excluding Turnover
(000) Net Assets Fee Waivers) Net Assets Fee Waivers) Rate
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------
INTERMEDIATE
- ------------
Class A
FOR THE YEAR
1996 $ 134,563 0.59% 0.66% 4.66% 4.59% 40.66%
1995 95,675 0.55% 0.72% 4.96% 4.79% 36.05%
1994 127,509 0.53% 0.71% 4.65% 4.47% 58.39%
1993 122,649 0.55% 0.69% 4.79% 4.65% 63.04%
1992 63,210 0.55% 0.71% 5.56% 5.40% 61.56%
1991 36,699 0.55% 0.78% 6.18% 5.95% 111.82%
1990 (2) 12,781 0.55%* 0.90%* 6.63%* 6.28%* 63.45%
FOR THE YEAR
1990 (1) $ 9,106 0.56%* 1.36%* 5.80%* 5.00%* 352.00%
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
*
+
(1)
(2)
<CAPTION>
* Annualized
<S> <C>
+ 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.
</TABLE>
3
<PAGE> 128
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 Intermediate-Term Municipal Portfolio (the "Portfolio"). 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, Pennsylvania 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.
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 federal
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 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 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 and, (b) municipal securities
4
<PAGE> 129
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.
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 federal 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 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.
For a description of the permitted investments and
ratings, see the "Description of Permitted Investments and
Risk Factors" and the Statement of Additional Information.
5
<PAGE> 130
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 fundamental
investment limitations are set forth in the Statement of
Additional Information.
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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 .24% of the average daily net assets of the
Portfolio. In addition, the Manager has voluntarily agreed
to waive a portion of its fees proportionately in order to
limit total operating expenses of the Class A shares of
the Portfolio to not more than .60% 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 its waiver at any time.
For the fiscal year
6
<PAGE> 131
ended August 31, 1996, the Portfolio paid management fees,
after waivers, of .20% of its average daily net assets.
THE ADVISER
SEI Financial Management
Corporation SEI Financial Management Corporation ("SFM") serves as
investment adviser to the Portfolio. SFM is a wholly-owned
subsidiary of SEI Investments Company ("SEI"), a financial
services company located in Wayne, Pennsylvania. The
principal business address of SFM is 680 East Swedesford
Road, Wayne, Pennsylvania 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 investment
companies, including more than portfolios, which
investment companies have more than $ billion in
assets as of September 30, 1996.
SFM acts as the investment adviser to the Portfolio
and operates as a "manager of managers." As Adviser, SFM
oversees the investment advisory services provided to the
Portfolio and manages the cash portion of the Portfolio's
assets. Pursuant to a separate sub-advisory agreement with
SFM, and under the supervision of the Adviser and the
Board of Trustees, the sub-adviser is responsible for the
day-to-day investment management of all or a discrete
portion of the assets of the Portfolio. Sub-advisers are
selected based primarily upon the research of SFM, which
evaluate quantitatively and qualitatively the
sub-advisers' skills and investment results in managing
assets for specific asset classes, investment styles and
strategies. Subject to Board review, SFM allocates and,
when appropriate, reallocates the Portfolio's assets to
the sub-advisers, monitors and evaluates the sub-advisers'
performance, and oversees sub-adviser compliance with the
Portfolio's investment objectives, policies and
restrictions. SFM HAS THE ULTIMATE RESPONSIBILITY FOR THE
INVESTMENT PERFORMANCE OF THE PORTFOLIO DUE TO ITS
RESPONSIBILITY TO OVERSEE SUB-ADVISERS AND RECOMMEND THEIR
HIRING, TERMINATION AND REPLACEMENT.
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. For the fiscal year ended August 31, 1996, the
Portfolio paid advisory fees, after waivers, of .33% of
its average daily net assets. SFM pays the sub-advisers
out its investment advisory fees.
SFM has obtained an exemptive order from the
Securities and Exchange Commission ("SEC") that permits
SFM, with the approval of the Trust's Board of Trustees,
to retain sub-advisers unaffiliated with SFM for the
Portfolio without submitting the sub-advisory agreements
to a vote of the Portfolio's shareholders. The exemptive
relief permits the disclosure of only the aggregate amount
payable
7
<PAGE> 132
by SFM under all such sub-advisory agreements. The Portfolio will notify
shareholders in the event of any addition or change in the identity of its
sub-advisers.
THE SUB-ADVISER
Standish, Ayer &
Wood, Inc. Standish Ayer & Wood, Inc. ("SAW" or the "Sub-Adviser")
serves as Sub-Adviser to the Portfolio. SAW's principal
offices are located at One Financial Center, Boston,
Massachusetts 02111. SAW which was founded in 1933, is a
Subchapter S Corporation organized under the laws of the
Commonwealth of Massachusetts that 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, 1996 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 based on a percentage of the
assets of the Portfolio managed by SAW.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as the Portfolio's
distributor pursuant to a distribution agreement with the
Trust.
The Portfolio has adopted a shareholder servicing
plan for Class A shares (the "Service Plan") under which a
shareholder servicing fee of up to .25% of average daily
net assets attributable to Class A shares will be paid to
the Distributor. Under the Service Plan, the Distributor
may perform, or may compensate other service providers for
performing the following shareholder and administrative
services: maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services
provided on investments; assisting clients in changing
dividend options; account designations and addresses; sub-
accounting; providing information on share positions to
clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and
processing dividend payments. Under the Service Plan, the
Distributor may retain as a profit any difference between
the fee it receives and the amount it pays to third
parties.
8
<PAGE> 133
It is possible that an institution may offer
different classes of shares to its customers and thus
receive different compensation with respect to different
classes. These financial institutions may also charge
separate fees to their customers.
The Trust may also execute brokerage or other
agency transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
In addition, the Distributor may, from time to time
in its sole discretion, institute one or more promotional
incentive programs, which will be paid by the Distributor
from its own resources. 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 dealers and
predicated upon the amount of shares of the Portfolio sold
by the 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").
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent (or its
authorized 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.
9
<PAGE> 134
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 number of
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.
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 (or its authorized 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.
10
<PAGE> 135
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, and 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 income tax consequences
is based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative
11
<PAGE> 136
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 The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies 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 Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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 also will not qualify for the dividends received
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 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.
12
<PAGE> 137
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.
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, 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 Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class 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
13
<PAGE> 138
remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at
least 10% of the outstanding shares of the Trust. In the
event that such a meeting is requested the Trust will
provide appropriate assistance and information to the
shareholders requesting the meeting.
Reporting The Trust issues unaudited financial statements
semi-annually and audited financial statements annually.
The Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Inquiries Shareholder inquiries should be directed to the Manager,
SEI Fund Management, 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.
Counsel and Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian and Wire Agent
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent of
the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS AND
RISK FACTORS
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and
14
<PAGE> 139
(iii) repurchase agreements involving any of the foregoing
obligations entered into with highly-rated banks and
broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the
15
<PAGE> 140
Federal Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
Variable and Floating
Rate Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
16
<PAGE> 141
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................................. 6
The Adviser................................. 7
The Sub-Adviser............................. 8
Distribution and Shareholder Servicing...... 8
Purchase and Redemption of Shares........... 9
Performance................................. 11
Taxes....................................... 11
General Information......................... 13
Description of Permitted Investments and
Risk Factors.............................. 14
</TABLE>
17
<PAGE> 142
[THIS PAGE INTENTIONALLY LEFT BLANK]
18
<PAGE> 143
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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
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 PENNSYLVANIA TAX-FREE 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> 144
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET
PORTFOLIO FIXED
------------------------------------ INCOME
CLASS A CLASS B CLASS C PORTFOLIO
------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .31% .31% .31% .44%
12b-1 Fees (2) None None None None
Total Other Expenses .04% .34% .54% .04%
Shareholder Servicing Fees (after fee waiver) .00%(2) .25% .25% .00%(2)
- --------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers and expense
reimbursements) (3) .35% .65% .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 and reimbursement, management/advisory fees for the Money Market
Portfolio would be .40% and for the Fixed Income Portfolio would be .55%.
(2) The Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee, and the Shareholder Servicing Fees shown reflect
this waiver. The Distributor reserves the right to terminate its waiver at
any time in its sole discretion. Absent such waiver, Shareholder Servicing
Fees would be .25% for the Class A shares of the Money Market Portfolio and
.25% for the Fixed Income Portfolio.
(3) Absent these fee waivers and reimbursements, Total Operating Expenses for
Class A, Class B and Class C shares of the Money Market Portfolio would be
.69%, .74% and .94%, respectively, and for the Class A shares of the Fixed
Income Portfolio would be .84%. Additional information may be found under
"The Adviser" and "The Manager."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
------ -------- -------- ---------
<S> <C> <C> <C> <C>
An investor in the Portfolios would pay the following expenses on a $1,000
investment assuming (1) a 5% annual return and (2) redemption at the end of
each time period:
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. 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 Class A, B and C shares of the Pennsylvania Tax Free
Portfolio and the Class A shares of the Pennsylvania Municipal Portfolio. 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," "The Adviser" and "Distribution and Shareholder Servicing."
2
<PAGE> 145
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 Annual Report to Shareholders which is
available upon request and without charge by calling 1-800-342-5734. As of
August 31, 1996 the Class B and Class C shares of the Pennsylvania Tax Free
Portfolio had not commenced operations.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ----- -------------------- Gain (Loss) on Net
Value, Net Net Net Investments Asset Value
Beginning Investment Investment Realized Total and Capital End Total
of Period Income Income Gain Distributions Transactions of Period Return
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- ------------------------------------
Class A
For the years ended August 31,
1996 $ 10.66 $ 0.55 $ (0.59) $ -- $ (0.59) $(0.14) $ 10.48 3.96%
1995 10.52 0.55 (0.55) -- (0.55) 0.14 10.66 6.81%
1994 10.94 0.53 (0.53) -- (0.53) (0.42) 10.52 1.14%
1993 10.59 0.55 (0.55) (0.01) (0.56) 0.36 10.94 8.91%
1992 10.29 0.57 (0.57) (0.01) (0.58) 0.31 10.59 8.89%
1991 9.95 0.60 (0.60) (0.003) (0.60) 0.34 10.29 9.80%
1990 (2) 9.98 0.34 (0.34) -- (0.34) (0.03) 9.95 3.12%+
FOR THE YEAR ENDED JANUARY 31,
1990 (1) 10.00 0.28 (0.23) (0.001) (0.23) (0.07) 9.98 2.11%+
- ------------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- ------------------------------------
Class A
For the years ended August 31,
1996 $ 1.00 $ 0.034 $ (0.034) $ -- $(0.034) $ -- $ 1.00 3.40%
1995 1.00 0.035 (0.035) -- (0.035) -- 1.00 3.60%
1994 (3) 1.00 0.014 (0.014) -- (0.014) -- 1.00 2.37%*
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio of
Ratio of Ratio of Investment
Expenses Net Income to
Ratio of to Average Investment Average
Net Assets, Expenses Net Assets Income to Net Assets Portfolio
End of Period to Average (Excluding Fee Average (Excluding Fee Turnover
(000) Net Assets Waivers) Net Assets Waivers) Rate
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- ------------------------------------
Class A
For the years ended August 31,
1996 $ 97,228 0.48% 0.65% 5.15% 4.98% 65.75%
1995 104,094 0.48% 0.72% 5.21% 4.97% 22.62%
1994 125,081 0.47% 0.71% 4.90% 4.66% 25.13%
1993 153,808 0.48% 0.70% 5.15% 4.93% 15.26%
1992 114,461 0.48% 0.72% 5.52% 5.28% 10.54%
1991 83,054 0.50% 0.73% 5.98% 5.75% 19.17%
1990 (2) 64,531 0.60%* 0.80%* 5.88%* 5.68%* 20.35%
FOR THE YEA
1990 (1) 53,042 0.60%* 0.85%* 6.05%* 5.79%* 10.00%
- ------------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- ------------------------------------
Class A
For the years ended August 31,
1996 $ 42,971 0.35% 0.49% 3.33% 3.19% --
1995 26,058 0.35% 0.51% 3.54% 3.38% --
1994 (3) 18,712 0.35%* 0.65%* 2.37%* 2.07%* --
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
* Annualized
+ Return is for the 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 (Class A) commenced operations on January 21, 1994.
</TABLE>
3
<PAGE> 146
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 a non-diversified
portfolio. Additional information pertaining to the Trust may be obtained by
writing to SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658, or by calling 1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES
PENNSYLVANIA
MUNICIPAL PORTFOLIO The Fixed Income Portfolio's investment objective is to
provide current income exempt from both federal and
Pennsylvania state income taxes while preserving capital
by investing primarily in municipal securities within the
guidelines presented below.
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 federal
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, the 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 will be sold at a time when, in the
judgment of Morgan Grenfell, it does not substantially
impact the market value of the Portfolio.
4
<PAGE> 147
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.
PENNSYLVANIA TAX
FREE PORTFOLIO The Money Market Portfolio's investment objective is a
high level of current income, free from federal income tax
and, 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 federal 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, as well
as 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
federal 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 municipal
bonds, municipal notes and tax-exempt commercial paper,
but only if such securities, at the time of purchase,
either meet the rating requirements imposed by Rule 2a-7
or, if not rated, are determined to be of comparable
quality by Weiss, Peck & Greer L.L.C., this Portfolio's
investment adviser. See "General Investment Policies."
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.
5
<PAGE> 148
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. Non-first tier 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 Money Market Portfolio is governed by
Rule 2a-7, its investment policies are more restrictive
than those imposed by that Rule.
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 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.
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
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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.
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
Pennsylvania Risk
Factors Under normal conditions the Fixed Income Portfolio will be
fully invested, and the Money Market Portfolio will invest
primarily, in obligations which produce interest income
exempt from federal income tax and Pennsylvania state
income tax. Accordingly, each Portfolio will have
considerable investments in Pennsylvania municipal
obligations. As a result, each Portfolio will be more
susceptible to factors which adversely affect issuers of
Pennsylvania obligations than a mutual fund which does not
have as great a concentration in Pennsylvania municipal
obligations.
An investment in either Portfolio will be affected
by the many factors that affect the financial condition of
the Commonwealth of Pennsylvania. For example, financial
difficulties of the Commonwealth, its counties,
municipalities and school districts that hinder efforts to
borrow and lower credit ratings are factors which may
affect the Portfolio. See "Special Considerations Relating
to Pennsylvania Municipal Securities" in the Statement of
Additional Information.
Non-Diversification Investment in the Money Market 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 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
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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
to the extent 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
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
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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 the Fixed Income Portfolio
to not more than .48% of that Portfolio's average daily
net assets on an annualized basis, and 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, 1996, the
Fixed Income and Money
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Market Portfolios paid management fees, after waivers, of
.24% and .27%, 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 discharges its
responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust.
Morgan Grenfell Capital
Management Incorporated
Morgan Grenfell Capital Management Incorporated ("Morgan
Grenfell") acts as investment adviser to the Fixed Income
Portfolio. Morgan Grenfell is a wholly-owned, U.S.-based
subsidiary of Morgan Grenfell Asset Management and was
organized in 1985. As of September 30, 1996, total assets
under management by Morgan Grenfell were approximately
$8.6 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, 1996, the Portfolio paid
Morgan Grenfell an advisory fee, after waivers, of .20% of
its average daily net assets.
Weiss, Peck &
Greer, L.L.C. Weiss, Peck & Greer, L.L.C. ("WPG") acts as investment
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, 1996, total assets
under management were approximately $13 billion. The
principal business address of WPG is One New York Plaza,
New York, New York 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 WPG up to $500
million; .04% of such assets from $500 million to $1
billion; and .03% of such assets over
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$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, 1996, the
Portfolio paid WPG an advisory fee, after waivers, of .04%
of its average daily net assets.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company
("SEI"), serves as each Portfolio's distributor pursuant
to a distribution agreement (the "Distribution Agreement")
with the Trust.
The Portfolios have adopted plans under which
firms, including the Distributor, that provide shareholder
and administrative services may receive compensation
therefor. The Class A, B and C plans differ in a number of
ways, including the amounts that may be paid. Under each
plan, the Distributor may provide those services itself or
may enter into arrangements under which third parties
provide such services and are compensated by the
Distributor. Under such arrangements the Distributor may
retain as a profit any difference between the fee it
receives and the amount it pays such third party. In
addition, the Portfolios may enter into such arrangements
directly.
Under the Class A plan, a Portfolio will pay the
Distributor a fee at an annual rate of up to .25% of the
average daily net assets of such Portfolio attributable to
Class A shares, in return for provision of a broad range
of shareholder services. Under the Class B and Class C
shareholder service plans, a Portfolio will pay
shareholder service fees to the Distributor at an annual
rate of up to .25% of average daily net assets in exchange
for the Distributor's (or its agent's) efforts in
maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services
provided or investment; and assisting clients in changing
dividend options, account designations and addresses. In
addition, under their administrative services plans, Class
B and Class C shares will pay administrative services fees
at specified percentages of the average daily net assets
of the shares of the Class (up to .05% in the case of the
Class B shares and up to .25% in the case of the Class C
shares). Administrative services include sub-accounting;
providing information on share positions to clients;
forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and
processing dividend payments.
It is possible that an institution may offer
different classes of shares to its customers and differing
services to the Classes of each Portfolio and thus receive
compensation with respect to different classes. These
financial institutions may also charge separate fees to
their customers. Certain financial institutions offering
shares to their customers may be required to register as
dealers pursuant to state laws.
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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 by the Distributor from its
own resources. Under any such program, the Distributor
will provide promotional incentives, in the form of cash
or other compensation, including merchandise, airline
vouchers, trips and vacation packages, to all dealers
selling shares of the Portfolios. Such promotional
incentives will be offered uniformly to all dealers and
predicated upon the amount of shares of the Portfolios
sold by the dealer.
PURCHASE AND
REDEMPTION OF
SHARES
Financial institutions may acquire shares of each
Portfolio for their own account, or as a record owner on
behalf of fiduciary, agency or custody accounts, by
placing orders with the Transfer Agent. Institutions that
use certain SEI proprietary systems may place orders
electronically through those systems. State securities
laws may require banks and financial institutions
purchasing shares for their customers to register as
dealers pursuant to state laws. Financial institutions
which purchase shares for the accounts of their customers
may impose separate charges on these customers for account
services. Financial institutions may impose an earlier
cut-off time for receipt of purchase orders directed
through them to allow for processing and transmittal of
these orders to the Transfer Agent for 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 (or its
authorized 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
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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. 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 number of 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 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 of the
Fixed Income Portfolio 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 (or its authorized agent) prior to 2:00
p.m., Eastern time for the Money Market Portfolio and 4:00
p.m., Eastern time for Fixed Income Portfolio. 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
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cut-off times for receipt of redemption requests directed
through the financial institution.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor its transfer agent will
be responsible for any loss, liability, cost or expense
for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine.
The Trust and its transfer agent will each employ
reasonable procedures to confirm that instructions
communicated by telephone are genuine, including requiring
a form of personal identification prior to acting upon
instructions received by telephone and recording telephone
instructions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, 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-
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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, and Ibbotson Associates of
Chicago, Illinois, which provides historical returns of
the capital markets in 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 of Class A shares will normally be
higher than that of Class B or Class C shares because of
the additional administrative services 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 Each Portfolio is treated as a separate entity for federal
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 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
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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 Distributions Each Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
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
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 such Portfolio's
earnings and profits and will not qualify for the
dividends-received deduction for corporate shareholders.
Distributions to shareholders of net capital gains of a
Portfolio also will not qualify for the dividends received
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 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 the
Portfolios' shares is a taxable transaction to the
shareholders.
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State Taxes 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.
Distributions paid by the Portfolios 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 the Portfolios to a Pennsylvania
resident that are attributable to most other sources will
not be exempt from the Pennsylvania personal income tax or
(for residents of Philadelphia) the Philadelphia School
District investment net income tax. Distributions paid by
a Portfolio which are excludable as exempt income for
federal tax purposes are not subject to the Pennsylvania
corporate net income tax.
Shares of the Portfolios are exempt from
Pennsylvania county personal property taxes to the extent
that the Portfolios' 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 the Portfolios invest in
obligations that pay interest that is not exempt for
Pennsylvania purposes but is exempt for federal purposes,
a portion of the Portfolios' distributions will be subject
to Pennsylvania personal income tax.
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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, 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 Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential 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 Inquiries Shareholder inquiries should be directed to the Manager,
SEI Fund Management, 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
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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 Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian and Wire Agent
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent of
the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investments for the Portfolios, and the associated risk
factors:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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
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<PAGE> 161
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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
act.
Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity.
19
<PAGE> 162
Guarantees as to the timely payment of principal and
interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
Variable and Floating
Rate Instruments Certain of the obligations purchased by a Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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> 163
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...................... 7
The Manager................................. 8
The Advisers................................ 9
Distribution and Shareholder Servicing...... 10
Purchase and Redemption of Shares........... 11
Performance................................. 13
Taxes....................................... 14
General Information......................... 17
Description of Permitted Investments and
Risk Factors.............................. 18
</TABLE>
21
<PAGE> 164
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 165
[THIS PAGE INTENTIONALLY LEFT BLANK.]
<PAGE> 166
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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 shareholder
servicing 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
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> 167
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) CLASS
A CLASS B
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .15% .15%
12b-1 Fees None None
Total Other Expenses .06% .36%
Shareholder Servicing Fees (after fee waiver) (2) .00% (2) .25%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (3) .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) The Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee for the Class A shares, and the Shareholder
Servicing Fees shown reflect this waiver. The Distributor reserves the right
to terminate its waiver at any time in its sole discretion. Absent such
waiver, Shareholder Servicing Fees would be .25% for the Class A shares of
the Portfolio.
(3) Absent these fee waivers, Total Operating Expenses of the Portfolio would
be .76% and .81% for Class A and Class B shares, respectively. Additional
information may be found under "The Adviser" and "The Manager."
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) a 5%
annual return and (2) redemption at the end of each time period:
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. 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,"
"Distribution and Shareholder Servicing" and "The Adviser."
Long-term Class B shareholders may pay more than the economic equivalent of the
maximum front-end sales charges otherwise permitted by the Conduct Rules of the
National Association of Securities Dealers, Inc.
2
<PAGE> 168
FINANCIAL HIGHLIGHTS
The following financial highlights 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 appear, along with the report of Arthur Andersen LLP, in
the Trust's 1996 Annual Report to Shareholders. Additional performance
information is set forth in the 1996 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734. As of
August 31, 1996, Class B shares of the Kansas Tax Free Portfolio had not
commenced operations.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Net Realized
Investment and
Net Activities Distributions Unrealized
Asset ----- ----------------------------------------- Gain (Loss) on Net
Value Net Net Net Investments Asset Value
Beginning Investment Investment Realized Total and Capital End Total
of Period Income Income Gain Distributions Transactions of Period Return
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- -------------------------------------
FOR THE YEARS ENDED AUGUST 31,
1996 $ 10.63 $ 0.56 $(0.56) $ -- $ (0.56) $(0.12) $ 10.51 4.23%
1995 10.47 0.57 (0.57) -- (0.57) 0.16 10.63 7.23%
1994 10.91 0.57 (0.57) (0.02) (0.59) (0.42) 10.47 1.41%
1993 10.50 0.58 (0.58) (0.05) (0.63) 0.46 10.91 10.38%
1992 10.13 0.60 (0.59) (0.01) (0.60) 0.37 10.50 9.78%
1991 (1) 10.00 0.42 (0.37) -- (0.37) 0.08 10.13 5.12%+
====================================================================================================================================
<CAPTION>
Ratio of
Net
Ratio of Ratio of Investment
Expenses Net Income to
Ratio of to Average Investment Average
Net Assets Expenses Net Assets Income to Net Assets Portfolio
End of Period to Average (Excluding Average (Excluding Turnover
(000) Net Assets Fee Waivers) Net Assets Fee Waivers) Rate
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- --------------------------------
FOR THE YEARS ENDED AUGUST 31,
1996 $72,066 0.21% 0.51% 5.31% 5.01% 12.71%
1995 65,834 0.21% 0.51% 5.47% 5.17% 17.60%
1994 62,346 0.21% 0.54% 5.36% 5.03% 10.57%
1993 58,197 0.21% 0.51% 5.56% 5.26% 23.04%
1992 45,609 0.22% 0.52% 5.87% 5.57% 12.69%
1991 (1) 29,242 0.31%* 0.61%* 5.85%* 5.55%* 21.82%
============================================================================================================
* Annualized.
+ Return is for period indicated and has not been annualized.
(1) The Kansas Tax Free Income Portfolio (Class A) commenced operations on December 10, 1990.
</TABLE>
3
<PAGE> 169
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, Pennsylvania 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 the Portfolio will
meet its investment objective.
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 for the issuer, 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 federal 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 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"), 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;
4
<PAGE> 170
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.
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 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 the
foregoing obligations.
Kansas Risk Factors Under normal conditions, the Portfolio will be primarily
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. Such factors include the
financial difficulties of Kansas, its counties,
municipalities and school districts, if any. See "Special
Considerations Relating to Kansas Municipal Securities" in
the Statement of Additional Information.
5
<PAGE> 171
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 fundamental
investment limitations are set forth in the Statement of
Additional Information.
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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 .15% of the average daily net assets of the
Portfolio. For the fiscal year ended August 31, 1996, 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
6
<PAGE> 172
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 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, 1996,
total assets under management were approximately $1.2
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 1990.
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, 1996, the
Portfolio paid advisory fees, after waivers, of .00% of
its relative net assets.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company
("SEI"), serves as the Portfolio's distributor pursuant to
a distribution agreement (the "Distribution Agreement")
with the Trust.
The Portfolio has adopted plans under which firms,
including the Distributor, that provide shareholder and
administrative services may receive compensation therefor.
The Class A and B plans differ in a number of ways,
including the amounts that may be paid. Under each plan,
the Distributor may provide those services itself or may
enter into arrangements under which third parties provide
such services and are compensated by the Distributor.
Under such arrangements the Distributor may retain as a
profit any difference between the fee it receives and the
amount it pays such third party. In addition, the
Portfolio may enter into such arrangements directly.
7
<PAGE> 173
Under the Class A plan, the Portfolio will pay the
Distributor a fee at an annual rate of up to .25% of the
average daily net assets of the Portfolio attributable to
Class A shares, in return for provision of a broad range
of shareholder and administrative services. Under the
Class B shareholder service plan, the Portfolio will pay
shareholder service fees to the Distributor at an annual
rate of up to .25% of average daily net assets in return
for the Distributor's (or its agent's) efforts in
maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services
provided or investment; and assisting clients in changing
dividend options, account designations and addresses. In
addition, under their administrative services plan, Class
B shares will pay administrative services fees of up to
.05% of the average daily net assets of the shares.
Administrative services include sub-accounting; providing
information on share positions to clients; forwarding
shareholder communications to clients; processing
purchase, exchange and redemption orders; and processing
dividend payments.
It is possible that an institution may offer
different classes of shares to its customers and differing
services to the Classes of the Portfolio and thus receive
compensation with respect to different classes. These
financial institutions may also charge separate fees to
their customers. Certain financial institutions offering
shares to their customers may be required to register as
dealers pursuant to state laws.
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 by the Distributor from its
own resources. Under any such program, the Distributor
will provide promotional incentives, in the form of cash
or other compensation, including merchandise, airline
vouchers, trips and vacation packages, to all dealers
selling shares of the Portfolios. Such promotional
incentives will be offered uniformly to all dealers and
predicated upon the amount of shares of the Portfolio sold
by the 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
8
<PAGE> 174
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 (or its
authorized 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 number of
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 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 shareholder
servicing fees charged to each class.
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.
9
<PAGE> 175
Shareholders who desire to redeem shares of the
Portfolio must place their redemption orders with the
Transfer Agent (or its authorized 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.
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
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service that ranks mutual funds on the basis of
risk-adjusted performance, and 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 of Class A shares will normally be
higher than that of Class B shares because of the
additional administrative services 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 The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies ("RICs") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), so
as to be relieved of federal income tax on net investment
company taxable income and net capital gain (the excess of
net long-term capital gain over net short-term capital
loss) distributed to shareholders.
Tax Status
of Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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
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<PAGE> 177
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 also will not qualify for the dividends received
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 at any time during the following January.
The Portfolio intends to make sufficient distributions
prior to the end of each calendar year to avoid liability
for the federal excise tax applicable to RICs.
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.
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
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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, 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 Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class 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 Inquiries Shareholder inquiries should be directed to the Manager,
SEI Fund Management, 680 E. Swedesford Road, Wayne,
Pennsylvania, 19087.
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<PAGE> 179
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 administrative services expenses charged to
Class B shares.
Counsel and Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian and Wire Agent
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent of
the Trust. The Custodian holds cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government; and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued by or on behalf of public authorities to obtain
funds to be used for various public facilities, for
refunding outstanding obligations, for general operating
expenses and for lending such funds to other public
institutions and facilities, and (ii) certain private
activity and industrial development bonds issued by or on
behalf of public authorities to obtain funds to provide
for the construction, equipment, repair or improvement of
privately operated facilities.
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General obligation bonds are backed by the taxing
power of the issuing municipality. Revenue bonds are
backed by the revenues of a project or facility, tolls
from a toll bridge, for example. Certificates of
participation represent an interest in an underlying
obligation or commitment such as an obligation issued in
connection with a leasing arrangement. The payment of
principal and interest on private activity and industrial
development bonds generally is dependent solely on the
ability of the facility's user to meet its financial
obligations and the pledge, if any, of real and personal
property so financed as security for such payment.
Municipal notes include general obligation notes,
tax anticipation notes, revenue anticipation notes, bond
anticipation notes, certificates of indebtedness, demand
notes and construction loan notes and participation
interests in municipal notes. Municipal bonds include
general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds
and participation interests in municipal bonds.
Repurchase Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage
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<PAGE> 181
Association securities). Guarantees of principal by
agencies or instrumentalities of the U.S. Government may
be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to
maturity there might not be a market and thus no means of
realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not
extend to the value or yield of these securities not to
the value of the Fund's shares.
Variable and Floating
Rate Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses................... 2
Financial Highlights........................ 3
The Trust................................... 4
Investment Objective and Policies........... 4
General Investment Policies................. 5
Investment Limitations...................... 6
The Manager................................. 6
The Adviser................................. 6
Distribution and Shareholder Servicing...... 7
Purchase and Redemption of Shares........... 8
Performance................................. 10
Taxes....................................... 11
General Information......................... 13
Description of Permitted Investments and
Risk Factors.............................. 14
</TABLE>
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<PAGE> 184
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<PAGE> 185
SEI TAX EXEMPT TRUST
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
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, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087, 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 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> 186
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Management/Advisory Fees (after fee waivers) (1) .50%
12b-1 Fees None
Total Other Expenses (2) .05%
Shareholder Servicing Fees (after fee waiver) (3) .00%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (4) .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) "Total Other Expenses" is based on estimated amounts for the current fiscal
year. See "The Manager."
(3) The Distributor has waived, on a voluntary basis, all or a portion of its
Shareholder servicing fee, and the Shareholder Servicing Fees shown reflect
this waiver. The Distributor reserves the right to terminate its waiver at
any time in its sole discretion. Absent such waiver, Shareholder Servicing
Fees for the Portfolio would be .25%.
(4) Absent these fee waivers. Total Operating Expenses for Class A shares of
the Portfolio would be .87%.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
------ -------- -------- ---------
<S> <C> <C> <C> <C>
An investor in Class A shares of the Portfolio would pay the following expenses on a
$1,000 investment assuming (1) a 5% annual return and (2) redemption at the end of
each time period: $6 $18 $31 $69
- ---------------------------------------------------------------------------------------------------------------------
</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 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,"
"Distribution and Shareholder Servicing" and "The Adviser."
2
<PAGE> 187
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, Pennsylvania 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 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 federal 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, as well as
municipal obligations issued by territories or possessions
of the United States.
Under normal conditions, the Portfolio may invest,
in the aggregate, up to 20% of its net assets in (1)
Municipal Securities the interest on which is a preference
item for purposes of the federal 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 determined by Weiss, Peck & Greer, L.L.C.
(the "Adviser") to be of comparable quality: (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
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<PAGE> 188
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.
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 the 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 or 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.
4
<PAGE> 189
RISK FACTORS
New York Risk Factors The Portfolio's concentration in investments in New York
municipal securities involves greater risks than if their
investments were more diversified. 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 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.
Non-Diversification In addition to the risks, described above, arising from
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.
5
<PAGE> 190
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 fundamental
investment limitations are set forth in the Statement of
Additional Information.
THE MANAGER
SEI Fund Management (the "Manager" and the "Transfer
Agent") 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 .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.
THE ADVISER
Weiss, Peck & Greer, L.L.C. 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 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
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management buyouts. WPG has been active since its founding in managing
portfolios of tax exempt securities. At September 30, 1996, total assets under
management were approximately $ 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." As
of August 31, 1996, the Portfolio had not commenced
operations.
DISTRIBUTION
AND SHAREHOLDER
SERVICING
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company ("SEI")
serves as the Portfolio's distributor pursuant to a
distribution agreement with the Trust.
The Portfolio has adopted a shareholder servicing
plan for Class A shares (the "Service Plan") under which a
shareholder servicing fee of up to .25% of average daily
net assets attributable to Class A shares will be paid to
the Distributor. Under the Service Plan, the Distributor
may perform, or may compensate other service providers for
performing the following shareholder and administrative
services; maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services
provided on investments; assisting clients in changing
dividend options; account designations and addresses; sub-
accounting; providing information on share positions to
clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and
processing dividend payments. Under the Service Plan, the
Distributor may retain as a profit any difference between
the fee it receives and the amount it pays to third
parties.
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.
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The Trust may also execute brokerage or other
agency transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
In addition, the Distributor may, from time to time
in its sole discretion, institute one or more promotional
incentive programs, which will be paid by the Distributor
from its own resources. 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 dealers and
predicated upon the amount of shares of the Portfolio sold
by the 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").
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent (or its
authorized 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
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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 number of 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
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 (or its authorized 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.
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<PAGE> 194
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 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, and 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, state and local 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
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<PAGE> 195
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 The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies 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
Distributions The Portfolio intends to distribute substantially all of
its net investment income (including net short-term
capital gain) to shareholders. If, at the close of each
quarter of its taxable year, at least 50% of the value of
the Portfolio's total assets consists of obligations the
interest on which is excludable from gross income, the
Portfolio may pay "exempt-interest dividends" to its
shareholders. 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 also will not qualify for the dividends received
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 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
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<PAGE> 196
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.
State and Local Taxes The following is a general, abbreviated summary of certain
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
retroactive.
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.
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, 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
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extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Trustees of the Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each 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 Inquiries Shareholder inquiries should be directed to the Manager,
SEI Fund Management, 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 Independent
Public Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian
and Wire Agent CoreStates Bank, N.A., Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, serves as
Custodian of the Trust's assets and acts as wire agent 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:
Money Market Securities
Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks; (ii) U.S. Treasury obligations and obligations
issued by the agencies and instrumentalities of the U.S.
Government and (iii) repurchase agreements involving any
of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Municipal Securities Municipal Securities consist of (i) debt obligations
issued 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 Agreements Repurchase agreements are arrangements by which a
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
(including principal and interest) on an agreed upon date
within a number of days from the date of purchase.
Repurchase agreements are considered loans under the 1940
Act.
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Standby Commitments
and Puts Securities subject to standby commitments or puts permit
the holder thereof to sell the securities at a fixed price
prior 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.
U.S. Government
Obligations Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, including,
among others, the Federal Farm Credit Bank, the Federal
Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by
instrumentalities of the U.S. Government, including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Post Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities not to the value of the Fund's shares.
Variable and Floating
Rate Instruments Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature.
Such obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing
market interest rates. A demand instrument with a demand
notice period exceeding seven days may be considered
illiquid if there is no secondary market for such
security.
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When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The 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.
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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...................... 5
The Manager................................. 6
The Adviser................................. 6
Distribution and Shareholder Servicing...... 7
Purchase and Redemption of Shares........... 8
Performance................................. 9
Taxes....................................... 10
General Information......................... 12
Description of Permitted Investments and
Risk Factors.............................. 14
</TABLE>
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<PAGE> 203
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<PAGE> 204
SEI TAX EXEMPT TRUST
MANAGER:
SEI FUND MANAGEMENT
DISTRIBUTOR:
SEI FINANCIAL SERVICES COMPANY
INVESTMENT ADVISERS AND SUB-ADVISERS:
INTRUST BANK, N.A.
MORGAN GRENFELL CAPITAL MANAGEMENT INCORPORATED
SEI FINANCIAL MANAGEMENT CORPORATION
STANDISH, AYER & WOOD, INC.
WEISS, PECK & GREER L.L.C.
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, 1996. Prospectuses may be obtained by
writing the Trust's distributor, SEI Financial Services Company, 680 East
Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling 1-800-342-5734.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DESCRIPTION OF RATINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DESCRIPTION OF PERMITTED INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
THE MANAGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
THE ADVISERS AND SUB-ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
TRUSTEES AND OFFICERS OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
PURCHASE AND REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
DESCRIPTION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
SHAREHOLDER LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
5% SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-
</TABLE>
December 31, 1996
SEI-F-043-08
<PAGE> 205
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, Class D and Class G shares of any Portfolio
pertaining to sales loads, shareholder servicing and administrative services
plans, distribution plans, transfer agency costs, voting rights and/or
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 -- Bankers' acceptances are bills of exchange or time
drafts drawn on and accepted by a commercial bank. Bankers' acceptances are
issued by corporations to finance the shipment and storage of goods.
Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT -- Certificates of deposit is an interest-bearing
instrument with a specific maturity. They are issued by banks and savings and
loan institutions in exchange for the deposit of funds and normally can be
traded in the secondary market prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER -- Commercial paper is a term used to describe unsecured
short-term promissory notes issued by banks, municipalities, corporations and
other entitites. Maturities on these issues vary from one to 270 days.
FIXED INCOME SECURITIES -- Fixed income securities are debt obligations issued
by corporations, municipalities and other borrowers. 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.
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 set forth in this statement of additional information.
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.
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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 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 -- 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 -- 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.
REPURCHASE AGREEMENTS -- Repurchase agreements are agreements under which
securities are acquired from a securities dealer or bank subject to resale on
an agreed upon date and at an agreed upon price which includes principal and
interest. The Portfolio or its agent will haveactual or constructive
possession of the securities held 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 securities, or if the Portfolio realizes a loss on
the sale of the collateral securities. The Advisers or Sub-Adviser will enter
into repurchase agreements on behalf of the Portfolio only with financial
institutions deemed to present minimal risk of bankruptcy during the term of
the agreement based on guidelines established and periodically reviewed by the
Board of Trustees. These guidelines currently permit the Portfolios to enter
into repurchase agreements only with approved banks and primary securities
dealers, as recognized by the Federal Reserve Bank of New York, which have
minimum net capital of $100 million, or with a member bank of the Federal
Reserve System. Repurchase agreements are considered to be loans
collateralized by the underlying security. Repurchase agreements entered into
by the Portfolios will provide that the underlying security at all times shall
have a value at least equal to 102% of the price stated in the agreement. This
underlying security will be marked to market daily. The Advisers or
Sub-Adviser will 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.
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STANDBY COMMITMENTS-PUT TRANSACTIONS - The Portfolios reserve the right to
engage in put transactions. The Advisers and Sub-Adviser 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 or Sub-Adviser believes present minimum credit
risks, and the Adviser or Sub-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 -- Time deposits are non-negotiable receipts issued by a bank in
exchange for the deposit of funds. Like a certificate of deposit, it earns a
specified rate of interest over a definite period of time; however, it cannot
be traded in the secondary market. Time deposits with a withdrawal penalty are
considered to be illiquid 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
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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.
The Portfolios will establish segregated accounts with the Custodian and will
maintain liquid, high grade assets in an amount at least equal in value to the
Portfolios' commitments to purchase when-issued securities.
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:
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.
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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-rated 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-rated 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.
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.
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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.
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 or Sub-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 and 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
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The following information constitutes only a brief summary, and is not intended
as a complete description.
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.
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.
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SPECIAL CONSIDERATIONS RELATING TO KANSAS MUNICIPAL SECURITIES
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.
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
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
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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.
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.
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.
THE MANAGER
The Management Agreement provides that SEI Fund Management (the "Manager")
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust in connection with the matters to which the Management
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Manager in the performance of its duties
or from reckless disregard of its duties and obligations thereunder.
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 (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
S-10
<PAGE> 214
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 Delaware business trust, has its principal business offices at
680 East Swedesford Road, Wayne, Pennsylvania 19087. SEI Financial Management
Corporation ("SFM"), a wholly-owned subsidiary of SEI Investments Company
("SEI"), is the owner of all beneficial interest in the Manager. SEI and its
subsidiaries, including the Manager, are leading providers of funds evaluation
services, trust accounting systems, and brokerage and information services to
financial institutions, institutional investors and money managers. The
Manager and its affiliates also serve as administrator to the following other
mutual funds: The Achievement Funds Trust; The Advisors' Inner Circle Fund; The
Arbor Fund; ARK Funds; Bishop Street Funds; CoreFunds, Inc.; CrestFunds, Inc.;
CUFUND; FMB Funds, Inc.; First American Funds, Inc.; First American Investment
Funds, Inc.; First American Strategy Funds; Marquis Funds(R); Monitor Funds;
Morgan Grenfell Investment Trust; The Pillar Funds; The PBHG Funds, Inc.;
Profit Funds Investment Trust; Rembrandt Funds(R); Santa Barbara Group of
Mutual Funds, Inc.; 1784 Funds(R); SEI Asset Allocation Trust; SEI Daily Income
Trust; SEI Index Funds; SEI Institutional Investments Trust; SEI Institutional
Managed Trust; SEI International Trust; SEI Liquid Asset Trust; Stepstone
Funds; STI Classic Funds; STI Classic Variable Trust; and Turner Funds.
For the fiscal years ended August 31, 1994, 1995, and 1996 the Portfolios paid
management fees, after waivers and/or reimbursements as follows:
<TABLE>
<CAPTION>
============================================================================================
FEES PAID (000) FEES WAIVED OR REIMBURSED
(000)
---------------------------- -----------------------------
PORTFOLIO 1994 1995 1996 1994 1995 1996
============================================================================================
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio $1,128 $ 991 $1,099 $ 353 $ 207 $ 158
- --------------------------------------------------------------------------------------------
Institutional Tax Free $1,569 $1,548 $1,697 $1,482 $1,567 $1,283
Portfolio
- --------------------------------------------------------------------------------------------
California Tax Exempt $ 145 $ 486 $ 581 $ 334 $ 330 $ 305
Portfolio
- --------------------------------------------------------------------------------------------
Intermediate-Term $ 357 $ 288 $ 279 $ 177 $ 125 $ 74
Municipal Portfolio
- --------------------------------------------------------------------------------------------
Pennsylvania Municipal $ 338 $ 132 $ 183 $ 224 $ 253 $ 174
Portfolio
- --------------------------------------------------------------------------------------------
Pennsylvania Tax Free $ 6 $ 42 $ 66 $ 27 $ 33 $ 43
Portfolio
- --------------------------------------------------------------------------------------------
Kansas Tax Free Income $ 68 $ 91 $ 101 $ 22 $ 3 $ 0
Portfolio
- --------------------------------------------------------------------------------------------
New York Intermediate-Term * * * * * *
Municipal Portfolio
============================================================================================
</TABLE>
*Not in operation during the period.
S-11
<PAGE> 215
THE ADVISERS AND SUB-ADVISER
Each Advisory Agreement or Sub-Advisory Agreement provides that each Adviser or
Sub-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 or Sub-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 or Sub-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 or Sub-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 Sub-Adviser, or by the Adviser
or Sub-Adviser on 90 days' written notice to the Trust.
For the fiscal years ended August 31, 1994, 1995 and 1996, the Portfolios paid
advisory fees, after waivers and/or reimbursements as follows:
<TABLE>
<CAPTION>
===================================================================================================
FEES PAID (000) FEES WAIVED OR REIMBURSED (000)
----------------------------- --------------------------------
PORTFOLIO 1994 1995 1996 1994 1995 1996
===================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio $ 259 $ 129 $ 137 $ 0 $ 0 $ 0
- ---------------------------------------------------------------------------------------------------
Institutional Tax Free $ 360 $ 334 $ 325 $ 0 $ 0 $ 0
Portfolio
- ---------------------------------------------------------------------------------------------------
California Tax Exempt $ 91 $ 137 $ 151 $ 0 $ 0 $ 0
Portfolio
- ---------------------------------------------------------------------------------------------------
Intermediate-Term Municipal $ 163 $ 131 $ 254 $ 73 $ 60 $ 0
Portfolio+
- ---------------------------------------------------------------------------------------------------
Pennsylvania Municipal $ 233 $ 262 $ 202 $ 161 $ 4 $ 0
Portfolio
- ---------------------------------------------------------------------------------------------------
Pennsylvania Tax Free $ 4 $ 8 $ 12 0 $ 0 $ 0
Portfolio
- ---------------------------------------------------------------------------------------------------
Kansas Tax Free Income $ 0 $ 0 $ 0 $ 180 $ 188 $ 202
Portfolio
- ---------------------------------------------------------------------------------------------------
New York Intermediate-Term * * * * * *
Municipal Portfolio
===================================================================================================
</TABLE>
* Not in operation during the period.
+ Amounts paid for the Portfolio since April 16, 1996 were paid to SFM, who
paid Standish, Ayer & Wood out this advisory fee.
DISTRIBUTION AND SHAREHOLDER SERVICING
S-12
<PAGE> 216
The Trust has adopted Distribution Plans for Class D and Class G 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 Plans provide that the Trust will pay the Distributor a fee on the Class D
and Class G shares of the Portfolio. The Distributor may use this fee for:
(i) compensation for its services in connection with distribution assistance or
provision of shareholder services or (ii) payments to financial institutions
and intermediaries such as banks, savings and loan associations, insurance
companies and investment counselors, broker-dealers and the Distributor's
affiliates and subsidiaries as compensation for services or reimbursement of
expenses incurred in connection with distribution assistance or provision of
shareholder services.
The Portfolios have also adopted shareholder servicing plans for its Class A,
Class B, Class C and Class G shares (the "Service Plans"), and Administrative
Services Plans for its Class B and Class C shares. Under these Service and
Administrative Services Plans, the Distributor may perform, or may compensate
other service providers for performing, the following shareholder and
administrative services: maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services provided on
investments; assisting clients in changing dividend options, account
designations and addresses; sub-accounting; providing information on share
positions to clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and processing dividend
payments. Under the Service and Administrative Services Plans, the Distributor
may retain as a profit any difference between the fee it receives and the
amount it pays to third parties.
For the fiscal year ended August 31, 1996, the Portfolios paid the following
amounts pursuant to the Distribution Plans:
<TABLE>
<CAPTION>
===========================================================================================================
Amount Paid to
Third Parties Prospectus Costs
by Distributor Printing & Associated
Total Basis of Distribution- Sales Mailing with
Portfolio/Class Amount Points Related Services Expenses Costs Registration
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio $200,621 .06% $ 0 $149,491 $14,595 $36,535
- - Class A**
- -----------------------------------------------------------------------------------------------------------
Institutional Tax $477,463 .06% $43,099 $328,981 $33,453 $71,930
Free Portfolio -
Class A**
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-13
<PAGE> 217
<TABLE>
<CAPTION>
===========================================================================================================
Amount Paid to
Third Parties Prospectus Costs
by Distributor Printing & Associated
Total Basis of Distribution- Sales Mailing with
Portfolio/Class Amount Points Related Services Expenses Costs Registration
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Institutional Tax $66,597 .36% $56,587 $7,557 $ 789 $ 1,664
Free Portfolio -
Class B**
- -----------------------------------------------------------------------------------------------------------
California Tax $25,267 .06% $ 0 $19,087 $1,889 $ 4,291
Exempt Portfolio -
Class A**
- -----------------------------------------------------------------------------------------------------------
California Tax * * * * * *
Exempt Portfolio -
Class B**
- -----------------------------------------------------------------------------------------------------------
California Tax * * * * * *
Exempt Portfolio -
Class C**
- -----------------------------------------------------------------------------------------------------------
California Tax $1,891,757 .56% $1,701,171 $140,169 $18,726 $31,691
Exempt Portfolio
Class G+
- -----------------------------------------------------------------------------------------------------------
Institutional Tax $4,150 .56% $ 0 $3,105 $ 371 $ 674
Free Portfolio
Class C**
- -----------------------------------------------------------------------------------------------------------
New York * * * * * *
Intermediate-Term
Municipal Portfolio
- - Class A
- -----------------------------------------------------------------------------------------------------------
Pennsylvania $57,636 .06% $ 0 $43,371 $4,462 $ 9,803
Municipal Portfolio
- - Class A**
- -----------------------------------------------------------------------------------------------------------
Pennsylvania Tax $15,084 .05% $ 0 $11,169 $1,274 $ 2,641
Free Portfolio**
- -----------------------------------------------------------------------------------------------------------
Intermediate-Term $50,572 .05% $ 0 $39,775 $ 18 $10,779
Municipal Portfolio
- - Class A**
- -----------------------------------------------------------------------------------------------------------
Kansas Tax Free $12,015 .02% $ 0 $ 0 $5,965 $6,050
Income Portfolio -
Class A**
- -----------------------------------------------------------------------------------------------------------
Kansas Tax Free * * * * * *
Income Portfolio -
Class B**
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-14
<PAGE> 218
<TABLE>
<CAPTION>
===========================================================================================================
Amount Paid to
Third Parties Prospectus Costs
by Distributor Printing & Associated
Total Basis of Distribution- Sales Mailing with
Portfolio/Class Amount Points Related Services Expenses Costs Registration
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio $ 527 .40% $ 429 $ 79 $ 5 $ 14
- - Class D
===========================================================================================================
</TABLE>
* Not in operation during the period.
** As of March 18, 1996, the Distribution Plans for the Trust's Class A,
Class B and Class C shares were eliminated.
+ Formerly the Class C shares; converted to Class G shares on March 18,
1996.
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, 1994, 1995 and 1996, the aggregate sales
charges payable to the Distributor with respect to the Class D shares for the
Tax Free Portfolio were as follows:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Aggregate Sales Charge Amount Retained
Year Payable to Distributor By Distributor
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
1994 $21,795 $ 508
- ----------------------------------------------------------------------------------------------
1995 $38,648 $3,468
- ----------------------------------------------------------------------------------------------
1996 $17,368 $1,614
- ----------------------------------------------------------------------------------------------
</TABLE>
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 Fund
Management, 680 East Swedesford Road, Wayne, Pennsylvania 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; ARK Funds; Bishop Street Funds; CoreFunds, Inc.;
CrestFunds, Inc.; CUFUND; First American Funds, Inc.; First American Investment
Funds, Inc.; First American Strategy Funds, Inc.; FMB Funds, Inc.; Insurance
Investment Products Trust; Inventor Funds, Inc.; Marquis Funds(R); Monitor
Funds; Morgan Grenfell Investment Trust; The PBHG Funds, Inc.; The Pillar
Funds; Profit Funds Investment Trust; Rembrandt Funds(R); Santa Barbara Group
of Mutual Funds, Inc.; 1784 Funds(R); SEI Asset Allocation Trust; SEI Daily
Income Trust; SEI Index Funds; SEI Institutional Investment Trust; SEI
Institutional Managed Trust; SEI International Trust; SEI Liquid Asset Trust;
Stepstone Funds; STI Classic Funds; STI Classic Variable Trust; and Turner
Funds, open-end management investment companies managed by SEI Financial
Management Corporation and its affiliates and, with the exception of Profit
Funds Investment Trust, Rembrandtsm Funds, and Santa Barbara Group of Mutual
Funds, Inc., distributed by SEI Financial Services Company.
S-15
<PAGE> 219
ROBERT A. NESHER (DOB 08/17/46) - Chairman of the Board of Trustees* - Retired
since 1994. Executive Vice President of SEI, 1986-1994. Director and
Executive Vice President of the Manager and the Distributor, September,
1981-1994. Trustee of the Arbor Fund, Marquis Funds(R),Advisors' Inner Circle
Fund, SEI Asset Allocation Trust, SEI Liquid Asset Trust, SEI Daily Income
Trust, SEI Tax Exempt Trust, SEI Index Funds, SEI Institutional Managed Trust,
SEI Institutional Investments Trust, SEI International Trust, Insurance
Investment Products Trust, 1784 Funds(R), Pillar Funds, Rembrandt Funds(R) and
Stepstone Funds.
WILLIAM M. DORAN (DOB 5/26/40) - Trustee* - 2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP, (law firm),
counsel to the Trust, Manager and Distributor, Director and Secretary of SEI
and Secretary of the Manager and Distributor. Trustee of the Arbor Fund,
Marquis Funds(R), Advisors' Inner Circle Fund, SEI Asset Allocation Trust, SEI
Liquid Asset Trust, SEI Daily Income Trust, SEI Tax Exempt Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional Investments Trust,
SEI International Trust, Insurance Investment Products Trust.
F. WENDELL GOOCH (DOB 12/03/37) - 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, SEI Asset Allocation Trust,
SEI Liquid Asset Trust, SEI Daily Income Trust, SEI Tax Exempt Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional Investments Trust,
and SEI International Trust.
FRANK E. MORRIS (DOB 12/30/23) - Trustee** - 105 Walpole Street, Dover, MA
02030. Retired since 1990. Peter Drucker Professor of Management, Boston
College, 1989-1990. President, Federal Reserve Bank of Boston, 1968-1988.
Trustee of The Arbor Fund, Marquis Funds(R), Advisors' Inner Circle Fund, SEI
Asset Allocation Trust, SEI Liquid Asset Trust, SEI Daily Income Trust, SEI Tax
Exempt Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional Investments Trust, and SEI International Trust.
JAMES M. STOREY (DOB 04/12/31) - Trustee - Partner of Dechert Price & Rhoads
from September 197 - December 1993. Trustee of the Arbor Fund, Marquis
Funds(R), Advisors' Inner Circle Fund, SEI Asset Allocation Trust, SEI Liquid
Asset Trust, SEI Daily Income Trust, SEI Tax Exempt Trust, SEI Index Funds, SEI
Institutional Managed Trust, SEI Institutional Investments Trust, SEI
International Trust, Insurance Investment Products Trust.
GEORGE J. SULLIVAN, JR. (DOB 11/13/42) - Trustee - General Partner, Teto
Partners, L.P. since 1991. Chief Financial Officer, Noble Partners, L.P.
since1991. Treasurer and Clerk, Peak Asset Management, Inc. since 1991.
Trustee, Navigator Securities Lending Trust since 1995. Trustee, SEI Asset
Allocation Trust, SEI Liquid Asset Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional Investments Trust and
SEI International Trust.
DAVID G. LEE (DOB 04/16/52) - President, Chief Executive Officer - Senior Vice
President of the Distributor since 1993. Vice President of the Manager and
Distributor 1991-1993. President, GW Sierra Trust Funds before 1991.
SANDRA K. ORLOW (DOB 10/18/53) - Vice President, Assistant Secretary - Vice
President and Assistant Secretary of the Manager and Distributor since 1988.
KEVIN P. ROBINS (DOB 04/15/61) - Vice President, Assistant Secretary - Senior
Vice President, General Counsel of SEI, the Administrator and Distributor since
1994. Vice President and Assistant Secretary of SEI, theAdministrator and
Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm)
1988-1992.
S-16
<PAGE> 220
KATHRYN L. STANTON (DOB 11/19/58) - Vice President, Assistant Secretary -
Deputy General Counsel, Vice President and Assistant Secretary of SEI, Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm) 1989-1994.
JOSEPH M. LYDON (DOB 09/27/59) - Vice President, Assistant Secretary -
Director, Business Administration of Fund Resources, April 1995. Vice
President, Fund Group, Dreman Value Management, LP, President, Dreman Financial
Services, Inc. prior to 1995.
STEPHEN G. MEYER (DOB 7/12/65) - controller, Chief Financial Officer-Vice
President and Controller of SEI Corporation since 1994. Director,
International Audit and Risk Management, SEI Corporation, 1992-1994. Senior
Associate, Coopers and Lybrand, 1990-1992. Internal Audit, Vanguard Group
prior to 1992.
TODD CIPPERMAN (DOB 1/14/66) - Vice President and 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).
BARBARA A. NUGENT (DOB 6/18/56) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Manager and Distributor since
1996. Associate, Drinker, Biddle & Reath (law firm). Assistant Vice
President/Administration, Delaware Service Company, Inc. (1992-1993), Assistant
Vice President - Operations, Delaware Service Company, Inc. (1988-1992).
MARC H. CAHN (DOB 6/19/57) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate General Counsel, Barclays Bank PLC (1995-1996). ERISA
counsel, First Fidelity Bancorporation (1994-1995), Associate, Morgan, Lewis &
Bockius LLP (1989-1994).
RICHARD W. GRANT (DOB 10/25/45) - Secretary - 2000 One Logan Square,
Philadelphia, PA 19103, Partner, Morgan, Lewis & Bockius LLP (law firm),
counsel to the Trust, Manager and Distributor.
- ---------------------------
* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.
** Messrs. Gooch, Storey, Sullivan and Morris serve as members of the Audit
Committee of the Trust.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
Compensation of officers and affiliated Trustees of the Trust is paid by the
Manager. For the fiscal year ended August 31, 1996, the Trust paid the
following amounts to the Trustees.
<TABLE>
<CAPTION>
==========================================================================================================
Pension or Total Compensation
Aggregate Retirement Estimated from Registrant and
Compensation From Benefits Accrued Annual Fund Complex Paid to
Name of Person and Registrant for as Part of Fund Benefits Upon Directors for FYE
Position FYE 8/31/96 Expenses Retirement 8/31/96
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard F. Blanchard, $ 9,200 $ 0 $ 0 $90,000 for services
Trustee 1/ on 7 boards
- ----------------------------------------------------------------------------------------------------------
</TABLE>
S-17
<PAGE> 221
<TABLE>
<CAPTION>
==========================================================================================================
Pension or Total Compensation
Aggregate Retirement Estimated from Registrant and
Compensation From Benefits Accrued Annual Fund Complex Paid to
Name of Person and Registrant for as Part of Fund Benefits Upon Directors for FYE
Position FYE 8/31/96 Expenses Retirement 8/31/96
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
William M. Doran, $ 0 $ 0 $ 0 $ 0
Trustee
- ----------------------------------------------------------------------------------------------------------
F. Wendell Gooch, $12,695 $ 0 $ 0 $90,000 for services
Trustee on 7 boards
- ----------------------------------------------------------------------------------------------------------
Frank E. Morris, $12,695 $ 0 $ 0 $90,000 for services
Trustee on 7 boards
- ----------------------------------------------------------------------------------------------------------
Robert A. Nesher, $ 0 $ 0 $ 0 $ 0
Trustee
- ----------------------------------------------------------------------------------------------------------
James M. Storey 2/, $12,695 $ 0 $ 0 $90,000 for services
Trustee on 7 boards
- ----------------------------------------------------------------------------------------------------------
George J. Sullivan, $ 3,005 $ 0 $ 0 $22,500 for services
Jr., Trustee 3/ on 7 boards
==========================================================================================================
</TABLE>
1/ Deceased May 7, 1996
2/ Mr. Storey received the stated amounts as compensation for service as an
Honorary Trustee for the Trust during the most recent fisal year.
3/ Mr. Sullivan was elected as Trustee to the Trust on July 5, 1996.
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
365/7
following formula: Effective Yield = {(Base Period Return + 1) } - 1. The
current and the effective yields reflect the reinvestment of net income earned
daily on portfolio assets.
S-18
<PAGE> 222
From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal,
Kansas Tax Free Income 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:
6
Yield = 2([(a-b)/(cd) + 1)] - 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, 1996, 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 7-DAY
7-DAY TAX-EQUIVALENT TAX-EQUIVALENT
PORTFOLIO CLASS 7-DAY YIELD EFFECTIVE YIELD YIELD EFFECTIVE YIELD
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tax Free Portfolio Class A 3.21% 3.26% 5.35% 5.43%
----------------------------------------------------------------------------------------
Class D 2.87% 2.91% 4.78% 4.85%
- ------------------------------------------------------------------------------------------------------------------
Institutional Tax Free Class A 3.37% 3.43% 5.62% 5.72%
Portfolio ----------------------------------------------------------------------------------------
Class B 3.07% 3.12% 5.12% 5.20%
----------------------------------------------------------------------------------------
Class C 2.87% 2.91% 4.78% 4.85%
- ------------------------------------------------------------------------------------------------------------------
California Tax Exempt Class A 3.22% 3.27% 6.44% 6.54%
Portfolio ----------------------------------------------------------------------------------------
Class B * * * *
----------------------------------------------------------------------------------------
Class C * * * *
----------------------------------------------------------------------------------------
Class G*+ 2.72% 2.76% 5.44% 5.52%
- ------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free Class A 3.22% 3.27% 5.60% 5.69%
Portfolio
==================================================================================================================
</TABLE>
* Not in operation during the period
+ Formerly the Class C shares; converted to Class G shares on March 18,
1996.
For the 30-day period ended August 31, 1996, yields on the Portfolios other
than the money market Portfolios were as follows:
S-19
<PAGE> 223
<TABLE>
<CAPTION>
==========================================================================================
YIELD
----------------------
30 DAY 30 DAY TAX
PORTFOLIO CLASS EQUIVALENT
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
New York Intermediate-Term Municipal Class A * *
Portfolio
- ------------------------------------------------------------------------------------------
Pennsylvania Municipal Portfolio Class A 4.96% 8.63%
- ------------------------------------------------------------------------------------------
Intermediate-Term Municipal Portfolio Class A 4.56% 7.60%
- ------------------------------------------------------------------------------------------
Kansas Tax Free Income Portfolio Class A 5.02 9.30%
---------------------------------------------
Class B * *
- ------------------------------------------------------------------------------------------
</TABLE>
*Not in operation during the period.
From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal,
Kansas Tax Free Income 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
n
will be calculated according to the following formula: P(1 + T) = 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, 1996 and for the one, five and ten year
periods ended August 31, 1996 were as follows:
<TABLE>
<CAPTION>
===========================================================================================================
AVERAGE ANNUAL TOTAL RETURN
----------------------------------------
ONE FIVE TEN SINCE
PORTFOLIO CLASS YEAR YEAR YEAR INCEPTION
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Tax Free Portfolio Class A(1) 3.35% 2.93% 3.95% 4.25%
-------------------------------------------------------------------------------
Class D--Offering Price(10) 2.99% * * 3.11%
- -----------------------------------------------------------------------------------------------------------
Institutional Tax Free Class A(1) 3.52% 3.20% 4.15% 4.36%
Portfolio -------------------------------------------------------------------------------
Class B(2) 3.21% 2.89% * 3.14%
-------------------------------------------------------------------------------
Class C 1.90% * * 3.00%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-20
<PAGE> 224
<TABLE>
<CAPTION>
===========================================================================================================
AVERAGE ANNUAL TOTAL RETURN
ONE FIVE TEN SINCE
PORTFOLIO CLASS YEAR YEAR YEAR INCEPTION
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
California Tax Exempt Class A(3) 3.41% 3.01% * 3.46%
Portfolio -------------------------------------------------------------------------------
Class B(4) (closed 7/12/95) * * * *
-------------------------------------------------------------------------------
Class C(5) * * * *
-------------------------------------------------------------------------------
Class G+ 1.84% * * 2.83%
- -----------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Class A(6) 3.96% 5.90% * 6.32%
Portfolio
- -----------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free Class A(7) 3.40% * * 3.24%
Portfolio
- -----------------------------------------------------------------------------------------------------------
Intermediate-Term Class A(8) 3.76% 5.78% * 6.14%
Municipal Portfolio
- -----------------------------------------------------------------------------------------------------------
Kansas Tax Free Income Class A(9) 4.23% 6.55% * 6.63%
-------------------------------------------------------------------------------
Portfolio Class B * * * *
===========================================================================================================
</TABLE>
(1) Commenced operations 2/1/84 (6) Commenced operations 8/14/89
(2) Commenced operations 10/15/90 (7) Commenced operations 1/21/94
(3) Commenced operations 5/14/90 (8) Commenced operations 9/5/89
(4) Commenced operations 1/5/94 (9) Commenced operations 12/10/90
(5) Commenced operations 5/11/94 (10) Commenced operations 11/1/94
* Not in operation during period.
+ Formerly the Class C shares; converted to Class G shares on March 18,
1996.
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 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.
S-21
<PAGE> 225
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 or the Pennsylvania Tax Free
Portfolio is downgraded below first tier security status after purchase, or the
Adviser of the 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 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 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:
S-22
<PAGE> 226
<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.
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 Tax Free 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
S-23
<PAGE> 227
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 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
FEDERAL INCOME TAX
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.
S-24
<PAGE> 228
Each Portfolio is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions, and
redemptions) paid individual or non-corporate 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.
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 for both corporate and non-corporate
taxpayers and the Environmental Tax for corporate taxpayers only. 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
S-25
<PAGE> 229
Portfolios. "Substantial user" is defined generally as including a "non-exempt
person" who regularly uses in a trade or business a part of a facility financed
from the proceeds of industrial development bonds or private activity 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 of issuance of the bonds to
which such dividends are attributable 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 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.
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 and Sub-Adviser 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 and Sub-Adviser 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 a principal except in conformity with the regulations of the SEC.
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 and Sub-Adviser may receive
orders for transactions by the Trust. Information so received will be in
addition to and not in lieu of the services required to be performed by the
Advisers or Sub-Adviser under the Advisory or Sub-Advisory Agreements, and the
expenses of the Advisers and Sub-Adviser will not necessarily be reduced as a
result of the receipt of such supplemental information.
The money market securities in which certain of the Portfolios invest are
traded primarily in the over-the-counter market. Bonds and debentures are
usually traded over-the-counter, but may be traded on an exchange. Where
possible, a Portfolio's Adviser or Sub-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
S-26
<PAGE> 230
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 and Sub-Adviser 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.
The Advisers and Sub-Adviser may, consistent with the interests of the
Portfolios, select brokers on the basis of the research services they provide
to the Adviser or Sub-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 or Sub-Adviser
will be in addition to and not in lieu of the services required to be performed
by an Adviser or Sub-Adviser under the Advisory or Sub-Advisory Agreements. If
in the judgement of an Adviser or Sub-Adviser the Portfolios, or other accounts
managed by the Adviser or Sub-Adviser, will be benefitted by supplemental
research services, the Adviser or Sub-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 or Sub-Adviser will not necessarily be
reduced as a result of the receipt of such supplemental information.
For the fiscal year ended August 31, 1996 the Portfolios paid brokerage fees as
follows:
<TABLE>
<CAPTION>
==============================================================================================================================
TOTAL
BROKERAGE
TOTAL $ % OF TOTAL COMMISSIONS
TOTAL $ AMOUNT AMOUNT OF TOTAL BROKERAGE PAID TO SFS
TOTAL $ OF BROKERAGE BROKERAGE BROKERAGE TRANSACTIONS IN CONNECTION
AMOUNT OF COMMISSIONS EFFECTED COMMISSIONS EFFECTED WITH
BROKERAGE PAID TO TOTAL $ AMOUNT THROUGH PAID TO THROUGH REPURCHASE
COMMISSIONS AFFILIATED OF BROKERED AFFILIATED AFFILIATED AFFILIATED AGREEMENT
PAID BROKERS TRANSACTIONS BROKERS BROKERS BROKERS TRANSACTIONS
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
PORTFOLIO ENDED 8/31/96 ENDED 8/31/96 ENDED 8/31/96 ENDED 8/31/96 ENDED 8/31/96 ENDED 8/31/96 ENDED 8/31/96
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Tax Free $ 0 $ 0 $1,271,181,915 $ 0 $ 0 $ 0 $ 0
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Institutional Tax $ 0 $ 0 $2,622,150,531 $ 0 $ 0 $ 0 $ 0
Free Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-27
<PAGE> 231
<TABLE>
<CAPTION>
==============================================================================================================================
TOTAL
BROKERAGE
TOTAL $ % OF TOTAL COMMISSIONS
TOTAL $ AMOUNT AMOUNT OF TOTAL BROKERAGE PAID TO SFS
TOTAL $ OF BROKERAGE BROKERAGE BROKERAGE TRANSACTIONS IN CONNECTION
AMOUNT OF COMMISSIONS EFFECTED COMMISSIONS EFFECTED WITH
BROKERAGE PAID TO TOTAL $ AMOUNT THROUGH PAID TO THROUGH REPURCHASE
COMMISSIONS AFFILIATED OF BROKERED AFFILIATED AFFILIATED AFFILIATED AGREEMENT
PAID IN BROKERS IN LAST TRANSACTIONS BROKERS IN BROKERS FOR BROKERS FOR TRANSACTIONS
PORTFOLIO LAST YEAR YEAR FOR LAST YEAR LAST YEAR LAST YEAR LAST YEAR FOR LAST YEAR
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
California Tax $ 0 $ 0 $922,166,186 $ 0 $ 0 $ 0 $ 0
Exempt Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Intermediate-Term $ 0 $ 0 $237,804,382 $ 0 $ 0 $ 0 $ 0
Municipal
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania $ 0 $ 0 $238,540,174 $ 0 $ 0 $ 0 $ 0
Municipal
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Kansas Tax Free $ 0 $ 0 $64,476,842 $ 0 $ 0 $ 0 $ 0
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
New York * * * * * * *
Intermediate-Term
Portfolio
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania Tax $ 0 $ 0 $174,412,406 $ 0 $ 0 $ 0 $ 0
Free Portfolio
==============================================================================================================================
</TABLE>
For the fiscal years ended August 31, 1994 and 1995, the Portfolios paid the
following brokerage commissions:
<TABLE>
<CAPTION>
===========================================================================================================
TOTAL $ AMOUNT OF BROKERAGE TOTAL $ AMOUNT OF BROKERAGE
COMMISSIONS PAID IN COMMISSIONS PAID TO AFFILIATES IN
PORTFOLIO
1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Free Portfolio $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------
Institutional Tax Free Portfolio $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------
California Tax Exempt Portfolio $ 0 $ 0 $ 0 $ 0
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-28
<PAGE> 232
<TABLE>
<CAPTION>
=============================================================================================================
TOTAL $ AMOUNT OF BROKERAGE TOTAL $ AMOUNT OF BROKERAGE
COMMISSIONS PAID IN COMMISSIONS PAID TO AFFILIATES IN
PORTFOLIO
1995 1994 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Intermediate-Term Municipal Portfolio $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Portfolio $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------
Kansas Tax Free Income Portfolio $ 0 $ 0 $ 0 $ 0
- -------------------------------------------------------------------------------------------------------------
New York Intermediate-Term Portfolio * * * *
- -------------------------------------------------------------------------------------------------------------
Pennsylvania Tax Free Portfolio $ 0 $ 0 $ 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, 1995 and 1996, the portfolio
turnover rate for each of the following Portfolios was:
<TABLE>
<CAPTION>
====================================================================================================
TURNOVER RATE
--------------------------
PORTFOLIO 1996 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania Municipal Portfolio 66% 23%
- ----------------------------------------------------------------------------------------------------
Intermediate-Term Municipal Portfolio 41% 36%
- ----------------------------------------------------------------------------------------------------
Kansas Tax Free Income Portfolio 13% 18%
- ----------------------------------------------------------------------------------------------------
New York Intermediate-Term Municipal Portfolio * *
====================================================================================================
</TABLE>
* Not in operation during the period.
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 D and Class G 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.
S-29
<PAGE> 233
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 December 6, 1996, 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.
TAX FREE PORTFOLIO
<TABLE>
<S> <C> <C>
Naidot & Co. 14.08% 53,284,900.00
c/o Bessemer Trust Company
Attn: Peter Scully
630 Fifth Avenue, 38th Floor
New York, New York 10111-0100
Vose & Co. 18.33% 69,389,135.31
159 E. Main Street
NY/RO/TO3C
Rochester, New York 14604-1605
Smith & Co. 17.59% 66,569,005.42
c/o First Security Bank of Utah
Attn: Rick Parr
P.O. Box 30007
Salt Lake City, Utah 84130
</TABLE>
S-30
<PAGE> 234
<TABLE>
<S> <C> <C>
INSTITUTIONAL TAX FREE PORTFOLIO
Bank of America NT & SA 7.41% 82,057,024.66
Attn: Common Trust Funds, Unit #8329
P.O. Box 3577 Terminal Annex
Los Angeles, California 90051
First American National Bank 5.49% 60,874,451.56
Attn: Jeff Eubanks
800 First American Center
Nashville, Tennessee 37237-0801
Fifth Third Bank 5.03% 55,761,952.00
Attn: Jennifer Burrell
38 Fountain Square
Cincinnati, Ohio 45263-0001
Calhoun & Co. 13.36% 148,047,986.92
c/o Comerica Bank
Attn: Dennis Miriani
P.O. Box 1319, 7th Floor
Detroit, Michigan 48231
River Oaks Trust Company 14.96% 165,706,737.00
Attn: Trust Operations
Securities Movement & Control
P.O. Box 4886
Houston, Texas 77210-4886
Unit & Co. 7.57% 83,855,669.89
c/o US National Bank of Oregon
Attn: Jeanene Wine
P.O. Box 3168
Portland, Oregon 97208
CALIFORNIA TAX EXEMPT PORTFOLIO
The Bank of California NA 6.32% 28,079,566.31
Cash Management Services
475 Samsome Street, 11th Floor
Attn: Elena Aguba
San Francisco, California 94111
Southwest Securities 75.10% 333,670,816.31
Special Custodial Account for Exclusive
Benefit of Our Customers
Attn: Cathy Reames
</TABLE>
S-31
<PAGE> 235
<TABLE>
<S> <C> <C>
P.O. Box 509002
Dallas, Texas 75250-9002
City National Bank 15.20% 67,521,249.56
Attn: Michael Nunnelee
400 N. Roxbury Drive, Suite 700
Beverly Hills, California 90210
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
Transco & Company 10.21% 1,496,084.61
c/o Intrust Bank, N.A.
Attn: Pat Wills
P.O. Box 48698
Wichita, Kansas 67201
SEI Trust Company 37.65% 5,518,621.47
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, Pennsylvania 19087
PENNSYLVANIA MUNICIPAL PORTFOLIO
Sheldon & Co. (Integra) 77.53% 7,050,282.09
c/o National City
Attn: Trust Mutual Funds
P.O. Box 94777, Loc 5312
Cleveland, Ohio 44101-4777
SEI Trust Company 6.78% 616,189.52
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, Pennsylvania 19087
Meg and Co. 8.24% 749,047.35
c/o United States National bank
Attn: Debbie Moraca
P.O. Box 520
Johnstown, Pennsylvania 15907-0520
PENNSYLVANIA TAX FREE PORTFOLIO
The Farmers Company 7.35% 3,201,900.00
c/o Farmers First Bank - Lititz
Attn: Wendy Basehoar
P.O. Box 1000
Lititz, Pennsylvania 17543-7000
</TABLE>
S-32
<PAGE> 236
<TABLE>
<S> <C> <C>
The Fulton Company 89.17% 38,858,961.20
c/o Fulton Bank Trust Dept.
Attn: Dennis Patrick
One Penn Square
Lancaster, Pennsylvania 17602-2853
KANSAS TAX FREE PORTFOLIO
Transco & Company 99.19% 6,964,666.79
c/o Intrust Bank, N.A.
Attn: Pat Wills
P.O. Box 48698
Wichita, Kansas 67201
</TABLE>
EXPERTS
The financial statements and the financial highlights included herein have
been audited by Arthur Andersen LLP, independent public accountants to the
extent and for the periods indicated in their reports and are included herein
in reliance upon the authority of said firm as experts in giving said reports.
FINANCIAL STATEMENTS
The Trust's financial statements for the fiscal year ended August 31, 1996,
including notes thereto and the report of Arthur Andersen LLP thereon, are
herein incorporated by reference. A copy of the 1996 Annual Report must
accompany the delivery of this Statement of Additional Information.
S-33
<PAGE> 237
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements
(1) Part A: Financial Highlights
(2) Part B: Report dated October 11, 1996 of independent public
accountants on financial statements as of August 31,
1996 are incorporated by reference to the Statement
of Additional Information.
Statements of Net Assets
Statements of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(b) Additional Exhibits
(1) Registrant's Declaration of Trust is incorporated herein by
reference to Registrant's Registration Statement of Form N-1A
(File No. 2-76990) filed with the Securities and Exchange
Commission on March 15, 1982.
(2) Registrant's By-Laws are incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No.
2-76990) filed with the Securities and Exchange Commission on
March 15, 1982.
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Management Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) as previously filed
with the Securities and Exchange Commission.
(5)(b) Investment Advisory Agreement with Weiss, Peck and Greer
Advisers, Inc. is incorporated herein by reference to Post
Effective Amendment No. 17 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) as previously filed
with the Securities and Exchange Commission.
(5)(c) Investment Advisory Agreement with Bessemer Trust Company is
incorporated herein by reference to Post Effective Amendment
No. 19 to Registrant's Registration Statement on Form N-1A
(File No. 2-76990) as previously filed with the Securities and
Exchange Commission.
(5)(d) Investment Advisory Agreement with First National Bank in
Wichita (now INTRUST Bank, NA in Wichita) is incorporated
herein by reference to Post Effective Amendment No. 29 to
Registrant's Registration Statement on Form N-1A (File No.
2-76990) filed with the Securities and Exchange Commission on
December 28, 1990.
(5)(f) Investment Advisory Agreement with Woodbridge Capital
Management, Inc. is incorporated herein by reference to Post
Effective Amendment No. 35 to Post Effective Amendment No. 35
to Registrant's Registration on Form N-1A (File No. 2-76990)
as previously filed with the Securities and Exchange
Commission.
(5)(g) Investment Advisory Agreement with State Street Bank and Trust
Company is incorporated herein by reference to Post Effective
Amendment No. 35 to Registrant's Registration Statement on Form
N-1A (File No. 2-76990) as previously filed with the Securities
and Exchange Commission.
(5)(h) Schedule E dated August 5, 1992 to Management Agreement is
incorporated herein by reference to Post Effective Amendment
No. 32 to Registrant's Registration Statement on Form N-1A
(File No. 2-76990) filed with the Securities and Exchange
Commission on August 17, 1992 (adding Massachusetts
Intermediate-Term Municipal Portfolio).
(5)(i) Schedule F dated August 5, 1992 to Management Agreement is
incorporated herein by reference to Post Effective Amendment
No. 32 to Registrant's Registration Statement on Form N-1A
(File No. 2-76990) filed with the Securities and Exchange
Commission on August 17, 1992 (adding Bainbridge Tax Exempt
Portfolio).
(5)(j) Schedule E dated August 5, 1992 to Investment Advisory
Agreement with Weiss, Peck & Greer Advisers, Inc. is
incorporated herein by reference to Post Effective Amendment
No. 32 to Registrant's Registration Statement on Form N-1A
(File No. 2-76990) filed with the Securities and Exchange
Commission on August 17, 1992 (adding
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<PAGE> 238
Bainbridge Tax Exempt Portfolio).
(5)(k) Schedule G, dated October 29, 1993, to Management Agreement
(adding Pennsylvania Tax Free Portfolio).
(5)(l) Schedule H, dated October 29, 1993, to Management Agreement
(adding New York Intermediate-Term Municipal Portfolio).
(5)(m) Schedule I, dated October 29, 1993, to Management Agreement
(adding California Intermediate-Term Municipal
Portfolio).
(5)(n) Schedule G, dated December 10, 1993, to Investment Advisory
Agreement with Weiss, Peck & Greer Advisers, Inc. (adding
Intermediate-Term Municipal, California Intermediate-Term
Municipal, and New York Intermediate-Term Municipal
Portfolios).
(5)(o) Schedule H, dated March 8, 1994, to Investment Advisory
Agreement with Weiss, Peck & Greer Advisers, Inc. (adding
Institutional Tax Free, Pennsylvania Tax Free, California Tax
Exempt, Bainbridge and Tax Free Portfolios).
(6) Distribution Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) as previously filed
with the Securities and Exchange Commission.
(7) Not Applicable.
(8) Custodian Agreement is incorporated herein by reference to
Pre-Effective Amendment No. 1 Registrant's Registration
Statement on Form N-1A (47File No. 2-76990) as previously filed
with the Securities and Exchange Commission.
(9)(a) Form of Class A Shareholder Service Plan and Agreement is
incorporated herein by reference to Post-Effective Amendment
#39 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) as previously filed on May 1, 1996.
(9)(b) Form of Class B Shareholder Service Plan and Agreement is
incorporated herein by reference to Post-Effective Amendment
#39 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) as previously filed on May 1, 1996.
(9)(c) Form of Class B Administrative Services Plan and Agreement is
incorporated herein by reference to Post-Effective Amendment
#39 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) as previously filed on May 1, 1996.
(9)(d) Form of Class C Shareholder Service Plan and Agreement is
incorporated herein by reference to Post-Effective Amendment
#39 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) as previously filed on May 1, 1996.
(9)(e) Form of Class C Administrative Services Plan and Agreement is
incorporated herein by reference to Post-Effective Amendment
#39 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) as previously filed on May 1, 1996.
(9)(f) Form of Class G Shareholder Service Plan and Agreement is
incorporated herein by reference to Post-Effective Amendment
#39 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) as previously filed on May 1, 1996.
(10) Opinion and Consent of Counsel is incorporated herein by
reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) as
previously filed with the Securities and Exchange Commission.
(11) Consent of Independent Public Accountants is filed herewith.
(12) Audited financial statements as of August 31, 1996, are filed
herewith.
(13) Not Applicable.
(14) Not Applicable.
(15)(a) Distribution Plan is incorporated herein by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) as previously filed
with the Securities and Exchange Commission.
(15)(b) Distribution Plan for Kansas Tax Free Income Portfolio Class B
is Incorporated herein by reference to Post Effective Amendment
No. 28 to Registrant's Registration Statement on Form N-1A
(File No. 2-76990) filed with the Securities and Exchange
Commission on October 9, 1990.
(15)(c) Distribution Plan for ProVantage Funds shares of Tax Free,
California Tax Exempt, Intermediate-Term Municipal,
Massachusetts Intermediate-Term Municipal, Pennsylvania
Municipal, Pennsylvania Tax Free, New York Intermediate-Term
Municipal and California Intermediate-Term Municipal
Portfolios.
(15)(d) Distribution Plan for Class C shares of California Tax Exempt
Portfolio and Institutional Tax Free Portfolio is incorporated
herein by reference to Post Effective Amendment No. 37 to Form
N-1A (File No. 2-76990) as previously filed with the Securities
and Exchange Commission on October 31, 1994.
(15)(e) Amended and Restated Class D Distribution Plan is filed
herewith.
(15)(f) Class G Distribution Plan is filed herewith.
(16) Performance Quotation Computation is incorporated herein by
reference to Post Effective Amendment No. 35 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) as
previously filed with the Securities and Exchange Commission.
(18)(a) Rule 18f-3 Plan is incorporated herein by reference to Post
Effective Amendment No. 38 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the
Securities and Exchange Commission on October 30, 1995.
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<PAGE> 239
(18)(b) Amendment No. 1 to Rule 18f-3 Plan relating to Class A, B, C, D
and G shares is filed herewith.
(25) Powers of Attorney are incorporated herein by reference to Post
Effective Amendment No. 38 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the
Securities and Exchange Commission on October 30, 1995.
(27) Financial Data Schedules are incorporated herein by reference
to Post-Effective Amendment No. 38, as filed on October 30,
1995.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES:
As of December 6, 1996:
<TABLE>
<CAPTION>
NUMBER OF
TITLE OF CLASS RECORD HOLDERS
- -----------------------------------------------------------------------------
<S> <C>
Units of beneficial interest, without par value
Tax Free Portfolio, Class A . . . . . . . . . . . . . . . 45
Tax Free Portfolio, Class D . . . . . . . . . . . . . . . 7
Institutional Tax Free Portfolio, Class A 80
Institutional Tax Free Portfolio, Class B . . . . . . . . 4
Institutional Tax Free Portfolio, Class C . . . . . . . . 4
California Tax Exempt Portfolio, Class A . . . . . . . . 12
California Tax Exempt Portfolio, Class B . . . . . . . . n/a
California Tax Exempt Portfolio, Class C . . . . . . . . n/a
California Tax Exempt Portfolio, Class G . . . . . . . . 2
Intermediate-Term Municipal Portfolio, Class A . . . . . 109
Pennsylvania Municipal Portfolio, Class A . . . . . . . . 28
Kansas Tax Free Income Portfolio, Class A . . . . . . . . 4
Kansas Tax Free Income Portfolio, Class B . . . . . . . . n/a
Pennsylvania Tax Free Portfolio, Class A . . . . . . . . 8
Pennsylvania Tax Free Portfolio, Class B . . . . . . . . n/a
Pennsylvania Tax Free Portfolio, Class C . . . . . . . . n/a
New York Intermediate-Term Municipal Portfolio, Class A . n/a
</TABLE>
ITEM 27. INDEMNIFICATION:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1
to the Registration Statement is incorporated by reference. Insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Declaration of Trust or otherwise,
the Registrant is aware that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
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<PAGE> 240
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS:
Other business, profession, vocation, or employment of a substantial
nature in which each director or principal office of each Investment Adviser is
or has been, at any time during the last two fiscal years, engaged for his or
her own account or in the capacity of director, officer, employee, partner or
trustee are as follows:
Weiss, Peck & Greer Advisers, Inc. is a wholly owned subsidiary of Weiss,
Peck & Greer, L.L.C. ("WPG"), a limited liability company which engages in
investment management, venture capital management and management buyouts for
individuals, mutual funds, corporations and other institutional clients. The
business address of each officer is One New York Plaza, New York, NY 10004.
<TABLE>
<CAPTION>
NAME AND POSITION WITH ADVISER BUSINESS AND OTHER CONNECTIONS
- ------------------------------ ------------------------------
<S> <C>
Stephen H. Weiss . . . . . . . . . . . . Senior Managing Principal and Chairman of Executive
Chairman of the Board and Director Committee of Weiss, Peck & Greer, L.L.C.; Director of
London Merchant Securities Services, Inc.; Trustee and
Chairman of the Board of Trustees of Cornell University
Melville Straus . . . . . . . . . . . . . Principal and member of Executive Committee, Weiss, Peck &
President and Director Greer, L.L.C.; President of Tudor Fund and WPG Growth Fund;
Chairman of the Board of Governing Trustees of American
Ballet Theater; Trustee of Independent Curators, Inc.
Roger J. Weiss . . . . . . . . . . . . . Senior Managing Principal and Member of Executive
Executive Vice President Committee, Weiss, Peck & Greer, L.L.C.; Chairman of WPG
and Director Fund, Tudor Fund, WPG Growth Fund, and Weiss, Peck & Greer
Funds Trust; Board of Trustees Fellow of Cornell University
Francis H. Powers . . . . . . . . . . . . Principal, Weiss, Peck & Greer, L.L.C.; Executive Vice
Vice President and Secretary President and Treasurer of WPG Fund, Tudor Fund, Growth
Fund, and Weiss, Peck & Greer Funds Trust; Trustee and
Treasurer of Staten Island Academy and a member of the
Board of Trustees and Finance Committee of St. Vincent's
Hospital, Staten Island
Ronald M. Hoffner . . . . . . . . . . . . Principal, Chief Financial Officer; Weiss, Peck & Greer,
Treasurer L.L.C.; member of the American Institute of Certified
Public Accountants.
</TABLE>
Standish, Ayer & Wood, Inc.
The principal address of Standish, Ayer & Wood, Inc. is One Financial
Center, Suite 26, Boston, Massachusetts 02111. Standish, Ayer & Wood, Inc. is
an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Standish,
Ayer & Wood, Inc., together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference
to Schedules A and D of Form ADV filed by Standish, Ayer & Wood, Inc. to the
Advisers Act (SEC File no. 801-584).
Morgan Grenfell Capital Management Incorporated ("MGCM") is a wholly-owned
U.S.-based subsidiary of Morgan Grenfell Asset Management ("MGAM"). MGAM is
located at 20 Finsbury Circus, London EC2 M1NB, England, and is 100% owned by
the Morgan Grenfell Group, PLC, which was acquired by Deutsche Bank AG in 1990.
The business address of each officer of MGCM is 885 Third Avenue, 32nd Floor,
New York, New York 10022.
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<PAGE> 241
<TABLE>
<S> <C>
Michael Bullock . . . . . . . . . . . . . Director, Morgan Grenfell Asset Management; Director,
Chairman and Director Morgan Grenfell Investment Services.
James Edward Minnick . . . . . . . . . . Director, Morgan Grenfell Asset Management; Director,
Director and President Morgan Grenfell Investment Services.
Robert Edward Kern, Jr. . . . . . . . . . Director, Morgan Grenfell Asset Management.
Executive Vice President
David Westover Baldt . . . . . . . . . . Director, Morgan Grenfell Asset Management, Ltd.
Director and Executive Vice President
Timothy Charles Vile . . . . . . . . . . --
Portfolio Manager
Gary William Bartlett . . . . . . . . . . --
Portfolio Manager
Karen Ann Rogers . . . . . . . . . . . . --
Portfolio Manager
Neil Patrick Jenkins . . . . . . . . . . Vice President, Morgan Grenfell Investment Trust
Director and Portfolio Manager
Mark Gerard Arthus . . . . . . . . . . . --
Director of Administration
Gerald Shaw Frey . . . . . . . . . . . . --
Portfolio Manager
David Alfred Baratta . . . . . . . . . . --
Portfolio Manager
Audrey Mary Theresa Jones . . . . . . . . --
Portfolio Manager
Thomas John Flaherty . . . . . . . . . . --
Portfolio Manager
Warren Spencer Davis, III . . . . . . . .
Portfolio Manager
</TABLE>
INTRUST Bank, NA in Wichita is a majority-owned subsidiary of INTRUST Financial
Corporation a bank holding company. The business address of each officer is
105 North Main, Box One, Wichita, Kansas 67201.
<TABLE>
<S> <C>
C.Q. Chandler . . . . . . . . . . . . . . Chairman of the Board and Chief Executive Officer, INTRUST
Chairman of the Board and Financial Corporation
Chief Executive Officer
William D. Bunten . . . . . . . . . . . . Vice Chairman of the Board, INTRUST Financial Corporation
President
C.Q. Chandler IV . . . . . . . . . . . . President, INTRUST Financial Corporation
Vice Chairman
J.V. Lentell . . . . . . . . . . . . . . not applicable
Vice Chairman
C. Robert Buford . . . . . . . . . . . . President, Zenith Drilling Corporation
Director
Frank L. Carney . . . . . . . . . . . . . Vice Chairman, TURBOCHEF, INC.
Director
F.L. Carson, Jr. . . . . . . . . . . . . Chairman of the Board and Chief Executive Officer, Mulvane
Director State Bank (Mulvane, Kansas)
Richard Chance . . . . . . . . . . . . . President and Chief Executive Chance Industries, Inc.
Director
George T. Chandler . . . . . . . . . . . Chairman, First National Bank in Pratt (Pratt, Kansas)
Director
</TABLE>
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<PAGE> 242
<TABLE>
<S> <C>
Jamie B. Coulter . . . . . . . . . . . . President, Coulter Enterprises
Director
R.L. Darmon . . . . . . . . . . . . . . . Financial Consultant
Director
Charles W. Dieker . . . . . . . . . . . . Director
Executive Vice President, Beech
Aircraft Corp. (Retired)
W.J. Easton, Jr. . . . . . . . . . . . . President, Easton Manufacturing Co., Inc.
Director
Martin K. Eby, Jr. . . . . . . . . . . . Chairman of the Board, Martin K. Eby Construction Co., Inc.
Director
Eric T. Knorr . . . . . . . . . . . . . . Chairman of the Board and Chief Executive Officer, Dulaney
Director Johnston and Priest Insurance
Charles G. Koch . . . . . . . . . . . . . Chairman, Koch Industries, Inc.
Director
Paul A. Seymour, Jr. . . . . . . . . . . Business Consultant
Director
Donald C. Slawson . . . . . . . . . . . . President, Slawson Companies
Director
John T. Stewart III . . . . . . . . . . . President and Chief Executive Officer, GBC Precision Corp.
Director
Patrick H. Thiessen . . . . . . . . . . . General Manager, Western Division, Flour Milling Division,
Director Cargill, Inc. (Retired)
</TABLE>
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the
securities of the Registrant also acts as a principal underwriter,
distributor or investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:
<TABLE>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds(R) June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
</TABLE>
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<PAGE> 243
<TABLE>
<S> <C>
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
Turner Funds April 30, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
</TABLE>
SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is 680 East Swedesford Road, Wayne, PA 19087.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President, President-Investment
Services Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
Larry Hutchison Senior Vice President --
Steven Kramer Senior Vice President --
David G. Lee Senior Vice President President & Chief Executive Officer
William Madden Senior Vice President --
Jack May Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Vice President & Assistant Secretary
Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Aller Vice President --
Marc H. Cahn Vice President & Assistant Secretary Vice President & Assistant Secretary
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President & Assistant Secretary
Robert Crudup Vice President & Managing Director --
Ed Daly Vice President --
Jeff Drennen Vice President --
</TABLE>
C-7
<PAGE> 244
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Mick Duncan Vice President and Team Leader --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
Donald H. Korytowski Vice President --
John Krzeminski Vice President & Managing Director --
Robert S. Ludwig Vice President and Team Leader --
Vicki Malloy Vice President and Team Leader --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Barbara A. Nugent Vice President & Assistant Secretary Vice President & Assistant Secretary
Sandra K. Orlow Vice President & Assistant Secretary Vice President & Assistant Secretary
Donald Pepin Vice President & Managing Director --
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President & Assistant Secretary
Wayne M. Withrow Vice President & Managing Director --
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, as amended ("1940 Act"), and the rules
promulgated thereunder, are maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records are maintained at
the offices of Registrant's Custodians:
CoreStates Bank, N.A. First Fidelity Bank, NA
Broad and Chestnut Street New Jersey
P.O. Box 7618 765 Broad Street
Philadelphia, PA 19101 Newark, NJ 07101
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1); 31a-1(b)(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Manager:
SEI Financial Management Corporation
680 E. Swedesford Road
Wayne, PA 19087
C-8
<PAGE> 245
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Advisers:
Weiss, Peck & Greer Advisers, Inc. Morgan Grenfell Capital Management
One New York Plaza Incorporated
New York, NY 10004 885 Third Avenue, 32nd Floor
New York, NY 19102
INTRUST Bank, NA in Wichita Standish, Ayer & Wood, Inc.
105 North Main Street One Financial Center, Suite 26
Box One Boston, MA 02111
Wichita, KS 67201
Item 31. Management Services: None
Item 32. Undertakings:
Registrant hereby undertakes to file a Post-Effective Amendment to this
Registration Statement, containing reasonably current financial statements that
need not be certified, within four to six months from the later of the
effective date of the New York Intermediate-Term Municipal Portfolio or, with
respect to such Portfolio's the commencement of operations.
Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the 1940 Act inform the Board of Trustees of
their desire to communicate with Shareholders of the Trust, the Trustees will
inform such Shareholders as to the approximate number of Shareholders of record
and the approximate costs of mailing or afford said Shareholders access to a
list of Shareholders.
Registrant undertakes to call a meeting of shareholders for the purpose of
voting upon the question of the removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with each meeting to comply with the provisions of
Section 16(c) of the Investment Company Act of 1940 Act relating to shareholder
communications.
Registrant undertakes to furnish, upon request and without charge, to each
person to whom a prospectus is delivered, a copy of the Registrant's latest
annual report to shareholders, when such annual report is issued containing
information called for by Item 5A of Form N-1A.
C-9
<PAGE> 246
NOTICE
A copy of the Agreement and Declaration of Trust of SEI Tax Exempt Trust is
on file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this Registration Statement has been executed on
behalf of the Trust by an officer of the Trust as an officer and by its
Trustees as trustees and not individually and the obligations of or arising out
of this Registration Statement are not binding upon any of the Trustees,
officers, or Shareholders individually but are binding only upon the assets and
property of the Trust.
C-10
<PAGE> 247
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for the effectiveness of this Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this Amendment to Registration Statement No. 2-76990 to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Wayne,
Commonwealth of Pennsylvania on the 20th day of December, 1996.
SEI TAX EXEMPT TRUST
By: /s/ David G. Lee
--------------------------------
David G. Lee, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
* Trustee December 20 , 1996
- ------------------------------------------ ------
George J. Sullivan, Jr.
* Trustee December 20 , 1996
- ------------------------------------------ -------
William M. Doran
* Trustee December 20 , 1996
- ------------------------------------------ -------
F. Wendell Gooch
* Trustee December 20 , 1996
- ------------------------------------------ -------
Frank E. Morris
* Trustee December 20 , 1996
- ------------------------------------------ -------
Robert A. Nesher
* Trustee December 20 , 1996
- ------------------------------------------ -------
James M. Storey
/s/ David G. Lee President & Chief Executive December 20 , 1996
- --------------------------------- Officer -------
David G. Lee
/s/ Stephen G. Meyer Controller & Assistant December 20 , 1996
- ----------------------------- Secretary -------
Stephen G. Meyer
*By: /s/ David G. Lee
--------------------------------------------
David G. Lee, Attorney-in-Fact
</TABLE>
<PAGE> 248
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
EX-99.B1 Registrant's Declaration of Trust is incorporated herein by reference to Registrant's Registration Statement of
Form N-1A (File No. 2-76990) filed with the Securities and Exchange Commission on March 15, 1982.
EX-99.B2 Registrant's By-Laws are incorporated herein by reference to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on March 15, 1982.
EX-99.B3 Not Applicable.
EX-99.B4 Not Applicable.
EX-99.B5a Management Agreement is incorporated herein by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) as previously filed with the Securities and Exchange
Commission.
EX-99.B5b Investment Advisory Agreement with Weiss, Peck and Greer Advisers, Inc. is incorporated herein by reference to Post
Effective Amendment No. 17 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously
filed with the Securities and Exchange Commission.
EX-99.B5c Investment Advisory Agreement with Bessemer Trust Company is incorporated herein by reference to Post Effective
Amendment No. 19 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed with
the Securities and Exchange Commission.
EX-99.B5d Investment Advisory Agreement with First National Bank in Wichita (now INTRUST Bank, NA in Wichita) is incorporated
herein by reference to Post Effective Amendment No. 29 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December 28, 1990.
EX-99.B5f Investment Advisory Agreement with Woodbridge Capital Management, Inc. is incorporated herein by reference to Post
Effective Amendment No. 35 to Post Effective Amendment No. 35 to Registrant's Registration on Form N-1A (File No.
2-76990) as previously filed with the Securities and Exchange Commission.
EX-99.B5g Investment Advisory Agreement with State Street Bank and Trust Company is incorporated herein by reference to Post
Effective Amendment No. 35 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously
filed with the Securities and Exchange Commission.
EX-99.B5h Schedule E dated August 5, 1992 to Management Agreement is incorporated herein by reference to Post Effective
Amendment No. 32 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with the Securities
and Exchange Commission on August 17, 1992 (adding Massachusetts Intermediate-Term Municipal Portfolio).
EX-99.B5i Schedule F dated August 5, 1992 to Management Agreement is incorporated herein by reference to Post Effective
Amendment No. 32 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with the Securities
and Exchange Commission on August 17, 1992 (adding Bainbridge Tax Exempt Portfolio).
EX-99.B5j Schedule E dated August 5, 1992 to Investment Advisory Agreement with Weiss, Peck & Greer Advisers, Inc. is
incorporated herein by reference to Post Effective Amendment No. 32 to Registrant's Registration Statement on
Form N-1A (File No. 2-76990) filed with the Securities and Exchange Commission on August 17, 1992 (adding
Bainbridge Tax Exempt Portfolio).
EX-99.B5k Schedule G, dated October 29, 1993, to Management Agreement (adding Pennsylvania Tax Free Portfolio).
EX-99.B5l Schedule H, dated October 29, 1993, to Management Agreement (adding New York Intermediate-Term Municipal
Portfolio).
EX-99.B5m Schedule I, dated October 29, 1993, to Management Agreement (adding California Intermediate-Term Municipal
Portfolio).
EX-99.B5n Schedule G, dated December 10, 1993, to Investment Advisory Agreement with Weiss, Peck & Greer Advisers, Inc.
(adding Intermediate-Term Municipal, California Intermediate-Term Municipal, and New York Intermediate-Term
Municipal Portfolios).
EX-99.B5o Schedule H, dated March 8, 1994, to Investment Advisory Agreement with Weiss, Peck & Greer Advisers, Inc. (adding
Institutional Tax Free, Pennsylvania Tax Free, California Tax Exempt, Bainbridge and Tax Free Portfolios).
</TABLE>
<PAGE> 249
<TABLE>
<S> <C>
EX-99.B6 Distribution Agreement is incorporated herein by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) as previously filed with the Securities and Exchange
Commission.
EX-99.B7 Not Applicable.
EX-99.B8 Custodian Agreement is incorporated herein by reference to Pre-Effective Amendment No. 1 Registrant's Registration
Statement on Form N-1A (File No. 2-76990) as previously filed with the Securities and Exchange Commission.
EX-99.B9a Form of Class A Shareholder Service Plan and Agreement is incorporated herein by reference to Post-Effective
Amendment #39 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed on May 1,
1996.
EX-99.B9b Form of Class B Shareholder Service Plan and Agreement is incorporated herein by reference to Post-Effective
Amendment #39 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed on May 1,
1996.
EX-99.B9c Form of Class B Administrative Services Plan and Agreement is incorporated herein by reference to Post-Effective
Amendment #39 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed on May 1,
1996.
EX-99.B9d Form of Class C Shareholder Service Plan and Agreement is incorporated herein by reference to Post-Effective
Amendment #39 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed on May 1,
1996.
EX-99.B9e Form of Class C Administrative Services Plan and Agreement is incorporated herein by reference to Post-Effective
Amendment #39 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed on May 1,
1996.
EX-99.B9f Form of Class G Shareholder Service Plan and Agreement is incorporated herein by reference to Post-Effective
Amendment #39 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed on May 1,
1996.
EX-99.B10 Opinion and Consent of Counsel is incorporated herein by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) as previously filed with the Securities and Exchange
Commission.
EX-99.B11 Consent of Independent Public Accountants is filed herewith.
EX-99.B12 Financial statements are filed herewith.
EX-99.B13 Not Applicable.
EX-99.B14 Not Applicable.
EX-99.B15a Distribution Plan is incorporated herein by reference to Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) as previously filed with the Securities and Exchange Commission.
EX-99.B15b Distribution Plan for Kansas Tax Free Income Portfolio Class B is Incorporated herein by reference to Post
Effective Amendment No. 28 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with the
Securities and Exchange Commission on October 9, 1990.
EX-99.B15c Distribution Plan for ProVantage Funds shares of Tax Free, California Tax Exempt, Intermediate-Term Municipal,
Massachusetts Intermediate-Term Municipal, Pennsylvania Municipal, Pennsylvania Tax Free, New York
Intermediate-Term Municipal and California Intermediate-Term Municipal Portfolios.
EX-99.B15d Distribution Plan for Class C shares of California Tax Exempt Portfolio and Institutional Tax Free Portfolio is
incorporated herein by reference to Post Effective Amendment No. 37 to Form N-1A (File No. 2-76990) as previously
filed with the Securities and Exchange Commission on October 31, 1994.
EX-99.B15e Amended and Restated Class D Distribution Plan is filed herewith.
EX-99.B15f Class G Distribution Plan is filed herewith.
EX-99.B16 Performance Quotation Computation is incorporated herein by reference to Post Effective Amendment No. 35 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) as previously filed with the Securities and
Exchange Commission.
EX-99.B18a Rule 18f-3 Plan is incorporated herein by reference to Post Effective Amendment No. 38 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange Commission on October 30, 1995.
EX-99.B18b Amendment No. 1 to Rule 18f-3 Plan relating to Class A, B, C, D and G shares is filed herewith.
EX-99.B25 Powers of Attorney are incorporated herein by reference to Post Effective Amendment No. 38 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange Commission on October
30, 1995.
EX-99.B27.1a Tax Free Portfolio Class A
EX-99.B27.1b Tax Free Portfolio Class D
EX-99.B27.2a Institutional Tax Free Portfolio Class A
EX-99.B27.2b Institutional Tax Free Portfolio Class B
EX-99.B27.2c Institutional Tax Free Portfolio Class C
EX-99.B27.3a California Tax Exempt Portfolio Class A
EX-99.B27.3b California Tax Exempt Portfolio Class G
EX-99.B27.4a Intermediate Term Municipal Portfolio Class A
EX-99.B27.5 Pennsylvania Municipal Bond Portfolio
EX-99.B27.6 Pennsylvania Tax Free Money Market Portfolio Class A
EX-99.B27.7 Kansas Tax Free Portfolio
</TABLE>
<PAGE> 1
EXHIBIT 99.B5(p)
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Agreement"), dated
as of May 31, 1996, is made by and between SEI Financial Management Corporation
("Transferor"), and SEI Fund Management ("Transferee"), with reference to the
following Recitals.
A. Transferor serves as the administrator to several
facilities of mutual funds pursuant to certain administration agreements with
such funds;
B. Transferor has agreed to sell, transfer and deliver
to Transferee certain of its assets relating to its mutual fund administration
business, including the mutual fund administration agreements identified on
Exhibit A hereto; and
C. Transferee has agreed that at the time of the
transfer of such assets, it will assume all of Transferor's liabilities arising
out of such administration agreements.
NOW THEREFORE, in consideration of the terms and conditions of
the Agreement and other good and valuable consideration, the receipt of which
is hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:
1. Transferor hereby grants, sells, conveys, transfers
and delivers to Transferee all of Transferor's right, title and interest in and
to the assets described in Schedule I attached hereto, including, without
limitation, all of its contracts, licenses and other documents or instruments
by which Transferor is bound and which are assumed hereby.
2. Transferee hereby assumes and agrees to perform or to
pay or discharge the obligations and liabilities of Transferor described on
Schedule II hereto.
3. Nothing contained in this Agreement shall be deemed
to confer any rights or benefits upon any person not a party to the Agreement.
This Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the respective parties. This Agreement shall be
governed and interpreted in accordance with the law of the Commonwealth of
Pennsylvania without reference to the conflicts of laws principles of such
state.
<PAGE> 2
IN WITNESS WHEREOF, the undersigned have caused this
instrument to be duly executed as of the date first set forth above.
Attest: SEI Financial Management Corporation
[sig] By: [sig]
- --------------------------------- --------------------------------
Name:
Title:
Attest: SEI Fund Management
[sig] By: [sig]
- --------------------------------- --------------------------------
Name:
Title:
<PAGE> 3
SCHEDULE I & II
<TABLE>
<CAPTION>
AGREEMENT TYPE BETWEEN SFM AND: DATE OF AGREEMENT EXPIRATION DATE
<S> <C> <C> <C>
Management Agreement SEI Liquid Asset Trust (formerly October 31, 1986 March 31, 1997
TrustFunds Liquid Asset Trust)
Management Agreement SEI Tax Exempt Trust (formerly May 23, 1986 March 31, 1997
TrustFunds Tax Exempt Trust)
Management Agreement SEI Daily Income Trust (formerly May 23, 1986 March 31, 1997
Cash+Plus Trust)
Management Agreement SEI Index Funds, on behalf of the Bond January 20, 1986 March 31, 1997
Index Portfolio (formerly TrustFunds
Equity Index Funds)
Management Agreement SEI Index Funds, on behalf of the S&P July 25, 1986 March 31, 1997
500 Portfolio (formerly TrustFunds
Index Funds)
Management Agreement SEI Institutional Managed Trust January 22, 1987 March 31, 1997
(formerly TrustFunds Institutional
Managed Trust)
Management Agreement SEI International Trust (formerly SEI August 30, 1988 March 31, 1997
Wealth Management Trust)
Administration Agreement Insurance Investment Products Trust December 30, 1994 March 31, 1997
Administration Agreement SEI Asset Allocation Trust April 1, 1996 March 31, 1997
</TABLE>
<PAGE> 1
EXHIBIT 99.B11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated October 11, 1996, on the August 31, 1996 financial statements of SEI Tax
Exempt Trust, included in the Post-Effective Amendment No. 40 to the
Registration Statement on Form N-1A of SEI Tax-Exempt Trust (File No. 2-76990),
and to all references to our Firm included in or made part of Post-Effective
Amendment No. 40 to Registration Statement File No. 2-76990.
\s\ Arthur Andersen LLP
Philadelphia, PA
December 20, 1996
<PAGE> 1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
================================================================================
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF
SEI TAX EXEMPT TRUST:
We have audited the accompanying statements of net assets of the Tax Free,
California 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, 1996 and the related
statements of operations, statements of changes in net assets, and financial
highlights for the periods presented. We have also audited the statement of
operations of the Bainbridge Tax Exempt Portfolio of SEI Tax Exempt Trust for
the period ended December 15, 1995, and the related statement of changes in net
assets and financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatment. An audit includes examining, on a
test basis, evidence supporting hte amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1996, by correspondence with the custodians. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
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, 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, 1996, the results of their
operations, changes in their net assets, and financial highlights for the
periods presented, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Philadelphia, PA
October 11, 1996
<PAGE> 2
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
TAX FREE PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 104.1%
ALABAMA -- 0.6%
Tuscaloosa Industrial
Development Board,
Industrial Development
Revenue, Field Container
Corporation, VRDN,
RB (A) (B) (C)
3.550%, 09/07/96 $1,950 $1,950
------
ARKANSAS -- 0.3%
Little Rock Unified
School District, TRAN
3.850%, 12/30/96 1,000 1,000
------
ARIZONA -- 1.5%
Chandler Industrial
Development Authority,
Parsons Municipal Series
Project, VRDN, RB (A) (B) (C)
3.700%, 09/15/96 3,900 3,900
Tucson Industrial Development
Authority, Tucson City Center
Parking, VRDN, RB (A) (B) (C)
3.625%, 09/07/96 1,250 1,250
------
5,150
------
CALIFORNIA -- 2.5%
California School Cash
Reserve Program Authority,
Pool, Ser A, RAN
4.750%, 07/02/97 5,000 5,036
California State, Ser
96-97, RAN
4.500%, 06/30/97 2,500 2,511
Western Placer, USD, TRAN
4.700%, 09/05/96 1,000 1,000
------
8,547
------
COLORADO -- 3.6%
Colorado Housing Finance
Authority, Multi-Family
Housing, Woodstream Project,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 2,500 2,500
Colorado Housing Finance
Authority, Multi-Family
Housing, Cambray Park,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 2,900 2,900
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Colorado Housing Finance
Authority, Multi-Family
Housing, Grants Plaza
Project 91-A, VRDN,
RB (A) (B) (C)
3.525%, 09/07/96 $1,500 $1,500
Denver City & County,
Multi-Family Housing,
Ogden Residence Project, Ser 85,
VRDN, RB (A) (B) (C)
3.950%, 09/01/96 2,965 2,965
Fraser Industrial Development
Revenue, Safeway Project,
VRDN, RB (A) (B) (C)
3.650%, 12/01/96 1,785 1,785
Jefferson County Industrial
Development Revenue,
Southwest Medpro Project,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 550 550
------
12,200
------
DISTRICT OF COLUMBIA -- 1.9%
District of Columbia, Washington,
Ser B-1, VRDN, RB (A) (B) (C)
3.950%, 09/07/96 600 600
District of Columbia, Washington,
Ser B-2, VRDN, RB (A) (B) (C)
3.950%, 09/07/96 5,300 5,300
District of Columbia, Washington,
Ser B-3, VRDN, RB (A) (B) (C)
3.950%, 09/07/96 500 500
------
6,400
------
FLORIDA -- 3.9%
Boca Raton Industrial
Development Authority,
Parking Garage, Ser 84-A,
VRDN, RB (A) (B) (C)
3.875%, 09/07/96 3,125 3,125
Florida Housing Finance Agency,
VRDN, RB (A) (B) (C)
3.850%, 09/07/96 2,300 2,300
Florida Housing Finance Authority,
Sarasota Beneva Place, Ser C,
VRDN, RB (A) (B) (C)
3.525%, 09/07/96 4,955 4,955
Halifax Hospital Medical Center,
Ser 96, TAN (C)
3.800%, 04/15/97 2,000 2,001
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
7
<PAGE> 3
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Pasco County Housing Facility
Authority, Multi-Family
Housing, Carlton Arms/
Magnolia Valley, VRDN,
RB (A) (B) (C)
3.625%, 09/07/96 $ 1,000 $ 1,000
-------
13,381
-------
GEORGIA -- 3.6%
Dekalb County, Development
Authority Revenue, Dart
Container Project, VRDN,
RB (A) (B) (C)
3.850%, 09/07/96 1,000 1,000
DeKalb County, Multi-Family
Housing, Wood Terrace
Apartments Project, Ser 95,
VRDN, RB (A) (B)
3.450%, 09/07/96 400 400
Fulton County Development
Authority, Robert W. Woodruff
Arts Center,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 3,500 3,500
Gordon Industrial Development
Authority, Federal Paper Board
Incorporated Project, Ser 92,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 2,000 2,000
Newton, Industrial Development
Revenue, H.B. Fuller Project,
Ser 84, VRDN, RB (A) (B) (C)
3.650%, 09/07/96 3,100 3,100
Richmond County, Industrial
Development Authority,
Federal Paper Board Company
Project, Ser 92,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,000 1,000
Rome City, Ser 96, TAN, G.O.
3.270%, 12/31/96 1,150 1,150
-------
12,150
-------
ILLINOIS -- 7.0%
Chicago O'Hare International
Airport, American Airlines,
Ser A, VRDN, RB (A)
(B) (C)
3.750%, 09/01/96 600 600
Chicago Park District, Ser A, TAW
5.000%, 10/30/96 1,000 1,002
Chicago, Multi-Family Housing
Authority, Waveland Project B,
VRDN, RB (A) (B)(C)
3.450%, 09/07/96 6,100 6,100
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
East Peoria, Multi-Family
Housing Revenue, Radnor
East Project, VRDN, RB (A)
(B) (C) 3.750%, 09/07/96 $1,720 $1,720
Hoffman Estates, Park District,
G.O. 4.000%, 12/01/96 1,815 1,815
Illinois State Development
Financial Authority, Dart
Container Project, VRDN,
RB (A) (B) (C)
3.548%, 09/07/96 1,300 1,300
Illinois State Financial
Development Authority,
Diamond Star Motors Project,
VRDN, RB (A) (B) (C)
3.850%, 09/01/96 1,900 1,900
Peoria Economic Development,
North Point Shopping Center
Project, VRDN, RB (A) (B) (C)
3.700%, 12/01/96 2,395 2,395
Skokie, Industrial Development
Authority, Fashion Square
Project, VRDN, RB (A) (B) (C)
3.875%, 09/07/96 2,800 2,800
Springfield, Community
Improvement Revenue,
Kent Family Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,000 1,000
St. Clair County, Industrial
Building Authority,
Winchester Apartments Project,
Ser 94, VRDN, RB (A) (B)
3.900%, 09/07/96 3,000 3,000
------
23,632
------
INDIANA -- 8.6%
Bartholomew Consolidated
Schools, TAW
4.000%, 12/31/96 1,738 1,739
East Chicago, School City TAW
4.000%, 12/31/96 3,000 3,002
Gary Environmental Improvement,
US Steel, VRDN, RB (A) (B) (C)
3.700%, 01/15/97 9,800 9,800
Hamilton Southeastern
Independent Schools,
Consolidated School
Building, BAN
3.900%, 12/31/96 750 751
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
8
<PAGE> 4
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Indiana Development Finance
Authority, Industrial
Development Revenue,
Goodwill Industries Center
Project, VRDN, RB (A) (B) (C)
3.550%, 09/07/96 $ 1,400 $ 1,400
Indiana Health Facilities Finance
Authority, Lutherwood Project,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 1,000 1,000
Lake County, Calumet Township,
Ser 95, G.O.
5.000%, 01/15/97 1,750 1,759
Michigan City, TAW
3.900%, 12/31/96 1,100 1,100
Portage Township Schools, TAW
4.150%, 12/31/96 1,350 1,352
Portage, Economic Development
Revenue, VRDN, RB (A) (B) (C)
3.650%, 09/07/96 780 780
South Bend Community School
District, G.O.
3.850%, 01/15/97 570 570
Tri-Creek School District, TAW
4.000%, 12/31/96 1,100 1,101
Valpariso Community School
District, TAW
4.100%, 12/31/96 3,500 3,504
Whitko Community School
District, TAW
4.000%, 12/31/96 1,490 1,491
-------
29,349
-------
KANSAS -- 0.2%
Salina, Central Mall Dillard,
Ser 84, VRDN, RB (A) (B) (C)
3.750%, 09/07/96 495 495
Shawnee County, Ser 96-1, BAN
4.800%, 03/01/97 280 280
-------
775
-------
LOUISIANA -- 0.6%
Ascension Parish, Pollution
Control Revenue, BASF
Wyandotte Corporation,
VRDN, RB, (A) (B) (C)
3.850%, 09/01/96 1,600 1,600
Louisiana State Public Facilities
Authority, Willis Knighton
Medical Project, VRDN, RB
AMBAC Insured (A) (B)
3.400%, 09/07/96 600 600
-------
2,200
-------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MAINE -- 0.6% Maine State, TAN,
G.O. 4.500%, 06/27/97 $2,000 $2,010
------
MARYLAND -- 5.2%
Baltimore County, G.O., TECP
3.500%, 10/02/96 (C) 2,000 2,000
Howard County Multi-Family
Housing, Sherwood Crossing
Limited, Ser A, VRDN, RB,
G.O. (A) (B)
3.750%, 06/01/97 1,500 1,500
Maryland State Health & Higher
Education Facilities Authority,
Kennedy Krieger, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 400 400
Maryland State Health & Higher
Education Facilities Authority,
Pooled Loan Program, Ser B,
VRDN, RB (A) (B) (C)
3.450%, 09/07/96 8,100 8,100
Montgomery County, Multi-Family
Housing Opportunities,
Community Housing,
VRDN, RB (A) (B) (C)
3.650%, 09/07/96 5,000 5,000
Prince Georges County Housing
Authority, VRDN, RB (A) (B) (C)
3.525%, 09/07/96 625 625
------
17,625
------
MICHIGAN -- 1.0%
Sterling Heights Economic
Development, Sterling Shopping
Center, VRDN, RB (A) (B) (C)
3.500%, 09/07/96 500 500
University of Michigan, University
Revenue, Ser A, VRDN,
RB (A) (B)
3.850%, 09/01/96 800 800
Wayne County, Sewer
System, TECP (B) (C)
3.650%, 09/27/96 2,000 2,000
------
3,300
------
MINNESOTA -- 3.2%
Bloomington Commercial
Development Revenue, Park
Project, VRDN, RB (A) (B) (C)
3.770%, 09/07/96 3,150 3,150
</TABLE>
9
<PAGE> 5
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Golden Valley Industrial
Development Revenue, Graco
Project, VRDN, RB (A) (B) (C)
3.750%, 09/07/96 $ 1,620 $ 1,620
Minneapolis, Highway
Improvement, VRDN,
G.O. (A) (B) (C)
3.500%, 09/07/96 3,500 3,500
Minnesota Housing Finance
Agency, Single Family Mortgage,
RB (A) (B) (C)
3.500%, 12/12/96 1,575 1,575
Minnesota School Districts,
Tax & Aid Anticipation
Borrowing Program 1996, Ser B, COP
4.500%, 09/09/97 900 906
-------
10,751
-------
MISSOURI -- 1.8%
Kansas City Industrial
Development Authority,
Baptist Health System, Ser A,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 5,975 5,975
-------
NEVADA -- 2.8%
Henderson, Public Improvement
Trust, Multi-Family Housing,
Pueblo Verde I & II-B Apartment
Project, #1071, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 9,500 9,500
-------
NEW HAMPSHIRE -- 0.3%
New Hampshire Higher Education
& Health Facility Authority,
Dartmouth College, RB (A) (B)
3.800%, 06/01/97 1,080 1,080
-------
NEW JERSEY -- 0.9%
New Jersey Economic
Development Authority,
Cincinnati Gear Company,
RB (A) (B) (C)
3.600%, 10/01/96 1,405 1,405
New Jersey State, G.O.,
Pre-Refunded @ 101 (D)
7.200%, 04/15/97 1,500 1,547
-------
2,952
-------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
NEW MEXICO -- 0.6%
Albuquerque Industrial
Development Revenue,
Plastech Project, Ser 94-B,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 $2,155 $2,155
------
NEW YORK -- 2.3%
Nassau County, Ser A, RAN
4.000%, 03/05/97 2,500 2,508
North Hempstead, BAN
4.250%, 05/29/97 2,000 2,006
North Hempstead, Ser B, BAN
3.850%, 02/27/97 1,000 1,002
Ontario County Industrial
Development Authority,
Seneca Foods, RB (A) (B) (C)
3.850%, 09/07/96 2,185 2,185
------
7,701
------
NORTH CAROLINA -- 0.9%
Beafort Industrial Facility,
Pollution Control Revenue,
Texas Gulf Corporation,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 3,000 3,000
------
NORTH DAKOTA -- 0.6%
Fargo, Commercial Development
Revenue, Cass Oil Project,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 2,200 2,200
------
OHIO -- 3.5%
Brecksville-Broadview Heights
School District, Ohio School
Improvement, Ser 96, BAN
3.900%, 01/17/97 1,000 1,001
Cincinnati & Hamilton County
Port Authority, CEI Realty
Project, VRDN, G.O. (A) (B) (C)
3.600%, 11/01/96 105 105
Cleveland Waterworks Revenue,
First Mortgage Improvement,
Ser E, VRDN, RB,
MBIA Insured,
Pre-Refunded @ 101 (A) (D)
7.625%, 01/01/97 485 501
Highland County Industrial
Development Revenue,
Lancaster Colony Corporation,
VRDN, RB (A) (C)
3.150%, 09/07/96 1,000 1,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
10
<PAGE> 6
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Montgomery County Economic
Development Revenue, Wayne
Town Center, VRDN, RB (A) (B) (C)
3.550%, 10/01/96 $ 1,045 $ 1,045
North Olmsted, BAN
4.600%, 12/19/96 5,000 5,007
Summit County Industrial
Development Authority,
SGS Tool Project, RB (A) (B) (C)
3.700%, 11/01/96 190 190
Summit County Industrial
Development Revenue,
Arlington Plaza Project,
RB (A) (B) (C)
3.150%, 09/07/96 2,285 2,285
Toledo, Industrial Development
Revenue, Countymark Cooperative
Project, VRDN, RB (A) (B) (C)
3.550%, 09/07/96 900 900
-------
12,034
-------
OKLAHOMA -- 4.4%
Bartlesville Development Authority,
Heritage Villa Nursing Center,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 3,000 3,000
Oklahoma County Industrial
Development Authority, Baptist
General Convention, Ser 89,
VRDN, RB (A) (B) (C)
3.850%, 09/01/96 2,500 2,500
Oklahoma State Water Reserve Board
State Loan Program Revenue, RB
(A) (B)
3.700%, 03/03/97 3,500 3,500
Tulsa County Industrial
Development Authority,
Healthcare Revenue, Laureate
Psychiatric Project, RB (A) (B)
3.850%, 12/15/96 3,500 3,500
Tulsa Parking Authority,
Refunding First Mortgage
Williams Project 84, Ser A,
VRDN, RB (A) (B) (C)
3.750%, 11/15/96 2,310 2,310
-------
14,810
-------
OREGON -- 0.8%
Port of Portland, Public Grain
Elevator, Columbia Grain,
VRDN, RB (A) (B) (C)
3.750%, 09/07/96 2,565 2,565
-------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA -- 19.2%
Allegheny County Education
Building Authority, University
of Pittsburgh Project, Ser 85-B,
VRDN, RB (A) (B) (C)
3.300%, 09/07/96 $ 950 $ 950
Allegheny County Hospital
Development Authority, Ser 88-D,
VRDN, RB (A) (B) (C)
3.400%, 09/07/96 600 600
Berks County Industrial
Development Authority, Rilsaw
Industrial Project, Elf Aquitaine,
VRDN, RB (A) (B) (C)
3.625%, 09/07/96 2,400 2,400
Bucks County Industrial
Development Authority,
Edgcomb Metals Project,
VRDN, RB (A) (B) (C)
3.400%, 09/07/96 3,955 3,955
Clarion County Industrial
Development Authority,
Specialized Development
Meritcare, MTC Project, Ser A,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,000 1,000
Cumberland County Municipal
Authority, United Methodist
Homes Aging Project, VRDN,
RB (A) (B) (C)
3.680%, 09/07/96 2,000 2,000
Delaware County Airport Facility,
Airport Facility Revenue, UPS
Project, Ser 85, VRDN, RB (A) (B)
3.650%, 09/07/96 1,500 1,500
Delaware County Industrial
Development Authority, British
Petroleum Project, Ser 95,
VRDN, RB (A) (B)
3.750%, 09/07/96 600 600
Delaware County Industrial
Development Authority,
Scott Paper Project, Ser A,
VRDN, RB (A) (B)
3.400%, 09/07/96 1,000 1,000
Emmaus General Authority
Revenue, Subseries D-8,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 7,000 7,000
Langhorne Hospital Revenue
Authority, Franciscan Health
Systems Project, Ser C, VRDN,
RB (A) (B) (C)
3.650%, 09/07/96 1,300 1,300
Finance Project, Ser F, VRDN,
RB, AMBAC Insured (A) (B)
3.350%, 09/07/96 1,000 1,000
Schuylkill County, Industrial
Development Authority,
Gilberton Power Project,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,200 1,200
Schuylkill County, Industrial
Development Authority,
Northeastern Power Project,
VRDN, RB (A) (B) (C)
3.850%, 09/01/96 3,100 3,100
Schuylkill County, Industrial
Development Authority,
Westwood Energy Project,
VRDN, RB (A) (B) (C)
3.950%, 09/01/96 2,900 2,900
Scranton-Lackawana, Health &
Welfare Authority, University
of Scranton Project, VRDN,
RB (A) (B) (C)
3.650%, 11/01/96 575 575
Shenango Valley Osteopathic
Hospital Authority, Shenango
Valley Medical Center, RB,
Pre-Refunded @ 102 (D)
7.875%, 04/01/97 1,755 1,831
Temple University, University
Funding, Ser 96, RAN
4.625%, 05/20/97 500 503
York General Authority,
Pooled Financing Revenue,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 5,000 5,000
-------
65,325
-------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
<PAGE> 7
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
Montgomery County Higher
Education & Health Facility
Authority, Higher Education
& Loan, Ser 96-A,
VRDN, RB (A) (B) (C)
3.650%, 09/07/96 $6,000 $6,000
Moon Township Industrial
Development Revenue,
Executive Office Project,
Ser 91-A, VRDN, RB (A) (B) (C)
3.550%, 09/07/96 800 800
North Umberland County,
Industrial Development
Authority, Atlas Development,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,025 1,025
Northeastern Hospital &
Education Authority, Allhealth
Pooled Financing Program,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 3,500 3,500
Pennsylvania Higher Education
Facility, Thomas Jefferson
University, Ser B, VRDN,
RB (A) (B) (C)
3.700%, 02/26/97 1,000 1,000
Pennsylvania Higher Education
Facility, Thomas Jefferson
University, Ser C, VRDN,
RB (A) (B) (C)
3.700%, 01/01/97 1,500 1,500
Pennsylvania Higher Education
Facility, Allegheny College
Project, VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,000 1,000
Pennsylvania Higher Education
Facility, Carnegie Mellon
University Project, Ser C,
VRDN, RB (A) (B)
3.750%, 09/01/96 2,500 2,500
Pennsylvania State Turnpike
Commission, Turnpike
Revenue, Ser A, RB,
Pre-Refunded @ 102 (D)
7.875%, 12/01/96 2,000 2,061
Philadelphia Industrial
Development Authority,
Multi-Family Housing,
Harbor View Towers Project,
VRDN, RB (A) (B) (C)
3.800%, 09/07/96 280 280
<CAPTION>
- ----------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- ----------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia Redevelopment
Authority, Pennsylvania
School For The Deaf,
VRDN, RB (A) (B) (C)
3.700%, 09/07/96 $ 2,000 $ 2,000
Philadelphia School
District, TRAN
4.500%, 06/30/97 1,500 1,507
Philadelphia, Ser A, TRAN
4.500%, 06/30/97 3,025 3,038
Sayre Health Care Facilities
Authority, Pennsylvania VHA
Capital Finance Project, Ser A,
VRDN, RB, AMBAC
Insured (A) (B)
3.350%, 09/07/96 700 700
Sayre Health Care Facilities
Authority, Pennsylvania Capital VHA
Finance Project, Ser F, VRDN,
RB, AMBAC Insured (A) (B)
3.350%, 09/07/96 1,000 1,000
Schuylkill County, Industrial
Development Authority,
Gilberton Power Project,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,200 1,200
Schuylkill County, Industrial
Development Authority,
Northeastern Power Project,
VRDN, RB (A) (B) (C)
3.850%, 09/01/96 3,100 3,100
Schuylkill County, Industrial
Development Authority,
Westwood Energy Project,
VRDN, RB (A) (B) (C)
3.950%, 09/01/96 2,900 2,900
Scranton-Lackawana, Health &
Welfare Authority, University
of Scranton Project, VRDN,
RB (A) (B) (C)
3.650%, 11/01/96 575 575
Shenango Valley Osteopathic
Hospital Authority, Shenango
Valley Medical Center, RB,
Pre-Refunded @ 102 (D)
7.875%, 04/01/97 1,755 1,831
Temple University, University
Funding, Ser 96, RAN
4.625%, 05/20/97 500 503
York General Authority,
Pooled Financing Revenue,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 5,000 5,000
-------
65,325
-------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
12
<PAGE> 8
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
SOUTH CAROLINA -- 1.5%
Florence County Industrial
Development Revenue,
La-Z-Boy Chair Project,
VRDN, RB (A) (B)
3.671%, 09/07/96 $ 5,000 $ 5,000
-------
TENNESSEE -- 0.9%
Greenville Industrial Development
Revenue, Pet Inc. Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 3,000 3,000
-------
TEXAS -- 3.5%
Brazo River, Hoffman-Laroche
Project, Ser 85, VRDN,
RB (A) (B) (C)
3.525%, 09/07/96 1,000 1,000
Harris County, Multi-Family
Housing, Arbor II Project,
VRDN, RB (A) (B)
3.950%, 10/01/96 1,000 1,000
Harris County, Multi-Family
Housing, Glenhollow Project,
VRDN, RB (A) (B) (C)
3.775%, 09/07/96 2,300 2,300
Houston Health Facilities
Development Authority,
Corporate Revenue, Memorial
Northwest Pavillion,
VRDN, RB (A) (B) (C)
3.700%, 09/07/96 845 845
Texas State, TECP
3.700%, 02/05/97 4,000 4,000
Trinity River, Industrial
Development Authority,
Trinity River Project,
VRDN, RB (A) (B) (C)
3.525%, 09/07/96 2,900 2,900
-------
12,045
-------
UTAH -- 3.7%
Castle Dale Industrial
Development Revenue,
Safeway Project, VRDN,
RB (A) (B) (C)
3.850%, 02/01/97 1,475 1,475
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Nephi Industrial Development
Authority, Safeway Project,
VRDN, RB (A) (B) (C)
3.350%, 09/01/96 $ 1,260 $ 1,260
Salt Lake City, Industrial
Development Authority,
Devereaux Partners Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 5,000 5,000
Salt Lake City, Industrial
Development Authority,
Park View Plaza Project,
VRDN, RB (A) (B) (C)
3.720%, 09/07/96 3,625 3,625
Tremonton City Industrial
Development Revenue,
Safeway Project, VRDN,
RB (A) (B) (C)
3.650%, 12/01/96 1,075 1,075
-------
12,435
-------
VERMONT -- 1.7%
Vermont State Student Assistance
Student Loan Bonds, Ser 85,
VRDN, RB (A) (B) (C)
3.750%, 09/07/96 5,825 5,825
-------
VIRGINIA -- 2.7%
Fairfax County, Multi-Family
Housing Revenue, Chase
Commons Project, VRDN,
RB (A) (B) (C)
3.625%, 09/07/96 5,000 5,000
Henrico County, Industrial
Development Authority,
Hermitage Project, VRDN,
RB (A) (B) (C)
3.900%, 09/01/96 2,100 2,100
Stafford County, Industrial
Development Authority,
Safeway Project, VRDN,
RB (A) (B) (C)
3.650%, 12/01/96 2,095 2,095
-------
9,195
-------
WASHINGTON -- 0.2%
Washington State, Ser 86-D, G.O.,
Pre-Refunded @ 100 (D)
7.800%, 09/01/96 800 800
</TABLE>
13
<PAGE> 9
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
TAX FREE PORTFOLIO--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
WEST VIRGINIA -- 2.9%
Keyser Industrial Development
Revenue, Keyser Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 $ 2,050 $ 2,050
West Virginia State Hospital
Finance Authority, Hospital
Revenue, VHA Mid-Atlantic,
Ser B, VRDN, RB,
AMBAC Insured (A) (B)
3.400%, 09/07/96 1,600 1,600
West Virginia State Hospital
Finance Authority, Hospital
Revenue, VHA Mid-Atlantic,
Ser F, VRDN, RB,
AMBAC Insured (A) (B)
3.400%, 09/07/96 5,700 5,700
West Virginia State Hospital
Finance Authority, St. Joseph's
Hospital Project, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 500 500
-------
9,850
-------
WISCONSIN -- 4.6%
Beaver Dam, USD, TRAN
4.140%, 08/27/97 1,000 1,000
Burlington Area School District,
TRAN
4.220%, 08/29/97 1,000 1,002
Kettle-Moraine School District,
TRAN
4.010%, 08/22/97 1,150 1,150
LaCrosse Industrial Development
Revenue, LaCrosse Properties,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 5,355 5,355
Mayville Area School
District, BAN
3.500%, 11/01/96 1,640 1,640
Mount Horeb Area School
District, BAN
3.500%, 11/01/96 1,750 1,750
Village of Menomonee, Industrial
Development Revenue,
Maysteel Corporation
VRDN, RB (A) (B) (C)
3.630%, 09/07/96 1,900 1,900
Watertown, USD, TRAN
3.975%, 10/25/96 2,000 2,000
-------
15,797
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Total Municipal Bonds
(Cost $353,664) $ 353,664
---------
Total Investments -- 104.1%
(Cost $353,664) 353,664
---------
OTHER ASSETS AND LIABILITIES, NET -- (4.1%) (13,752)
---------
NET ASSETS:
Portfolio Shares of Class A (unlimited
authorization -- no par value) based on
340,065,680 outstanding shares of
beneficial interest 339,921
Portfolio Shares of Class D (unlimited
authorization -- no par value) based on
5,951 outstanding shares of
beneficial interest 6
Undistributed Net Investment Income 3
Accumulated Net Realized Loss on
Investments (18)
---------
Total Net Assets--100.0% $ 339,912
=========
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>
AMBAC AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
BAN BOND ANTICIPATION NOTE
COP CERTIFICATE OF PARTICIPATION
GO GENERAL OBLIGATION
MBIA MUNICIPAL BOND INVESTORS ASSURANCE
RAN REVENUE ANTICIPATION NOTE
RB REVENUE BOND SER SERIES
TAN TAX ANTICIPATION NOTE
TAW TAX ANTICIPATION WARRANT
TECP TAX EXEMPT COMMERCIAL PAPER
TRAN TAX & REVENUE ANTICIPATION NOTE
UPS UNITED PARCEL SERVICE
USD UNIFIED SCHOOL DISTRICT
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, 1996.
(B) PUT AND DEMAND FEATURE--THE MATURITY 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.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<PAGE> 10
CALIFORNIA TAX EXEMPT PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 104.2%
CALIFORNIA -- 104.2%
Association of Bay Area
Governments, Lucille Salter
Packard Project, VRDN, RB,
AMBAC Insured (A) (B)
3.300%, 09/07/96 $1,100 $1,100
Butte County, Office of
Education, TRAN
4.750%, 09/12/96 5,000 5,001
California Education Facility
Authority, Point Nazarene
College, VRDN, RB (A) (B)
3.250%, 09/07/96 4,000 4,000
California Education Facility
Authority, Stanford University,
VRDN, RB (A) (B) (C)
3.200%, 09/07/96 5,055 5,055
California Health Facilities
Finance Authority, Catholic
Health Care, Ser A, VRDN,
RB, MBIA Insured (A) (B)
3.250%, 09/07/96 3,100 3,100
California Health Facilities
Finance Authority, Catholic
Health Care, Ser B, VRDN,
RB, MBIA Insured (A) (B)
3.250%, 09/07/96 2,000 2,000
California Health Facilities
Finance Authority, Catholic
Health Care, Ser C, VRDN,
RB, MBIA Insured (A) (B)
3.250%, 09/07/96 1,600 1,600
California Health Facilities Finance
Authority, Kaiser Permanente,
Ser 93-A, VRDN, RB (A) (B)
3.150%, 09/07/96 4,200 4,200
California Health Facilities
Finance Authority, Kaiser
Permanente, Ser 93-B, VRDN,
RB (A) (B)
3.150%, 09/07/96 2,000 2,000
California Health Facilities Finance
Authority, Memorial Health
Services, VRDN, RB (A) (B)
3.150%, 09/07/96 2,300 2,300
California Health Facilities Finance
Authority, Santa Barbara Cottage,
Ser B, VRDN, RB (A) (B) (C)
3.150%, 09/07/96 2,900 2,900
California Health Facilities Finance
Authority, Scripps Memorial
Hospital, Ser 91-B, VRDN, RB,
MBIA Insured (A) (B)
3.350%, 09/07/96 1,800 1,800
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
California Health Facilities
Finance Authority, Sutter
Health Facility, Ser 96-B, VRDN,
RB, AMBAC Insured (A) (B)
3.650%, 09/01/96 $ 5,600 $ 5,600
California Pollution Control
Finance Authority, Chevron
USA Project, RB (A) (B)
3.700%, 09/07/96 3,200 3,200
California Pollution Control
Finance Authority, Pacific
Gas & Electric, TECP (C)
3.500%, 09/09/96 3,500 3,500
3.550%, 10/23/96 3,500 3,500
California School Cash Reserve
Program Authority, Pool
Ser A, RAN, G.O.
4.750%, 07/02/97 5,000 5,036
California State Economic
Development Financing
Authority, KQED Inc. Project,
VRDN, RB, (A) (B) (C)
3.350%, 09/07/96 4,800 4,800
California State Community
Development Authority,
North California Retirement,
VRDN, RB, (A) (B) (C)
3.750%, 09/07/96 18,000 18,000
California State Community
Development Authority,
St. Joseph Health System,
VRDN, COP, (A) (B)
3.150%, 09/07/96 7,300 7,300
California State Housing Finance
Authority, Multi-Family
Housing Revenue, Oakbrook
Ridge Apartments, VRDN,
RB (A) (B)
3.300%, 09/07/96 4,830 4,830
California State,
Ser 96-97, RAN
4.500%, 06/30/97 3,500 3,515
City of Corona, Multi-Family
Housing, County Hills
Apartment Project, Ser 95-B,
VRDN, RB (A) (B) (C)
3.300%, 09/07/96 6,955 6,955
Compton, COP, Capital Improvement
Project, Pre-Refunded @ 102 (D)
8.000%, 09/01/96 430 439
</TABLE>
15
<PAGE> 11
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
CALIFORNIA TAX EXEMPT PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Contra Costa County, Multi-
Family Mortgage Revenue,
VRDN, RB (A) (B)
3.900%, 09/07/96 $ 3,500 $ 3,500
Contra Costa County, Multi-
Family Housing, Delta Square
Project, Ser A, VRDN,
RB (A) (B) (C)
3.400%, 09/07/96 3,400 3,400
Contra Costa, TRAN
4.500%, 06/30/97 5,000 5,028
Corona Redevelopment Agency,
Crown Point Project, Ser 85,
RB (A) (B) (C)
4.000%, 05/01/97 7,740 7,740
Downey Civic Center Project,
COP, MBIA Insured
4.000%, 02/01/97 280 280
Dry Creek, Joint Elementry
School District #1, Special Tax,
G.O., CGIC Insured
4.200%, 09/01/96 365 365
Escondido, Multi-Family Housing
Project, Heritage House Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 7,250 7,250
Fairfield County, TRAN
4.750%, 06/30/97 2,275 2,288
Folsom Cordova, USD, TRAN
4.750%, 10/18/96 6,500 6,506
Folsom Public Finance Authority,
Ser B, RB, Pre-Refunded
@ 103 (D)
7.900%, 10/01/96 1,000 1,033
Fontana, Gaf Tax Exempt Bond
Grantor Trust, Ser GA-7,
VRDN, (A) (B) (C)
3.650%, 09/07/96 6,325 6,325
Irvine Ranch Water District, Ser B,
VRDN, RB (A) (B) (C)
3.700%, 09/01/96 15,900 15,900
Irwindale Industrial Development
Revenue, Toys "R" Us Project,
VRDN, RB (A) (B) (C)
3.625%, 09/07/96 500 500
Kern County, Panama-Buena
Vista Union School District,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 9,000 9,000
Kern County, Public Facilities
Project, Ser D, VRDN,
RB (A) (B) (C)
3.250%, 09/07/96 2,500 2,500
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Livermore Housing Authority,
Multi-Family Housing,
Refunding-Housing-Richards
Manor A, VRDN, RB (A) (B) (C)
3.550%, 09/07/96 $ 7,370 $ 7,370
Long Beach Housing Authority,
Channel Point Apartments,
Ser A , VRDN, RB, (A) (B) (C)
3.550%, 09/07/96 2,500 2,500
Los Angeles, USD, Ser A, TRAN
4.500%, 06/30/97 5,350 5,380
Los Angeles County, Metropolitan
Transportation Commission,
TECP (C)
3.600%, 12/05/96 4,000 4,000
Los Angeles County, Pension
Obligation, Ser A, VRDN, G.O.,
AMBAC Insured (A) (B)
3.200%, 09/07/96 7,300 7,300
Los Angeles County, Pension
Obligation, Ser B, VRDN, G.O.,
AMBAC Insured (A) (B)
3.200%, 09/07/96 1,000 1,000
Los Angeles County, Pension
Obligation, Ser C, VRDN, G.O.,
AMBAC Insured (A) (B)
3.200%, 09/07/96 5,000 5,000
Los Angeles County, Community
Redevelopment Agency,
Willowbrook Project, VRDN,
RB (A) (B) (C)
3.450%, 09/07/96 1,600 1,600
Los Angeles Department of
Water & Power, Electric Plant
Revenue, RB
9.000%, 01/15/97 500 511
Los Angeles Redevelopment
Agency, Baldwin Hills Public
Park, VRDN, RB (A) (B) (C)
3.450%, 09/07/96 600 600
Los Angeles Multi-Family Housing
Revenue, Ser K, VRDN,
RB (A) (B) (C)
3.350%, 09/07/96 16,500 16,500
Los Angeles Department of
Airports, Airport Revenue,
Ser B, RB, Pre-Refunded
@ 102 (D)
7.300%, 05/01/97 1,500 1,563
Lucia Mar, USD # 87, Facilities
Financing Project, RB,
Pre-Refunded @ 102 (D)
8.300%, 05/01/97 500 525
Modesto, High School & City
School District, VRDN,
COP (A) (B) (C)
3.400%, 09/07/96 2,880 2,880
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<PAGE> 12
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Monterey County, Finance
Authority Revenue, Reclamation
& Distribution Program,
Ser 95-A, VRDN, RB (A) (B) (C)
3.500%, 09/07/96 $5,000 $5,000
Monterey Regional Waste
Management Authority,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 3,500 3,500
Moulton Niguel Water District,
Improvement District # 6, Ser 1,
RB, Pre-Refunded @ 102 (D)
7.875%, 02/01/97 2,500 2,594
New Haven, USD, RB, TRAN
4.500%, 07/01/97 3,625 3,638
Oakland, Revenue Assessment
Bay Area Government, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 2,275 2,275
Ontario, TRAN
4.500%, 06/30/97 6,495 6,521
Orange County, Apartment
Development Revenue, Radnor/
Aragon Corporation Project-D,
RB, (A) (B) (C)
3.525%, 09/07/96 3,400 3,400
Oxnard Redevelopment Agency,
Channel Islands Business,
VRDN, RB (A) (B) (C)
3.775%, 09/07/96 4,685 4,685
Palm Springs Community
Redevelopment Agency,
Headquarters Hotel-1, VRDN,
COP (A) (B) (C)
3.450%, 09/07/96 2,070 2,070
Palm Springs Community
Redevelopment Agency,
Headquarters Hotel-4, VRDN,
COP (A) (B) (C)
3.450%, 09/07/96 2,800 2,800
Palm Springs Community
Redevelopment Agency,
Headquarters Hotel-6, VRDN,
COP (A) (B) (C)
3.450%, 09/07/96 900 900
Pasadena Historical Rehabilitation,
Dodsworth Building Project,
VRDN, RB (A) (B) (C)
3.250%, 09/07/96 3,900 3,900
Placer County, Loomis Union
Elementary School District,
TRAN
4.450%, 09/04/97 1,170 1,176
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Placer County, Placer County
Office of Education, TRAN
4.450%, 09/04/97 $ 475 $ 477
Placer County, Roseville City
School District, TRAN
4.450%, 09/04/97 1,350 1,357
Placer County, Roseville Joint
Union High School District,
TRAN
4.450%, 09/04/97 850 854
Placer County, TRAN
4.450%, 09/04/97 1,660 1,668
Pomona Public Finance Authority,
Southwest Pomona, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 2,200 2,200
Redlands Redevelopment Agency,
Parking Lease, VRDN,
RB (A) (B) (C)
3.720%, 09/07/96 4,610 4,610
Redlands Redevelopment
Refunding Project, Ser A,
VRDN, RB (A) (B) (C)
3.720%, 09/07/96 11,120 11,120
Riverside County, Ser B, G.O.,
TRAN (C)
3.200%, 06/30/97 3,000 3,000
Riverside County, Industrial
Development Advanced
Business Forms Project,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,950 1,950
Roseville, Joint Union High School
District, VRDN, COP (A) (B) (C)
3.400%, 09/07/96 3,485 3,485
Sacramento City Financing
Authority, Gas Tax, Ser A, RB,
AMBAC Insured
6.500%, 12/01/96 535 539
Sacramento County, TRAN
4.750%, 10/04/96 1,500 1,501
Sacramento Municipal Utility
District, Electric Revenue, Ser S,
RB, Pre-Refunded @ 102 (D)
6.625%, 02/01/97 1,000 1,034
San Bernardino County, County
Center Refunding Project,
VRDN, RB (A) (B) (C)
3.300%, 09/07/96 6,200 6,200
San Bernardino County, Glen Helen
Blockbuster, Ser E,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 4,340 4,340
</TABLE>
17
<PAGE> 13
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
CALIFORNIA TAX EXEMPT PORTFOLIO--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
San Bernardino County,
Industrial Development
Authority, Sandpiper
Investments Project, VRDN,
RB (A) (B) (C)
3.700%, 09/07/96 $3,400 $3,400
San Bernardino County, Multi-
Family Housing Revenue,
Alta Loma Heritage Project,
Ser A, VRDN, RB (A) (B) (C)
3.400%, 09/07/96 1,264 1,264
San Bernardino County, Multi-
Family Housing Revenue,
Gold West Apartments, Ser A,
VRDN, RB (A) (B) (C)
3.400%, 09/07/96 500 500
San Bernardino Industrial
Development Revenue, Gate
City Beverage District, VRDN,
RB (A) (B) (C)
3.700%, 09/07/96 515 515
San Bernardino County, Multi-
Family Revenue, VRDN,
RB, (A) (B) (C)
3.750%, 09/07/96 4,300 4,300
San Diego County, Water Authority
Revenue Center, Ser A, RB,
Pre-Refunded @102 (D)
7.000%, 05/01/97 225 234
San Diego Multi-Family Housing
Revenue, LA Cima Apartments
Project, Ser K, VRDN,
RB (A) (B) (C)
3.250%, 09/07/96 1,550 1,550
San Diego Water Authority, Water
Revenue, Ser A, COP,
Pre-Refunded @ 102 (D)
7.300%, 05/01/97 1,900 1,981
San Dimas Multi-Family Housing
Revenue, Ser 88-A, VRDN,
RB (A) (B) (C)
3.570%, 09/07/96 5,670 5,670
San Francisco, City & County, TRAN
4.750%, 09/19/96 1,000 1,000
San Jose, USD, Santa Clara
County, TRAN
4.500%, 08/05/97 3,000 3,015
San Jose Finance Authority,
Hayes Mansion Improvement
Project B, VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,545 1,545
San Marcos Industrial Development
Authority, Amistar Project,
VRDN, RB (A) (B) (C)
3.700%, 09/07/96 4,500 4,500
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Santa Ana Housing Authority,
Harbor Points Apartments,
Ser 95-A, VRDN,
RB (A) (B) (C)
3.250%, 09/07/96 $ 2,650 $ 2,650
Santa Clara, Electric Revenue,
Ser A, VRDN, RB (A) (B) (C)
3.300%, 09/07/96 860 860
Santa Rosa, Wastewater Revenue,
Subregional Wastewater Project A,
RB, FGIC Insured
4.000%, 09/01/96 890 890
Simi Valley Multi-Family Housing,
Lincoln Wood Ranch, VRDN,
RB (A) (B) (C)
3.450%, 09/07/96 9,700 9,700
Simi Valley Public Finance
Authority, Lease Revenue,
VRDN, RB (A) (B) (C)
3.300%, 09/07/96 9,000 9,000
Simi Valley, West End Community
Development Project,
RB, Pre-Refunded @ 102 (D)
7.550%, 09/01/96 500 510
Solano County, USD, TRAN
4.500%, 11/01/96 5,000 5,005
Sonoma County, TRAN
4.250%, 11/01/96 1,000 1,002
Sonoma Valley, USD, TRAN
4.500%, 07/03/97 3,000 3,014
South California Public Power
Authority, Transmission Project,
Ser 91, RB, AMBAC
Insured (A) (B)
3.200%, 09/07/96 6,800 6,800
Tracy, Hospital Revenue, Tracy
Community Memorial Hospital,
Ser A, RB, Pre-Refunded @ 102 (D)
8.625%, 01/01/97 3,000 3,107
University of California, Various
Capital Projects, Ser B, COP,
MBIA Insured
3.950%, 09/01/96 1,000 1,000
Upland Community Redevelopment
Agency, Multi-Family Housing
Revenue, Northwoods Project,
Ser B, VRDN, RB (A) (B) (C)
3.900%, 09/07/96 2,300 2,300
Vacaville Multi-Family Housing,
Quail Run Apartments, Ser 88-A,
VRDN, RB (A) (B)
3.300%, 09/07/96 10,100 10,100
Visalia Convention Center,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 100 100
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18
<PAGE> 14
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Visalia Convention Center,
VRDN, COP (A) (B) (C)
3.550%, 09/07/96 $ 9,475 $ 9,475
---------
Total Municipal Bonds
(Cost $411,856) 411,856
---------
Total Investments -- 104.2%
(Cost $411,856) 411,856
---------
OTHER ASSETS AND LIABILITIES, NET -- (4.2%) (16,443)
---------
NET ASSETS:
Portfolio Shares of Class A (unlimited
authorization -- no par value)
based on 44,720,592 outstanding
shares of beneficial interest 44,721
Portfolio Shares of Class G (unlimited
authorization -- no par value) based on
350,731,620 outstanding shares
of beneficial interest 350,731
Overdistributed Net Investment Income (34)
Accumulated Net Realized Loss
on Investments (5)
---------
Total Net Assets--100.0% $ 395,413
=========
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 G $ 1.00
=========
</TABLE>
AMBAC AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
CGIC CAPITAL GUARANTY INSURANCE CORPORATION
COP CERTIFICATE OF PARTICIPATION
FGIC FINANCIAL GUARANTY INSURANCE CORPORATION
GO GENERAL OBLIGATION
MBIA MUNICIPAL BOND INVESTORS ASSURANCE
RAN REVENUE ANTICIPATION NOTE
RB REVENUE BOND
SER SERIES
TECP TAX EXEMPT COMMERCIAL PAPER
TRAN TAX & REVENUE ANTICIPATION NOTE
USD UNIFIED SCHOOL DISTRICT
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, 1996.
(B) PUT AND DEMAND FEATURE--THE MATURITY 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>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 103.4%
ALABAMA -- 1.9%
Birmingham Historical Reservation
Authority, Tutwiler Hotel Project,
VRDN, RB (A) (B) (C)
3.700%, 09/07/96 $ 5,480 $ 5,480
Birmingham Medical Clinic
Revenue, St. Martins In The
Pines Project, Ser 89, VRDN,
RB (A) (B) (C)
3.600%, 09/07/96 3,375 3,375
Mobile Industrial Development,
IB Chemical Company,
VRDN, RB (A) (B) (C)
3.750%, 09/07/96 1,350 1,350
Montgomery BMC Special Care
Facilities Finance Authority,
Baptist Medical Center, Ser A,
VRDN, RB (A) (B) (C)
3.450%, 09/07/96 5,000 5,000
Russelville Industrial Development
Revenue, Clark Pulley Project,
Ser 94, VRDN, RB (A) (B) (C)
3.600%, 09/07/96 1,675 1,675
-------
16,880
-------
ALASKA -- 0.5%
Alaska Industrial Development
Export Authority, Safeway
Incorporated Project, RB
(A) (B) (C)
3.650%, 12/01/96 4,580 4,580
-------
ARIZONA -- 0.2%
Maricopa County Industrial
Development Authority,
McLane Company Project,
VRDN, RB (A) (B) (C)
3.900%, 09/07/96 870 870
Pinal County Industrial
Development Authority,
Pollution Control Project,
VRDN, RB (A) (B) (C)
3.750%, 09/01/96 300 300
Tucson Industrial Development
Authority, Tucson City Center
Parking, VRDN, RB (A) (B) (C)
3.625%, 09/07/96 900 900
-------
2,070
</TABLE>
19
<PAGE> 15
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ARKANSAS -- 1.6%
Little Rock Southwest Hospital,
Ser 88, VRDN, RB (A) (B) (C)
3.450%, 09/07/96 $ 7,300 $ 7,300
Little Rock USD, TRAN
3.850%, 12/30/96 3,000 3,000
Pine Bluff Industrial Development
Revenue, Camden Wire Project,
VRDN, RB, (A) (B) (C)
3.550%, 09/07/96 3,700 3,700
-------
14,000
-------
CALIFORNIA -- 3.7%
California School Cash Reserve
Pool, Ser A, RAN
4.750%, 07/02/97 10,000 10,072
California State, Ser 96-97,
RAN
4.500%, 06/30/97 6,000 6,025
Placer Union High School
District, TRAN
4.700%, 09/05/96 3,000 3,000
Redlands Redevelopment
Agency, Parking Lease,
VRDN, RB (A) (B) (C)
3.720%, 09/07/96 1,900 1,900
Redlands Redevelopment
Refunding Project, Ser A,
VRDN, RB (A) (B) (C)
3.720%, 09/07/96 8,880 8,880
Rocklin USD, TRAN
4.700%, 09/05/96 2,000 2,000
-------
31,877
-------
COLORADO -- 1.7%
Colorado Housing Finance
Authority, Multi-Family
Housing, Grants Plaza Project
91-A, VRDN, RB (A) (B) (C)
3.525%, 09/07/96 875 875
Colorado State Health Facilities
Authority, Rocky Mountain
Project, VRDN, RB, (A) (B) (C)
3.550%, 09/07/96 2,000 2,000
Denver City & County Multi-
Family Housing, Ogden
Residence Project, VRDN,
Ser 85-B, RB (A) (B) (C)
3.950%, 09/01/96 5,485 5,485
Denver City & County
Revenue, Children's Hospital
Association Project, Ser B,
Pre-Refunded @ 101,
FGIC Insured (D)
8.000%, 10/01/96 1,350 1,368
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Englewood Industrial
Development Revenue,
Safeway Incorporated Project,
VRDN, RB (A) (B) (C)
3.650%, 12/01/96 $ 3,050 $ 3,050
Idaho Springs Industrial
Development Revenue, Safeway
Incorporated Project, VRDN,
RB (A) (B) (C)
3.650%, 12/01/96 2,230 2,230
-------
15,008
-------
DELAWARE -- 0.1%
Delaware Economic Development
Authority, Commercial
Development, Congoleum
Project, VRDN, RB (A) (B) (C)
3.650%, 09/07/96 1,000 1,000
-------
DISTRICT OF COLUMBIA -- 0.3%
District of Columbia, Washington,
Ser B-1, VRDN, RB (A) (B) (C)
3.950%, 09/01/96 2,500 2,500
-------
FLORIDA -- 4.1%
Boca Raton Industrial Development
Revenue, Parking Garage Project,
Ser 84-A, VRDN, RB (A) (B) (C)
3.875%, 09/07/96 7,950 7,950
Brevard County Housing Finance
Authority, Park Village &
Malobar Lakes Project,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 900 900
Broward County Multi-Family
Housing, Parkview Partnership,
VRDN, RB (A) (B) (C)
3.750%, 09/07/96 5,525 5,525
Broward County Housing Finance
Authority, Multi-Family Housing
Revenue, Landings Inverray
Apartments Project, VRDN,
RB (A) (B) (C)
3.550%, 09/07/96 1,000 1,000
Florida Housing Finance Authority,
Multi-Family Housing, Kings
County Project, Ser D, VRDN,
RB (A) (B) (C)
3.525%, 09/07/96 1,000 1,000
Florida Housing Finance Agency,
Multi-Family Housing, Lakeside
South Association, VRDN,
RB (A) (B) (C)
3.525%, 09/07/96 2,000 2,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
20
<PAGE> 16
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Florida Housing Finance
Authority, Sarasota Beneva
Place Association, Ser C,
VRDN, RB (A) (B) (C)
3.525%, 09/07/96 $ 3,645 $ 3,645
Florida Housing Finance
Authority, Ser 84, VRDN,
RB (A) (B) (C)
3.850%, 09/07/96 1,900 1,900
Halifax Hospital Medical
Center, Ser 96, TAN
3.800%, 04/15/97 6,000 6,002
Jacksonville Hospital Finance
Authority, University Medical
Center, VRDN, RB (A) (B) (C)
3.600%, 09/07/96 800 800
Jacksonville Industrial
Development, University of
Florida Health Science Center,
Ser 89, VRDN, RB (A) (B) (C)
3.650%, 09/07/96 1,000 1,000
Jacksonville University Hospital
Center Project,VRDN,
RB (A) (B) (C)
3.600%, 09/07/96 400 400
Orange County Industrial
Development Authority,
Orlando International Drive
Partnership Project, VRDN,
RB (A) (B) (C)
3.700%, 09/07/96 1,700 1,700
Pasco City Housing Finance
Authority, Multi-Family
Housing, Carlton Arms of
Magnolin Valley, Ser 85,
VRDN, RB (A) (B) (C)
3.625%, 09/07/96 2,000 2,000
-------
35,822
-------
GEORGIA -- 6.9%
Athens Multi-Family Housing,
Georgian Apartments,
VRDN, RB (A) (B) (C)
3.775%, 09/07/96 1,400 1,400
Cobb County Multi-Family
Housing, Tibairen Associates
Project, Ser 85-D, VRDN,
RB (A) (B) (C)
3.600%, 09/07/96 8,600 8,600
DeKalb County Industrial
Development Revenue,
Weyerhaeuser County Project,
VRDN, RB (A) (B)
3.548%, 09/07/96 3,500 3,500
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
DeKalb County Multi-Family
Housing Revenue, Camden
Brook Project, VRDN, RB (A) (B)
3.450%, 09/07/96 $ 500 $ 500
DeKalb County Multi-Family
Housing, Terrace Club Project,
Ser 93-B, VRDN, RB
(A) (B) (C)
3.600%, 09/07/96 4,430 4,430
DeKalb County Multi-Family
Housing, Wood Terrace
Apartments Project, VRDN,
RB (A) (B)
3.450%, 09/07/96 13,400 13,400
Downtown Athens Housing
Development Authority,
Georgian Apartments
Association, VRDN,
RB (A) (B) (C)
3.900%, 09/07/96 1,000 1,000
Evans County Industrial
Development Authority,
Sherman Utilities Structures,
VRDN, RB (A) (B) (C)
3.600%, 12/01/96 400 400
Federal Paper Board Company,
Tax-Exempt Bond Grantor
Trust, VRDN, RB (A) (B) (C)
3.900%, 09/07/96 7,200 7,200
Glynn-Brunswick Memorial
Hospital Authority, Georgia
Southeast Georgia Project,
VRDN, RB, MBIA
Insured (A) (B) (C)
3.350%, 09/07/96 500 500
Gwinnett Housing Authority,
Multi-Family Housing Revenue,
VRDN, RB (A) (B)
3.450%, 09/07/96 1,000 1,000
Jefferson & Twiggs County
Pollution Control, Nord Kaolin
Project, VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,220 1,220
Marietta Housing Finance
Authority, Multi-Family
Housing, Franklin Walk
Apartments Project,
VRDN, RB (A) (B) (C)
3.525%, 09/07/96 5,240 5,240
Rome, Ser 96, TAN, G.O.
3.270%, 12/31/96 3,000 3,000
Roswell Multi-Family Housing
Revenue, Belcourt Limited
Project, VRDN, RB (A) (B) (C)
3.750%, 09/07/96 9,000 9,000
-------
60,390
-------
</TABLE>
21
<PAGE> 17
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ILLINOIS -- 6.1%
Chicago O'Hare International
Airport, American Airlines,
Ser A, VRDN, RB (A)
(B) (C)
3.750%, 09/01/96 $ 1,500 $ 1,500
Chicago O'Hare International
Airport, American Airlines,
Ser D, VRDN, RB (A)
(B) (C)
3.750%, 09/01/96 1,000 1,000
Chicago Tender Notes, Ser C (C)
3.700%, 11/25/96 10,000 10,000
Chicago Multi-Family Housing,
Waveland Association Project,
Ser A, VRDN, RB (A) (B) (C)
3.450%, 09/07/96 8,400 8,400
Chicago Multi-Family Housing,
Waveland Association Project,
Ser B, VRDN, RB (A) (B) (C)
3.450%, 09/07/96 825 825
Hazel Crest Hospital Facilities
Refunding & Improvement,
South Suburban Project,
Pre-Refunded @ 102, RB (D)
9.125%, 07/01/97 300 319
Illinois Development Finance
Authority, Pollution Control
Revenue, Commonwealth Edison
Project, Ser A, VRDN, RB,
AMBAC Insured (A) (B) (C)
3.550%, 09/07/96 9,300 9,300
Illinois State Health Facility
Authority, Lutheran Institution,
Ser C, VRDN, RB (A) (B)
3.500%, 09/07/96 1,000 1,000
Illinois State Industrial
Development, Miyano Machinery,
VRDN, RB (A) (B) (C)
4.000%, 09/07/96 4,250 4,250
Kave, Cook, & Dupage Counties
School District, Ser #46, G.O.,
FGIC Insured
6.300%, 01/01/97 1,000 1,010
Northwest Mutual Life Tax Exempt
Mortgage Trust, Illinois,
VRDN, RB (A) (B) (C)
4.500%, 02/15/97 485 485
Orland Hills Mortgage Authority,
Multi-Family Housing, Ser 88-A,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,400 1,400
Paxton Industrial Development
Authority, Merck & Aircoil,
VRDN, RB (A) (B)
3.900%, 09/07/96 900 900
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Saint Clair Industrial Building
Authority, Winchester
Apartments Project, Ser 94,
VRDN, RB (A) (B)
3.900%, 09/07/96 $ 8,000 $ 8,000
Springfield Multi-Family Housing,
Oak Center Limited Project,
VRDN, RB (A) (B)
3.750%, 09/07/96 4,900 4,900
-------
53,289
-------
INDIANA -- 5.0%
Bartholomew Consolidated
Schools, TAW
4.000%, 12/31/96 6,417 6,422
Beach Grove, TAW
3.850%, 12/31/96 1,400 1,400
East Chicago School City, TAW
4.000%, 12/31/96 7,500 7,505
Fort Wayne, Ser 83, VRDN,
RB (A) (B) (C)
3.625%, 09/07/96 4,750 4,750
GAF Tax Exempt Bond Grantor
Trust, Indiana, Ser A,
VRDN, RB (A) (B) (C)
4.050%, 09/07/96 2,520 2,520
Gary Indiana, Environmental
Improvement, United States
Steel Corporation,
VRDN, RB (A) (B) (C)
3.700%, 09/07/96 3,000 3,000
Kokomo Center Township, TAW
4.250%, 12/31/96 4,963 4,969
Merrillville Community School
Corporation, TAW
4.000%, 12/31/96 3,650 3,652
Michigan City Economic
Development, Marley Company
Project, Ser 84, VRDN,
RB (A) (B) (C)
3.625%, 09/07/96 1,525 1,525
Michigan City Economic
Development, Marley Company
Project, VRDN, RB (A) (B) (C)
3.625%, 09/07/96 1,225 1,225
Michigan City, TAW
3.900%, 12/31/96 3,000 3,001
Northwest Mutual Life Tax Exempt
Mortgage Trust, VRDN,
RB (A) (B) (C)
4.500%, 02/15/97 55 55
South Bend Community School
Corporation, G.O.
3.850%, 01/15/97 1,500 1,500
Westfield-Washington School, TAW
4.000%, 12/31/96 1,500 1,501
-------
43,025
-------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
22
<PAGE> 18
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
KANSAS -- 0.9%
Merriam Municipal Temporary
Notes, Ser A, G.O.
4.150%, 06/01/97 $2,100 $2,102
Merriam Municipal Temporary
Notes, Ser B, G.O.
4.150%, 06/01/97 2,640 2,643
Shawnee County, Ser 96-1,
BAN, Callable 07/01/96 @ 100
4.800%, 03/01/97 415 415
Topeka Multi-Family Housing
Revenue, Ser 85, VRDN,
RB (A) (B) (C)
3.400%, 09/07/96 870 870
Wichita Pollution Control, CIC
Industries Incorporated,
VRDN, RB (A) (B) (C)
3.875%, 09/07/96 1,590 1,590
------
7,620
------
KENTUCKY -- 0.6%
Covington Industrial Building
Revenue, Atkins & Pearce
Incorporated, Ser 95,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,770 1,770
Georgetown Educational
Institution Improvement,
Georgetown College Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 2,000 2,000
Newport City Multi-Family
Housing Revenue, Hannaford
Project, (A) (B)
3.750%, 12/01/96 1,785 1,785
------
5,555
------
LOUISIANA -- 0.7%
Louisiana Water Project, VRDN,
RB (A) (B) (C)
3.600%, 09/07/96 3,000 3,000
New Orleans Industrial
Development Bond, Spectrum
Control Technology Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 2,000 2,000
South Louisiana Port Common
Marine Term Revenue Refunding,
Occidental Petroleum Project,
VRDN, RB (A) (B) (C)
3.400%, 09/07/96 1,000 1,000
------
6,000
------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MAINE -- 0.2%
Portland Industrial Development
Revenue, W.W. Grainger Project,
Ser 85, VRDN, RB (A) (B) (C)
3.800%, 09/07/96 $ 1,315 $ 1,315
-------
MARYLAND -- 4.9%
Annapolis Forest Gemini Facilities,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 2,450 2,450
Baltimore County, TECP (C)
3.500%, 10/02/96 6,000 6,000
Baltimore County Pollution Control
Revenue, Baltimore Gas and
Electric Project, TECP
3.550%, 10/03/96 6,000 6,000
Baltimore Industrial Development
Refunding Revenue, Field
Container Corporation, VRDN,
RB (A) (B) (C)
3.550%, 09/07/96 1,200 1,200
Howard County Maryland Multi-
Family Housing Authority,
Sherwood Crossing Limited
Project, Ser A (A)
3.750%, 06/01/97 2,500 2,500
Hyattsville Industrial Development
Revenue, Refunding Safeway
Project, RB (A) (C)
3.650%, 12/02/96 2,465 2,465
Maryland State Health & Higher
Education Facilities Authority,
Greater Baltimore Medical,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 1,000 1,000
Maryland State Health & Higher
Education Facilities Authority,
North Arundel Project, Ser B,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 2,000 2,000
Maryland State Health & Higher
Education Facilities Authority,
Pooled Loan Program, Ser B,
VRDN, RB (A) (B) (C)
3.450%, 09/07/96 5,000 5,000
Montgomery County Multi-
Family Housing Opportunities,
VRDN, RB (A) (B)
3.650%, 09/07/96 13,000 13,000
Prince George County Housing
Authority, Laurel Oxford Project,
VRDN, RB (A) (B) (C)
3.525%, 09/07/96 925 925
-------
42,540
</TABLE>
23
<PAGE> 19
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MICHIGAN -- 1.5%
Benton Harbor School District,
Student Aid Anticipation Notes
4.000%, 03/31/97 $ 2,600 $ 2,601
Birmingham Economic
Development Corporation,
Brown Street Project, Ser 83,
VRDN, RB (A) (B) (C)
3.875%, 09/07/96 1,195 1,195
Detroit Downtown Development
Authority, Millender Center
Program Project, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 1,000 1,000
McDonalds Tax-Exempt Mortgage
Trust #1, VRDN, RB (A) (B) (C)
4.250%, 02/15/97 533 533
Michigan State Job Development
Authority, VRDN, RB (A) (B) (C)
3.700%, 09/07/96 1,300 1,300
Michigan State Job Development
Authority, Pollution Control
Revenue, Ser 85, Mazda Motor
Manufacturing Corporation #384,
VRDN, RB (A) (B) (C)
3.650%, 09/07/96 825 825
Michigan State Strategic Fund
Limited Obligation, Freezer
Services of Michigan, Ser 93,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 870 870
Northwest Mutual Life Tax-Exempt
Mortgage Trust, Michigan,
VRDN, RB (A) (B) (C)
4.500%, 02/15/97 135 135
University of Michigan Hospital,
Ser A, VRDN, RB (A) (B)
3.850%, 09/01/96 4,300 4,300
-------
12,759
-------
MINNESOTA -- 7.1%
Bloomington Commercial
Development, ATS II Project,
VRDN, RB (A) (B) (C)
3.795%, 09/07/96 4,125 4,125
Bloomington Multi-Family
Housing, Revenue Refunding,
Hampshire Apartments Project,
VRDN, RB (A) (B)
3.620%, 09/07/96 15,000 15,000
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Brooklyn Center Development
Project, Brookdale Office Park,
Ser 84, VRDN, RB (A) (B) (C)
3.620%, 09/07/96 $ 2,860 $ 2,860
Minneapolis, Ser A, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 17,700 17,700
Minneapolis, Various Purpose,
Ser 95-B, VRDN,
G.O. (A) (B) (C)
3.500%, 09/07/96 2,050 2,050
Minneapolis, VRDN,
G.O. (A) (B) (C)
3.500%, 09/07/96 6,500 6,500
Minnesota School District Credit
Enhancement, Tax & Aid
Anticipation Borrowing Program,
Ser 96-B, COP
4.500%, 09/09/97 1,700 1,711
New Brighton Commercial
Development Revenue, Business
Center, VRDN, RB (A) (B)
3.770%, 09/07/96 2,810 2,810
New Brighton Commercial
Development Revenue,
Venture I Project, Ser A,
VRDN, RB (A) (B)
3.770%, 09/07/96 1,740 1,740
Plymouth Industrial Development
Revenue, Banner Engineering
Project, VRDN, RB (A) (B) (C)
3.650%, 09/07/96 1,800 1,800
Plymouth Refunding Revenue,
Woodland Village Project,
VRDN, RB (A) (B) (C)
3.650%, 09/07/96 1,580 1,580
Saint Paul Housing &
Redevelopment Authority,
Lutheran Social Service Project,
VRDN, RB (A) (B) (C)
3.650%, 09/07/96 790 790
Saint Paul Housing &
Redevelopment Authority,
Multi-Family Housing,
Kendrick Housing Project,
VRDN, RB (A) (B) (C)
4.950%, 09/07/96 3,360 3,360
-------
62,026
-------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
24
<PAGE> 20
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MISSISSIPPI -- 0.3%
Desoto County Industrial
Development Revenue,
American Soap Company
Project, VRDN, RB (A) (B) (C)
4.867%, 09/07/96 $ 2,400 $ 2,400
-------
MISSOURI -- 4.1%
Howell County Industrial
Development Authority,
Safeway Incorporated Project,
VRDN, RB (A) (B) (C)
3.850%, 02/01/97 4,015 4,015
Macon City Industrial
Development Authority, Health
Care Realty Macon Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,640 1,640
Missouri State Health &
Educational Facilities Authority,
Health Care Project, VRDN,
RB, MBIA Insured (A) (B) (C)
3.500%, 09/07/96 18,400 18,400
Saint Louis County Industrial
Development Authority,
Riverport Associates Project,
VRDN, RB (A) (B) (C)
3.700%, 09/07/96 2,900 2,900
Saint Louis County Industrial
Development Authority, Schnuck
Markets Kirkwood Incorporated,
VRDN, RB (A) (B) (C)
3.625%, 09/07/96 3,350 3,350
St. Louis Grantor Trust #1,
Ser 96-A, COP (A) (B) (C)
3.700%, 09/07/96 3,000 3,000
West Plains Industrial
Development Authority, West
Plains Manor Project, VRDN,
RB (A) (B) (C)
3.750%, 09/07/96 2,200 2,200
-------
35,505
-------
MONTANA -- 0.4%
Great Falls Industrial Development
Revenue, Safeway Incorporated
Project (A) (B) (C)
3.650%, 12/01/96 2,210 2,210
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Montana State Board of Investments,
Municipal Finance Consolidation
Act, Intercap Revolving Project,
Ser 94, G.O. (A) (B)
3.350%, 03/01/97 $1,000 $1,000
------
3,210
------
NEBRASKA -- 0.0%
Northwest Mutual Life Tax
Exempt Mortgage Trust,
VRDN, RB (A) (B) (C)
4.500%, 02/15/97 44 44
------
NEVADA -- 0.2%
Henderson Public Improvement
Trust, Multi-Family Housing,
Pueblo Verde I+II Apartment
Project, Ser 95-A/95-B #1071,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,900 1,900
------
NEW HAMPSHIRE -- 0.7%
New Hampshire Education &
Health Facilities Authority,
Dartmouth Education Loan
Project, VRDN, RB (A) (B)
3.800%, 06/01/97 1,015 1,015
New Hampshire Higher Education
& Health Facilities, Dartmouth
College, Mandatory
Put 06/01/97 @ 100 (A) (B)
3.750%, 06/01/97 2,500 2,500
New Hampshire State Housing
Finance Authority, Hampshire
Estates MHJ Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 2,500 2,500
------
6,015
------
NEW JERSEY -- 0.4%
New Jersey State, G.O.,
Pre-Refunded @ 101 (D)
7.200%, 04/15/97 3,500 3,610
Northwest Mutual Life Tax
Exempt Mortgage Trust,
VRDN, RB (A) (B) (C)
4.500%, 02/15/97 243 243
------
3,853
------
NEW MEXICO -- 0.6%
Albuquerque Metropolitan
Redevelopment, Springer Square
Project, VRDN, RB (A) (B) (C)
3.900%, 09/07/96 3,000 3,000
</TABLE>
25
<PAGE> 21
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Dona Ana County Industrial
Development Authority,
Foamex Products Incorporated
Project, VRDN, RB (A) (B) (C)
3.400%, 09/07/96 $ 2,100 $ 2,100
-------
5,100
-------
NEW YORK -- 3.6%
Monroe County Industrial
Development Authority,
Rochester District Project,
VRDN, RB (A) (B) (C)
3.450%, 09/07/96 2,200 2,200
Nassau County, Ser A, RAN
4.000%, 03/05/97 9,500 9,530
Nassau Library System
Project, RAN
4.000%, 12/30/96 1,200 1,201
New York State Job Development
Authority, VRDN, RB (A) (B) (C)
3.700%, 09/07/96 1,610 1,610
New York State Power
Authority, TECP (C)
3.500%, 09/09/96 1,000 1,000
North Hempstead, BAN
4.250%, 05/29/97 5,000 5,014
North Hempstead, Ser B, BAN
3.850%, 02/27/97 2,500 2,504
Ontario County Industrial
Development Authority, Seneca
Foods Project, Ser 92,
VRDN, RB (A) (B)
3.850%, 09/01/97 3,000 3,000
Wayne County Industrial
Development Authority, Seneca
Foods Project, Ser 92,
VRDN, RB (A) (B)
3.850%, 09/07/96 5,060 5,060
-------
31,119
-------
NORTH CAROLINA -- 2.5%
North Carolina Medical Care
Community, Hospital Revenue,
Pooled Finance Project, Ser A,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 19,400 19,400
Winston Salem, VRDN,
COP (A) (B) (C)
3.500%, 09/07/96 2,000 2,000
-------
21,400
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
NORTH DAKOTA -- 0.1%
Fargo Kelly Inn, Fargo Project,
Ser 93, VRDN, RB (A) (B) (C)
3.750%, 09/07/96 $ 1,225 $ 1,225
-------
OHIO -- 4.4%
Brecksville-Broadview Heights
School District, Ohio School
Improvement, Ser 96, BAN
3.900%, 01/17/97 2,500 2,503
Cleveland Waterworks Revenue,
Ser E, RB, Pre-Refunded @ 102,
MBIA Insured (D)
7.750%, 01/01/97 1,250 1,291
Franklin County Industrial
Development Revenue, Leveque
& Associates Project, RB, (A) (C)
3.650%, 12/01/96 1,445 1,445
Highland County Industrial
Development Revenue, Lancaster
Colony Corporation, VRDN,
RB (A) (C)
3.150%, 09/01/96 2,000 2,000
Marion County, Hospital Revenue,
Pooled Lease Program, Ser 91,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 2,650 2,650
McDonalds Tax-Exempt Mortgage
Trust #1, VRDN, RB, Mandatory
(A) (B) (C)
4.250%, 02/15/97 2,489 2,489
Montgomery County Educational
Development Authority, ND
Motels Project, Mandatory
(A) (B) (C)
3.800%, 12/15/96 1,650 1,650
North Olmsted, BAN
4.600%, 12/19/96 16,250 16,274
Ohio Higher Education Facility
Commission, Ashland University
Project, Ser 95, VRDN,
RB (A) (B) (C)
3.550%, 09/07/96 2,820 2,820
Scioto County Healthcare Facilities
Revenue, Hillview Retirement
Project, (A) (B)
3.650%, 12/01/96 1,930 1,930
Stark County Healthcare Facilities,
Canton Christian Home Project,
VRDN, RB, (A) (B) (C)
3.150%, 09/01/96 1,380 1,380
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
26
<PAGE> 22
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Stark County Healthcare Facilities,
Canton Christian Home Project,
VRDN, RB (A) (B) (C)
3.350%, 09/15/96 $ 1,615 $ 1,615
-------
38,047
-------
OKLAHOMA -- 4.5%
Oklahoma City, Oklahoma
University, Ser 65, VRDN,
RB (A) (B) (C)
3.650%, 09/07/96 7,500 7,500
Oklahoma City, University City
Project, Ser 85, VRDN,
RB (A) (B) (C)
3.650%, 09/07/96 400 400
Oklahoma County Industrial
Development Authority, Baptist
General Convention Project,
Ser 89, VRDN, RB, Optional Put
09/01/96 @ 100 (A) (B) (C)
3.850%, 09/01/96 6,225 6,225
Oklahoma Mid-West Tax-Exempt
Mortgage Bond Trust,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 263 263
Oklahoma State Water Revenue
Board, State Loan Program
Revenue, RB (A) (B) (C)
3.700%, 03/03/97 10,000 10,000
Tulsa County Industrial
Development Authority,
Healthcare Revenue Laureate
Psychiatric Project, RB (A)
3.850%, 12/15/96 8,500 8,500
Tulsa Parking Authority,
Refunding First Mortgage
Williams Project 84, Ser A,
VRDN, RB (A) (B) (C)
3.750%, 11/15/96 3,000 3,000
Tulsa Public Facilities Authority,
Capital Improvement Project,
Ser 87-B, VRDN, RB (A) (B) (C)
3.800%, 11/15/96 2,910 2,910
-------
38,798
-------
OREGON -- 0.7%
Lane County Industrial
Development Revenue,
Weyerhaeuser Project,
VRDN, RB (A) (B)
3.548%, 09/07/96 1,000 1,000
Port of Portland, Public Grain
Elevator Columbia,
VRDN, RB (A) (B) (C)
3.750%, 09/07/96 4,945 4,945
-------
5,945
-------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
PENNSYLVANIA -- 14.0%
Allegheny County Hospital
Development Authority
Revenue, South Hills Health
System Project, Ser B (A) (B) (C)
3.400%, 09/07/96 $ 1,850 $ 1,850
Allegheny County, Hospital
Development Presbyterian
University, Ser B-1, VRDN,
RB (A) (B) (C)
3.500%, 09/01/96 200 200
Bucks County Industrial
Development Authority,
Edgecomb Metals Project,
VRDN, RB (A) (B) (C)
3.400%, 09/07/96 1,600 1,600
Chester County Industrial
Development Authority,
The Woods Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,200 1,200
Cumberland County Municipal
Authority, United Methodist
Homes Aging Project,
VRDN, RB (A) (B) (C)
3.620%, 09/07/96 3,735 3,735
Delaware County, VRDN,
RB (A) (B)
3.400%, 09/07/96 3,500 3,500
Delaware County Industrial
Development Authority, British
Petroleum Project, Ser 95,
VRDN, RB (A) (B) (C)
3.750%, 09/01/96 700 700
Delaware County Industrial
Development Authority,
United Parcel Services Project,
Ser 85, VRDN, RB (A) (B)
3.650%, 09/01/96 2,000 2,000
Delaware Valley, Regional
Government Finance, Ser A,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 11,100 11,100
Emmaus General Authority,
Local Government, Ser B,
Goldman FGIC Insured,
VRDN, RB (A) (B)
3.550%, 09/07/96 900 900
Emmaus General Authority,
Local Government, Ser G-7,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 200 200
Emmaus General Authority,
Local Government, Ser H-5 ,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 600 600
</TABLE>
27
<PAGE> 23
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INSTITUTIONAL TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Emmaus General Authority,
Sub Ser B-11, VRDN,
RB (A) (B) (C)
3.600%, 09/07/96 $10,000 $10,000
Emmaus General Authority,
Sub Ser D-8, VRDN,
RB (A) (B) (C)
3.600%, 09/07/96 3,000 3,000
Erie County, Senior Living Services
Project, VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,930 1,930
Langhorne Hospital Revenue
Authority, Franciscan Health
Systems Project, Ser C, VRDN,
RB (A) (B) (C)
3.650%, 09/01/96 1,520 1,520
McCandless Industrial
Development Authority,
Bradford Foundation Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,730 1,730
McDonalds Tax-Exempt Mortgage
Trust, Pennsylvania #1,
VRDN, RB (A) (C)
4.250%, 02/15/97 533 533
Montgomery County Higher
Education & Health Authority,
Hospital Revenue, VRDN, RB,
AMBAC Insured (A) (B)
3.350%, 09/07/96 2,300 2,300
Montgomery County Higher
Education & Health Authority,
Hospital Revenue,
VRDN, RB (A) (B) (C)
3.650%, 09/07/96 20,000 20,000
Montgomery County, Industrial
Development Authority, Ikea
Property Project, VRDN,
RB (A) (B) (C)
3.550%, 09/07/96 3,300 3,300
Montgomery County, Industrial
Development Authority,
Plymouth Woods Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 4,500 4,500
Northeastern Hospital &
Education Authority, Allhealth
Pooled Finance Program,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 5,000 5,000
Northwest Mutual Life Tax-Exempt
Mortgage Trust,VRDN,
RB, (A) (B) (C)
4.500%, 02/15/97 99 99
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania Higher Education
Facilities Authority, Thomas
Jefferson University, Ser B,
VRDN, RB, Put 02/26/97
@ 100 (A) (B) (C)
3.700%, 02/26/97 $1,000 $1,000
Pennsylvania Higher Education
Facilities Authority, Thomas
Jefferson University, Ser C,
VRDN, RB (A) (B) (C)
3.700%, 02/26/97 3,000 3,000
Pennsylvania Hospital & Higher
Education Facility, Children's
Hospital Project, VRDN,
RB (A) (B) (C)
3.750%, 09/01/96 1,000 1,000
Pennsylvania Intergovernmental
Authority, Special Tax Revenue,
Philadelphia Funding Program,
FGIC Insured
5.000%, 06/15/97 2,700 2,727
Pennsylvania State Higher
Education Facility, Carnegie
Mellon University Project,
Ser C, VRDN, RB (A) (B) (C)
3.750%, 09/01/96 500 500
Philadelphia Redevelopment
Authority, Pennsylvania
School For The Deaf, VRDN,
RB (A) (B) (C)
3.700%, 09/07/96 1,095 1,095
Philadelphia School
District, TRAN
4.500%, 06/30/97 3,000 3,015
Philadelphia, Ser A, TRAN
4.500%, 06/30/97 6,000 6,026
Schuykill County, VRDN,
RB (A) (B) (C)
3.950%, 09/01/96 200 200
Schuylkill County Industrial
Development Authority,
Northeastern Power Project,
VRDN, RB (A) (B) (C)
3.850%, 09/01/96 1,000 1,000
Shenango Valley Osteopathic
Hospital Authority, Shenango
Valley Medical Center Project,
Pre-Refunded @ 102 (D)
7.875%, 04/01/97 3,900 4,069
Temple University of The
Commonwealth, University
Funding Project, Ser 96, RB
4.625%, 05/20/97 1,000 1,006
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
28
<PAGE> 24
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Warren County, Warren General
Hospital Project, Ser 94-B,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 $ 400 $ 400
York County Industrial
Development, New Edgecomb
Corporation Project,
VRDN, RB (A) (B) (C)
3.400%, 09/07/96 1,300 1,300
York General Authority Pooled
Revenue, VRDN, RB (A) (B) (C)
3.500%, 09/07/96 14,000 14,000
--------
121,835
--------
SOUTH CAROLINA -- 2.6%
Charleston Center Tax Exempt
Bond Grantor Trust #1,
VRDN, RB (A) (B) (C)
3.900%, 02/01/97 7,263 7,263
Charleston Center Tax-Exempt
Mortgage Bond Grantor Trust #2
(A) (B) (C)
3.700%, 11/01/96 4,000 4,000
Charleston Center Tax-Exempt
Bond Grantor Trust #4,
VRDN, RB (A) (B) (C)
3.700%, 12/01/96 7,267 7,267
Charleston Center Tax-Exempt
Bond Grantor Trust #5,
VRDN, RB (A) (B) (C)
3.150%, 09/01/96 4,035 4,035
--------
22,565
--------
SOUTH DAKOTA -- 0.2%
Watertown Industrial
Development Authority,
Ramkota Project, Ser 93,
VRDN, RB (A) (B) (C)
3.750%, 09/07/96 1,315 1,315
--------
TENNESSEE -- 1.0%
GAF Tax-Exempt Bond Grantor
Trust, Ser A, VRDN, RB (A) (B) (C)
4.100%, 09/07/96 4,480 4,480
Nashville Metropolitan
Government, Toys "R" Us Project,
Ser 84, VRDN, RB (A)
(B) (C)
3.750%, 09/07/96 1,030 1,030
Shelby County Health Education
Housing, Metropolitan
Government Industrial
Development, Rhodes College,
VRDN, RB (A) (B) (C)
3.850%, 09/07/96 3,000 3,000
--------
8,510
--------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
TEXAS -- 4.4%
Arlington Industrial Development
Revenue, Dallas-Fort Worth
Newspaper, Ser 85,
VRDN, RB (A) (B) (C)
3.900%, 09/07/96 $ 6,200 $ 6,200
Brazo River, Hoffman-Laroche
Project, Ser 85,
VRDN, RB (A) (B) (C)
3.525%, 09/07/96 1,000 1,000
Corpus Christi Industrial
Development Committee,
Texas-Air Project,
VRDN, RB (A) (B) (C)
3.850%, 02/01/97 4,800 4,800
Harris County Housing Finance
Authority, Multi-Family Housing,
Arbor II Project, VRDN, RB (A) (B)
3.950%, 09/07/96 2,070 2,070
Harris County Multi-Family
Housing, Glenhollow Project,
VRDN, RB (A) (B) (C)
3.775%, 09/07/96 1,900 1,900
Harris County Multi-Family
Housing, Greenhouse Project,
VRDN, RB (A) (B) (C)
3.775%, 09/07/96 2,400 2,400
Nacogdocles Health Finance
Development Committee,
South Central Health Services
Project, VRDN, RB (A) (B) (C)
3.600%, 09/07/96 3,000 3,000
North Carolina National Bank
Tax-Exempt Trust, Texas,
Ser 90-B, VRDN, RB (A) (B) (C)
4.125%, 09/07/96 3,865 3,865
Texas State, TECP
3.700%, 02/05/97 11,000 11,000
Trinity River Industrial
Development Authority,
Trinity River Project,
VRDN, RB (A) (B) (C)
3.525%, 09/07/96 2,000 2,000
-------
38,235
-------
UTAH -- 0.4%
Northwest Mutual Life Tax-Exempt
Mortgage Trust,
VRDN, RB, (A) (B) (C)
4.500%, 02/15/97 113 113
</TABLE>
29
<PAGE> 25
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INSTITUTIONAL TAX FREE PORTFOLIO--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Salt Lake City Industrial
Development Authority,
Deveraux Partners Project,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 $2,500 $2,500
Salt Lake City Industrial
Development Authority,
Park View Plaza Project,
VRDN, RB (A) (B) (C)
3.720%, 09/07/96 1,275 1,275
------
3,888
------
VIRGINIA -- 0.7%
Henrico County Industrial
Development Authority,
Hermitage Project,
VRDN, RB (A) (B) (C)
3.900%, 09/01/96 2,600 2,600
Northwest Mutual Life
Tax-Exempt Mortgage Trust,
VRDN, RB, (A) (B) (C)
4.500%, 02/15/97 77 77
Norfolk Industrial Development
Authority, Toys "R" Us Project,
Ser 84, VRDN, RB, (A) (B) (C)
3.625%, 09/07/96 1,425 1,425
Virginia State Housing
Development Authority,
AHC Services Corporation, Ser A,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 2,100 2,100
------
6,202
------
WASHINGTON -- 1.7%
Kent Economic Development
Revenue, Northwest Aluminum
Products, VRDN, RB (A) (B) (C)
3.950%, 09/07/96 1,600 1,600
Redmond Public Corporation
Industrial Development Revenue,
Integrated Circuit Project,
Ser 88, VRDN, RB (A) (B) (C)
3.820%, 09/07/96 620 620
Washington State Housing Finance
Commission, VRDN,
RB (A) (B) (C)
3.650%, 09/07/96 5,550 5,550
Washington State Housing Finance
Community, Nonprofit Housing
YMCA, Snobonish County Project,
VRDN, RB (A) (B) (C)
3.550%, 09/01/96 3,250 3,250
Washington State Housing Finance
Community, Pioneer Human
Services Project, Ser 91,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,855 1,855
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Washington State Student Loan
Finance Association Project,
Second Series, VRDN,
RB (A) (B) (C)
3.650%, 09/07/96 $ 1,605 $ 1,605
-------
14,480
-------
WEST VIRGINIA -- 1.9%
Charleston Building Community
Parking Facility, Charleston
Town Center,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 10,920 10,920
Charleston Community Parking
Facility Revenue,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 400 400
Parkersburg Industrial
Development Revenue,
B-H Associates Project,
VRDN, RB (A) (B) (C)
3.775%, 09/07/96 3,500 3,500
West Virginia State Hospital
Financing Authority, VHA
Mid-Atlantic/Cap Project,
Ser G, VRDN, RB,
AMBAC Insured (A) (B)
3.400%, 09/07/96 1,500 1,500
-------
16,320
-------
WISCONSIN -- 5.4%
Beaver Dam USD, TRAN
4.140%, 08/27/97 3,000 3,001
Burlington Area School
District, TRAN
4.220%, 08/29/97 3,000 3,005
Eau Claire Area School
District, TRAN
4.015%, 09/23/96 11,000 11,000
Hartford Industrial Development
Revenue, IC Products Company
Project, VRDN, RB (A) (B) (C)
3.700%, 09/07/96 5,000 5,000
Kettle - Moraine School
District, TRAN
4.010%, 08/22/97 3,200 3,200
Mayville Area School
District, BAN
3.500%, 11/01/96 5,000 5,000
Mount Horeb Area School
District, BAN
3.500%, 11/01/96 3,750 3,750
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
30
<PAGE> 26
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Northwest Mutual Life
Tax-Exempt Mortgage Trust,
VRDN, RB, (A) (B) (C)
4.500%, 02/15/97 $ 118 $ 118
Village of Menomonee Industrial
Development Revenue,
Maysteel Corporation,
VRDN, RB (A) (B) (C)
3.630%, 09/07/96 3,000 3,000
Wausau Industrial Development
Revenue, Venture Partnership
Project, VRDN, RB (A) (B) (C)
3.600%, 09/07/96 10,000 10,000
---------
47,074
---------
WYOMING -- 0.6%
Cheyenne County Revenue
Refunding, Holiday Inn Project,
VRDN (A) (B) (C)
3.700%, 10/01/96 1,355 1,355
Evanston Industrial Development
Revenue, Safeway Project,
Optional Put 12/01/96
@ 100 (A) (B) (C)
3.650%, 12/01/96 3,700 3,700
Northwest Mutual Life
Tax-Exempt Mortgage
Trust, VRDN, RB, (A) (B) (C)
4.500%, 02/15/97 85 86
---------
5,141
---------
Total Municipal Bonds
(Cost $898,382) 898,382
---------
Total Investments -- 103.4%
(Cost $898,382) 898,382
---------
OTHER ASSETS AND LIABILITIES, NET -- (3.4%) (29,630)
---------
NET ASSETS:
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 835,524,839 outstanding shares of
beneficial interest 835,356
Portfolio Shares of Class B (unlimited
authorization -- no par value) based
on 14,150,080 outstanding shares of
beneficial interest 14,150
Portfolio Shares of Class C (unlimited
authorization -- no par value) based
on 19,205,806 outstanding shares of
beneficial interest 19,206
Undistributed Net Investment Income 4
Accumulated Net Realized Gain
on Investments 36
---------
Total Net Assets--100.0% $ 868,752
=========
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
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 B $ 1.00
========
Net Asset Value, Offering Price and
Redemption Price Per Share-- Class C $ 1.00
========
</TABLE>
AMBAC AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
BAN BOND ANTICIPATION NOTE
COP CERTIFICATE OF PARTICIPATION
FGIC FINANCIAL GUARANTY INSURANCE CORPORATION
GO GENERAL OBLIGATION
MBIA MUNICIPAL BOND INVESTOR ASSURANCE
RAN REVENUE ANTICIPATION NOTE
RB REVENUE BOND
SER SERIES
TAN TAX ANTICIPATION NOTE
TAW TAX ANTICIPATION WARRANT
TECP TAX EXEMPT COMMERCIAL PAPER
TRAN TAX & REVENUE ANTICIPATION NOTE
USD UNIFIED SCHOOL DISTRICT
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, 1996.
(B) PUT AND DEMAND FEATURE--THE MATURITY 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.
<TABLE>
<CAPTION>
PENNSYLVANIA TAX
FREE PORTFOLIO
<S> <C> <C>
MUNICIPAL BONDS -- 103.9%
PENNSYLVANIA -- 103.9%
Allegheny County Hospital
Development Authority,
Children's Hospital of Pittsburgh,
Ser 85 B, VRDN, RB,
MBIA Insured (A) (B)
3.350%, 09/07/96 $ 200 $ 200
Allegheny County Education
Building Authority, University
of Pittsburgh Project, Ser 85 B,
VRDN, RB (A) (B) (C)
3.300%, 09/07/96 850 850
Allegheny County Hospital
Development Authority,
Children's Hospital, Ser B,
VRDN, RB, MBIA Insured (A) (B)
3.500%, 09/07/96 1,000 1,000
</TABLE>
31
<PAGE> 27
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
PENNSYLVANIA TAX FREE PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Athens Area School District, TRAN
4.100%, 06/30/97 $ 800 $ 800
Beaver County Industrial
Development Authority,
Pollution Control Revenue,
Ser C, TECP (C)
3.500%, 10/24/96 1,000 1,000
Berks County Industrial
Development Authority, Rilsaw
Industrial Project, Elf Aquitaine,
VRDN, RB (A) (B) (C)
3.625%, 09/07/96 900 900
Bucks County Industrial
Development Authority,
Edgecomb Metals Project,
VRDN, RB (A) (B) (C)
3.400%, 09/07/96 1,275 1,275
Bucks County Industrial
Development Authority,
USX Project, VRDN, RB (B) (C)
3.550%, 11/01/96 1,000 1,000
Butler County Industrial
Development Authority,
Pennzoil Project, VRDN,
RB (A) (B) (C)
3.850%, 09/07/96 600 600
Chartiers Valley Industrial &
Commercial Development
Authority, Commercial
Development Revenue, Parkay
Center West Project A,
VRDN, RB (A) (B) (C)
3.700%, 09/07/96 1,250 1,250
Chester County Hospital Authority,
Paoli Memorial Hospital Project,
RB, Pre-Refunded @ 102 (D)
7.625%, 10/01/96 400 409
Chester County Health & Education
Facilities Authority, Barclay
Friends Project, Ser A,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 500 500
Cumberland Valley School
District, Ser A, G.O
6.150%, 09/01/97 95 97
Cumberland Valley School
District, Ser B, G.O
5.750%, 09/01/97 385 392
Delaware County Airport Facility,
Airport Facility Revenue, Ser 85,
VRDN, RB (A) (B) (C)
3.650%, 09/01/96 600 600
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Delaware County Industrial
Development Authority, British
Petroleum Project, Ser 95,
VRDN, RB (A) (B)
3.750%, 09/01/96 $1,000 $1,000
Delaware County Industrial
Development Authority, Scott
Paper Project, Ser A,
VRDN, RB (A) (B)
3.400%, 09/07/96 1,000 1,000
Delaware Valley Regional
Finance Authority, Local
Government Revenue, Ser D,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 100 100
Delaware Valley Regional Finance
Authority, Local Government
Revenue, Ser B,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,000 1,000
East Penn School District
Authority, Ser A, G.O.,
FGIC Insured (C)
3.500%, 09/01/96 255 255
Emmaus General Authority,
Local Government, Ser B,
Goldman FGIC Insured (A) (B)
3.550%, 09/07/96 1,500 1,500
Emmaus General Authority,
Revenue Credit Enhancement,
RB (A) (B) (C)
3.550%, 09/07/96 500 500
Johnsonburg Area School District,
Elk County, G.O., FSA Insured
4.000%, 04/01/97 135 135
Lancaster Higher Education
Authority, Franklin & Marshall
Project, Ser 95, VRDN, RB (A) (B)
3.700%, 09/07/96 575 575
Lancaster, Ser A, G.O., FGIC Insured
3.400%, 10/01/96 300 300
Lebanon County Industrial
Development Authority,
Aluminum Company of America
Project, Ser 92, VRDN, RB (A) (B)
3.550%, 09/07/96 2,020 2,020
Lehigh County Water Authority,
VRDN, RB, FGIC Insured (A) (B)
3.350%, 09/07/96 835 835
Montgomery County, PECO
Energy Project, TECP (C)
3.550%, 09/10/96 1,200 1,200
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
32
<PAGE> 28
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Montgomery County Higher
Education & Health Authority,
Holy Redeemer Hospital, VRDN,
RB, AMBAC Insured, (A) (B)
3.350%, 09/07/96 $ 900 $ 900
Montgomery County Higher
Education & Health Facility
Authority, Higher Education
& Loan, Ser 96-A, VRDN,
RB (A) (B) (C)
3.650%, 09/07/96 1,700 1,700
Montgomery County Industrial
Development Authority, Ikea
Property Project, VRDN,
RB (A) (B)
3.550%, 09/07/96 1,500 1,500
Montgomery County Industrial
Development Authority, Valley
Square Project, VRDN,
RB (A) (B) (C)
3.450%, 09/07/96 755 755
Montgomery County Higher
Education & Health Authority,
Frankford Hospital Project, RB,
Pre-Refunded @ 102 (D)
7.875%, 01/01/97 600 620
Mount Carmel School District,
Unlimited Tax G.O.,
AMBAC Insured
3.300%, 10/15/96 230 230
North Umberland County
Industrial Development Authority,
Atlas Development Association,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 100 100
Northeastern Hospital & Education
Authority, Allhealth Pooled
Financing Program,
VRDN, RB (A) (B) (C)
3.600%, 09/07/96 1,850 1,850
Pennsylvania Higher Education
Facilities, Thomas Jefferson
University, Ser B, RB, (A) (B) (C)
3.700%, 02/26/97 1,750 1,750
Pennsylvania Intergovernmental
Authority, Special Tax Revenue,
Philadelphia Funding Program,
RB, FGIC Insured
5.000%, 06/15/97 300 303
Pennsylvania State Higher
Education Facility, Allegheny
College Project, VRDN,
RB (A) (B) (C)
3.500%, 09/07/96 1,800 1,800
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia Industrial
Development Authority, Multi-
Family Housing, Harbor View
Towers Project,
VRDN, RB (A) (B) (C)
3.800%, 09/07/96 $ 1,065 $ 1,065
Philadelphia School District, TRAN
4.500%, 06/30/97 1,250 1,256
Philadelphia Redevelopment
Authority, Rivers Edge Project,
VRDN, RB (A) (B) (C)
3.850%, 09/07/96 500 500
Philadelphia, TRAN
4.500%, 06/30/97 1,000 1,004
Pittsburgh, University of Pittsburgh,
Ser 89-A,VRDN, RB (A) (B) (C)
3.300%, 09/07/96 500 500
Sayre Health Facilities Authority
Revenue, VHR Pennsylvania
Capital Financing Project, Ser D,
VRDN, RB, AMBAC
Insured (A) (B)
3.350%, 09/07/96 200 200
Schuylkill County Industrial
Development Authority,
Gilberton Power Project,
VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,000 1,000
Scranton Lackawana Health &
Welfare Authority, University
of Scranton Project, RB (B) (C)
3.650%, 11/01/96 685 685
Shaler Township, TRAN
3.810%, 12/31/96 800 801
Temple University, University
Funding, Ser 96, RB
4.625%, 05/20/97 1,000 1,006
Warren County Hospital
Authority, Warren General
Hospital Project, Ser 94-B,
VRDN, RB (A) (B) (C)
3.550%, 09/07/96 1,500 1,500
West York School District
Authority, TRAN
4.375%, 06/30/97 534 535
York General Authority, Pooled
Revenue, VRDN, RB (A) (B) (C)
3.500%, 09/07/96 1,800 1,800
-------
Total Municipal Bonds
(Cost $44,653) 44,653
-------
</TABLE>
33
<PAGE> 29
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
PENNSYLVANIA TAX FREE PORTFOLIO--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
Total Investments -- 103.9%
(Cost $44,653) $ 44,653
--------
OTHER ASSETS AND LIABILITIES, NET-- (3.9%) (1,682)
--------
NET ASSETS:
Portfolio Shares of Class A (unlimited authorization
-- no par value) based on
42,985,216 outstanding shares of
beneficial interest 42,985
Accumulated Net Realized Loss
on Investments (14)
--------
Total Net Assets--100.0% $ 42,971
========
Net Asset Value, Offering Price and
Redemption Price Per Share-- Class A $ 1.00
========
</TABLE>
AMBAC AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
FGIC FINANCIAL GUARANTY INSURANCE CORPORATION
FSA FINANCIAL SECURITY ASSURANCE
GO GENERAL OBLIGATION
MBIA MUNICIPAL BOND INVESTORS ASSURANCE
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, 1996.
(B) PUT AND DEMAND FEATURE--THE MATURITY 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.
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 99.9%
ALABAMA -- 1.2%
Alabama State Private Colleges
& Tuskegee University Project,
RB, Asset Guaranty
5.700%, 09/01/10 $ 825 $ 798
5.700%, 09/01/11 870 840
------
1,638
------
ALASKA -- 2.8%
Anchorage Electric Utility,
RB, MBIA Insured
8.000%, 12/01/06 1,775 2,150
8.000%, 12/01/07 1,310 1,595
------
3,745
------
ARIZONA -- 0.6% Tempe, G.O
8.000%, 07/01/01 735 837
------
ARKANSAS -- 0.2%
Little Rock Capital Improvement
Refunding Bonds, Ser 95-A,
RB, Callable 02/01/00 @ 100
5.950%, 02/01/12 305 307
------
CALIFORNIA -- 17.1%
Anaheim Public Finance
Authority, Electric Utility
Project, RB, MBIA Insured,
Callable 04/01/03 @ 102
5.400%, 10/01/08 2,000 1,982
California Education Facility
Authority, University of San
Francisco, RB, MBIA Insured
6.000%, 10/01/08 1,000 1,057
California Health Facilities
Finance Authority, Sisters of
Providence, RB
5.500%, 10/01/05 1,100 1,107
California Housing Finance
Agency, RB, MBIA Insured
5.300%, 08/01/14 500 490
California Housing Finance
Authority, RB, MBIA Insured,
Callable 08/01/04 @ 102
7.250%, 08/01/17 1,250 1,322
California State Health Facilities
Summit Medical Center, Ser A,
RB, FSA Insured
5.250%, 05/01/04 1,500 1,504
California Statewide Communities
Development Authority, San
Gabriel Valley-A, COP
6.000%, 09/01/06 1,000 1,019
</TABLE>
34
<PAGE> 30
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Elk Grove, Unified School
District, G.O., AMBAC Insured
6.500%, 12/01/07 $ 1,000 $ 1,105
Irvine Special Assessment
District 89-10, VRDN,
G.O. (A) (B) (E)
3.750%, 09/07/96 100 100
Los Angeles County Public
Leasing, RB
5.125%, 09/01/08 1,380 1,335
Los Angeles Department of
Water & Power, RB
9.000%, 10/15/02 2,000 2,432
Modesto Irrigation, RB,
MBIA Insured
5.150%, 10/01/04 2,000 2,028
Mojave Water Agency, G.O.,
FGIC Insured, Callable
09/01/06 @ 102
5.600%, 09/01/12 1,000 990
Oakland Health Facilities
Authority, Childrens
Hospital Project, RB
5.000%, 07/01/01 1,175 1,179
Orange County Transportation
Authority, Sales Tax Revenue,
First Ser-Measure M, RB
5.400%, 02/15/00 1,000 1,020
Orange County, Water District
Project B, COP,
VRDN (A) (B)
3.600%, 09/07/96 200 200
Orange County, COP, MBIA
Insured, Callable 7/1/06 @ 102
5.800%, 07/01/16 1,000 984
Riverside Electric, RB,
Callable 10/01/01 @ 102
6.600%, 10/01/05 1,000 1,069
University of California,
Board of Regents, RB
6.500%, 09/01/02 1,995 2,122
-------
23,045
-------
COLORADO -- 2.6%
Colorado Health Facilities
Authority, RB
6.250%, 02/01/04 1,500 1,526
Colorado Student Loan, RB (E)
6.100%, 09/01/02 1,845 1,910
-------
3,436
-------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
CONNECTICUT -- 0.4%
Connecticut State, Industrial
Development Authority,
Pollution Control Revenue,
Frito-Lay/Pepsi Project, RB
6.375%, 07/01/04 $ 560 $ 571
------
DELAWARE -- 0.4%
Wilmington Hospital, VRDN,
RB (A) (E)
3.700%, 09/07/96 500 500
------
DISTRICT OF COLUMBIA -- 3.3%
District of Columbia Hospital
Revenue, Washington Hospital
Center, RB, MBIA Insured,
Callable 08/05/02 @ 102
7.000%, 08/15/05 1,500 1,646
District of Columbia, Ser A, G.O
5.125%, 06/01/99 1,000 990
District of Columbia, Ser A-3, G.O
4.250%, 06/01/97 1,790 1,776
------
4,412
------
FLORIDA -- 3.8%
Florida Housing Finance
Authority, Capital Appreciation,
Single Family Mortgage, RB
5.500%, 07/15/16 2,000 215
Florida State Finance Department,
Environmental-Preservation
Department, RB, AMBAC Insured,
Callable 07/01/05 @ 101
5.500%, 07/01/07 1,000 1,019
Hillsborough County Utility
Authority, RB, MBIA Insured (D)
9.750%, 12/01/03 1,425 1,733
Orlando & Orange County
Expressway Authority, Florida
Expressway Revenue, Linked
Security, RB, FGIC Insured
5.097%, 07/01/04 2,200 2,181
-----
5,148
-----
GEORGIA -- 0.9%
Gwinette County, G.O.,
9.500%, 02/01/02 1,000 1,200
-----
IDAHO -- 0.1%
Power County, Pollution Control
Revenue, FMC Corporation
Project, VRDN, RB (A) (E)
3.850%, 09/07/96 100 100
-----
</TABLE>
35
<PAGE> 31
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INTERMEDIATE-TERM MUNICIPAL--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
ILLINOIS -- 9.0%
Chicago Equipment Notes,
G.O., AMBAC Insured
5.600%, 01/01/06 $ 2,000 $ 2,035
Cook County, G.O., MBIA Insured
7.250%, 11/01/07 2,000 2,277
Illinois Hospital Facilities,
Metropolitan Pier & State
Exposition Authority, McCormick
Plaza Convention, RB
6.250%, 07/01/17 450 435
Illinois Housing Development
Authority RB,
Callable 2/1/06 @ 102
5.650%, 02/01/16 1,390 1,366
Illinois State Health Facility
Authority, RB, MBIA Insured
7.900%, 08/15/03 597 617
Illinois State, G.O., Callable
08/01/99 @ 102
6.375%, 08/01/00 1,000 1,051
Kane & DeKalb County, Unified
School District #301, G.O.,
AMBAC Insured
6.300%, 12/01/04 2,640 2,871
McClean County Public Building
Commission, Lease Receipts,
Law & Justice Center, G.O.
7.300%, 11/01/02 1,280 1,434
--------
12,086
--------
INDIANA -- 1.3%
Indiana State Health Facilities, RB
7.100%, 09/01/00 1,555 1,691
Rockport Pollution Control
Revenue, Aep Generating
Company, Project B, VRDN,
RB, AMBAC Insured (A)
3.850%, 09/07/96 100 100
--------
1,791
--------
KENTUCKY -- 1.2%
Kentucky State Turnpike Authority,
Ser A, RB
8.500%, 07/01/04 410 424
Kentucky State Turnpike Authority,
TRAN, AMBAC Insured
5.500%, 07/01/06 1,200 1,225
--------
1,649
--------
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
LOUISIANA -- 1.8%
Louisiana State Housing Finance
Agency, RB, MBIA Insured
5.125%, 12/01/10 $ 500 $ 491
Louisiana State Recovery District
Sales Tax, RB, FGIC Insured,
VRDN (A)
3.850%, 09/01/96 400 400
Louisiana State Ser A, G.O.,
Callable 08/01/97 @ 102
7.000%, 08/01/02 1,500 1,568
--------
2,459
--------
MASSACHUSETTS -- 13.2%
Commonwealth of Massachusetts
VRDN, RB (A) (B)
3.650%, 09/07/96 1,800 1,800
Holyoke G.O.
5.500%, 06/15/03 1,640 1,679
Lowell, G.O., FSA Insured,
Callable 02/15/01 @ 103
8.300%, 02/15/05 1,855 2,124
Massachusetts State Health &
Education Facilities Authority, RB
5.500%, 07/01/01 1,325 1,307
Massachusetts Bay
Transportation Authority,
RB,Callable 3/1/06 @ 101
5.625%, 03/01/26 2,000 1,882
Massachusetts Bay Transportation
Authority, General
Transportation System, G.O.
7.000%, 03/01/07 3,000 3,405
Massachusetts Municipal
Wholesale Electric Company,
Ser A, RB, Mandatory
Redemption @100 (B)
8.750%, 07/01/98 5 5
8.750%, 01/01/99 5 5
8.750%, 07/01/99 5 5
8.750%, 07/01/00 5 6
8.750%, 01/01/02 5 6
8.750%, 07/01/02 5 6
8.750%, 01/01/03 5 6
8.750%, 07/01/03 5 6
8.750%, 01/01/04 5 6
8.750%, 07/01/04 10 12
8.750%, 07/01/05 5 6
Massachusetts Single Family
Housing, Ser 14, RB,
Callable 06/01/00 @ 102
7.600%, 12/01/14 1,000 1,071
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
36
<PAGE> 32
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Massachusetts State, G.O., Ser B
6.250%, 07/01/02 $ 1,155 $ 1,236
Massachusetts State Water
Resource Authority, Ser B, RB
5.250%, 03/01/13 1,000 926
New England Education Loan
Marketing, RB
5.800%, 03/01/02 1,175 1,212
Springfield G.O., AMBAC Insured
6.375%, 08/01/04 1,000 1,079
--------
17,790
--------
MICHIGAN -- 1.2%
Greater Detroit Resource
Recovery, RB, AMBAC Insured
5.500%, 12/13/03 1,525 1,563
--------
MISSISSIPPI -- 1.2%
Mississippi State Capital
Improvement, Ser A, G.O.,
Callable 08/01/03 @ 100
5.100%, 08/01/07 1,685 1,658
--------
NEW MEXICO -- 1.7%
New Mexico Mortgage Finance
Authority, Single Family
Mortgage, RB
Callable 07/01/02 @ 102 (E)
6.850%, 07/01/10 1,325 1,378
Santa Fe, Saint Vincent's Hospital
Project, RB, FGIC Insured,
Pre-Refunded @ 100 (C)
7.500%, 07/01/02 785 888
--------
2,266
--------
NEW YORK -- 6.7%
New York State Dormitory
Authority, RB,
Callable 5/15/03 @ 102,
6.000%, 05/15/22 1,200 1,156
New York State Dormitory
Authority, Rosewell Park, RB
5.500%, 07/01/03 1,000 996
New York State Local Government
Assistance, G.O., Callable
4/01/02 @ 100
5.500%, 04/01/22 1,500 1,395
New York State Medical Care
Facility Finance Agency,
Adult Day Care, RB
5.350%, 11/15/05 825 819
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
New York State Medical Care
Facility Finance Agency,
Ser C, RB, FHA Insured
5.200%, 08/15/05 $ 615 $ 620
New York State Urban
Development Authority,
Correctional Facilities, Ser G, RB,
Callable 01/01/00 @ 102
7.100%, 01/01/03 2,500 2,669
New York State Urban
Development, G.O.
6.250%, 01/01/09 1,325 1,352
--------
9,007
--------
OHIO -- 0.6%
Hamilton County
Health System, RB, VRDN (A)
3.750%, 09/07/96 800 800
--------
OKLAHOMA -- 3.0%
Central Oklahoma Transportation
& Parking Authority, RB (D)
6.000%, 07/01/03 170 173
McAlester Public Works Authority,
RB, FSA Insured
8.100%, 12/01/08 875 1,049
Oklahoma State Industrial
Development Authority, Integris
Health, RB, AMBAC Insured
5.250%, 08/15/06 1,255 1,236
Tulsa Industrial Development
Authority, St Johns Medical
Center, RB (D)
6.875%, 01/01/02 500 536
Tulsa Port Industrial
Development, RB
5.350%, 09/01/06 1,000 995
--------
3,989
--------
PENNSYLVANIA -- 2.1%
Easton Joint School
Authority, RB (D)
5.350%, 04/15/02 290 298
Pennsylvania State Health
Services Allegheny/Delaware
Valley, RB, MBIA Insured
5.500%, 11/15/08 2,000 2,000
Westmoreland County Municipal
Authority, Special Obligation (D)
9.125%, 07/01/10 500 594
--------
2,892
--------
</TABLE>
37
<PAGE> 33
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
INTERMEDIATE-TERM MUNICIPAL--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
SOUTH CAROLINA -- 1.8%
South Carolina Jobs Economic
Development Authority,
St. Francis Hospital, VRDN (A)
3.700%, 09/07/96 $ 100 $ 100
South Carolina Public Service
Authority, Electric Improvement
Revenue, Ser B, RB,
Callable 07/01/01 @ 102
6.700%, 07/01/02 1,220 1,318
Spartanburg County, School
District #5, COP, MBIA Insured
5.400%, 07/01/08 1,000 970
--------
2,388
--------
SOUTH DAKOTA -- 1.7%
South Dakota Health & Educational
Facilities Authority, RB MBIA
Insured Callable 7/1/06 @ 102
6.000%, 07/01/08 1,025 1,066
South Dakota Housing Authority,
Ser A, RB
5.500%, 05/01/10 1,000 1,002
South Dakota Student Loan
Assistance Corporation, Ser A, RB
7.000%, 08/01/98 180 185
--------
2,253
--------
TEXAS -- 10.0%
Austin Independent School
District, RB (D)
9.000%, 07/01/99 645 721
Austin Utility Systems, Ser 92-B,
RB, Callable 11/15/98 @ 102
7.250%, 11/15/03 1,175 1,251
7.750%, 11/15/08 600 654
Fort Worth Water & Sewer
Authority, RB
5.250%, 02/15/06 1,360 1,362
Harris County, G.O.
10.000%, 10/01/00 1,850 2,204
7.000%, 10/01/01 2,000 2,197
Lone Star Airport Improvement
Authority, VRDN, RB (A) (E)
3.700%, 09/07/96 700 700
Plano, G.O.
5.625%, 09/01/06 1,020 1,056
Texas Municipal Power Agency,
RB, MBIA Insured
5.500%, 09/01/10 1,000 994
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Texas State Water Development
Board State Revolving Funds --
Senior Lien
5.250%, 07/15/17 $ 2,500 $ 2,316
--------
13,455
--------
UTAH -- 0.9%
Salt Lake City Airport, RB,
FGIC Insured
7.400%, 06/01/00 1,100 1,154
--------
VIRGINIA -- 0.5%
Virginia Housing, Multi-Family
Housing, RB
5.250%, 05/01/03 685 694
--------
WASHINGTON -- 3.8%
Clark County, Public Utility
District # 001, RB, FGIC Insured
6.000%, 01/01/04 2,525 2,645
Grant County, Public Utility
District #2, RB
5.625%, 01/01/07 2,470 2,495
--------
5,140
--------
WISCONSIN -- 4.0%
Wisconsin Housing & Economic
Development Authority, Home
Ownership, Ser 1, RB,
FHA Insured, Callable
07/01/02 @ 102
6.600%, 09/01/07 1,300 1,350
Wisconsin Public Power, RB,
Pre-Refunded @ 102,
AMBAC Insured (C)
6.875%, 07/01/01 2,000 2,210
Wisconsin State, Clean Water
Revenue, Ser 1, RB
6.875%, 06/01/11 1,640 1,833
--------
5,393
--------
WYOMING -- 0.8%
Wyoming Student Loan
Corporation, RB
6.250%, 12/01/99 1,000 1,035
--------
Total Municipal Bonds
(Cost $134,570) 134,401
--------
Total Investments -- 99.9%
(Cost $134,570) 134,401
--------
OTHER ASSETS AND LIABILITIES, NET -- 0.1% 162
--------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
38
<PAGE> 34
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
NET ASSETS:
Portfolio Shares of Class A (unlimited
authorization -- no par value) based
on 12,870,920 outstanding shares of
beneficial interest $135,894
Undistributed Net Investment Income 2
Accumulated Net Realized Loss
on Investments (1,164)
Net Unrealized Depreciation on Investments (169)
--------
Total Net Assets--100.0% $134,563
========
Net Asset Value, Offering Price and
Redemption Price Per Share-- Class A $ 10.45
========
</TABLE>
AMBAC AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
COP CERTIFICATE OF PARTICIPATION
FGIC FINANCIAL GUARANTY INSURANCE CORPORATION
FHA FEDERAL HOUSING AGENCY
FSA FINANCIAL SECURITY ASSURANCE
GO GENERAL OBLIGATION
MBIA MUNICIPAL BOND INVESTORS ASSURANCE
RB REVENUE BOND
SER SERIES
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, 1996.
(B) MANDATORY REDEMPTION--THE MATURITY DATE REPORTED ON THE
STATEMENT OF NET ASSETS IS THE MANDATORY REDEMPTION DATE.
(C) PRE-REFUNDED SECURITY--THE MATURITY DATE REPORTED ON THE STATEMENT
OF NET ASSETS IS THE PRE-REFUNDED DATE.
(D) SECURITY IS ESCROWED TO MATURITY
(E) SECURITY IS HELD IN CONJUNCTION WITH A LETTER OF CREDIT FROM A MAJOR
COMMERCIAL BANK OR FINANCIAL INSTITUTION.
PENNSYLVANIA MUNICIPAL PORTFOLIO
<TABLE>
<S> <C> <C>
MUNICIPAL BONDS -- 99.0%
PENNSYLVANIA -- 99.0%
Allegheny County Hospital
Development Authority,
Allegheny General
Hospital, RB (C)
6.750%, 05/01/04 $ 10 $ 10
Allegheny County Redevelopment
Authority, Home Improvement, RB
6.700%, 08/01/99 485 500
Allegheny County Hospital
Development Authority,
Allegheny General, RB (C)
7.250%, 07/01/03 185 194
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Allegheny County Hospital
Development Authority, Children's
Hospital of Pittsburgh, Ser 91,
RB, MBIA Insured
6.600%, 07/01/01 $1,000 $1,064
Allegheny County Hospital
Development Authority, Magee
Women's Hospital, Ser 93,
RB, FGIC Insured
5.200%, 10/01/05 1,000 1,000
Allegheny County Hospital
Development Authority, Mercy
Hospital of Pittsburgh, AMT
RB, BIGI Insured
6.875%, 10/01/99 1,000 1,022
Allegheny County Hospital
Development Authority,
Montefiore Hospital, RB (C)
6.875%, 07/01/09 520 555
Allegheny County Hospital
Development Authority,
St. Margaret Memorial
Hospital, RB (C)
6.750%, 07/01/10 475 510
Allegheny County Industrial
Development Authority, Home
Improvement Project, RB
6.700%, 02/01/99 800 822
Allegheny County Industrial
Development Authority, RB, AMT (B)
6.000%, 10/01/04 150 150
Allentown Hospital Authority,
Sacred Heart Project, RB (C)
8.000%, 03/01/09 105 120
Allentown Hospital Authority,
Sacred Heart Hospital of
Allentown, Ser A, RB
6.500%, 11/15/08 1,200 1,211
Altoona Area School District
Authority, Blair County,
Pennsylvania School Revenue,
Ser 78, RB, Pre-Refunded @ 100 (A)
6.500%, 07/01/06 155 165
Altoona School District, RB (C)
6.250%, 01/01/03 10 10
Baldwin Whitehall School
Building Revenue, RB (C)
6.625%, 11/15/02 105 110
Beaver County Housing Authority,
First Mortgage Guaranteed,
Section 8, RB, MBIA Insured,
Callable 03/19/97 @ 100
7.875%, 07/01/99 345 343
</TABLE>
39
<PAGE> 35
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
PENNSYLVANIA MUNICIPAL PORTFOLIO--CONTINUED
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Bensalem Township Water &
Sewer Authority, RB (C)
6.750%, 12/01/14 $ 75 $ 84
Blair County Hospital
Authority, RB (C)
6.900%, 07/01/08 570 602
Borough of Tarentum, Pennsylvania
Guaranteed Electric Revenue
Bond, Ser 93-A, RB, Asset
Guaranty Insured
5.500%, 09/01/08 645 630
Bucks County Industrial
Development Authority,
Grandview Hospital, Ser 91,
RB, AMBAC Insured (C)
6.600%, 07/01/01 250 269
Bucks County Redevelopment
Authority, Mortgage Revenue,
Warminster Heights, Section 8-A,
Ser 92-A, RB, FHA Insured,
Callable 02/01/02 @ 100
6.250%, 08/01/02 315 325
Bucks County Redevelopment
Authority, Mortgage Revenue,
Warminster Heights, Section 8,
Ser 92-A, RB, FHA Insured
5.750%, 08/01/97 50 50
Bucks County Industrial
Development Authority
Revenue, RB (C)
8.750%, 09/01/04 15 17
Butler Area Sewer Authority, RB,
Pre-Refunded @ 100 (A)
7.250%, 01/01/04 75 83
Cambria County Hospital
Authority, Conemaugh Valley
Memorial Hospital, RB (C)
7.625%, 09/01/11 235 275
Chartiers Valley Industrial
Development Authority, Colonial
Building, RB, Mandatory
Put 12/01/97 @ 100 (B) (D)
5.625%, 12/01/97 690 691
Chester County Hospital
Authority, Paoli Memorial
Hospital, RB (C)
5.500%, 02/01/03 105 104
Chester County, Pennsylvania
Health & Education Authority,
RB, Ser 96-B, (B) (D)
4.900%, 08/01/99 2,575 2,575
City of Aliquippa, Beaver County,
RB, Asset Guaranty Insured
8.250%, 09/15/01 1,220 1,295
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Cresswell Heights, Joint Water
Authority Revenue, RB (C)
7.375%, 03/01/07 $ 95 $ 103
Dauphin County General
School Authority, RB,
Mandatory Put 06/01/98 @100
6.000%, 06/01/26 50 49
Dauphin County General School
Authority, G.O., Mandatory
Put 06/01/04 @ 100 (D)
6.700%, 06/01/04 1,220 1,299
Dauphin County General
Authority, Phoenixville Hospital,
Hapsco Group Incorporated,
Ser 92-A, RB, FGIC Insured
5.900%, 07/01/05 845 882
Dauphin County General School
Authority, Penncrest School
Project, RB, Mandatory
Put 06/01/03 @ 100 (D)
6.600%, 06/01/26 915 974
Delaware County Authority,
Villanova University, RB (C)
9.625%, 08/01/02 165 187
Delaware County Hospital
Authority, Chester Crozer, RB (C)
7.250%, 12/15/10 115 123
Delaware County Industrial
Development Authority,
Resource-Recovery Project, RB (B)
8.100%, 12/01/13 405 420
Delaware County, Pennsylvania
Industrial Development Authority,
Resource Recovery Project,
Ser A, RB, Callable
12/01/96 @ 103.50 (C)
7.900%, 12/01/05 25 26
Delaware County, Pennsylvania
Industrial Development Authority,
Resource Recovery Project,
Ser A, RB, Callable
12/01/96 @ 103.50 (C)
7.650%, 12/01/01 20 21
Delaware River Port Authority, RB (C)
6.000%, 01/15/10 90 92
Delaware River Port Authority,
PA & NJ River Bridges
Revenue, RB (B) (C)
6.500%, 01/15/11 265 277
Derry Township Sanitation Sewer
Authority, RB (C)
6.250%, 08/01/12 65 67
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
40
<PAGE> 36
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
East Marlboro Township Sewer
Authority, Guaranteed Sewer
Revenue, RB
5.200%, 12/01/01 $ 55 $ 55
5.300%, 12/01/02 200 198
Economy Municipal Authority,
Sewer Revenue, RB,
Callable 12/15/99 @100
6.000%, 12/15/03 55 56
Erie County Hospital Authority,
RB (C)
6.750%, 07/01/11 320 344
Erie County Hospital Authority,
Hamot Health Systems, RB,
AMBAC Insured
6.700%, 02/15/02 500 539
Fayette County Hospital Authority,
Uniontown Hospital, RB,
Connie Lee Insured
4.850%, 06/15/01 1,000 988
5.000%, 06/15/02 300 296
5.100%, 06/15/03 1,065 1,053
5.200%, 06/15/04 100 98
5.300%, 06/15/05 1,000 984
Fort Le Boeuf School District,
Ser 93-A, G.O., MBIA Insured
5.150%, 01/01/02 500 510
Fox Chapel Sanitation Sewer
Authority, RB
5.900%, 05/01/05 275 274
Franklin Hospital, Pennsylvania
State, Special Obligation, RB (C)
7.125%, 10/01/08 20 21
Greene County Industrial
Development Authority, Pollution
Control Revenue, Monogahela
Power-Hatfield Ferry, Ser A, RB
6.300%, 02/01/02 865 869
Hampton Township, G.O.
6.300%, 06/01/02 775 822
Harrisburg Authority, Lease
Revenue, RB, Cross Over
Pre-Refunded @ 101,
CGIC Insured (A)
6.250%, 06/01/01 1,000 1,059
Hopewell Township, Guaranteed
Sewer Revenue, RB,
Callable 11/01/03 @ 100
5.800%, 11/01/08 815 768
Jefferson County Municipal
Authority Revenue, RB,
MBIA Insured (C)
7.000%, 12/01/02 20 21
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Jersey Shore Area School District,
G.O., MBIA Insured (C)
9.375%, 03/01/03 $ 95 $ 109
Lehigh County Community
College, School Lease, RB
5.750%, 01/15/02 1,285 1,287
Lehigh County Industrial
Development Authority,
Strawbridge Project, RB (C)
7.200%, 12/15/01 1,150 1,235
Lehigh County General Purpose
Authority, Muhlenberg Medical
Center Project, RB (C)
7.000%, 07/01/04 20 21
Luzerne County, Ser 91, G.O.,
FGIC Insured
6.800%, 09/15/02 500 543
Lycoming County Authority,
Hospital Revenue, Williamsport
Hospital, RB, Connie Lee Insured
5.250%, 11/15/06 1,300 1,279
Lycoming County Hospital
Authority, RB (C)
5.750%, 07/01/02 125 125
McCandless Township Sanitation
Authority, Sewer Revenue, RB (C)
6.750%, 11/15/05 85 92
Montgomery County Higher
Education & Health Authority,
Abington Memorial Hospital,
Ser 91-A, RB, AMBAC Insured
6.200%, 06/01/00 800 841
Montgomery County Industrial
Development Authority,
Ecri Project, RB
6.850%, 06/01/13 2,165 2,124
Montgomery County, G.O. (C)
9.000%, 08/15/04 165 185
Moon School District, School
Building Revenue, RB,
MBIA Insured (C)
6.375%, 11/15/98 40 40
Moon Transportation Authority,
Pre-Refunded @100, RB (A) (C)
9.000%, 02/01/98 10 11
Mount Lebanon Hospital
Authority, RB (C)
7.000%, 07/01/06 185 197
Norristown Area School District,
Ser 91, Bank Qualified, G.O.,
Pre-Refunded @ 100 (A)
6.650%, 09/01/01 100 108
</TABLE>
41
<PAGE> 37
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
<TABLE>
<CAPTION>
PENNSYLVANIA MUNICIPAL PORTFOLIO--CONTINUED
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Northampton County Industrial
Development Authority,
Moravian Hall Square Project,
Ser A, RB, Asset Guaranty Insured
5.000%, 07/01/05 $ 575 $ 554
5.000%, 07/01/06 560 532
5.250%, 07/01/08 595 566
5.350%, 07/01/10 1,470 1,384
Northeast Allegheny County, RB (C)
6.000%, 05/01/02 60 61
Northeast Hospital Authority, RB (C)
6.375%, 09/01/07 60 61
Northeastern Hospital, Hospital
Revenue Authority, RB (C)
7.000%, 06/01/06 210 223
Pennsylvania Housing Finance
Authority, RB (C)
7.750%, 12/01/07 45 50
Pennsylvania Higher Education
Authority, Ser 95, RB,
Asset Guaranty Insured (C)
4.750%, 09/15/02 270 264
4.850%, 09/15/03 250 244
4.950%, 09/15/04 515 501
5.150%, 09/15/06 345 334
Pennsylvania Higher Education
Facilities Authority,
Commonwealth of Pennsylvania,
Ser E, RB, MBIA Insured
6.450%, 06/15/01 400 428
Pennsylvania Higher Education
Facilities Authority, Hahnemann
University Project, Ser-91, RB,
MBIA Insured
6.400%, 07/01/01 570 611
Pre-Refunded 07/01/01 @ 102 (A)
6.600%, 07/01/01 535 586
Pennsylvania Higher Education
Facilities Authority, Philadelphia
College of Pharmacy, Ser A,
RB, MBIA Insured,
Pre-Refunded @ 101 (A)
6.750%, 09/01/98 500 529
Pennsylvania Housing Finance
Agency, RB, AMT,
Callable 10/01/00 @ 102
7.800%, 10/01/20 100 105
Pennsylvania Housing Finance
Agency, Rental Housing,
Ser 91, RB, Callable 07/01/03
@ 102, FNMA Collateral
5.450%, 07/01/06 2,000 2,010
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Pennsylvania Housing Finance
Agency, Single Family
Mortgage, Ser 92-33, RB
5.700%, 04/01/98 $ 330 $ 332
Pennsylvania State Higher
Education, Philadelphia
College of Textiles & Science,
Ser 96, RB
5.900%, 04/01/02 225 226
6.050%, 04/01/03 240 242
6.150%, 04/01/04 250 252
6.250%, 04/01/05 265 268
6.350%, 04/01/06 285 288
6.450%, 04/01/07 295 299
6.550%, 04/01/08 320 325
6.600%, 04/01/09 340 345
Pennsylvania State Higher
Education Facilities Authority,
College & University Revenue,
Tenth Series, RB (C)
6.900%, 07/01/07 75 80
Pennsylvania State Higher
Education Facilities, Drexel
University, RB,
6.375%, 05/01/17 1,450 1,434
Pennsylvania State Higher
Education, College &
University, RB (C)
9.375%, 07/01/10 120 145
Pennsylvania State Higher
Education, Student Loan,
Ser A, RB, AMT,
AMBAC Insured
7.050%, 10/01/16 3,500 3,645
Pennsylvania State Higher
Education, Student Loan,
Ser C, RB, AMT,
AMBAC Insured
7.150%, 09/01/21 500 522
Pennsylvania State Housing
Finance Authority, Single
Family Mortgage, Ser N, RB,
Callable 10/01/97 @ 102
7.500%, 10/01/99 200 204
Peters Township School District,
G.O., MBIA Insured,
Callable 11/15/02 @ 100 (C)
0.00%, 11/15/07 100 54
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
42
<PAGE> 38
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia Gas Works Revenue,
Fourteenth Series, RB, FSA Insured,
Callable 07/01/03 @ 102
6.250%, 07/01/08 $ 1,000 $ 1,076
Philadelphia Hospital & Higher
Education Authority, Presbyterian
Medical Center, RB (C)
6.100%, 12/01/03 410 435
Philadelphia Hospital & Higher
Education Facilities, Philadelphia
MR Project, RB
5.500%, 08/01/01 1,175 1,160
Philadelphia Hospital, Graduate
Hospital Project, RB (C)
7.000%, 07/01/10 335 359
Philadelphia Industrial
Development Authority,
Convention Project, PGH
Development Corporation,
Ser 89, RB, AMBAC Insured (C)
7.000%, 07/01/99 885 925
Philadelphia Industrial
Development Authority,
National Board of Medical
Examiners Project, RB,
Callable 05/01/02 @ 102
6.750%, 05/01/12 950 1,008
Philadelphia Municipal Authority,
Justice Lease Revenue, Ser B,
RB, FGIC Insured
6.700%, 11/15/01 1,000 1,088
Philadelphia Municipal Authority,
Services Building Lease Rental
Revenue, Ser 90, RB,
FSA Insured
6.900%, 03/15/99 1,000 1,056
Philadelphia Hospital & Higher
Education Facilities Authority,
St. Agnes Medical Center, RB,
MBIA Insured
4.900%, 07/01/04 820 810
Philadelphia Redevelopment
Authority, Home Improvement
Loan, Ser 95-A, RB, AMT
5.100%, 06/01/01 140 139
5.100%, 12/01/01 110 109
5.250%, 06/01/02 200 198
5.250%, 12/01/02 220 218
5.400%, 06/01/03 160 158
5.400%, 12/01/03 185 183
5.550%, 06/01/04 65 64
5.650%, 12/01/05 70 69
6.100%, 12/01/10 1,000 984
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Philadelphia Redevelopment
Authority, West Philadelphia
Project, RB, FNMA Collateral
6.750%, 05/15/04 $ 765 $ 797
Philadelphia School District,
Ser 91-B, G.O., MBIA Insured
7.000%, 07/01/05 250 276
Philadelphia United Hospitals
Project, RB, Pre-Refunded @ 100 (A)
10.875%, 07/01/05 660 859
Philadelphia Water & Sewer
Authority, Ser 10, RB (C)
7.350%, 09/01/04 5,485 6,150
Pittsburgh Parking Authority,
Ser 92-A, RB, FGIC Insured,
Callable 12/14/04 @ 100
5.750%, 12/01/05 500 518
Pittsburgh, G.O., FGIC Insured
7.000%, 03/01/01 775 800
Pittsburgh Stadium Authority,
Lease Revenue, RB (C)
6.500%, 04/01/11 815 849
Pittsburgh Urban Redevelopment
Authority Mortgage Revenue,
Ser 96-C, RB, AMT
5.700%, 10/01/05 240 239
Pittsburgh Urban Redevelopment
Authority Mortgage Revenue,
Ser 96-D, RB
5.900%, 04/01/08 285 284
5.900%, 10/01/08 290 289
6.000%, 10/01/09 310 310
6.100%, 10/01/10 330 330
Pittsburgh Urban Redevelopment
Authority, Home Improvement
Loans, RB, Callable 08/14/03 @ 100
7.125%, 08/01/04 835 859
Pittsburgh Urban Redevelopment
Authority, Mortgage Revenue,
Ser A, RB, AMT
5.000%, 10/01/02 70 68
5.100%, 10/01/03 70 68
5.750%, 10/01/10 55 53
Pittsburgh Urban Redevelopment
Authority, Ser A, RB, AMT
5.300%, 04/01/05 75 72
5.400%, 04/01/06 80 77
5.400%, 10/01/06 80 76
5.500%, 04/01/07 85 81
5.500%, 10/01/07 85 81
5.600%, 04/01/08 90 86
5.700%, 04/01/09 90 86
5.700%, 10/01/09 95 90
</TABLE>
43
<PAGE> 39
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
PENNSYLVANIA MUNICIPAL PORTFOLIO--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Pittsburgh Urban Redevelopment
Authority, Ser B, RB,
Callable 04/01/03 @ 100
6.700%, 04/01/10 $ 40 $ 40
Pittsburgh Urban Redevelopment
Authority, Ser B, RB
5.700%, 10/01/11 110 104
Pittsburgh Urban Redevelopment
Center, Triangle Tax Increment,
Ser A, RB (B)
5.125%, 06/01/00 1,175 1,157
5.750%, 12/01/06 1,980 1,896
Pittsburgh Urban Redevelopment
Center, Triangle Tax Increment,
Ser B, RB (B)
5.750%, 03/15/06 1,185 1,138
Pittsburgh, RB, Pre-Refunded
@ 102, FGIC Insured (A)
7.000%, 03/01/97 100 103
Potter County Hospital Authority,
Charles Cole Memorial, RB,
Asset Guaranty Insured
4.750%, 08/01/99 260 258
4.850%, 06/01/00 270 268
5.100%, 08/01/02 290 287
5.200%, 08/01/03 245 242
5.400%, 08/01/04 325 321
5.400%, 08/01/05 320 316
5.500%, 08/01/06 160 157
Pottsville Hospital Authority,
Pottsville Hospital &
Warner Clinic, RB
6.400%, 07/01/03 930 927
Quakertown Pennsylvania
Hospital Authority, Quakertown
Community Hospital, RB (C)
7.125%, 01/01/11 10 11
Sayre Health Facilities Authority,
Guthrie Health Care,
Ser 91-A, RB, AMBAC Insured
6.800%, 03/01/03 1,000 1,086
Scranton Lackawanna Health &
Welfare Authority, Community
Medical Center, RB, FGIC Insured
6.900%, 07/01/98 500 522
7.000%, 07/01/99 250 266
Scranton Lackawanna Health &
Welfare Authority, Moses Taylor
Hospital, RB (C)
6.625%, 07/01/09 485 509
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Scranton Lackawanna Health &
Welfare Authority, RB, BIGI Insured
7.250%, 07/01/99 $ 790 $ 841
Scranton Lackawana Health &
Welfare Allied Services,
Rehabilitation Hospital, RB,
Callable 07/01/04 @ 102
7.125%, 07/15/05 1,500 1,524
Shaler School District, RB (C)
6.250%, 04/15/08 50 52
Shaler Township, G.O. (C)
6.400%, 08/01/01 30 31
South Side Area School
District, Ser 91, G.O.,
AMBAC Insured,
Pre-Refunded @ 100 (A)
6.550%, 04/15/98 260 269
Southeastern Greene
School District, G.O. (C)
9.375%, 07/01/03 60 70
University Area Joint Authority,
Sewer Revenue, Ser 90, RB,
MBIA Insured,
Pre-Refunded @ 101 (A)
7.000%, 09/01/00 750 815
Upper Allegheny Joint Sanitation
Authority, RB, AMBAC Insured (C)
9.000%, 09/01/00 10 11
Washington County Authority,
Municipal Facilities Lease
Revenue, Pooled Capital,
Ser C, Subseries C-1A, RB,
AMBAC Insured,
Pre-Refunded @ 100 (A)
7.000%, 06/15/00 400 435
Washington County Hospital
Authority, Shadyside Hospital
Project, Ser 92, RB,
AMBAC Insured
5.875%, 12/15/04 1,000 1,052
Westmoreland County Industrial
Development Authority, Henry
Clay Frick Hospital, RB
7.000%, 12/01/05 830 832
Westmoreland County Industrial
Development Authority, Hospital
Revenue, Ser 92-A, RB,
AMBAC Insured
5.900%, 07/01/05 595 614
Westmoreland County Industrial
Development Authority,
Hospital Revenue, Ser 99-A,
AMBAC Insured
5.800%, 07/01/04 565 583
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
44
<PAGE> 40
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Windber Area Authority, Hospital
Revenue, RB, FHA Insured
5.900%, 02/01/10 $ 355 $ 363
Wyoming County Hospital
Authority, RB (C)
7.400%, 01/01/05 45 48
Wyoming County Hospital Authority,
Tyler Memorial, RB (C)
7.400%, 01/01/05 60 63
York County Hospital Authority,
Lutheran Social Services, RB
5.400%, 04/01/04 500 486
5.600%, 04/01/05 500 485
5.800%, 04/01/06 500 484
--------
Total Municipal Bonds
(Cost $96,024) 96,265
--------
Total Investments -- 99.0%
(Cost $96,024) 96,265
--------
OTHER ASSETS AND LIABILITIES, NET-- 1.0% 963
--------
NET ASSETS:
Portfolio Shares of Class A (unlimited
authorization -- no par value) based on
9,275,192 outstanding shares of
beneficial interest 95,265
Undistributed Net Investment Income 1
Accumulated Net Realized Gain
on Investments 1,721
Net Unrealized Appreciation
on Investments 241
--------
Total Net Assets--100.0% $97,228
========
Net Asset Value, Offering Price and
Redemption Price Per Share-- Class A $ 10.48
========
</TABLE>
AMBAC AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
AMT ALTERNATIVE MINIMUM TAX
BIGI BOND INVESTORS GUARANTY INSURANCE CORPORATION
CGIC CAPITAL GUARANTY INSURANCE CORPORATION
FGIC FINANCIAL GUARANTY INSURANCE CORPORATION
FHA FEDERAL HOUSING AGENCY
FNMA FEDERAL NATIONAL MORTGAGE ASSOCIATION
FSA FINANCIAL SECURITY ASSURANCE
GO GENERAL OBLIGATION
MBIA MUNICIPAL BOND INVESTORS ASSURANCE
RB REVENUE BOND
SER SERIES
(A) PRE-REFUNDED SECURITY--THE MATURITY DATE REPORTED ON THE
STATEMENT OF NET ASSETS IS THE PRE-REFUNDED DATE.
(B) SECURITY IS HELD IN CONJUNCTION WITH A LETTER OF CREDIT FROM
A MAJOR COMMERCIAL BANK OR FINANCIAL INSTITUTION.
(C) SECURITY IS ESCROWED TO MATURITY.
(D) PUT AND DEMAND FEATURE -- THE MATURITY DATE REPORTED ON THE STATEMENT
OF NET ASSETS IS THE LESSER OF THE MATURITY DATE OR THE PUT DATE.
KANSAS TAX FREE
INCOME PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS -- 98.4%
KANSAS -- 95.9%
Anderson County, USD #365
Garnett, Ser 91, G.O.,
AMBAC Insured
6.400%, 09/01/05 $ 250 $ 263
6.500%, 09/01/06 250 264
Arkansas City, G.O.
3.800%, 12/01/99 285 271
Belleville Electric & Gas,
Ser A, RB
5.000%, 12/01/98 150 151
5.500%, 12/01/02 175 180
5.700%, 12/01/04 150 155
Bourbon County, G.O.
5.500%, 09/01/09 195 194
Bourbon County, USD # 234,
Fort Scott , Ser B, G.O.
5.625%, 09/01/11 285 280
Bourbon County, USD # 234,
G.O., Callable 09/01/06 @ 100
5.600%, 09/01/10 215 212
Butler County, Bank Qualified,
G.O., CGIC Insured
4.150%, 10/01/01 250 241
4.300%, 10/01/02 250 241
Chanute Electric Light Water &
Gas, RB, MBIA Insured
Pre-Refunded @ 100 (A)
6.900%, 11/01/05 600 633
Cherokee County, USD #499, G.O.,
AMBAC Insured
5.800%, 10/01/09 200 204
5.900%, 10/01/10 215 220
5.950%, 10/01/11 225 230
Clay County, Clay Center, Ser 92,
Bank Qualified, G.O.
5.300%, 04/01/00 250 255
5.400%, 04/01/01 250 254
Clay County, Ser 94-B, G.O.
6.200%, 10/01/15 250 253
Coffeyville Water and Sewer, Ser 93,
RB, AMBAC Insured
4.600%, 10/01/04 465 446
4.700%, 10/01/05 490 469
Coffeyville, COP
5.875%, 10/01/14 250 250
Cowley County, USD #470, G.O.,
Callable 12/01/06 @ 100
5.450%, 12/01/12 500 493
Cowley County, USD #465 School
Improvement Bonds, Winfields,
Ser 91, G.O.
6.000%, 11/01/97 250 255
</TABLE>
45
<PAGE> 41
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
KANSAS TAX FREE INCOME PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Decatur County, Ser 92, Bank
Qualified, G.O.
6.000%, 09/01/01 $ 250 $ 260
Dickinson County, Abilene School
District, Ser 92, Bank
Qualified, G.O.
5.400%, 04/01/01 265 267
5.600%, 04/01/03 300 300
Dodge City, Pollution Control
Revenue, Excel Project, RB
6.625%, 05/01/05 700 760
Dodge, USD #443, Ford County,
G.O., CGIC Insured
4.700%, 03/01/07 180 167
4.800%, 03/01/08 360 337
5.000%, 03/01/14 250 228
Douglas County, USD #497,
Ser 93-A, G.O.
4.500%, 09/01/02 250 246
Douglas County, USD #497,
Ser A, G.O.
5.400%, 09/01/15 600 574
Emporia Sewer System, Ser 90,
RB, Pre-Refunded @ 100.50 (A)
7.100%, 06/01/04 300 316
Emporia, Ser B, G.O.
5.150%, 09/01/00 155 158
5.250%, 09/01/01 165 170
6.000%, 09/01/06 175 182
Finney County, Garden City
Project, Ser 91, G.O.
5.700%, 10/01/98 500 505
Finney County, USD #457, G.O.
5.500%, 10/01/99 185 190
5.550%, 10/01/00 250 258
Ford County, Single Family
Mortgage Ser A, RB
7.900%, 08/01/10 325 341
Garden City, Ser B, G.O.,
MBIA Insured
4.900%, 11/01/99 250 254
5.450%, 11/01/04 250 259
Garden City, Water & Sewer, RB
6.500%, 11/01/00 125 134
6.750%, 11/01/03 125 134
Gardner County, G.O.
5.300%, 09/01/11 330 323
Gardner Electric Utility, Ser 92, RB
7.000%, 11/01/09 500 523
Gove County, G.O., AMBAC Insured,
Callable 10/01/01 @ 101
5.150%, 04/01/12 560 523
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Gray County,USD #102, G.O.
6.000%, 09/01/04 $ 100 $ 104
6.200%, 09/01/06 125 131
6.800%, 09/01/15 250 261
Great Bend, Ser B, G.O., FGIC Insured
5.900%, 09/01/98 250 250
Great Bend, Ser B, G.O.,
Pre-Refunded @ 100 (A)
6.300%, 09/01/02 250 250
Halstead Hospital, Active
Sinking Fund, RB
6.750%, 10/01/06 255 274
Hays, Ser A, G.O., FGIC Insured,
Callable 09/01/03 @ 100
5.150%, 09/01/09 250 241
5.250%, 09/01/10 250 246
Hays, Internal Improvement,
Ser A, G.O.
5.200%, 09/01/01 105 108
5.300%, 09/01/02 110 112
5.500%, 09/01/04 120 122
Hays, Water & Sewer, Ser 92,
Bank Qualified, RB,
AMBAC Insured
5.600%, 09/01/99 100 103
5.800%, 09/01/00 100 104
6.200%, 09/01/03 100 106
6.400%, 09/01/05 180 191
Hayes Water & Sewer System, RB
5.200%, 09/01/11 260 247
Holton, Electrical Systems,
Ser 92-A, RB
6.400%, 12/01/06 150 161
6.500%, 12/01/07 150 161
Hutchinson, Ser A, RB
5.450%, 10/01/14 125 121
5.500%, 10/01/15 135 130
Hutchinson, Single Family
Mortgage, Ser 92, RB
6.500%, 12/01/09 175 182
Hutchinson, Water & Sewer,
Ser 93, RB, AMBAC Insured
6.850%, 12/01/05 150 168
5.000%, 12/01/11 225 210
Jackson County, Holton School
Boards USD #336, Ser 92,
Bank Qualified, G.O.
6.200%, 10/01/07 205 219
6.300%, 10/01/08 125 134
Jefferson County, USD #340,
G.O., CGIC Insured
6.000%, 09/01/06 300 317
6.100%, 09/01/07 320 338
6.200%, 09/01/08 330 348
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
46
<PAGE> 42
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Johnson County, Blue Valley
Recreation Commission,
COP, Ser 91, G.O.
6.000%, 10/01/97 $ 250 $ 253
Johnson County, G.O.
6.800%, 09/01/99 1,000 1,068
Johnson County, Internal
Improvement, Ser A, G.O.
5.600%, 09/01/03 200 209
Johnson County, USD #229
Blue Valley, Ser A, G.O.,
Pre-Refunded @ 100 (A)
6.500%, 10/01/12 300 323
Johnson County, USD #233
Olathe, Ser 89-B, G.O.,
Pre-Refunded @ 100 (A)
7.000%, 03/01/03 500 534
7.000%, 09/01/03 500 534
Johnson County, USD #233,
G.O., AMBAC Insured
5.950%, 09/01/05 500 524
Johnson County, Water
District #001, Ser 90-A, RB
6.800%, 06/01/99 250 264
6.900%, 12/01/00 250 272
5.125%, 12/01/08 250 245
5.250%, 12/01/15 500 463
6.100%, 12/01/16 250 253
Junction City, Industrial
Development, F.W. Woolworth, RB
7.250%, 11/01/98 190 191
Junction City, Ser 00, Bank
Qualified, G.O., AMBAC Insured
6.200%, 09/01/06 515 534
Junction City, Water, Ser A, RB
4.900%, 04/01/01 205 206
4.900%, 10/01/01 210 211
Kansas City, Community
College Center, G.O., MBIA Insured
6.000%, 05/15/10 205 216
6.125%, 05/15/11 215 228
6.125%, 05/15/12 230 244
Kansas City, Improvement Project,
Ser B, MBIA Insured
5.375%, 09/01/10 1,500 1,487
Kansas City, Sisters of Charity
Health Hospital, RB
4.850%, 08/01/97 250 251
Kansas City, Special Obligation (B)
5.500%, 02/15/99 500 514
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Kansas Rural Water Finance
Authority, Revenue District # 13,
Ser F, RB, Callable 06/01/01 @ 100
5.900%, 06/01/11 $ 400 $ 403
Kansas Water Pollution Control
Callable 05/01/03 @ 102
5.750%, 05/01/14 370 375
Kansas State Department of
Transportation Highway, RB
5.000%, 03/01/04 250 252
Kansas State Department of
Transportation Highway, Ser 92,
RB, Pre-Refunded @ 102 (A)
6.125%, 03/01/03 500 536
6.500%, 03/01/08 750 818
Kansas State Development
Finance Authority, RB
Callable 05/01/04 @ 101
5.200%, 05/01/07 120 121
5.400%, 05/01/09 135 136
5.450%, 05/01/10 100 101
5.500%, 05/01/11 100 101
5.550%, 05/01/12 100 101
Kansas State Development
Finance Authority, Storemont
Vail Health Care, Ser F, RB,
MBIA Insured
5.800%, 11/15/16 500 491
Kansas State Development Finance
Authority, Storemont
Vail Health
Care, Ser G, RB, MBIA Insured
5.750%, 11/15/10 500 500
Kansas State Development Finance
Authority, Department of
Corrections El Dorado Project L,
RB, MBIA Insured
5.625%, 02/01/03 250 255
Kansas State Development Finance
Authority, Kansas Board Regents
Wichita, RB, AMBAC Insured
5.125%, 06/01/06 250 247
Kansas State Development Finance
Authority, Water Pollution
Control, G.O.
4.450%, 05/01/01 355 358
Kansas State Pollution Control, RB
5.450%, 04/01/06 500 499
Kingman, Electric Utility &
Distribution System, RB
5.500%, 09/01/08 250 243
Kingman, Water & Sewer, Utility &
Distribution System, RB
6.125%, 09/01/15 250 255
</TABLE>
47
<PAGE> 43
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
KANSAS TAX FREE INCOME PORTFOLIO--CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Lawrence Hospital, RB
4.850%, 07/01/97 $ 250 $ 250
Lawrence Water & Sewer
System, RB
5.300%, 11/01/07 315 313
5.700%, 11/01/11 395 392
Lawrence, G.O.
5.100%, 09/01/01 220 223
Lawrence, Ser 91-L, G.O.
5.600%, 09/01/98 175 180
Leavenworth County, USD #449,
Ser A, Bank Qualified, G.O.
6.300%, 09/01/09 150 152
6.400%, 09/01/10 160 163
6.500%, 09/01/12 125 128
6.500%, 09/01/13 100 102
Leavenworth, Ser 91-A,
Bank Qualified, G.O.
5.700%, 09/01/97 160 160
Leavenworth, Ser B, G.O.
5.050%, 09/01/00 210 212
Leawood, Ser 92-A, G.O.
5.000%, 09/01/00 300 305
5.200%, 09/01/01 250 255
6.000%, 09/01/08 135 141
Leawood, Unlimited Tax, Ser B, G.O.
5.000%, 09/01/10 400 377
Lindsborg Electric & Waterworks
System, Callable 10/01/05 @ 100
5.300%, 10/01/07 105 105
5.600%, 10/01/09 120 120
Lindsborg Electric & Waterworks
System, RB
5.000%, 10/01/05 100 100
Lindsborg Temp Nts. Ser A, G.O.
Callable 06/01/97 @ 100
4.750%, 06/01/98 280 280
Lyon County, Hospital Revenue,
Ser 94, 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%, 10/01/08 250 262
Manhattan, Unlimited Tax,
Ser 89, G.O.
5.850%, 11/01/02 250 262
6.300%, 11/01/11 100 103
6.300%, 11/01/12 105 109
Marion County, USD #411, RB
5.300%, 04/01/13 660 629
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
McPherson County, USD #400
Smoky Valley, G.O., FGIC Insured,
Callable 12/01/05 @ 100
5.200%, 12/01/10 $ 250 $ 243
5.250%, 12/01/12 250 241
McPherson, Electric Utility, RB,
AMBAC Insured
5.550%, 03/01/09 550 548
McPherson, Electric Utility-Capital
Appreciation, RB, AMBAC Insured
0.000%, 03/01/10 520 209
McPherson, Refunding &
Improvement, Ser 115, G.O.
5.000%, 11/01/06 500 488
Meade Industrial Development,
Dekalb Agresearch Project, RB
6.500%, 10/01/06 1,000 1,103
Miami County, USD #367, Ser A, G.O.
5.850%, 09/01/13 550 558
Miami County, USD #368 Paola,
Ser 92, G.O., AMBAC Insured
6.500%, 12/01/05 500 533
Miami County, USD #416 Louisburg,
Ser 92, G.O., AMBAC Insured
6.000%, 09/01/02 250 261
Nemaha County, USD #441,
Ser 92, G.O., AMBAC Insured
5.400%, 03/01/02 250 254
5.750%, 03/01/07 250 254
Neosho County, USD #413, G.O.
5.650%, 09/01/01 260 270
Newton, Waste Water Treatment
System, Ser 92, Bank
Qualified, RB
5.750%, 03/01/99 110 113
6.000%, 03/01/00 115 119
6.200%, 03/01/01 120 126
6.400%, 03/01/02 130 138
Olathe & Labette County, GNMA
Collateral Mortgage, Senior
Ser 91-B, RB
7.150%, 02/01/15 55 58
Olathe, Multi-Family Housing,
Deerfield Apartments,
Ser 94-A, RB
5.500%, 06/01/04 435 443
Olathe, Sewer Improvement,
Ser 84, G.O.
4.600%, 10/01/99 275 276
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
48
<PAGE> 44
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Osborne, Ser 92, Bank
Qualified, G.O.
5.500%, 12/01/01 $ 135 $ 137
5.600%, 12/01/02 140 141
5.700%, 12/01/03 150 151
5.800%, 12/01/04 155 156
Ottawa, Waterworks & Electric
Systems, Ser 91, RB,
MBIA Insured
6.150%, 12/01/00 250 264
6.250%, 12/01/01 250 267
Pawnee County, G.O., CGIC Insured
5.100%, 09/01/04 255 257
Phillip County, USD #325, G.O.
5.200%, 09/01/03 100 102
5.600%, 09/01/07 155 158
Pittsburg, Water & Sewer
Systems, Ser 91-A, RB
6.400%, 09/01/03 105 111
6.500%, 09/01/04 110 116
Pottawatomie County, USD #320
Wamego, Ser 90, G.O.,
AMBAC Insured
6.600%, 10/01/02 500 539
Pratt, Electrical System, Ser 92,
RB, AMBAC Insured
6.600%, 11/01/07 250 276
6.000%, 11/01/12 250 254
Reno County, G.O.
6.250%, 08/01/00 685 706
Reno County, Single Family
Mortgage, Ser B, RB,
Callable 09/01/01 @ 103
8.700%, 09/01/11 205 219
Riley County Hospital, Ser A, RB
4.750%, 09/01/98 110 110
5.000%, 09/01/99 165 165
5.150%, 09/01/00 100 100
Riley County, Ser 92,
Bank Qualified, G.O.
5.000%, 11/01/98 335 338
Riley County, Ser B, G.O.
6.100%, 09/01/06 110 116
6.200%, 09/01/07 110 117
6.300%, 09/01/08 110 117
6.400%, 09/01/09 110 117
Salina County, Sales Tax, RB
3.700%, 12/01/96 100 100
Salina, Internal Improvement
Bonds, Ser P-240, G.O.
4.900%, 10/01/96 125 125
5.500%, 10/01/99 100 103
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000
- --------------------------------------------------------------------------------
<S> <C> <C>
Salina, Water & Sewer, RB,
MBIA Insured
5.000%, 09/01/07 $ 330 $ 315
Salina, Water & Sewer, RB
6.700%, 10/01/99 250 257
6.750%, 10/01/00 250 256
6.850%, 10/01/02 250 256
Scott City, Water System, Ser A,
Bank Qualified, G.O.
5.250%, 09/01/04 130 129
5.400%, 09/01/05 140 139
5.600%, 09/01/06 140 139
5.700%, 09/01/07 150 150
5.800%, 09/01/08 145 145
Scott County, USD #466, Ser 93, G.O.
5.375%, 09/01/06 685 676
Sedgwick & Shawnee County,
GNMA Collateral Mortgage,
Senior Ser 91-A, RB
7.300%, 12/01/12 610 640
Sedgwick & Shawnee County,
Single Family Housing, RB
8.050%, 05/01/14 440 489
Sedgwick & Shawnee County,
Single Family Mortgage, RB,
Callable 11/01/04 @ 103
7.800%, 05/01/14 185 200
Sedgwick & Shawnee County,
Single Family Mortgage, RB
5.250%, 11/01/04 145 147
Sedgwick County, Airport Facilities,
Beech Aircraft, Ser 93, RB
5.625%, 03/01/99 1,000 1,026
Sedgwick County, Ser B, G.O.
4.050%, 08/01/98 250 249
Sedgwick County, USD #262,
Valley Center, G.O.
0.000%, 11/01/98 100 91
Sedgwick Temp Notes, Ser B,
G.O. Callable 06/01/97 @ 100
4.750%, 06/15/98 250 250
Seward County, Ser B, G.O.,
AMBAC Insured
6.000%, 08/15/08 250 254
6.000%, 08/15/13 250 254
Seward County, Single Family
Mortgage, Ser B, RB
8.000%, 05/01/11 395 420
Seward County, USD# 480, RB,
Ser 92, MBIA Insured
5.000%, 12/01/00 500 503
</TABLE>
49
<PAGE> 45
STATEMENT OF NET ASSETS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
KANSAS TAX FREE INCOME PORTFOLIO--CONCLUDED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Shawnee County, Ser B, G.O.,
Callable 09/01/03 @100
5.500%, 09/01/09 $ 250 $ 250
5.500%, 09/01/11 250 248
Shawnee County, Health Care
Facilities, G.O., Callable
08/15/05 @ 100
5.150%, 08/15/10 500 472
Shawnee County, Ser 92-C, G.O.
5.600%, 09/01/04 500 513
Shawnee County, Sisters Charity
Leavenworth, RB
4.700%, 12/01/04 230 223
5.000%, 12/01/10 360 330
Shawnee County, USD #345
Seaman, G.O.
7.200%, 09/01/98 250 263
5.750%, 09/01/98 250 252
Shawnee County, USD #437
Auburn-Washburn, Ser 92,
G.O., FGIC Insured
6.250%, 03/01/03 700 748
Sumner County, Bridge
Improvement Bonds, Ser 92,
G.O., AMBAC Insured
6.000%, 11/01/04 435 457
6.000%, 11/01/05 250 263
Thomas County, USD #315,
Ser 93, G.O.
4.200%, 09/01/01 150 145
4.300%, 09/01/02 160 154
4.400%, 09/01/03 165 159
4.600%, 09/01/04 175 168
Topeka Hospital, Storemont
Vail Project, Ser 90-B, RB
6.750%, 11/15/00 500 540
Topeka, Ser C, G.O.
5.500%, 08/15/05 250 253
Wellington Electric & Water,
Bank Qualified, RB,
AMBAC Insured
7.050%, 05/01/06 250 284
6.250%, 05/01/12 250 258
Wichita, Hospital Facility,
St. Joseph Rehabilitation
Center, RB (B)
6.000%, 07/01/04 1,245 1,301
Wichita, Single Family Mortgage,
Ser B, RB, Callable 07/01/98 @ 100
7.100%, 09/01/09 380 394
Wichita, Kansas, Multi-Family
Housing, RB
5.900%, 12/01/16 660 648
<CAPTION>
- --------------------------------------------------------------------------------
FACE
AMOUNT (000) VALUE (000)
- --------------------------------------------------------------------------------
<S> <C> <C>
Wichita, Water & Sewer
Improvement, Ser B, RB,
FGIC Insured
5.600%, 10/01/05 $ 750 $ 762
Winfield, Sales Tax, RB, Callable
09/01/03 @ 100
5.100%, 09/01/06 100 98
5.250%, 09/01/07 100 98
5.400%, 09/01/08 100 97
Wyandotte County, G.O.
7.000%, 09/01/05 415 435
Wyandotte County, USD #203
Piper, G.O.
5.750%, 09/01/03 140 142
5.900%, 09/01/04 295 298
6.600%, 09/01/13 500 507
--------
69,090
--------
GUAM -- 1.1%
Guam Government Highway
Bonds, Ser A, G.O., CGIC Insured
5.100%, 05/01/97 250 252
5.500%, 05/01/99 200 206
6.300%, 05/01/12 100 105
Guam Government, Ser A, G.O.
5.900%, 09/01/05 250 250
--------
813
--------
PUERTO RICO -- 1.4%
Puerto Rico Commonwealth
Highway and Transportation
Authority, RB
5.000%, 07/01/02 500 502
Puerto Rico Public Buildings,
Series I, RB, Callable
07/01/99 @ 100
6.000%, 07/01/12 500 498
--------
1,000
--------
Total Municipal Bonds
(Cost $69,752) 70,903
--------
CASH EQUIVALENT -- 2.1%
Dreyfus Tax Exempt
Money Market Fund 1,512 1,512
--------
Total Cash Equivalent
(Cost $1,512) 1,512
--------
Total Investments -- 100.5%
(Cost $71,264) 72,415
--------
OTHER ASSETS AND LIABILITIES, NET-- (0.5%) (349)
--------
</TABLE>
50
<PAGE> 46
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
VALUE (000)
- --------------------------------------------------------------------------------
<S> <C>
NET ASSETS:
Portfolio Shares of Class A (unlimited
authorization -- no par value) based on
6,857,687 outstanding shares of
beneficial interest $70,596
Undistributed Net Investment Income 322
Accumulated Net Realized Loss
on Investments (3)
Net Unrealized Appreciation on Investments 1,151
--------
Total Net Assets--100.0% $72,066
========
Net Asset Value, Offering Price and
Redemption Price Per Share-- Class A $ 10.51
========
</TABLE>
AMBAC AMERICAN MUNICIPAL BOND ASSURANCE CORPORATION
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 ASSURANCE
RB REVENUE BOND
SER SERIES
USD UNIFIED SCHOOL DISTRICT
(A) PRE-REFUNDED SECURITY--THE MATURITY DATE REPORTED ON THE
STATEMENT OF NET ASSETS IS THE PRE-REFUNDED DATE.
(B) SECURITY IS ESCROWED TO MATURITY
51
<PAGE> 47
STATEMENT OF OPERATIONS (000)
================================================================================
SEI TAX EXEMPT TRUST -- FOR THE YEAR ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
--------- ---------- ----------- ----------- ----------- ------------ ------------ ---------
CALIFORNIA BAINBRIDGE INTERMEDIATE- KANSAS
TAX TAX INSTITUTION PENNSYLVANIA TERM PENNSYLVANIA TAX FREE
TAX FREE EXEMPT EXEMPT TAX FREE TAX FREE MUNICIPAL MUNICIPAL INCOME
PORTFOLIO PORTFOLIO PORTFOLIO(2) PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- ----------- ----------- ----------- ------------ ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest Income $ 13,091 $ 13,944 $ 1,592 $ 31,291 $ 1,120 $ 5,589 $ 5,726 $ 3,720
-------- -------- -------- -------- -------- -------- -------- --------
EXPENSES:
Management Fees 1,257 886 148 2,980 110 353 357 101
Waiver of Management Fees (158) (305) (82) (1,282) (43) (74) (172) --
Investment Advisory Fees 137 151 16 325 12 254 204 202
Waiver of Investment
Advisory Fees -- -- -- -- -- -- (2) (202)
Custodian/Wire Agent Fees 47 52 9 107 4 20 16 11
Professional Fees 39 44 2 85 5 13 12 9
Pricing Fees 6 7 1 14 -- 2 3 2
Registration Fees 37 36 12 74 3 11 10 6
Trustee Fees 11 11 1 25 1 3 3 2
Distribution Fees (1) 150 1,860 -- 439 11 41 43 --
Printing Fees 37 30 1 43 3 -- 12 7
Amortization of Deferred
Organizational Costs -- -- 13 -- -- -- -- 2
Insurance Fees 5 5 2 11 -- 1 2 1
Other Expenses 3 3 -- 8 -- 1 1 --
-------- -------- -------- -------- -------- -------- -------- --------
Total Expenses 1,571 2,780 123 2,829 106 625 489 141
-------- -------- -------- -------- -------- -------- -------- --------
NET INVESTMENT INCOME 11,520 11,164 1,469 28,462 1,014 4,964 5,237 3,579
-------- -------- -------- -------- -------- -------- -------- --------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net Realized Gain (Loss)
on Investments 18 (5) 27 39 (14) 1,014 2,349 132
Net Change in Unrealized
Depreciation of Investments -- -- -- -- -- (1,920) (3,618) (903)
-------- -------- -------- -------- -------- -------- -------- --------
Net Realized and Unrealized
Gain (Loss) on Investments 18 (5) 27 39 (14) (906) (1,269) (771)
-------- -------- -------- -------- -------- -------- -------- --------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ 11,538 $ 11,159 $ 1,496 $ 28,501 $ 1,000 $ 4,058 $ 3,968 $ 2,808
======== ======== ======== ======== ======== ======== ======== ========
</TABLE>
1 INCLUDES CLASS SPECIFIC DISTRIBUTION AND SHAREHOLDER SERVICING EXPENSES.
2 THE BAINBRIDGE TAX EXEMPT PORTFOLIO CLOSED ON DECEMBER 15, 1995
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
52 & 53
<PAGE> 48
STATEMENT OF CHANGES IN NET ASSETS (000)
================================================================================
SEI TAX EXEMPT TRUST -- FOR THE YEAR ENDED AUGUST 31,
<TABLE>
<CAPTION>
-------------------- ------------------ ------------------- ---------------------
BAINBRIDGE INSTITUTIONAL
TAX CALIFORNIA TAX TAX
FREE TAX EXEMPT EXEMPT FREE
PORTFOLIO PORTFOLIO PORTFOLIO1 PORTFOLIO
--------------------- ------------------- ------------------- ---------------------
1996 1995 1996 1995 1996 1995 1996 1995
---------- ---------- --------- --------- --------- --------- ---------- ----------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income $ 11,520 $ 11,420 $ 11,164 $ 10,554 $ 1,469 $ 5,952 $ 28,462 $ 31,315
Net Realized Gain (Loss) from
Security Transactions 18 (5) (5) -- 27 4 39 (4)
Net Change in Unrealized
Appreciation (Depreciation)
of Investment Securities -- -- -- -- -- -- -- --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Net Increase in Net Assets
Resulting from Operations 11,538 11,415 11,159 10,554 1,496 5,956 28,501 31,311
---------- ---------- --------- --------- --------- --------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Class A (11,513) (11,398) (1,471) (1,158) (1,502) (5,950) (27,624) (30,581)
Class B -- -- -- (170) -- -- (596) (724)
Class C -- -- -- -- -- -- (248) --
Class D (4) (23) -- -- -- -- -- --
Class G(2) -- -- (9,727) (9,226) -- -- -- --
Net Capital Gains
Class A -- -- -- (1) -- -- -- --
Class B -- -- -- -- -- -- -- --
Class C -- -- -- -- -- -- -- --
Class D -- -- -- -- -- -- -- --
Class G(2) -- -- -- (8) -- -- -- --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Total Distributions (11,517) (11,421) (11,198) (10,563) (1,502) (5,950) (28,468) (31,305)
---------- ---------- --------- --------- --------- --------- ---------- ----------
TRANSACTIONS:
Class A:
Proceeds from Shares Issued 1,426,417 1,502,741 232,581 193,641 29,983 256,460 4,958,411 5,130,777
Reinvestment of Cash Distributions 357 74 55 8 -- -- 776 1,645
Cost of Shares Redeemed (1,464,041)(1,483,956) (218,860) (194,711) (179,210) (268,046) (4,912,703)(5,179,065)
---------- ---------- --------- --------- --------- --------- ---------- ----------
Total Class A Share Transactions (37,267) 18,859 13,776 (1,062) (149,227) (11,586) 46,484 (46,643)
---------- ---------- --------- --------- --------- --------- ---------- ----------
Class B(2):
Proceeds from Shares Issued -- -- -- 41,150 -- -- 69,063 77,163
Reinvestment of Cash Distributions -- -- -- -- -- -- 58 69
Cost of Shares Redeemed -- -- -- (44,406) -- -- (70,053) (83,875)
---------- ---------- --------- --------- --------- --------- ---------- ----------
Total Class B Share Transactions -- -- -- (3,256) -- -- (932) (6,643)
---------- ---------- --------- --------- --------- --------- ---------- ----------
Class C:
Proceeds from Shares Issued -- -- -- -- -- -- 82,543 --
Reinvestment of Cash Distributions -- -- -- -- -- -- -- --
Cost of Shares Redeemed -- -- -- -- -- -- (63,337) --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Total Class C Share Transactions -- -- -- -- -- -- 19,206 --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Class D(3):
Proceeds from Shares Issued 1,615 4,827 -- -- -- -- -- --
Reinvestment of Cash Distributions -- -- -- -- -- -- -- --
Cost of Shares Redeemed (1,881) (4,555) -- -- -- -- -- --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Total Class D Share Transactions (266) 272 -- -- -- -- -- --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Class G(4):
Proceeds from Shares Issued -- -- 744,985 675,735 -- -- -- --
Reinvestment of Cash Distributions -- -- 8,087 6,682 -- -- -- --
Cost of Shares Redeemed -- -- (730,352) (672,528) -- -- -- --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Total Class G Share Transactions -- -- 22,720 9,889 -- -- -- --
---------- ---------- --------- --------- --------- --------- ---------- ----------
Increase (Decrease) in Net Assets
from Share Transactions (37,533) 19,131 36,496 5,571 (149,227) (11,586) 64,758 (53,286)
---------- ---------- --------- --------- --------- --------- ---------- ----------
Total Increase (Decrease)
in Net Assets (37,512) 19,125 36,457 5,562 (149,233) (11,580) 64,791 (53,280)
---------- ---------- --------- --------- --------- --------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS:
Beginning of period 377,424 358,299 358,956 353,394 149,233 160,813 803,961 857,241
---------- ---------- --------- --------- --------- --------- ---------- ----------
End of period $ 339,912 $ 377,424 $ 395,413 $ 358,956 $ -- $ 149,233 $ 868,752 $ 803,961
========== ========== ========= ========= ========= ========= ========== ==========
</TABLE>
<TABLE>
<CAPTION>
------------------- ------------------- ------------------- -------------------
PENNSYLVANIA INTERMEDIATE- KANSAS
TAX TERM PENNSYLVANIA TAX FREE
FREE MUNICIPAL MUNICIPAL INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------- ------------------- -------------------
1996 1995 1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- --------- --------- ---------
INVESTMENT ACTIVITIES:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Investment Income $ 1,014 $ 733 $ 4,964 $ 5,258 $ 5,237 $ 5,733 $ 3,579 $ 3,420
Net Realized Gain (Loss) from
Security Transactions (14) (1) 1,014 (1,478) 2,349 (311) 132 (121)
Net Change in Unrealized
Appreciation (Depreciation)
of Investment Securities -- -- (1,920) 3,053 (3,618) 1,299 (903) 1,095
--------- --------- --------- --------- --------- --------- --------- ---------
Net Increase in Net Assets
Resulting from Operations 1,000 732 4,058 6,833 3,968 6,721 2,808 4,394
--------- --------- --------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income
Class A (1,013) (733) (5,335) (5,340) (5,686) (5,837) (3,544) (3,407)
Class B -- -- -- -- -- -- -- --
Class C -- -- -- -- -- -- -- --
Class D -- -- (17) (41) -- -- -- --
Class G(2) -- -- -- -- -- -- -- --
Net Capital Gains
Class A -- -- -- (15) -- (4) -- --
Class B -- -- -- -- -- -- -- --
Class C -- -- -- -- -- -- -- --
Class D -- -- -- -- -- -- -- --
Class G(2) -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Distributions (1,013) (733) (5,352) (5,396) (5,686) (5,841) (3,544) (3,407)
--------- --------- --------- --------- --------- --------- --------- ---------
TRANSACTIONS:
Class A:
Proceeds from Shares Issued 209,781 126,868 73,397 41,823 14,469 9,245 18,206 10,341
Reinvestment of Cash Distributions 60 14 1,360 1,102 171 153 -- --
Cost of Shares Redeemed (192,915) (119,535) (34,549) (76,186) (19,788) (31,265) (11,238) (7,840)
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class A Share Transactions 16,926 7,347 40,208 (33,261) (5,148) (21,867) 6,968 2,501
--------- --------- --------- --------- --------- --------- --------- ---------
Class B(2):
Proceeds from Shares Issued -- -- -- -- -- -- -- --
Reinvestment of Cash Distributions -- -- -- -- -- -- -- --
Cost of Shares Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class B Share Transactions -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Class C:
Proceeds from Shares Issued -- -- -- -- -- -- -- --
Reinvestment of Cash Distributions -- -- -- -- -- -- -- --
Cost of Shares Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------
Total Class C Share Transactions -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------
Class D(3):
Proceeds from Shares Issued -- -- 1 26 -- -- -- --
Reinvestment of Cash Distributions -- -- 11 37 -- -- -- --
Cost of Shares Redeemed -- -- (586) (630) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class D Share Transactions -- -- (574) (567) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Class G(4):
Proceeds from Shares Issued -- -- -- -- -- -- -- --
Reinvestment of Cash Distributions -- -- -- -- -- -- -- --
Cost of Shares Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class G Share Transactions -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Increase (Decrease) in Net Assets
from Share Transactions 16,926 7,347 39,634 (33,828) (5,148) (21,867) 6,968 2,501
--------- --------- --------- --------- --------- --------- --------- ---------
Total Increase (Decrease)
in Net Assets 16,913 7,346 38,340 (32,391) (6,866) (20,987) 6,232 3,488
--------- --------- --------- --------- --------- --------- --------- ---------
NET ASSETS:
Beginning of period 26,058 18,712 96,223 128,614 104,094 125,081 65,834 62,346
--------- --------- --------- --------- --------- --------- --------- ---------
End of period $ 42,971 $ 26,058 $ 134,563 $ 96,223 $ 97,228 $ 104,094 $ 72,066 $ 65,834
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
1 THE BAINBRIDGE TAX EXEMPT PORTFOLIO CLOSED ON DECEMBER 15, 1995
2 ON JULY 12, 1995, CALIFORNIA TAX EXEMPT PORTFOLIO CLASS B CLOSED.
3 ON JUNE 30, 1996, INTERMEDIATE-TERM MUNICIPAL PORTFOLIO CLASS D CLOSED.
4 ON MAY 1, 1996, THE CALIFORNIA TAX EXEMPT PORTFOLIO CLASS C SHARES WERE
REDESIGNATED CLASS G SHARES.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
54 & 55
<PAGE> 49
FINANCIAL HIGHLIGHTS
================================================================================
SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
NET REALIZED
INVESTMENT AND
NET ACTIVITIES DISTRIBUTIONS UNREALIZED
ASSET ---------- ------------------------------- GAIN (LOSS) ON
VALUE, NET NET NET INVESTMENTS
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
- --------------------------------------------------------------------------------
- ------------------
TAX FREE PORTFOLIO
- ------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.033 $(0.033) -- $(0.033) --
1995 1.00 0.034 (0.034) -- (0.034) --
1994 1.00 0.022 (0.022) -- (0.022) --
1993 1.00 0.022 (0.023) -- (0.023) --
1992 1.00 0.033 (0.033) -- (0.033) --
1991 1.00 0.047 (0.047) -- (0.047) --
1990 (1) 1.00 0.032 (0.032) -- (0.032) --
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,:
<S> <C> <C> <C> <C> <C> <C>
1990 $1.00 $0.059 $(0.059) -- $(0.059) --
1989 1.00 0.049 (0.049) -- (0.049) --
1988 1.00 0.042 (0.042) -- (0.042) --
1987 1.00 0.041 (0.041) -- (0.041) --
1986 1.00 0.051 (0.051) -- (0.051) --
1985 1.00 0.058 (0.058) -- (0.058) --
<CAPTION>
CLASS D
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.030 $(0.030) -- $(0.030) --
1995(2) 1.00 0.026 (0.026) -- (0.026) --
<CAPTION>
- -------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.034 $(0.034) -- $(0.034) --
1995 1.00 0.033 (0.033) -- (0.033) --
1994 1.00 0.023 (0.023) -- (0.023) --
1993 1.00 0.024 (0.024) -- (0.024) --
1992 1.00 0.034 (0.034) -- (0.034) --
1991 1.00 0.047 (0.047) -- (0.047) --
1990 (3) 1.00 0.016 (0.016) -- (0.016) --
<CAPTION>
CLASS G***
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.028 $(0.028) -- $(0.028) --
1995 1.00 0.029 (0.029) -- (0.029) --
1994(4) 1.00 0.006 (0.006) -- (0.006) --
<CAPTION>
- -------------------------------
BAINBRIDGE TAX EXEMPT PORTFOLIO
- -------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996(5) $1.00 $0.011 $(0.011) -- $(0.011) --
1995 1.00 0.036 (0.036) -- (0.036) --
1994 1.00 0.025 (0.025) -- (0.025) --
1993(6) 1.00 0.019 (0.019) -- (0.019) --
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
NET
RATIO INVESTMENT
OF EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
NET NET RATIO OF NET ASSETS INVESTMENT NET ASSETS
ASSET VALUE, ASSETS,END EXPENSES EXCLUDING INCOME TO EXCLUDING PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE FEE AVERAGE FEE TURNOVER
OF PERIOD RETURN (000) NET ASSETS WAIVERS NET ASSETS WAIVERS RATE
- -----------------------------------------------------------------------------------------------------
- ------------------
TAX FREE PORTFOLIO
- ------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 3.35% $339,906 0.45% 0.50% 3.30% 3.25% --
1995 1.00 3.48% 377,152 0.45% 0.51% 3.43% 3.37% --
1994 1.00 2.20% 358,299 0.45% 0.53% 2.17% 2.09% --
1993 1.00 2.29% 414,975 0.45% 0.53% 2.24% 2.16% --
1992 1.00 3.32% 293,982 0.45% 0.55% 3.30% 3.20% --
1991 1.00 4.81% 343,300 0.37% 0.55% 4.70% 4.52% --
1990(1) 1.00 3.20%+ 356,814 0.45%* 0.56%* 5.46%* 5.35%* --
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 $1.00 5.97% $464,389 0.54% 0.59% 5.90% 5.85% --
1989 1.00 4.98% 790,629 0.46% 0.58% 4.90 4.78% --
1988 1.00 4.34% 938,484 0.53% 0.54% 4.20% 4.19% --
1987 1.00 4.31% 1,143,083 0.56% 0.56% 4.10% 4.10% --
1986 1.00 5.21% 503,891 0.57% 0.57% 5.10% 5.10% --
1985 1.00 5.86% 263,325 0.58% 0.60% 5.80% 5.78% --
<CAPTION>
CLASS D
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 2.99% $ 6 0.80% 0.88% 3.18% 3.10% --
1995(2) 1.00 2.68%+ 272 0.80%* 0.86%* 3.13%* 3.07%* --
<CAPTION>
- -------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 3.41% $ 44,729 0.28% 0.36% 3.33% 3.25% --
1995 1.00 3.49% 30,921 0.28% 0.42% 3.43% 3.29% --
1994 1.00 2.32% 32,015 0.27% 0.38% 2.28% 2.17% --
1993 1.00 2.41% 540,285 0.28% 0.37% 2.37% 2.28% --
1992 1.00 3.44% 445,936 0.28% 0.38% 3.34% 3.24% --
1991 1.00 4.92% 376,653 0.28% 0.40% 4.74% 4.62% --
1990 (3) 1.00 1.81%+ 275,095 0.28% 0.51% 5.27% 5.04% --
<CAPTION>
CLASS G***
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 2.90% $350,684 0.78% 0.86% 2.84% 2.76% --
1995 1.00 2.97% 328,035 0.78% 0.93% 2.93% 2.78% --
1994(4) 1.00 2.14%* 318,122 0.67%* 0.87%* 2.06%* 1.86%* --
<CAPTION>
- -------------------------------
BAINBRIDGE TAX EXEMPT PORTFOLIO
- -------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996(5) $1.00 3.14%* -- 0.30% 0.50% 3.56% 3.36% --
1995 1.00 3.69% $149,233 0.30% 0.46% 3.62% 3.46% --
1994 1.00 2.52% 160,813 0.30% 0.47% 2.49% 2.32% --
1993(6) 1.00 1.95%+ 160,058 0.30%* 0.48%* 2.39%* 2.21%* --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
56
<PAGE> 50
<TABLE>
<CAPTION>
NET REALIZED
INVESTMENT AND
NET ACTIVITIES DISTRIBUTIONS UNREALIZED
ASSET ---------- ------------------------------- GAIN (LOSS) ON
VALUE, NET NET NET INVESTMENTS
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
- --------------------------------------------------------------------------------
- --------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- --------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.035 $(0.035) -- $(0.035) --
1995 1.00 0.036 (0.036) -- (0.036) --
1994 1.00 0.025 (0.025) -- (0.025) --
1993 1.00 0.026 (0.026) -- (0.026) --
1992 1.00 0.036 (0.036) -- (0.036) --
1991 1.00 0.049 (0.049) -- (0.049) --
1990(1) 1.00 0.033 (0.033) -- (0.033) --
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,:
<S> <C> <C> <C> <C> <C> <C>
1990 $1.00 $0.059 $(0.059) -- $(0.059) --
1989 1.00 0.048 (0.048) -- (0.048) --
1988 1.00 0.042 (0.042) -- (0.042) --
1987 1.00 0.041 (0.041) -- (0.041) --
1986 1.00 0.050 (0.050) -- (0.050) --
1985 1.00 0.056 (0.056) -- (0.056) --
CLASS B
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.032 $(0.032) -- $(0.032) --
1995 1.00 0.033 (0.033) -- (0.033) --
1994 1.00 0.022 (0.022) -- (0.022) --
1993 1.00 0.023 (0.023) -- (0.023) --
1992 1.00 0.033 (0.033) -- (0.033) --
1991(7) 1.00 0.038 (0.038) -- (0.038) --
CLASS C
<CAPTION>
FOR THE YEAR ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996(8) $1.00 $0.029 $(0.029) -- $(0.029) --
<CAPTION>
- -------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- -------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $1.00 $0.034 $(0.034) -- $(0.034) --
1995 1.00 0.035 (0.035) -- (0.035) --
1994(9) 1.00 0.014 (0.014) -- (0.014) --
<CAPTION>
- -------------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- -------------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $10.59 $0.49 $(0.53) -- $(0.53) $(0.10)
1995 10.36 0.52 (0.52) -- (0.52) 0.23
1994 10.84 0.49 (0.49) $(0.06) (0.55) (0.42)
1993 10.49 0.49 (0.50) (0.02) (0.52) 0.38
1992 10.20 0.56 (0.54) (0.01) (0.55) 0.28
1991 9.98 0.61 (0.63) -- (0.63) 0.24
1990(1 10.01 0.38 (0.37) -- (0.37) (0.04)
<CAPTION>
FOR THE YEAR ENDED JANUARY 31,:
<S> <C> <C> <C> <C> <C> <C>
1990(1) $10.00 $0.21 $(0.16) $(0.002) $(0.16) $(0.04)
CLASS D
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996(14) $10.59 $0.38 $(0.41) -- $(0.41) $(0.10)
1995 10.36 0.48 (0.48) -- (0.48) 0.23
1994(11)** 10.90 0.45 (0.42) $(0.06) (0.48) (0.51)
<CAPTION>
RATIO OF
NET
RATIO INVESTMENT
OF EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
NET NET RATIO OF NET ASSETS INVESTMENT NET ASSETS
ASSET VALUE, ASSETS,END EXPENSES EXCLUDING INCOME TO EXCLUDING PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE FEE AVERAGE FEE TURNOVER
OF PERIOD RETURN (000) NET ASSETS WAIVERS NET ASSETS WAIVERS RATE
- -----------------------------------------------------------------------------------------------------
- --------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- --------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 3.52% $835,388 0.33% 0.49% 3.46% 3.30% --
1995 1.00 3.70% 788,877 0.33% 0.52% 3.64% 3.45% --
1994 1.00 2.51% 835,516 0.33% 0.50% 2.48% 2.31% --
1993 1.00 2.59% 763,040 0.33% 0.49% 2.55% 2.39% --
1992 1.00 3.66% 623,689 0.33% 0.51% 3.54% 3.36% --
1991 1.00 5.20% 448,390 0.33% 0.53% 4.91% 4.71% --
1990(1) 1.00 3.32%+ 226,658 0.33%* 0.56%* 5.64%* 5.41%* --
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990 $1.00 6.11% $177,342 0.52% 0.60% 5.90% 5.82% --
1989 1.00 5.05% 99,774 0.55% 0.57% 4.80% 4.78% --
1988 1.00 4.28% 223,653 0.55% 0.56% 4.20% 4.19% --
1987 1.00 4.23% 255,147 0.55% 0.56% 4.10% 4.09% --
1986 1.00 5.11% 198,761 0.57% 0.57% 5.00% 5.00% --
1985 1.00 5.71% 162,676 0.57% 0.59% 5.60% 5.58% --
CLASS B
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 3.21% $ 14,156 0.63% 0.80% 3.16% 2.99% --
1995 1.00 3.39% 15,084 0.63% 0.82% 3.32% 3.13% --
1994 1.00 2.21% 21,725 0.63% 0.81% 2.31% 2.13% --
1993 1.00 2.29% 3,040 0.63% 0.79% 2.22% 2.06% --
1992 1.00 3.35% 686 0.63% 0.81% 3.22% 3.04% --
1991(7) 1.00 3.89%+ 1,515 0.63%* 0.84%* 4.34%* 4.13%* --
<CAPTION>
CLASS C
FOR THE YEAR ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996(8) $1.00 $2.92%+ $ 19,208 0.83%* 0.96%* 2.89%* 2.76%* --
<CAPTION>
- -------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- -------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $1.00 3.40% $ 42,971 0.35% 0.49% 3.33% 3.19% --
1995 1.00 3.60% 26,058 0.35% 0.51% 3.54% 3.38% --
1994(9) 1.00 2.37%* 18,712 0.35%* 0.65%* 2.37%* 2.07%* --
<CAPTION>
- -------------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- -------------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $10.45 3.76% $134,563 0.59% 0.66% 4.66% 4.59% 40.66%
1995 10.59 7.53% 95,675 0.55% 0.72% 4.96% 4.79% 36.05%
1994 10.36 0.65% 127,509 0.53% 0.71% 4.65% 4.47% 58.39%
1993 10.84 8.62% 122,649 0.55% 0.69% 4.79% 4.65% 63.04%
1992 10.49 8.56% 63,210 0.55% 0.71% 5.56% 5.40% 61.56%
1991 10.20 8.82% 36,699 0.55% 0.78% 6.18% 5.95% 111.82%
1990(1 9.98 3.44%+ 12,781 0.55%* 0.90%* 6.63%* 6.28%* 63.45%
FOR THE YEAR ENDED JANUARY 31,:
1990(1) $10.01 1.72%+ $ 9,106 0.56%* 1.36%* 5.80%* 5.00%* 352.00%
<CAPTION>
CLASS D
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996(14) $10.46 3.22%* -- 0.98% 1.08% 4.26% 4.16% 40.66%
1995 10.59 7.11% $ 548 0.95% 1.12% 4.57% 4.40% 36.05%
1994(11)** 10.36 (0.93%)* 1,105 0.93%* 1.07%* 4.34%* 4.20%* 58.39%
</TABLE>
57
<PAGE> 51
FINANCIAL HIGHLIGHTS (concluded)
================================================================================
SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR
<TABLE>
<CAPTION>
NET REALIZED
INVESTMENT AND
NET ACTIVITIES DISTRIBUTIONS UNREALIZED
ASSET ---------- ------------------------------- GAIN (LOSS) ON
VALUE, NET NET NET INVESTMENTS
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
- --------------------------------------------------------------------------------
- --------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- --------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $10.66 $0.55 $(0.59) -- $(0.59) $(0.14)
1995 10.52 0.55 (0.55) -- (0.55) 0.14
1994 10.94 0.53 (0.53) -- (0.53) (0.42)
1993 10.59 0.55 (0.55) $ (0.01) (0.56) 0.36
1992 10.29 0.57 (0.57) (0.01) (0.58) 0.31
1991 9.95 0.60 (0.60) (0.003) (0.60) 0.34
1990(1) 9.98 0.34 (0.34) -- (0.34) (0.03)
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,:
<S> <C> <C> <C> <C> <C> <C>
1990(12) $10.00 $0.28 $(0.23) $(0.001) $(0.23) $(0.07)
<CAPTION>
- --------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- --------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C>
1996 $10.63 $0.56 $(0.56) -- $(0.56) $(0.12)
1995 10.47 0.57 (0.57) -- (0.57) 0.16
1994 10.91 0.57 (0.57) $(0.02) (0.59) (0.42)
1993 10.50 0.58 (0.58) (0.05) (0.63) 0.46
1992 10.13 0.60 (0.59) (0.01) (0.60) 0.37
1991(13) 10.00 0.42 (0.37) -- (0.37) 0.08
<CAPTION>
RATIO OF
NET
RATIO INVESTMENT
OF EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
NET NET RATIO OF NET ASSETS INVESTMENT NET ASSETS
ASSET VALUE, ASSETS,END EXPENSES EXCLUDING INCOME TO EXCLUDING PORTFOLIO
END TOTAL OF PERIOD TO AVERAGE FEE AVERAGE FEE TURNOVER
OF PERIOD RETURN (000) NET ASSETS WAIVERS NET ASSETS WAIVERS RATE
- ---------------------------------------------------------------------------------------------------------------------------
- --------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- --------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $10.48 3.96% $ 97,228 0.48% 0.65% 5.15% 4.98% 65.75%
1995 10.66 6.81% 104,094 0.48% 0.72% 5.21% 4.97% 22.62%
1994 10.52 1.14% 125,081 0.47% 0.71% 4.90% 4.66% 25.13%
1993 10.94 8.91% 153,808 0.48% 0.70% 5.15% 4.93% 15.26%
1992 10.59 8.89% 114,461 0.48% 0.72% 5.52% 5.28% 10.54%
1991 10.29 9.80% 83,054 0.50% 0.73% 5.98% 5.75% 19.17%
1990(1) 9.95 3.12%+ 64,531 0.60%* 0.80%* 5.88%* 5.68%* 20.35%
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1990(12) $9.98 2.11%+ $ 53,042 0.60%* 0.86%* 6.05%* 5.79%* 10.00%
<CAPTION>
- --------------------------------------------------------------------------------
KANSAS TAX FREE INCOME PORTFOLIO
- --------------------------------------------------------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $10.51 4.23% $ 72,066 0.21% 0.51% 5.31% 5.01% 12.71%
1995 10.63 7.23% 65,834 0.21% 0.51% 5.47% 5.17% 17.60%
1994 10.47 1.41% 62,346 0.21% 0.54% 5.36% 5.03% 10.57%
1993 10.91 10.38% 58,197 0.21% 0.51% 5.56% 5.26% 23.04%
1992 10.50 9.78% 45,609 0.22% 0.52% 5.87% 5.57% 12.69%
1991(13) 10.13 5.12%+ 29,242 0.31%* 0.61%* 5.85%* 5.55%* 21.82%
</TABLE>
<TABLE>
<S> <C>
* ANNUALIZED.
** TOTAL RETURN DOES NOT REFLECT THE SALES CHARGE ON THE CLASS D. *** ON MAY 1,
1996, CLASS C SHARES WERE REDESIGNATED CLASS G SHARES.
+ 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 C COMMENCED OPERATIONS ON MAY 11, 1994.
5 THE BAINBRIDGE TAX EXEMPT PORTFOLIO--CLASS A CLOSED ON DECEMBER 15, 1995.
6 THE BAINBRIDGE TAX EXEMPT PORTFOLIO--CLASS A COMMENCED OPERATIONS ON NOVEMBER 9, 1992.
7 THE INSTITUTIONAL TAX FREE PORTFOLIO--CLASS B COMMENCED OPERATIONS ON OCTOBER 15, 1990.
8 THE INSTITUTIONAL TAX FREE PORTFOLIO--CLASS C COMMENCED OPERATIONS ON SEPTEMBER 11, 1995.
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 INTERMEDIATE-TERM MUNICIPAL PORTFOLIO CLASS D CLOSED ON JUNE 30, 1996.
</TABLE>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
58
<PAGE> 52
NOTES TO FINANCIAL STATEMENTS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
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 nine portfolios: the
Tax Free Portfolio, the California 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 California
Intermediate-Term Municipal Portfolio and the New York Intermediate-Term
Municipal Portfolio (collectively "the Fixed Income Portfolios"). The California
Intermediate-Term Municipal Portfolio and the New York Intermediate-Term
Municipal Portfolio had not commenced operations as of August 31, 1996. The
Trust is registered to offer five classes of shares: Class A, Class B, Class C,
Class D and Class G. The Portfolios' prospectus provides a description of each
Portfolio's investment objectives, policies and strategies. The assets of each
portfolio are segregated and a shareholder's interest is limited to the
portfolio in which shares are held.
On December 15, 1995, the Bainbridge Tax Exempt Portfolio closed and all of
the outstanding shares of the Portfolio were redeemed. SEI Financial Management
Corporation voluntarily agreed to bear the costs associated with the liquidation
of the Portfolio which approximated $13,000 and included the amount of
unamortized organizational expenses.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of 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
valuation method, purchase discounts and premiums on securities are accreted and
amortized ratably to maturity.
The market value for each security for each Fixed Income Portfolio is
obtained 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
qualify as a regulated investment company and to distribute all of its taxable
income. Accordingly, no provision for Federal income taxes is required in the
accompanying 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%. The Intermediate-Term
Municipal Portfolio Class D closed on June 30, 1996.
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 relative net asset value each day.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted 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
securities are those of the specific securities sold. Interest income is
recognized 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.
USES OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS -- The
preparation of financial statements, in conformity with generally accepted
accounting principles, requires management to make estimates and assumptions
that affect the reported
59
<PAGE> 53
NOTES TO FINANCIAL STATEMENTS (continued)
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
amount of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared on a daily basis and are payable on the first business day of the
following month for the Tax Free, the California Tax Exempt, the Institutional
Tax Free, the Pennsylvania Tax Free, the Intermediate-Term Municipal, and
the Pennsylvania Municipal Portfolios. Distributions from net investment income
are declared each month and paid on the tenth day of the following month for the
Kansas Tax Free Income Portfolio. Any net realized capital gain on sales of
securities after capital loss carryovers is distributed to the shareholders of
the Portfolios at least annually.
3. TRANSACTIONS WITH AFFILIATES
The Trust and SEI Fund Management (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 assets of the Tax Free, Institutional Tax
Free and Pennsylvania Tax Free Portfolios, .23% of the average daily net asset
value of the California Tax Exempt Portfolio, .24% 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 .15% of the
average daily net asset value of the Kansas Tax Free Income Portfolio. However,
the Manager has voluntarily agreed to waive a portion of its fee so that total
expenses of each Portfolio will not exceed certain annual expense limitations.
For the period September 1, 1995 to April 30, 1996, SEI Financial Services
Company ("SFS"), a wholly-owned subsidiary of SEI Corporation and a registered
broker-dealer, acted 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.
Effective May 1, 1996, SFS (the "Distributor") continued to act as the
distributor of the shares of the Trust under new Distribution Agreements. The
Trust has adopted plans under which firms, including the Distributor, that
provide shareholder and administrative services may receive compensation
thereof. The Class A, Class B, Class C and Class G shareholder servicing plans
(the "Shareholder Servicing Plans") provide for servicing fees payable to the
Distributor of up to .25% of the average daily net assets attributable to that
particular class. For Class A and Class G, no such fees were levied since the
inception of the plan. Such fees may be levied in the future when the Portfolios
are operating below their voluntary expense caps. In addition to the Shareholder
Servicing Plans, the Class B and Class C shares have adopted administrative
services plans that provide for administrative service fees payable to the
Distributor of up to .05% and .25%, receptively, of the average daily nets
assets attributable to that class. The Trust has adopted a distribution for its
Class D and Class G shares pursuant to which a 12b-1 fee of up to .25% and .50%,
respectively, of the average daily net assets attributable to that particular
class of Class D and Class G shares will be paid to the Distributor. This
payment may be used to compensate financial institutions that provide
distribution-related services to their customers. Under each of the plans
adopted by the Trust, the Distributor may retain as a profit any difference
between the fee it receives and the amount it pays to third parties.
Certain officers of the Trust are also officers and/or Directors of the
Manager. The Trust pays each unaffiliated Trustee an annual fee for attendance
at quarterly, interim and committee meetings. Compensation of officers and
affiliated Trustees is paid by the Manager.
4. INVESTMENT ADVISORY
Weiss, Peck, & Greer L.L.C. ("WPG") act as the Investment Adviser on behalf of
the Tax Free, the California Tax Exempt, the Institutional Tax Free and the
Pennsylvania Tax Free Portfolios. For its services, WPG receives a monthly fee
equal to an annual rate of .05% of the combined daily net assets up to $500
million, .04% on the next $500 million
60
<PAGE> 54
and .03% of such assets in excess of $1 billion of the Tax Free, the California
Tax Exempt, the Institutional Tax Free and the Pennsylvania Tax Free Portfolios.
Prior to January 1, 1996, WPG also served as the Investment Adviser on behalf of
the Intermediate-Term Municipal Portfolio. For the period January 1, 1996 to
April 15, 1996, Standish Ayer & Wood ("SAW") acted as the Investment Adviser on
behalf of the Intermediate-Term Municipal Bond Portfolio. Commencing April 16,
1996, SEI Financial Management Corporation ("SFM") was appointed as the
Investment Adviser of the Intermediate-Term Municipal Portfolio. For its
services, SFM is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .33% of the Portfolios average daily net assets.
Sub-Advisory services are provided to SFM for Intermediate-Term Municipal
Portfolio by SAW pursuant to a sub-advisory agreement dated April 16, 1996.
Under the terms of such agreement, SAW is entitled to receive a fee from SFM.
For its services, SAW receives a monthly fee equal to an annual rate of .18% of
the daily net assets up to $125 million and .15% of such assets in excess of
$125 million. SFM is responsible for the supervision of, and payment of fees
to, SAW in connection with their services.
Morgan Grenfell Capital Management Incorporated ("MGCM") acts as the
Investment Adviser 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 Portfolio.
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 is entitled to receive
a monthly fee equal to an annual rate of .30% of the average daily net assets of
the Portfolio. 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.
5. INVESTMENT TRANSACTIONS
The cost of security purchases and the proceeds from the sale of securities,
other than short-term investments for the year ended August 31, 1996, were as
follows:
<TABLE>
<CAPTION>
INTERMEDIATE- KANSAS
TERM PENNSYLVANIA TAX FREE
MUNICIPAL MUNICIPAL INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
(000) (000) (000)
---------- ---------- ----------
<S> <C> <C> <C>
Purchases $77,347 $64,232 $15,060
Sales 40,710 69,195 8,345
</TABLE>
Subsequent to October 31, 1995, the Portfolios recognized net capital
losses for tax purposes that have been deferred and can be used to offset future
capital gains at August 31, 1997. The Portfolios also had capital loss
carryforwards at August 31, 1996, as follows:
<TABLE>
<CAPTION>
CAPITAL
LOSS
CARRYOVER
AUGUST 31, EXPIRES EXPIRES EXPIRES
PORTFOLIO 1996 2002 2003 2004
- -------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Tax Free
Portfolio $ 17,501 $17,408 $ 93 $ --
Intermediate-
Term
Municipal
Portfolio 1,163,939 -- 927,882 236,057
Pennsylvania
Municipal
Portfolio -- -- -- --
Pennsylvania
Tax Free
Portfolio -- -- -- --
Kansas Tax
Free
Income
Portfolio 3,335 -- 3,335 --
</TABLE>
61
<PAGE> 55
NOTES TO FINANCIAL STATEMENTS (continued)
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
<TABLE>
<CAPTION>
POST CAPITAL LOSS
OCTOBER 31, UTILIZED
1995 NET DURING THE
DEFERRED CAPITAL CURRENT WASH
PORTFOLIO LOSSES LOSSES YEAR SALES
- -------- -------------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
Tax Free
Portfolio $ -- $ 17,501 $ 13,466 $ --
Intermediate-
Term
Municipal
Portfolio -- 1,163,939 -- --
Pennsylvania
Municipal
Portfolio -- -- 330,838 14,228
Pennsylvania
Tax Free
Portfolio 13,628 -- -- --
Kansas Tax
Free
Income
Portfolio -- 3,335 14,967 --
</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 aggregate gross unrealized appreciation on securities in which there
was an excess of market 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 appreciation (depreciation) at August 31, 1996, for
each Portfolio are as follows:
<TABLE>
<CAPTION>
INTERMEDIATE- KANSAS
TERM PENNSYLVANIA TAX FREE
MUNICIPAL MUNICIPAL INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
(000) (000) (000)
---------- ---------- ----------
<S> <C> <C> <C>
Aggregate gross unrealized
appreciation $ 969 $1,316 $1,652
Aggregate gross unrealized
depreciation 1,138 1,075 501
------ ------ ------
Net unrealized appreciation
(depreciation) $ (169) $ 241 $1,151
====== ====== ======
</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 112% 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
commercial paper, tax and revenue anticipation notes, and general obligation
bonds. At August 31, 1996, the percentage of portfolio investments by each
revenue source were as follows:
<TABLE>
<CAPTION>
CALIFORNIA
TAX FREE TAX EXEMPT
PORTFOLIO PORTFOLIO
---------- ----------
<S> <C> <C>
Revenue Bonds:
Education Revenue 10.3% 7.0%
Health Care Facilities 9.7% 9.2%
Housing Facilities 14.2% 24.5%
Industrial Development 22.1% 5.0%
Lease Rental Bonds 0.0% 0.7%
Pollution Control 1.5% 3.3%
Public Facility 4.7% 6.7%
Resource Recovery 1.2% 0.0%
Transportation 2.7% 2.5%
Utility Revenue 1.9% 8.8%
General Obligation 8.9% 9.1%
Tax Exempt Commercial Paper 0.0% 0.0%
Anticipation Notes:
Bond 3.6% 0.0%
Revenue 0.9% 0.9%
Tax 4.9% 0.0%
Tax & Revenue 2.1% 10.4%
Other 11.3% 11.9%
------ ------
Total 100.0% 100.0%
</TABLE>
62
<PAGE> 56
<TABLE>
<CAPTION>
INTERMEDIATE-
INSTITUTIONAL PENNSYLVANIA TERM
TAX FREE TAX FREE MUNICIPAL
PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- ----------
<S> <C> <C> <C>
Revenue Bonds:
Education Revenue 6.7% 19.3% 10.9%
Health Care Facilities 11.2% 15.6% 12.2%
Housing Facilities 16.6% 3.5% 9.0%
Industrial Development 19.2% 19.5% 3.1%
Lease Rental Bonds 0.0% 0.0% 0.0%
Pollution Control 2.2% 8.1% 0.9%
Public Facility 4.1% 0.2% 2.6%
Resource Recovery 0.0% 0.0% 1.5%
Transportation 1.0% 1.3% 9.1%
Utility Revenue 1.1% 4.1% 23.3%
General Obligation 6.2% 3.2% 27.4%
Tax Exempt Commercial Paper 0.0% 0.0% 0.0%
Anticipation Notes:
Bond 4.2% 0.0% 0.0%
Revenue 0.9% 2.3% 0.0%
Tax 4.4% 2.8% 0.0%
Tax & Revenue 3.9% 5.8% 0.0%
Other 18.3% 14.3% 0.0%
------ ------ ------
Total 100.0% 100.0% 100.0%
</TABLE>
<TABLE>
<CAPTION>
KANSAS
PENNSYLVANI TAX FREE
MUNICIPAL INCOME
PORTFOLIO PORTFOLIO
----------- -----------
<S> <C> <C>
Revenue Bonds:
Education Revenue 22.0% 2.0%
Health Care Facilities 27.5% 6.8%
Housing Facilities 11.4% 5.8%
Industrial Development 17.6% 3.3%
Lease Rental Bonds 1.1% 3.4%
Pollution Control 0.0% 1.4%
Public Facility 2.5% 4.8%
Resource Recovery 0.1% 3.3%
Transportation 0.4% 1.4%
Utility Revenue 10.9% 16.8%
General Obligation 5.4% 52.9%
Tax Exempt Commercial Paper 0.0% 0.0%
Anticipation Notes:
Bond 0.0% 0.0%
Revenue 0.0% 0.0%
Tax 0.0% 0.0%
Tax & Revenue 0.0% 0.0%
Other 1.1% 2.9%
------ ------
Total 100.0% 100.0%
</TABLE>
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.
Although 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.
Also, some of the securities have credit enhancements (letters of credit or
guarantees issued by third party domestic or foreign banks or other
institutions). At August 31, 1996, the percentage of the Portfolios' investments
that were insured and the percentage of the Portfolios' investments that had
credit enhancements were as follows:
<TABLE>
<CAPTION>
CREDIT
INSURED ENHANCEMENTS
-------- ------------
<S> <C> <C>
Tax Free Portfolio 21.0% 52.8%
California Tax Exempt Portfolio 24.7% 53.9%
Institutional Tax Free Portfolio 23.1% 51.2%
Pennsylvania Tax Free Portfolio 26.1% 49.2%
Intermediate-Term
Municipal Portfolio 46.6% 1.3%
Pennsylvania Municipal Portfolio 45.3% 5.8%
Kansas Tax Free Income Portfolio 33.7% 0.0%
</TABLE>
8. SHAREHOLDER VOTING RESULTS (UNAUDITED)
I. At a special meeting of shareholders held on September 28, 1995, shareholders
of the Pennsylvania Municipal Portfolio (the "Portfolio") of SEI Tax Exempt
Trust (the "Trust") voted to approve the selection of Morgan Grenfell Capital
Management Incorporated ("Morgan Grenfell") as investment adviser to the
Portfolio and the investment advisory agreement between the Trust and Morgan
Grenfell. The proposal and the results of the shareholder meeting are set
forth below.
1. Proposal to approve Morgan Grenfell as investment adviser of the
Portfolio and to approve the new investment advisory agreement relating
to the Portfolio between the Trust and Morgan Grenfell.
<TABLE>
<CAPTION>
Shares Voted
--------------
<S> <C>
For 8,955,686
Against 71
Abstain 29,339
</TABLE>
There were no broker non-votes submitted and no other proposals voted on
at such meeting.
63
<PAGE> 57
NOTES TO FINANCIAL STATEMENTS
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
II. At a special meeting of shareholders held on April 16, 1996, shareholders of
the Intermediate-Term Municipal Portfolio (the "Portfolio") voted on a
series of proposals. The proposals and the results of the shareholder
meeting are set forth below.
1. Authorize the Trust's Board of Trustees to appoint additional or
replacement sub-advisers recommended by SEI Financial Management
Corporation ("SFM") for the Portfolio's Shareholders of the contacts
pursuant to which such sub-advisers serve.
<TABLE>
<CAPTION>
Shares Voted
--------------
<S> <C>
For 4,660,163
Against 261,182
Abstain 3,199
</TABLE>
2. Approve the selection of SFM as the investment adviser for the
Portfolio, and to approve the Investment Advisory Agreement between
the Trust, on behalf of the Portfolio, and SFM.
<TABLE>
<CAPTION>
Shares Voted
--------------
<S> <C>
For 4,178,187
Against 743,158
Abstain 3,199
</TABLE>
3. Approve the selection of Standish, Ayer & Wood, Inc. ("SAW") as an
investment sub-adviser for the Portfolio, and to approve the form of
investment sub-advisory agreement between SFM and SAW.
<TABLE>
<CAPTION>
Shares Voted
--------------
<S> <C>
For 4,776,803
Against 139,371
Abstain 8,381
</TABLE>
There were no broker non-votes submitted and no other proposals voted on at
such meeting.
III. At a special meeting of shareholders held on August 14, 1996,
shareholders of the SEI Tax Exempt Trust (the "Trust") voted to approve the
selection of the Trust's Board of Trustees. The proposal and the results of
the shareholder meeting are set forth below.
1. Election of Trustees
<TABLE>
<CAPTION>
SHARES VOTED
TRUSTEE "FOR"
------- -------------
<S> <C>
Robert A. Nesher 1,321,644,859
Frank E. Morris 1,432,333,985
William M. Doran 1,321,356,731
F. Wendell Gooch 1,321,333,985
James M. Storcy 1,321,333,985
George J. Sullivan, Jr. 1,321,333,985
</TABLE>
There were no broker non-votes submitted and no other proposals voted on
at such meeting.
64
<PAGE> 58
This page is left intentionally blank.
65
<PAGE> 59
NOTES TO FINANCIAL STATEMENTS (concluded)
================================================================================
SEI TAX EXEMPT TRUST -- AUGUST 31, 1996
9. SHARE TRANSACTIONS (000):
<TABLE>
<CAPTION>
--------------------- --------------------- --------------------- ---------------------
BAINBRIDGE INSTITUTIONAL
TAX CALIFORNIA TAX TAX
FREE TAX EXEMPT EXEMPT FREE
PORTFOLIO PORTFOLIO PORTFOLIO1 PORTFOLIO
--------------------- --------------------- --------------------- ---------------------
1996 1995 1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- --------- --------- ---------
SHARES ISSUED AND REDEEMED:
Class A:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares Issued 1,426,417 1,502,741 232,581 193,641 29,983 256,460 4,958,411 5,130,777
Shares Issued in Lieu
of Cash Distributions 357 74 55 8 -- -- 776 1,645
Shares Redeemed 1,464,041) (1,483,956) (218,860) (194,711) (179,210) (268,046) (4,912,703) (5,179,065)
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class A Transactions (37,267) 18,859 13,776 (1,062) (149,227) (11,586) 46,484 (46,643)
--------- --------- --------- --------- --------- --------- --------- ---------
Class B(2):
Shares Issued -- -- -- 41,150 -- -- 69,063 77,163
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- 58 69
Shares Redeemed -- -- -- (44,406) -- -- (70,053) (83,875)
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class B Transactions -- -- -- (3,256) -- -- (932) (6,643)
--------- --------- --------- --------- --------- --------- --------- ---------
Class C:
Shares Issued -- -- -- -- -- -- 82,543 --
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- (63,337) --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class C Transactions -- -- -- -- -- -- 19,206 --
--------- --------- --------- --------- --------- --------- --------- ---------
Class D(3):
Shares Issued 1,615 4,827 -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed (1,881) (4,555) -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class D Transactions (266) 272 -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Class G(4):
Shares Issued -- -- 744,985 675,735 -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- 8,087 6,682 -- -- -- --
Shares Redeemed -- -- (730,352) (672,528) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class G Transactions -- -- 22,720 9,889 -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Increase (Decrease) in Capital Shares (37,533) 19,131 36,496 5,571 (149,227) (11,586) 64,758 (53,286)
--------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
--------------------- --------------------- --------------------- ---------------------
PENNSYLVANIA INTERMEDIATE- KANSAS
TAX TERM PENNSYLVANIA TAX FREE
FREE MUNICIPAL MUNICIPAL INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------- --------------------- --------------------- ---------------------
1996 1995 1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- --------- --------- ---------
SHARES ISSUED AND REDEEMED:
Class A:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares Issued 209,781 126,868 6,976 4,110 1,365 889 1,719 994
Shares Issued in Lieu
of Cash Distributions 60 14 129 108 16 15 -- --
Shares Redeemed (192,915) (119,535) (3,269) (7,494) (1,869) (3,027) (1,057) (754)
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class A Transactions 16,926 7,347 3,836 (3,276) (488) (2,123) 662 240
--------- --------- --------- --------- --------- --------- --------- ---------
Class B(2):
Shares Issued -- -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class B Transactions -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Class C:
Shares Issued -- -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class C Transactions -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Class D(3):
Shares Issued -- -- -- 2 -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- 1 5 -- -- -- --
Shares Redeemed -- -- (53) (61) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class D Transactions -- -- (52) (54) -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Class G(4):
Shares Issued -- -- -- -- -- -- -- --
Shares Issued in Lieu
of Cash Distributions -- -- -- -- -- -- -- --
Shares Redeemed -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Total Class G Transactions -- -- -- -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
Increase (Decrease) in Capital Shares 16,926 7,347 3,784 (3,330) (488) (2,123) 662 240
--------- --------- --------- --------- --------- --------- --------- ---------
</TABLE>
1 THE BAINBRIDGE TAX EXEMPT PORTFOLIO CLOSED ON DECEMBER 15, 1995
2 ON JULY 12, 1995, CALIFORNIA TAX EXEMPT PORTFOLIO CLASS B CLOSED.
3 ON JUNE 30, 1996, INTERMEDIATE-TERM MUNICIPAL PORTFOLIO CLASS D CLOSED.
4 ON MAY 1, 1996, THE CALIFORNIA TAX EXEMPT PORTFOLIO CLASS C SHARES WERE
REDESIGNATED TO CLASS G SHARES.
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
66 & 67
<PAGE> 1
EXHIBIT 99.B25
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints David G. Lee and Kevin P. Robins, and each of
them singly, his or her true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ STEPHEN G. MEYER Date: 10-16-96
- --------------------------------------------- -------------
Stephen G. Meyer
Controller and Chief Financial Officer
<PAGE> 2
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints David G. Lee and Kevin P. Robins, and each of
them singly, his or her true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ FRANK E. MORRIS Date: [illegible]
- ------------------------------------------- -----------------
Frank E. Morris
Trustee
<PAGE> 3
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints David G. Lee and Kevin P. Robins, and each of
them singly, his or her true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ GEORGE J. SULLIVAN, JR. Date: Oct. 16, 1996
- --------------------------------------------- -------------------
George J. Sullivan, Jr.
Trustee
<PAGE> 4
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints David G. Lee and Kevin P. Robins, and each of
them singly, his or her true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ F. WENDELL GOOCH Date: 10-18-96
- ------------------------------------- ----------------
F. Wendell Gooch
Trustee
<PAGE> 5
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints David G. Lee and Kevin P. Robins, and each of
them singly, his or her true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ ROBERT A. NESHER Date: 10-15-96
- -------------------------------------- -------------------
Robert A. Nesher
Trustee
<PAGE> 6
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints David G. Lee and Kevin P. Robins, and each of
them singly, his or her true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ JAMES M. STOREY Date:
- -------------------------------------- -------------------
James M. Storey
Trustee
<PAGE> 7
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints David G. Lee and Kevin P. Robins, and each of
them singly, his or her true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him or her and in his or
her name, place and stead, and in the capacity indicated below, to sign any or
all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ WILLIAM M. DORAN Date: 10-16-96
- ---------------------------------------- ------------------
William M. Doran
Trustee
<PAGE> 8
SEI ASSET ALLOCATION TRUST
SEI LIQUID ASSET TRUST
SEI DAILY INCOME TRUST
SEI TAX EXEMPT TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
SEI INTERNATIONAL TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned
trustee and/or officer of the above referenced funds (the "Trusts"), each a
business trust organized under the laws of The Commonwealth of Massachusetts,
hereby constitutes and appoints Todd C. Cipperman and Kevin P. Robins, and each
of them singly, his or her true and lawful attorney-in- fact and agent with
full power of substitution and resubstitution, to sign for him or her and in
his or her name, place and stead, and in the capacity indicated below, to sign
any or all amendments (including post-effective amendments) to each Trust's
Registration Statement on Form N-1A under the provisions of the Investment
Company Act of 1940 and the Securities Act of 1933, each such Act as amended,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, acting alone, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his or
her hand and seal as of the date set forth below.
/s/ DAVID G. LEE Date: 10/23/96
- ------------------------------------------- -------------------
David G. Lee
President, Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000701817
<NAME> SEI TAX EXEMPT TRUST
<SERIES>
<NUMBER> 010
<NAME> TAX FREE MONEY MARKET CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 353,664
<INVESTMENTS-AT-VALUE> 353,664
<RECEIVABLES> 2,500
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 356,166
<PAYABLE-FOR-SECURITIES> 4,406
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,848
<TOTAL-LIABILITIES> 16,254
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 339,927
<SHARES-COMMON-STOCK> 340,066
<SHARES-COMMON-PRIOR> 377,333
<ACCUMULATED-NII-CURRENT> 3
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 339,912
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 13,091
<OTHER-INCOME> 0
<EXPENSES-NET> (1,571)
<NET-INVESTMENT-INCOME> 11,520
<REALIZED-GAINS-CURRENT> 18
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 11,538
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (11,513)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,426,417
<NUMBER-OF-SHARES-REDEEMED> (1,464,041)
<SHARES-REINVESTED> 357
<NET-CHANGE-IN-ASSETS> (37,242)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (36)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 137
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,729
<AVERAGE-NET-ASSETS> 348,788
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .033
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> (.033)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000701817
<NAME> SEI TAX EXEMPT TRUST
<SERIES>
<NUMBER> 011
<NAME> TAX FREE MONEY MARKET CLASS D
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1996
<PERIOD-START> SEP-01-1995
<PERIOD-END> AUG-31-1996
<INVESTMENTS-AT-COST> 353,664
<INVESTMENTS-AT-VALUE> 353,664
<RECEIVABLES> 2,500
<ASSETS-OTHER> 2
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 356,166
<PAYABLE-FOR-SECURITIES> 4,406
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,848
<TOTAL-LIABILITIES> 16,254
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 339,927
<SHARES-COMMON-STOCK> 6
<SHARES-COMMON-PRIOR> 272
<ACCUMULATED-NII-CURRENT> 3
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (18)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 339,912
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