<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1997
FILE NO. 2-76990
FILE NO. 811-3447
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 41 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 43 /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 Investments Company
Oaks, Pennsylvania 19456
(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
------------------------
Title of Securities Being Registered...Units of Beneficial Interest
------------------------
It is proposed that the filing will become effective (check appropriate box)
<TABLE>
<C> <S>
/ / Immediately upon filing pursuant to paragraph (b), or
/X/ On December 31, 1997, pursuant to paragraph (b), or
/ / 60 days after filing pursuant to paragraph (a), or
/ / On [date] pursuant to paragraph (a) of Rule 485
</TABLE>
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<PAGE>
SEI TAX EXEMPT TRUST
POST-EFFECTIVE AMENDMENT NO. 41
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- -------------------------------------------------
<S> <C> <C>
PART A--ALL FUNDS (EXCEPT TAX FREE PORTFOLIO CLASS D SHARES)
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
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...... **
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- -------------------------------------------------
<S> <C> <C>
Item 6. Capital Stock and Other Securities............... Taxes; General Information--Voting Rights,
General Information--Shareholder Inquiries;
General Information-- Dividends
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 B--ALL FUNDS
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 1997 Annual Report to
Shareholders
(ii)
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) CLASS C
<S> <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
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<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
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</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 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>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734.
FOR A CLASS C SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED
INVESTMENT GAIN
ACTIVITIES DISTRIBUTIONS (LOSS) ON
NET ASSET ----------- ---------------------------------------- INVESTMENTS NET ASSET
VALUE, NET NET NET AND VALUE,
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL CAPITAL END OF
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ------------------------------
Class C
FOR THE YEARS ENDED AUGUST 31,
1997 $ 1.00 $ 0.029 $ (0.029) $ -- $(0.029) $ -- $ 1.00
1996(1) 1.00 0.029 (0.029) -- (0.029) -- 1.00
<CAPTION>
RATIO OF
RATIO OF NET
EXPENSES INVESTMENT
TO RATIO OF INCOME TO
RATIO OF AVERAGE NET AVERAGE
NET EXPENSES NET INVESTMENT NET
ASSETS, TO ASSETS INCOME TO ASSETS
END OF AVERAGE (EXCLUDING AVERAGE (EXCLUDING
TOTAL PERIOD NET FEE NET FEE
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS)
- -------------------------------- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ------------------------------
Class C
FOR THE YEARS ENDED AUGUST 31,
1997 2.93% $9,382 0.83% 0.95% 2.85% 2.73%
1996(1) 2.92%+ 19,208 0.83%* 0.96%* 2.89%* 2.76%*
</TABLE>
* 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.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class C shares of
the Trust's Institutional Tax Free Portfolio (the "Portfolio"). As of September
30, 1997, the aggregate net assets of all classes of the Institutional Tax Free
Portfolio was $992,670,088. 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 Investments
Distribution Co., Oaks, Pennsylvania 19456, 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, meet the quality,
maturity and diversification requirements imposed by Rule
2a-7. 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 assets were not so invested. Moreover, in
4
<PAGE>
seeking to attain its investment objective, the Portfolio
may invest all or any part of its assets in municipal
securities that are industrial development bonds.
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
In purchasing obligations, the Portfolio complies with the
requirements of Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), as that Rule may be amended from
time to time. These requirements currently provide that the
Portfolio must limit its investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, the Portfolio may only invest in eligible quality
securities. In general, this means 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
Weiss, Peck & Greer, L.L.C. (the "Adviser") to be of
equivalent quality. Since the Portfolio often purchases
securities supported by credit enhancements from banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Portfolio
and affect its share price.
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. The Portfolio's investments in non-first tier
conduit securities will be limited to 5% of the Portfolio's
assets. Conduit securities are securities issued to finance
non-governmental private projects, such as housing
developments and retirement homes, and for which the
ultimate obligor is not a governmental issuer.
The Portfolio may purchase securities on a
"when-issued" basis, and reserves the right to engage in
transactions involving standby commitments. While the
Portfolio generally intends to be fully invested in
federally tax-exempt securities, 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. The
Portfolio will not invest more than 10% of its total assets
in securities which are considered to be illiquid.
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>
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.
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 .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
6
<PAGE>
August 31, 1997, 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. The Adviser has been active since its founding in
managing portfolios of tax exempt securities. As of
September 30, 1997, total assets under management were
approximately $14.6 billion. The principal business address
of the Adviser 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 the Adviser, has
been associated with the Adviser's Tax Exempt Fixed Income
group since 1988, and with its predecessor since 1980.
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, 1997 the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company ("SEI
Investments"), serves as the 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.
7
<PAGE>
Under the Class C shareholder service plan, the
Distributor is entitled to receive shareholder service fees
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 the Distributor 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.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 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 determination of net asset
value and in accordance with the procedures described below
for the order to be accepted on
8
<PAGE>
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 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.
9
<PAGE>
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 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
10
<PAGE>
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholder during the taxable year.
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.
11
<PAGE>
GENERAL INFORMATION
_______________________________________________________________________
THE TRUST
The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated March 15, 1982. The
Declaration of Trust permits the Trust to offer separate
portfolios of shares and different classes of each
portfolio. In addition to the Portfolio, the Trust consists
of the following portfolios: Tax Free Portfolio, California
Tax Exempt Portfolio, Intermediate-Term Municipal
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 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, Oaks, Pennsylvania, 19456.
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. Dividends will be paid on the next Business Day
to shareholders who redeem all of their
12
<PAGE>
shares of the Portfolio at any time during the 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 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
13
<PAGE>
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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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.
14
<PAGE>
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 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>
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>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) CLASS A
- --------------------------------------------------------------------------------
<TABLE>
<S> <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, 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>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 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
NET INVESTMENT UNREALIZED
ASSET ACTIVITIES DISTRIBUTIONS GAIN (LOSS)
VALUE, --------- ------------------------------------------- ON
BEGINNING NET NET NET INVESTMENTS
OF INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL
PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
TAX FREE PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,
1997 $ 1.00 $0.033 $(0.033) $ -- $ (0.033) $ --
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 0.023 (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) --
FOR THE YEARS ENDED JANUARY 31,
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) --
<CAPTION>
RATIO OF
RATIO OF NET
RATIO OF NET INVESTMENT
EXPENSES INVESTMENT INCOME TO
RATIO OF TO INCOME TO AVERAGE
NET EXPENSES AVERAGE AVERAGE NET
NET ASSET ASSETS, TO NET NET ASSETS
VALUE, END OF AVERAGE ASSETS ASSETS (EXCLUDING
END OF TOTAL PERIOD NET (EXCLUDING (EXCLUDING FEE
PERIOD RETURN* (000) ASSETS WAIVERS) WAIVERS) WAIVERS)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------- -----------------------------------------------------------------------
TAX FREE PORTFOLIO
- -------------------------------- -----------------------------------------------------------------------
CLASS A
FOR THE YEARS ENDED AUGUST 31,
1997 $ 1.00 3.31% $431,016 0.45% 0.69% 3.26% 3.02%
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%*
FOR THE YEARS ENDED JANUARY 31,
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%
</TABLE>
* ANNUALIZED
+ RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) IN AUGUST 1990, THE TRUSTEES CHANGED THE FISCAL YEAR END OF THE TRUST FROM
JANUARY 31 TO AUGUST 31.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class A shares of
the Trust's 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 Investments Distribution Co., Oaks,
Pennsylvania 19456, 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, meet the quality,
maturity and diversification requirements imposed by Rule
2a-7. 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 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.
4
<PAGE>
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 eligible quality
securities. In general, this means 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
Weiss, Peck & Greer, L.L.C. (the "Adviser") to be of
equivalent quality. Since the Portfolio often purchases
securities supported by credit enhancements from banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Portfolio
and affect its share price.
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. The Portfolio's investments in non-first tier
conduit securities will be limited to 5% of the Portfolio's
assets. Conduit securities are securities issued to finance
non-governmental private projects, such as housing
developments and retirement homes, and for which the
ultimate obligor is not a governmental issuer.
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. While the
Portfolio generally intends to be fully invested in
federally tax-exempt securities, the Portfolio may invest
up to 20% of its net assets in taxable money market
instruments and securities the interest on which is a
preference item for purposes of the alternative minimum
tax. The 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.
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
5
<PAGE>
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.
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, 1997, 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,
6
<PAGE>
supervises and administers the Portfolio's investment
program. The Adviser is independent of the Manager and SEI
Investments, 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, 1997, total assets under management were
approximately $14.6 billion. The principal business address
of the Adviser 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 the Adviser, has
been associated with the Adviser's Tax Exempt Fixed Income
group since 1988, and with its predecessor since 1980.
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, 1997, the Portfolio paid
advisory fees, after waivers, of .04% of its relative daily
net assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), serves as the 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.
The Portfolio has adopted a shareholder servicing
plan for Class A shares (the "Service Plan") under which
the Distributor is entitled to receive a shareholder
servicing fee of up to .25% of average daily net assets
attributable to Class A shares. 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.
7
<PAGE>
It is possible that an institution may offer
different classes of shares to its customers and thus
receive different compensation with respect to different
classes. These financial institutions may also charge
separate fees to their customers.
The Trust may also execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 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 determination of net asset
value and in accordance with the procedures described below
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.
8
<PAGE>
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.
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
9
<PAGE>
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 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.
10
<PAGE>
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholder during the taxable year.
Furthermore, the Portfolio may not be an appropriate
investment for persons (including corporations and other
business entities) who are "substantial users" (or persons
related to "substantial users") of facilities financed by
industrial development bonds or private activity bonds.
Such persons should consult their tax advisers before
purchasing shares.
The Portfolio will report annually to its
shareholders the portion of dividends that is taxable and
the portion that is tax-exempt based on income received by
the Portfolio during the year to which the dividends
relate.
Each sale, exchange or redemption of the Portfolio's
shares is a taxable transaction for the shareholder.
GENERAL INFORMATION
_______________________________________________________________________
THE TRUST
The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated March 15, 1982. The
Declaration of Trust permits the Trust to offer separate
portfolios of shares and different classes of each
portfolio. In addition to the Portfolio, the Trust consists
of the following portfolios: Institutional Tax Free
Portfolio, California Tax Exempt Portfolio,
Intermediate-Term Municipal Portfolio, Pennsylvania
Municipal Portfolio, 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,
11
<PAGE>
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, Oaks, Pennsylvania, 19456.
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. Dividends will be paid on the next Business Day
to shareholders who redeem all of their shares of the
Portfolio at any time during the 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.
12
<PAGE>
DESCRIPTION OF
PERMITTED
INVESTMENTS AND RISK
FACTORS ______________________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
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.
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
13
<PAGE>
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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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 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.
14
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights...................................................... 3
The Trust................................................................. 4
Investment Objective and Policies......................................... 4
General Investment Policies............................................... 5
Investment Limitations.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 6
Distribution and Shareholder Servicing.................................... 7
Purchase and Redemption of Shares......................................... 8
Performance............................................................... 9
Taxes..................................................................... 10
General Information....................................................... 11
Description of Permitted Investments and Risk Factors..................... 13
</TABLE>
15
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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. IN ADDITION, THE PORTFOLIO
MAY INVEST A SIGNIFICANT PERCENTAGE OF ITS ASSETS IN A SINGLE ISSUER, AND
INVESTING IN THE PORTFOLIO MAY BE RISKIER THAN INVESTING IN OTHER TYPES OF MONEY
MARKET FUNDS.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------ ---------- ----------
<S> <C> <C> <C>
Management/Advisory Fees (AFTER FEE WAIVER) (1) .23% .23% .23%
12b-1 Fees None None None
Total Other Expenses .05% .35% .55%
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 FOR THE CLASS A SHARES, 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 .57%, .62% AND .82%, 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 CNI CLASS 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."
2
<PAGE>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997 was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734. As of
August 31, 1997, 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>
NET REALIZED
AND
INVESTMENT UNREALIZED
ACTIVITIES DISTRIBUTIONS GAIN (LOSS)
NET ASSET ---------- -------------------------------------- ON NET ASSET
VALUE NET NET NET INVESTMENTS VALUE END
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL OF
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS PERIOD
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1997 $ 1.00 $0.033 $ (0.033) $ -- $(0.033) $ -- $ 1.00
1996 1.00 0.034 (0.034) -- (0.034) -- 1.00
1995 1.00 0.033 (0.033) -- (0.033) -- 1.00
1994 1.00 0.023 (0.023) -- (0.023) -- 1.00
1993 1.00 0.024 (0.024) -- (0.024) -- 1.00
1992 1.00 0.034 (0.034) -- (0.034) -- 1.00
1991 1.00 0.047 (0.047) -- (0.047) -- 1.00
1990(1) 1.00 0.016 (0.016) -- (0.016) -- 1.00
Class B
FOR THE YEARS ENDED AUGUST 31,
1995(2) $ 1.00 $0.027 $ (0.027) $ -- $(0.027) $ -- $ 1.00
1994(3) 1.00 0.013 (0.013) -- (0.013) -- 1.00
<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
RATIO OF NET ASSETS INVESTMENT NET ASSETS
NET ASSETS EXPENSES (EXCLUDING INCOME TO (EXCLUDING
TOTAL END OF TO AVERAGE FEE AVERAGE FEE
RETURN PERIOD (000) NET ASSETS WAIVERS) NET ASSETS WAIVERS)
- ------------------------------ ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------ ---------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- ------------------------------ ---------------------------------------------------------------------------
Class A
FOR THE YEARS ENDED AUGUST 3
1997 3.30% $ 51,314 0.28% 0.57% 3.26% 2.97%
1996 3.41% 44,729 0.28% 0.36% 3.33% 3.25%
1995 3.49% 30,921 0.28% 0.42% 3.43% 3.29%
1994 2.32% 32,015 0.27% 0.38% 2.28% 2.17%
1993 2.41% 540,285 0.28% 0.37% 2.37% 2.28%
1992 3.44% 445,936 0.28% 0.38% 3.34% 3.24%
1991 4.92% 376,653 0.28% 0.40% 4.74% 4.62%
1990(1) 1.81%+ 275,095 0.28%* 0.51%* 5.27%* 5.04%*
Class B
FOR THE YEARS ENDED AUGUST 3
1995(2) 2.65%+ $ 0 0.58%* 0.69%* 3.16%* 3.05%*
1994(3) 2.07%* 3,257 0.51%* 0.81%* 2.05%* 1.75%*
</TABLE>
* ANNUALIZED.
+ 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.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class A, Class B
and Class C shares of the Trust's California Tax Exempt Portfolio (the
"Portfolio"). As of September 30, 1997, the aggregate net assets of all classes
of the California Tax Exempt Portfolio was $429,919,818. Investors may also
purchase CNI Class 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 Investments Distribution Co., Oaks, Pennsylvania 19456, 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.
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 projects.
This restriction does not apply to municipal securities in
any of the following categories: public housing
authorities; general obligations of states and localities;
state and local housing finance authorities or municipal
utilities systems.
4
<PAGE>
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 eligible quality
securities. In general, this means 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
Weiss, Peck & Greer, L.L.C. (the "Adviser") to be of
equivalent quality. Since the Portfolio often purchases
securities supported by credit enhancements from banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Portfolio
and affect its share price.
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. The Portfolio's investments in non-first tier
conduit securities will be limited to 5% of the Portfolio's
assets. Conduit securities are securities issued to finance
non-governmental private projects, such as housing
developments and retirement homes, and for which the
ultimate obligor is not a governmental issuer.
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 illiquid
securities.
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.
RISK FACTORS
______________________________________________________________________
CALIFORNIA RISK FACTORS
THE PORTFOLIO'S CONCENTRATION IN INVESTMENTS IN MUNICIPAL
SECURITIES OF A SINGLE STATE INVOLVES GREATER RISKS THAN
MONEY MARKET FUNDS THAT ARE DIVERSIFIED ACROSS ISSUERS
LOCATED IN A NUMBER OF STATES. Certain additional risks are
inherent in the Portfolio's concentrated
5
<PAGE>
investments in California municipal securities. These risks
result primarily from (1) amendments to the California
Constitution and other statutes that limit the taxing and
spending authority of California government entities, and
(2) a variety of California laws and regulations that may
affect, directly or indirectly, the issuer of California
municipal securities.
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.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the
value of the total assets of the Portfolio. All
borrowings will be repaid before making additional
investments and any interest paid on such borrowings
will reduce the income of the Portfolio.
6
<PAGE>
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional 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, 1997, the Portfolio paid management fees, after
waivers, of .19% 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. The Adviser has been active since its founding in
managing portfolios of tax exempt securities. As of
September 30, 1997, total assets under management were
approximately $14.6 billion. The principal business address
of the Adviser 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 the Adviser, has
been associated with the Adviser's Tax Exempt Fixed Income
group since 1988, and with 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
7
<PAGE>
their relative net assets. For the fiscal year ended August
31, 1997, the Portfolio paid advisory fees, after waivers,
of .04% of its relative net assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company ("SEI
Investments"), serves as the 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 Distributor is entitled
to receive 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 Distributor is
entitled to receive shareholder service fees 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.
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.
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 and at its own
expense, provide promotional incentives, in the form of
cash or other compensation to certain financial
8
<PAGE>
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
Financial institutions may impose an earlier cut-off time
for receipt of purchase orders directed through them to
allow for processing and transmittal of these orders to the
Transfer Agent for effectiveness on the same day. Financial
institutions which purchase shares for the accounts of
their customers may impose separate charges on these
customers for account services.
Shares of the 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 on which wire transfers are restricted.
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent (or its
authorized agent) prior to the calculation of net asset
value on any Business Day for the order to be accepted on
that Business Day. Cash investments must be transmitted or
delivered in federal funds to the wire agent by the close
of business on the same day the order is placed. The Trust
reserves the right to reject a purchase order when the
Distributor determines that it is not in the best interest
of the Trust or shareholders to accept such purchase order.
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 liabilities, by the total
outstanding shares of the Portfolio. The Portfolio's
investments will be valued by the amortized cost method
described in the Statement of Additional Information. Net
asset value per share is determined 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
9
<PAGE>
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 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
CNI Class shares because of the additional distribution
and/or administrative services expenses charged to Class B,
Class C and CNI Class 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
10
<PAGE>
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 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
to the extent that it relates to exempt-interest dividends
distributed to the shareholder during the taxable year.
Furthermore, the Portfolio may not be an appropriate
investment
11
<PAGE>
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 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
12
<PAGE>
Trust consists of the following portfolios: Tax Free
Portfolio, Institutional Tax Free Portfolio,
Intermediate-Term Municipal 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 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. Oaks, Pennsylvania, 19456.
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. Dividends will be paid on
the next Business Day to shareholders who redeem all of
their shares of the Portfolio at any time during the 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.
13
<PAGE>
The dividends on Class A shares of the Portfolio are
normally higher than those on Class B, Class C or CNI Class
shares because of the additional distribution and/or
administrative services expenses charged to Class B, Class
C and CNI Class 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; (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
14
<PAGE>
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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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 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>
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.............................................................. 5
Investment Limitations.................................................... 6
The Manager............................................................... 7
The Adviser............................................................... 7
Distribution and Shareholder Servicing.................................... 8
Purchase and Redemption of Shares......................................... 9
Performance............................................................... 10
Taxes..................................................................... 10
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 14
</TABLE>
16
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE 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>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) CLASS A
<S> <C>
- ------------------------------------------------------------------------------
Management/Advisory Fees (AFTER FEE WAIVER) (1) .55%
12b-1 Fees None
Total Other Expenses .05%
Shareholder Servicing Fees (AFTER FEE WAIVER) (2) .00%
- ------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVERS) (3) .60%
- ------------------------------------------------------------------------------
</TABLE>
(1) SEI INVESTMENTS MANAGEMENT CORPORATION ("SIMC") HAS WAIVED, ON A VOLUNTARY
BASIS, A PORTION OF ITS FEES, AND THE MANAGEMENT/ADVISORY FEES SHOWN REFLECT
THESE VOLUNTARY WAIVERS. SIMC 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
.87%. 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: $ 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.
ADDITIONAL INFORMATION MAY BE FOUND UNDER "THE MANAGER," "THE ADVISER" AND
"DISTRIBUTION AND SHAREHOLDER SERVICING."
2
<PAGE>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET INVESTMENT NET REALIZED
ASSET ACTIVITIES DISTRIBUTIONS AND UNREALIZED NET
VALUE, --------- ----------------------------------- GAIN (LOSS) ON ASSET
BEGINNING NET NET NET INVESTMENTS VALUE,
OF INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL END OF
PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS PERIOD
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
- --------------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1997 $ 10.45 $ 0.48 $ (0.48) $ -- $(0.48) $ 0.32 $ 10.77
1996 10.59 0.49 (0.53) -- (0.53) (0.10) 10.45
1995 10.36 0.52 (0.52) -- (0.52) 0.23 10.59
1994 10.84 0.49 (0.49) (0.06) (0.55) (0.42) 10.36
1993 10.49 0.49 (0.50) (0.02) (0.52) 0.38 10.84
1992 10.20 0.56 (0.54) (0.01) (0.55) 0.28 10.49
1991 9.98 0.61 (0.63) -- (0.63) 0.24 10.20
1990(2) 10.01 0.38 (0.37) -- (0.37) (0.04) 9.98
FOR THE YEAR ENDED JANUARY 31,
1990(1) $ 10.00 $ 0.21 $ (0.16) $(0.002) $(0.16) $(0.04) $ 10.01
<CAPTION>
RATIO OF
EXPENSES RATIO OF NET
TO RATIO OF INVESTMENT
RATIO OF AVERAGE NET INCOME TO
EXPENSES NET INVESTMENT AVERAGE
TO ASSETS INCOME TO NET ASSETS
NET ASSETS, AVERAGE (EXCLUDING AVERAGE (EXCLUDING PORTFOLIO
TOTAL END OF NET FEE NET FEE TURNOVER
RETURN PERIOD (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- -------------------------------- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------
INTERMEDIATE-TERM MUNICIPAL PORT
- --------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1997 7.93% $ 259,238 0.60% 0.88% 4.53% 4.25% 16%
1996 3.76% 134,563 0.59% 0.66% 4.66% 4.59% 41%
1995 7.53% 95,675 0.55% 0.72% 4.96% 4.79% 36%
1994 0.65% 127,509 0.53% 0.71% 4.65% 4.47% 58%
1993 8.62% 122,649 0.55% 0.69% 4.79% 4.65% 63%
1992 8.56% 63,210 0.55% 0.71% 5.56% 5.40% 62%
1991 8.82% 36,699 0.55% 0.78% 6.18% 5.95% 112%
1990(2) 3.44%+ 12,781 0.55%* 0.90%* 6.63%* 6.28%* 63%
FOR THE YEAR ENDED JANUARY 31,
1990(1) 1.72%+ $9,106 0.56%* 1.36%* 5.80%* 5.00%* 352%
</TABLE>
* ANNUALIZED
+ RETURN IS FOR PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) THE INTERMEDIATE-TERM MUNICIPAL PORTFOLIO COMMENCED OPERATIONS ON SEPTEMBER
5, 1989.
(2) IN AUGUST 1990, THE TRUSTEES CHANGED THE FISCAL YEAR END OF THE TRUST FROM
JANUARY 31 TO AUGUST 31.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. 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 Investments Distribution Co., Oaks,
Pennsylvania 19456, or by calling 1-800-342-5734.
INVESTMENT
OBJECTIVES 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. There can be no assurance that the Portfolio
will achieve its investment objective.
The Portfolio invests at least 80% of its net assets
in municipal securities the interest of which is exempt
from federal income taxes (collectively "Municipal
Securities"), based on opinions from bond counsel for the
issuers. This investment policy is a fundamental policy of
the Portfolio. The issuers of these securities can be
located in all fifty states, the District of Columbia,
Puerto Rico, and other U.S. territories and possessions.
Under normal conditions, the Portfolio will invest at least
80% of its net assets in securities the interest on which
is not a preference item for purposes of the 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 the
interest on which is derived from revenues of similar type
projects. This restriction does not apply to
4
<PAGE>
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 typically 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 to 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.
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
5
<PAGE>
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 ended August 31, 1997, the Portfolio paid
management fees, after waivers, of .22% of its average
daily net assets.
6
<PAGE>
THE ADVISER
_______________________________________________________________________
SEI INVESTMENTS
MANAGEMENT CORPORATION
SEI Investments Management Corporation ("SIMC") serves as
investment adviser to the Portfolio. SIMC is a wholly-owned
subsidiary of SEI Investments Company ("SEI Investments"),
a financial services company. The principal business
address of SIMC and SEI Investments is Oaks, Pennsylvania
19456. SEI Investments was founded in 1968 and is a leading
provider of investment solutions to banks, institutional
investors, investment advisers and insurance companies.
Affiliates of SIMC have provided consulting advice to
institutional investors for more than 20 years, including
advice regarding the selection and evaluation of investment
advisers. SIMC currently serves as manager or administrator
to more than 46 investment companies, including more than
345 portfolios, which investment companies have more than
$99.9 billion in assets as of September 30, 1997.
SIMC acts as the investment adviser to the Portfolio
and operates as a "manager of managers." As Adviser, SIMC
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
SIMC, 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 and
recommendations of SIMC, 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,
SIMC 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. SIMC 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, SIMC 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, 1997, the
Portfolio paid advisory fees, after waivers, of .33% of its
average daily net assets. SIMC pays the sub-advisers out
its investment advisory fees.
SIMC and the Trust have obtained an exemptive order
from the Securities and Exchange Commission ("SEC") that
permits SIMC, with the approval of the Trust's Board of
Trustees, to retain sub-advisers unaffiliated with SIMC 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 by SIMC 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.
7
<PAGE>
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 22 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, 1997 were $36.7 billion.
Raymond J. Kubiak, CFA serves as portfolio manager to
the Portfolio. Mr. Kubiak has 16 years experience in public
finance and is a Vice President and Director of the Sub-
Adviser. He has been with SAW since March, 1988.
SIMC pays SAW a fee based on a percentage of average
the monthly market value of the assets of the Portfolio
managed by SAW.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments, 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
the Distributor is entitled to receive a shareholder
servicing fee of up to .25% of average daily net assets
attributable to Class A shares. 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.
8
<PAGE>
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 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 determination of net asset
value and in accordance with the procedures described below
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 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
liabilities 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.
Information about the market value of each portfolio
security may be 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.
9
<PAGE>
The pricing service may also provide market quotations. The
procedures used by 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 last
quoted sale price on each Business Day or, if there is no
such reported sale, at the most recently quoted bid price.
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
determination of net asset value and in accordance with the
procedures described below 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, 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.
10
<PAGE>
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 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
11
<PAGE>
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholder during the taxable year.
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, New York
Intermediate-
12
<PAGE>
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, Oaks, Pennsylvania, 19456.
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.
13
<PAGE>
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, 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 the
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
14
<PAGE>
(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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government, and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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 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>
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.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 7
The Sub-Adviser........................................................... 8
Distribution and Shareholder Servicing.................................... 8
Purchase and Redemption of Shares......................................... 9
Performance............................................................... 10
Taxes..................................................................... 11
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 14
</TABLE>
16
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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.
IN ADDITION, THE PENNSYLVANIA TAX FREE PORTFOLIO MAY INVEST A SIGNIFICANT
PERCENTAGE OF ITS ASSETS IN A SINGLE ISSUER, AND INVESTING IN THE PORTFOLIO MAY
BE RISKIER THAN INVESTING IN OTHER TYPES OF MONEY MARKET FUNDS.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY MARKET
PORTFOLIO FIXED
---------------------------------------- INCOME
CLASS A CLASS B CLASS C PORTFOLIO
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Management/Advisory Fees (AFTER FEE WAIVER) (1) .29% .29% .29% .41%
12b-1 Fees (2) None None None None
Total Other Expenses .06% .36% .56% .07%
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 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 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
.71%, .76% AND .96%, RESPECTIVELY, AND FOR THE CLASS A SHARES OF THE FIXED
INCOME PORTFOLIO WOULD BE .87%. 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 7 21 36 81
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>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734. As of
August 31, 1997 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
AND
UNREALIZED
INVESTMENT GAIN
ACTIVITIES DISTRIBUTIONS (LOSS) ON NET
NET ASSET --------- ---------------------------------------------- INVESTMENTS ASSET
VALUE, NET NET AND VALUE,
BEGINNING INVESTMENT NET INVESTMENT REALIZED TOTAL CAPITAL END OF
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS PERIOD
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- ---------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1997 $ 10.48 $ 0.53 $ (0.53) $ (0.19) $(0.72) $ 0.29 $ 10.58
1996 10.66 0.55 (0.59) -- (0.59) (0.14) 10.48
1995 10.52 0.55 (0.55) -- (0.55) 0.14 10.66
1994 10.94 0.53 (0.53) -- (0.53) (0.42) 10.52
1993 10.59 0.55 (0.55) (0.01) (0.56) 0.36 10.94
1992 10.29 0.57 (0.57) (0.01) (0.58) 0.31 10.59
1991 9.95 0.60 (0.60) (0.003) (0.60) 0.34 10.29
1990(2) 9.98 0.34 (0.34) -- (0.34) (0.03) 9.95
FOR THE YEAR ENDED JANUARY 31,
1990(1) $ 10.00 $ 0.28 $ (0.23) $ (0.001) $(0.23) $ (0.07) $ 9.98
- --------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- --------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1997 $ 1.00 $0.033 $ (0.033) $ -- $(0.033) $ -- $ 1.00
1996 1.00 0.034 (0.034) -- (0.034) -- 1.00
1995 1.00 0.035 (0.035) -- (0.035) -- 1.00
1994(3) 1.00 0.014 (0.014) -- (0.014) -- 1.00
<CAPTION>
RATIO OF
RATIO OF NET
EXPENSES INVESTMENT
TO RATIO OF INCOME TO
RATIO OF AVERAGE NET AVERAGE
NET EXPENSES NET INVESTMENT NET
ASSETS, TO ASSETS INCOME TO ASSETS
END OF AVERAGE (EXCLUDING AVERAGE (EXCLUDING PORTFOLIO
TOTAL PERIOD NET FEE NET FEE TURNOVER
RETURN (000) ASSETS WAIVERS) ASSETS WAIVERS) RATE
- -------------------------------- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------
PENNSYLVANIA MUNICIPAL PORTFOLIO
- --------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1997 8.08% $ 98,079 0.48% 0.86% 5.08% 4.70% 34%
1996 3.96% 97,228 0.48% 0.65% 5.15% 4.98% 66%
1995 6.81% 104,094 0.48% 0.72% 5.21% 4.97% 23%
1994 1.14% 125,081 0.47% 0.71% 4.90% 4.66% 25%
1993 8.91% 153,808 0.48% 0.70% 5.15% 4.93% 15%
1992 8.89% 114,461 0.48% 0.72% 5.52% 5.28% 11%
1991 9.80% 83,054 0.50% 0.73% 5.98% 5.75% 19%
1990(2) 3.12%+ 64,531 0.60%* 0.80%* 5.88%* 5.68%* 20%
FOR THE YEAR ENDED JANUARY 31,
1990(1) 2.11%+ $ 53,042 0.60%* 0.86%* 6.05%* 5.79%* 10%
- --------------------------------
PENNSYLVANIA TAX FREE PORTFOLIO
- --------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31,
1997 3.39% $ 49,563 0.35% 0.71% 3.33% 2.97% --%
1996 3.40% 42,971 0.35% 0.49% 3.33% 3.19% --%
1995 3.60% 26,058 0.35% 0.51% 3.54% 3.38% --%
1994(3) 2.37%* 18,712 0.35%* 0.65%* 2.37%* 2.07%* --%
</TABLE>
* ANNUALIZED
+ RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) THE PENNSYLVANIA MUNICIPAL PORTFOLIO CLASS A 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.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class A shares of
the Trust's Pennsylvania Municipal Portfolio (the "Fixed Income Portfolio") and
Class A, Class B and Class C shares of the Trust's Pennsylvania Tax Free
Portfolio (the "Money Market Portfolio"). The Fixed Income Portfolio is a
diversified portfolio, and the Money Market Portfolio is a non-diversified
portfolio. Additional information pertaining to the Trust may be obtained by
writing to SEI Investments Distribution Co., Oaks, Pennsylvania 19456, or by
calling 1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES
___________________________________________________________________________
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.
The Fixed Income Portfolio will typically maintain a
dollar-weighted average portfolio maturity of seven years
or less. Each security purchased will typically have an
average maturity of no longer than fifteen years.
4
<PAGE>
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.
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, meet the
quality, maturity and diversification requirements imposed
by Rule 2a-7. 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.
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
eligible quality securities. In general, this means
securities rated in one of the two highest categories for
short-term
5
<PAGE>
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 Weiss, Peck & Greer, L.L.C. (the
"Adviser") to be of equivalent quality. Since the Portfolio
often purchases securities supported by credit enhancements
from banks and other financial institutions, changes in the
credit quality of these institutions could cause losses to
the Portfolio and affect its share price.
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. The Portfolio's investments in non-first
tier conduit securities will be limited to 5% of the
Portfolio's assets. Conduit securities are securities
issued to finance non-governmental private projects, such
as housing developments and retirement homes, and for which
the ultimate obligor is not a governmental issuer.
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 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
6
<PAGE>
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 MONEY MARKET FUNDS THAT ARE DIVERSIFIED ACROSS ISSUERS
LOCATED IN A NUMBER OF STATES BECAUSE OF ITS CONCENTRATION
IN MUNICIPAL SECURITIES OF A SINGLE STATE. Any economic,
political, or regulatory developments affecting the value
of the securities this Portfolio holds could have a greater
impact on the total value of the Portfolio's holdings than
would be the case if the portfolio securities were
diversified among more issuers. The Money Market Portfolio
intends to comply with the diversification requirements of
Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). In accordance with these
requirements, the Portfolio will not invest more than 5% of
its total assets in any one issuer; this limitation applies
to 50% of the Portfolio's total assets.
INVESTMENT
LIMITATIONS
________________________________________________________________________
The investment objectives and investment limitations are
fundamental policies of the Portfolios. Fundamental
policies cannot be changed with respect to the Trust or a
Portfolio without the consent of the holders of a majority
of the Trust's or that Portfolio's outstanding shares. It
is a fundamental policy of the Money Market Portfolio to
use its best efforts to maintain a constant net asset value
of $1.00 per share.
NEITHER PORTFOLIO MAY:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government,
its agencies or instrumentalities) if, as a result, more
than 5% of the total assets of the Portfolio would be
invested in the securities of such issuer. This
limitation does not apply to the Money Market Portfolio
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
7
<PAGE>
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, 1997, the Fixed Income and
Money Market Portfolios paid management fees, after
waivers, of .21% and .25%, 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
8
<PAGE>
September 30, 1997, total assets under management by Morgan
Grenfell were approximately $9.7 billion. The principal
place of business address of Morgan Grenfell is 885 Third
Avenue, 32nd Floor, New York, New York 10022.
David W. Baldt, Director and Executive Vice President
of Morgan Grenfell, has served as the portfolio manager of
the Fixed Income Portfolio since July, 1995, and has been
with Morgan Grenfell since 1989.
For its services, Morgan Grenfell is entitled to a
fee, which is calculated daily and paid monthly, at an
annual rate of .20% of the average daily net assets. For
the fiscal year ended August 31, 1997, 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, 1997, total assets under
management were approximately $14.6 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 $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, 1997, the Portfolio paid WPG an advisory
fee, after waivers, of .04% of its average daily net
assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company ("SEI
Investments"), 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
9
<PAGE>
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, the Distributor is entitled
to receive 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, the Distributor is entitled to
receive 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 the Distributor 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.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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.
10
<PAGE>
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 the determination of net asset
value and in accordance with the procedures described below
for the order to be accepted on that Business Day; the
specified time is presently 2:00 p.m., Eastern time, for
the Money Market Portfolio and the close of trading on the
New York Stock Exchange (presently 4:00 p.m., Eastern time)
for the Fixed Income Portfolio. Cash investments must be
transmitted or delivered in federal funds to the wire agent
by the close of business on the same day the order is
placed for the Money Market Portfolio and on the next
Business Day following the day the order is placed for the
Fixed Income Portfolio.
Purchases will be made in full or fractional shares
of the Fixed Income Portfolio calculated to three decimal
places. The Trust will send shareholders a statement of
shares owned after each transaction. The purchase price of
shares is the net asset value next determined after a
purchase order is received and accepted by the Trust. The
purchase price of shares of the Money Market Portfolio is
expected to remain constant at $1.00. The net asset value
per share of each 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 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.
Information about the market value of each portfolio
security of the Fixed Income Portfolio may be 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 used by 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 last
quoted sale price on each Business Day or, if there is no
such reported sale, at the most recently quoted bid price.
11
<PAGE>
Shareholders who desire to redeem shares of a
Portfolio must place their redemption orders with the
Transfer Agent (or its authorized agent) prior to the
determination of net asset value and in accordance with the
procedures described below on any Business Day. Otherwise,
the redemption orders will be effective on the next
Business Day. Payment for redemption orders from the Fixed
Income Portfolio will be made as promptly as possible and,
in any event, within five Business Days after the
redemption order is received. Payment for redemption orders
from the Money Market Portfolio received before the
calculation of net asset value will be made the same day by
transfer of federal funds. The redemption price is the net
asset value per share of the Portfolio next determined
after receipt by the Transfer Agent of an effective
redemption order. Financial institutions which redeem
shares for the accounts of their customers may impose their
own procedures and cut-off times for receipt of redemption
requests directed through the financial institution.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor its transfer agent will be
responsible for any loss, liability, cost or expense for
acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The
Trust and its transfer agent will each employ reasonable
procedures to confirm that instructions communicated by
telephone are genuine, including requiring a form of
personal identification prior to acting upon instructions
received by telephone and recording telephone instructions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, 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.
12
<PAGE>
The total return of the Fixed Income Portfolio refers
to the average compounded rate of return to a hypothetical
investment for designated time periods (including, but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions.
The "tax equivalent yield" is calculated by
determining the rate of return that would have been
achieved on a fully taxable investment to produce the
after-tax equivalent of a Portfolio's yield, assuming
certain tax brackets for a shareholder of the Money Market
Portfolio.
A Portfolio may periodically compare its performance
to that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. The Fixed Income Portfolio
may quote Morningstar, Inc., a service that ranks mutual
funds on the basis of risk-adjusted performance, 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 of the Money Market
Portfolio will normally be higher than that of Class B or
Class C shares of the Portfolio 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.
13
<PAGE>
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
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholder during the taxable year.
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.
14
<PAGE>
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.
PENNSYLVANIA 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. 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.
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.
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, 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
15
<PAGE>
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, Oaks, Pennsylvania, 19456.
DIVIDENDS
The net investment income (exclusive of capital gains) of
each Portfolio is distributed in the form of dividends. The
Money Market Portfolio declares dividends daily, and
shareholders of record at the close of each Business Day
will be entitled to receive that day's dividend. The Money
Market Portfolio pays dividends on the first Business Day
of each month. Dividends will be paid on the next Business
Day to shareholders who redeem all of their shares of the
Money Market Portfolio at any time during the 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
16
<PAGE>
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 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.
17
<PAGE>
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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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. Fannie Mae securities).
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 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.
18
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights...................................................... 3
The Trust................................................................. 4
Investment Objectives and Policies........................................ 4
General Investment Policies............................................... 5
Risk Factors.............................................................. 6
Investment Limitations.................................................... 7
The Manager............................................................... 8
The Advisers.............................................................. 8
Distribution and Shareholder Servicing.................................... 9
Purchase and Redemption of Shares......................................... 10
Performance............................................................... 12
Taxes..................................................................... 13
General Information....................................................... 15
Description of Permitted Investments and Risk Factors..................... 17
</TABLE>
19
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission, and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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 CNI Class 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. IN ADDITION, THE PORTFOLIO
MAY INVEST A SIGNIFICANT PERCENTAGE OF ITS ASSETS IN A SINGLE ISSUER, AND
INVESTING IN THE PORTFOLIO MAY BE RISKIER THAN INVESTING IN OTHER TYPES OF MONEY
MARKET FUNDS.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Management/Advisory Fees (AFTER FEE WAIVER) (1) .23%
12b-1 Fees (AFTER FEE WAIVER) (2) .25%
Total Other Expenses .30%
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
CNI CLASS SHARES OF THE PORTFOLIO WOULD BE .27%.
(2) THE DISTRIBUTOR HAS WAIVED, ON A VOLUNTARY BASIS, A PORTION OF ITS 12B-1
FEE, AND THE 12B-1 FEES SHOWN REFLECT THIS WAIVER. THE DISTRIBUTOR RESERVES
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 1.07%. 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:
CNI Class $ 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 CNI CLASS 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>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734.
FOR A CNI CLASS SHARE OUTSTANDING THROUGHOUT THE PERIOD+
<TABLE>
<CAPTION>
NET REALIZED
AND
INVESTMENT UNREALIZED
ACTIVITIES DISTRIBUTIONS GAIN (LOSS)
NET ASSET ---------- --------------------------------------- ON NET ASSET
VALUE NET NET NET INVESTMENTS VALUE
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL END OF
OF PERIOD INCOME INCOME INCOME DISTRIBUTIONS TRANSACTIONS PERIOD
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -------------------------------
CNI Class
FOR THE YEARS ENDED AUGUST 31,
1997 $1.00 $0.028 $ (0.028) $ -- $(0.028) $ -- $1.00
1996 1.00 0.028 (0.028) -- (0.028) -- 1.00
1995 1.00 0.029 (0.029) -- (0.029) -- 1.00
1994(1) 1.00 0.006 (0.006) -- (0.006) -- 1.00
<CAPTION>
RATIO OF RATIO OF NET
EXPENSES INVESTMENT
TO AVERAGE RATIO OF NET INCOME TO
RATIO OF NET ASSETS INVESTMENT AVERAGE
NET ASSETS EXPENSES (EXCLUDING INCOME TO NET ASSETS
TOTAL END OF TO AVERAGE FEE AVERAGE (EXCLUDING
RETURN PERIOD (000) NET ASSETS WAIVERS) NET ASSETS FEE WAIVERS)
- --------------------------------- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------
CALIFORNIA TAX EXEMPT PORTFOLIO
- -------------------------------
CNI Class
FOR THE YEARS ENDED AUGUST 31,
1997 2.79% $ 412,142 0.78% 1.06% 2.75% 2.47%
1996 2.90% 350,684 0.78% 0.86% 2.84% 2.76%
1995 2.97% 328,035 0.78% 0.93% 2.93% 2.78%
1994(1) 2.14%* 318,122 0.67%* 0.87%* 2.06%* 1.86%*
</TABLE>
+ CLASS G SHARES WERE RENAMED CNI CLASS SHARES ON DECEMBER 31, 1997.
* ANNUALIZED
(1) THE CALIFORNIA TAX EXEMPT PORTFOLIO--CNI CLASS (FORMERLY, 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.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers CNI Class 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 Investments Distribution Co., Oaks,
Pennsylvania 19456, 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"),
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.
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 projects.
This restriction does not apply to municipal securities in
any of the following categories: public housing
authorities; general obligations of states and localities;
state and local housing finance authorities or municipal
utilities systems.
4
<PAGE>
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 eligible quality
securities. In general, this means 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
Weiss, Peck & Greer, L.L.C. (the "Adviser") to be of
equivalent quality. Since the Portfolio often purchases
securities supported by credit enhancements from banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Portfolio
and affect its share price.
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. The Portfolio's investments in non-first tier
conduit securities will be limited to 5% of the Portfolio's
assets. Conduit securities are securities issued to finance
non-governmental private projects, such as housing
developments and retirement homes, and for which the
ultimate obligor is not a governmental issuer.
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.
RISK FACTORS
______________________________________________________________________
CALIFORNIA RISK FACTORS
THE PORTFOLIO'S CONCENTRATION IN INVESTMENTS IN MUNICIPAL
SECURITIES OF A SINGLE STATE INVOLVES GREATER RISKS THAN
MONEY MARKET FUNDS THAT ARE DIVERSIFIED ACROSS ISSUERS
LOCATED IN A NUMBER OF STATES. These risks result primarily
from (1) amendments to the California
5
<PAGE>
Constitution and other statutes that limit the taxing and
spending authority of California government entities, and
(2) a variety of California laws and regulations that may
affect, directly or indirectly, the issuer of California
municipal securities.
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.
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.
6
<PAGE>
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 CNI Class shares of the Portfolio (as a
percentage of the Portfolio's average daily net assets
attributable to CNI Class 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, 1997, the
Portfolio paid management fees, after waivers, of .19% 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, 1997, total assets under management were
approximately $14.6 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 the Adviser, has
been associated with the Adviser's Tax Exempt Fixed Income
group since 1988, and its predecessor since 1980.
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<PAGE>
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, 1997, the Portfolio paid advisory fees, after waivers,
of .04% of its relative net assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company ("SEI
Investments"), serves as the Portfolio's distributor
pursuant to a distribution agreement (the "Distribution
Agreement") with the Trust.
The Rule 12b-1 Plan applicable to CNI Class shares of
the Portfolio ("CNI Class Plan") provides for payments to
the Distributor at an annual rate of .50% of the
Portfolio's average daily net assets attributable to CNI
Class 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 CNI Class 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 "CNI Class Service Plan") under which firms,
including the Distributor, that provide shareholder
services may receive compensation therefor. Under the CNI
Class Service Plan, the Distributor is entitled to receive
shareholder service fees 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. 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. 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
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<PAGE>
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.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 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 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 liabilities, by
the total number of outstanding shares of the Portfolio.
The Portfolio's
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<PAGE>
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
determination of net asset value and in accordance with the
procedures described below for the order to be accepted on
that Business 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.
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
10
<PAGE>
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
CNI Class shares because of the additional distribution
and/or administrative services expenses charged to Class B,
Class C and CNI Class 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 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
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<PAGE>
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholders during the taxable year.
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 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.
12
<PAGE>
GENERAL INFORMATION
_______________________________________________________________________
THE TRUST
The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated March 15, 1982. The
Declaration of Trust permits the Trust to offer separate
portfolios of shares and different classes of each
portfolio. In addition to the Portfolio, the Trust consists
of the following portfolios: Tax Free Portfolio,
Institutional Tax Free Portfolio, Intermediate-Term
Municipal 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 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, Oaks, Pennsylvania, 19456.
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. Dividends will be paid on the next Business Day
to shareholders who redeem all of their
13
<PAGE>
shares of the Portfolio at any time during the 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, Class C or CNI Class
shares because of the additional distribution and/or
administrative services expenses charged to Class B, Class
C and CNI Class 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; (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
14
<PAGE>
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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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.
15
<PAGE>
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 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>
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.............................................................. 5
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..................... 14
</TABLE>
17
<PAGE>
PROSPECTUS
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-437-6016. The Statement of
Additional Information is incorporated 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 Investments Distribution Co. (the
Trust's distributor), and through participating broker-dealers, financial
institutions and other organizations. This Prospectus offers Class D shares of
the Trust's 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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
HOW TO READ THIS PROSPECTUS
- --------------------------------------------------------------------------------
This Prospectus gives you information that you should know about the Portfolio
before investing. Brief descriptions are also provided throughout the Prospectus
to better explain certain key points. To find these helpful guides, look for
this symbol.[>]
FUND HIGHLIGHTS
- --------------------------------------------------------------------------------
The following summary provides basic information about the Class D shares of the
Portfolio. This summary is qualified in its entirety by reference to the more
detailed information provided elsewhere in this Prospectus and in the Statement
of Additional Information.
INVESTMENT 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 Investments
Distribution Co. acts as
distributor ("Distributor") of
the Trust's shares. See "The
Manager and Shareholder
Servicing Agent," "The Adviser"
and "Distribution."
...........................................................................
TABLE OF CONTENTS
<TABLE>
<S> <C>
FUND HIGHLIGHTS................................... 2
PORTFOLIO EXPENSES................................ 4
FINANCIAL HIGHLIGHTS.............................. 5
YOUR ACCOUNT AND DOING BUSINESS WITH US........... 6
INVESTMENT OBJECTIVE AND POLICIES................. 9
GENERAL INVESTMENT POLICIES....................... 10
INVESTMENT LIMITATIONS............................ 11
THE MANAGER AND SHAREHOLDER SERVICING AGENT....... 12
THE ADVISER....................................... 12
DISTRIBUTION...................................... 13
PERFORMANCE....................................... 13
TAXES............................................. 14
ADDITIONAL INFORMATION ABOUT DOING BUSINESS WITH
US........................................... 16
GENERAL INFORMATION............................... 18
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK
FACTORS...................................... 20
</TABLE>
...........................................................................
2
<PAGE>
YOUR ACCOUNT AND
DOING BUSINESS WITH
US
You may open an account with just $1,000, and make
additional investments with as little as $100. Redemptions
of the 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 of
capital gains) of the Portfolio
is distributed in the form of
dividends that will be declared
daily and paid monthly on the
first Business Day of each
month. Any realized net capital
gain is distributed at least
annually. Distributions are paid
in additional shares unless the
shareholder elects to take the
payment in cash. See "General
Information--Dividends."
INFORMATION/SERVICE
CONTACTS
For more information about Class
D Shares, call 1-800-437-6016.
...........................................................................
[>] INVESTMENT PHILOSOPHY
BELIEVING THAT NO SINGLE INVESTMENT ADVISER CAN DELIVER OUTSTANDING PERFORMANCE
IN EVERY INVESTMENT CATEGORY, ONLY THOSE ADVISERS WHO HAVE DISTINGUISHED
THEMSELVES WITHIN THEIR AREAS OF SPECIALIZATION ARE SELECTED TO ADVISE OUR
MUTUAL FUNDS.
...........................................................................
3
<PAGE>
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)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS D
-------
<S> <C>
Maximum Sales Load Imposed on Purchases (AS A PERCENTAGE OF
OFFERING PRICE) None
Maximum Sales Load Imposed on Reinvested Dividends (AS A
PERCENTAGE OF OFFERING PRICE) None
Redemption Fees (1) None
</TABLE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS D
-------
<S> <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%. TOTAL OPERATING EXPENSES HAVE BEEN RESTATED TO
REFLECT CURRENT EXPENSES. ADDITIONAL INFORMATION MAY BE FOUND UNDER "THE
ADVISER" AND "THE MANAGER AND SHAREHOLDER SERVICING AGENT."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3 5 10
1 YR. YRS. YRS. 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>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-437-6016.
FOR A CLASS D SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
INVESTMENT NET REALIZED
ACTIVITIES: DISTRIBUTIONS: AND UNREALIZED
NET ASSET ----------- --------------------------------------------- GAIN (LOSS) ON
VALUE, NET NET INVESTMENTS
BEGINNING INVESTMENT NET INVESTMENT REALIZED TOTAL AND CAPITAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------
TAX FREE PORTFOLIO
- ------------------
Class D
FOR THE YEAR ENDED
AUGUST 31,
1997 $ 1.00 $0.028 $ (0.028) $ -- $(0.028) $ --
1996 1.00 0.030 (0.030) -- (0.030) --
1995 (1) 1.00 0.026 (0.026) -- (0.026) --
<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES RATIO OF INCOME
TO AVERAGE NET TO AVERAGE
NET ASSETS, RATIO OF NET ASSETS INVESTMENT NET ASSETS
NET ASSET END OF EXPENSES (EXCLUDING INCOME (EXCLUDING
VALUE, END OF PERIOD TO AVERAGE FEE TO AVERAGE FEE
PERIOD TOTAL RETURN (000) NET ASSETS WAIVERS) NET ASSETS WAIVERS)
- ------------------------ -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------
TAX FREE PORTFOLIO
- ------------------
Class D
FOR THE YEAR ENDED
AUGUST 31,
1997 $1.00 2.86% $ 1 0.74% 0.74% 3.04% 3.04%
1996 1.00 2.99% 6 0.80% 0.88% 3.18% 3.10%
1995 (1) 1.00 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>
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 Investments Distribution Co. ("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. Contact your Intermediary for information
on how to buy, sell and exchange shares. To allow for
processing and transmittal of orders to the Transfer Agent
(or its authorized agent) on the
same day, Intermediaries may
impose earlier cut-off times for
receipt of purchase orders.
Certain Intermediaries may
charge customer account fees.
Information concerning any
charges will be provided to the
customer by the Intermediary.
The shares you purchase
through an Intermediary may be
held "of record" by that
Intermediary. If you want to
transfer the registration of
shares beneficially owned by
you, but held "of record" by an Intermediary, you should
call the Intermediary to request this change.
...........................................................................
[>] WHAT IS AN INTERMEDIARY?
ANY ENTITY, SUCH AS A BANK, BROKER-DEALER, OTHER FINANCIAL INSTITUTION,
ASSOCIATION OR ORGANIZATION WHICH HAS ENTERED INTO AN ARRANGEMENT WITH THE
DISTRIBUTOR TO SELL CLASS D SHARES TO ITS CUSTOMERS.
...........................................................................
HOW TO BUY SHARES
FROM THE TRANSFER
AGENT
Account application forms may be obtained by calling
1-800-437-6016.
OPENING AN ACCOUNT BY
CHECK
You may buy Class D shares by mailing a completed
application and a check (or other negotiable bank
instrument or money order) to the Transfer Agent (or its
authorized 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
purchases are made by check (including certified or
cashier's checks), redemption proceeds will not be
forwarded until the check providing for the investment
being redeemed has cleared (which may take up to 15 days).
BY FED WIRE
You may buy shares by Fed Wire by calling 1-800-437-6016.
AUTOMATIC INVESTMENT
PLAN ("AIP")
You may systematically buy Class D shares through
deductions from your checking or savings accounts, provided
these accounts are maintained through banks which are part
of the Automated Clearing House ("ACH") system. You may
purchase shares on a fixed schedule (semi-monthly or
monthly) with amounts as low as $25, or as high as
$100,000. Upon notice, the amount you commit to the AIP may
be changed or canceled at any time. The AIP is subject to
account minimum initial purchase amounts and minimum
balance maintenance requirements.
6
<PAGE>
EXCHANGING SHARES
WHEN CAN YOU
EXCHANGE SHARES?
Once good payment for your shares has been received and
accepted (I.E., an account has been established), you may
exchange some or all of your shares for Class D shares of
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
APPLY TO AN EXCHANGE?
SEI Funds' portfolios that are
not money market portfolios
currently impose a sales charge
on Class D shares. If you
exchange into one of these "non-
money market" portfolios, you
will have to pay a sales charge
on any portion of your exchanged
Class D shares for which you
have not previously paid a sales
charge.
If you previously paid a
sales charge on your Class D
shares, no additional sales
charge will be assessed when you
exchange those Class D shares
for other Class D shares.
If you buy Class D shares
of a "non-money market" fund and
you receive a sales charge
waiver, you will be deemed to have paid the sales charge
for purposes of this exchange privilege. In calculating any
sales charge payable on your exchange, the Trust will
assume that the first shares you exchange are those on
which you have already paid a sales charge. Sales charge
waivers may also be available under certain circumstances
described in the SEI Funds' prospectuses.
...........................................................................
[>] HOW DOES AN EXCHANGE TAKE PLACE?
WHEN MAKING AN EXCHANGE, YOU AUTHORIZE THE SALE OF YOUR SHARES OF ONE OR MORE
PORTFOLIOS IN ORDER TO PURCHASE THE SHARES OF ANOTHER PORTFOLIO. IN OTHER WORDS,
YOU ARE EXECUTING A SELL ORDER AND THEN A BUY ORDER. THIS SALE OF YOUR SHARES IS
A TAXABLE EVENT WHICH COULD RESULT IN A TAXABLE GAIN OR LOSS.
...........................................................................
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 EXCHANGE
OF SHARES
To request an exchange, you must provide proper
instructions in writing to the Transfer Agent (or its
authorized agent). Telephone exchanges will also be
accepted if you previously elected this option on your
account application.
In the case of shares held "of record" by an
Intermediary but beneficially owned by you, you should
contact the Intermediary who will contact the Transfer
Agent and effect the exchange on your behalf.
HOW TO SELL SHARES
THROUGH THE
TRANSFER AGENT
To sell your shares, a written request for redemption in
good order must be received by the Transfer Agent (or its
authorized agent). Valid written redemption requests will
be effective on receipt. All shareholders of record must
sign the redemption request. The Transfer Agent may require
that the signatures on written requests be guaranteed.
7
<PAGE>
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 most circumstances,
payments will be transmitted on
the next Business Day following
receipt of a valid telephone
request for redemption. Wire
redemption requests may be made
by calling 1-800-437-6016, who
will subtract a wire redemption
charge (presently $10.00) from
the amount of the redemption.
SYSTEMATIC WITHDRAWAL
PLAN ("SWP")
You may establish a systematic
withdrawal plan for an account
with a $10,000 minimum balance.
Under the plan, redemptions can
be automatically processed from
accounts (monthly, quarterly,
semi-annually or annually) by
check or by ACH with a minimum
redemption amount of $50.
...........................................................................
[>] WHAT IS A SIGNATURE GUARANTEE?
A SIGNATURE GUARANTEE VERIFIES THE AUTHENTICITY OF YOUR SIGNATURE AND MAY BE
OBTAINED FROM ANY OF THE FOLLOWING: BANKS, BROKERS, DEALERS, CERTAIN CREDIT
UNIONS, SECURITIES EXCHANGE OR ASSOCIATION, CLEARING AGENCY OR SAVINGS
ASSOCIATION. A NOTARY PUBLIC CANNOT PROVIDE A SIGNATURE GUARANTEE.
...........................................................................
CHECK-WRITING
Check-Writing Service is offered free of charge to Class D
shareholders in the Portfolio. You may redeem shares by
writing checks on your account for $500 or more. Once you
have signed and returned a signature card, you will receive
a supply of checks. A check may be made payable to any
person, and your account will continue to earn dividends
until the check clears.
Because of the difficulty of determining in advance
the exact value of your account, you may not use a check to
close your account. The checks are free, but your account
will be charged a fee for stopping payment of a check upon
your request or if the check cannot be honored because of
insufficient funds or other valid reasons.
8
<PAGE>
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, meet the quality, maturity and
diversification requirements imposed by Rule 2a-7. See
"General Investment Policies."
...........................................................................
[>] WHAT ARE INVESTMENT OBJECTIVES AND POLICIES?
THE PORTFOLIO'S INVESTMENT OBJECTIVE IS A STATEMENT OF WHAT IT SEEKS TO ACHIEVE.
IT IS IMPORTANT TO MAKE SURE THAT THE INVESTMENT OBJECTIVE MATCHES YOUR OWN
FINANCIAL NEEDS AND CIRCUMSTANCES. THE INVESTMENT POLICIES SECTION SPELLS OUT
THE TYPES OF SECURITIES IN WHICH THE PORTFOLIO INVESTS.
...........................................................................
The Adviser will not invest more than 25% of
Portfolio assets in municipal securities (a) whose issuers
are located in the same state or (b) the interest on which
is derived from revenues of similar type projects. This
restriction does not apply to municipal securities in any
of the following categories; public housing authorities;
general obligations of states and localities; state and
local housing finance authorities or municipal utilities
systems.
There could be economic, business, or political
developments which might affect all municipal securities of
a similar type. To the extent that a significant portion of
the Portfolio's assets are invested in municipal securities
payable from revenues on similar projects, the Portfolio
will be subject to the peculiar risks presented by such
projects to a greater extent than it would be if the
Portfolio's assets were not so invested. Moreover, in
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.
9
<PAGE>
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 eligible quality
securities. In general, this means 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
Weiss, Peck & Greer, L.L.C. (the "Adviser") to be of
equivalent quality. Since the Portfolio often purchases
securities supported by credit enhancements from banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Portfolio
and affect its share price.
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. The Portfolio's investments in non-first tier
conduit securities will be limited to 5% of the Portfolio's
assets. Conduit securities are securities issued to finance
non-governmental private projects, such as housing
developments and retirement homes, and for which the
ultimate obligor is not a governmental issuer.
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.
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.
10
<PAGE>
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.
11
<PAGE>
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, 1997, the
Portfolio paid management fees, after waivers, of .36% of
its average daily net assets.
The Trust and DST Systems, Inc., 1004 Baltimore
Avenue, Kansas City, Missouri, 64105 ("DST"), have entered
into a separate transfer agent agreement, with respect to
the Class D shares of the Portfolio. Under this agreement,
DST acts as the transfer agent and dividend disbursing
agent (the "Transfer Agent") for the Class D shares of the
Trust.
THE ADVISER
_______________________________________________________________________
Weiss, Peck & Greer, L.L.C., acts as the Portfolio's
investment adviser under an advisory agreement with the
Trust (the "Advisory Agreement"). Under the Advisory
Agreement, the Adviser invests
the assets of the Portfolio, and
continuously reviews, supervises
and administers the Portfolio's
investment program. The Adviser
is independent of the Manager
and SEI, and discharges its
responsibilities subject to the
supervision of, and policies set
by, the Trustees of the Trust.
The Adviser is a limited
liability company founded as a
limited partnership in 1970, and
engages in investment
management, venture capital
management and management
buyouts. WPG has been active
since its founding in managing
portfolios of tax exempt
securities. As of September 30,
1997, total assets under management were approximately
$14.6 billion. The principal business address of the
Adviser is One New York Plaza, New York, New York 10004.
...........................................................................
[>] INVESTMENT
ADVISER
THE PORTFOLIO'S INVESTMENT ADVISER MANAGES THE INVESTMENT ACTIVITIES AND IS
RESPONSIBLE FOR THE PERFORMANCE OF THE PORTFOLIO. THE ADVISER CONDUCTS
INVESTMENT RESEARCH, EXECUTES INVESTMENT STRATEGIES BASED ON AN ASSESSMENT OF
ECONOMIC AND MARKET CONDITIONS, AND DETERMINES WHICH SECURITIES TO BUY, HOLD OR
SELL.
...........................................................................
Janet Fiorenza acts as the portfolio manager for the
Portfolio. Ms. Fiorenza, a Principal of the Adviser, has
been associated with the Adviser's Tax Exempt Fixed Income
group since 1988, and with its predecessor since 1980.
12
<PAGE>
For its services, the Adviser is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .05% of the combined average daily net assets of
the money market portfolios of the Trust that are advised
by the Adviser up to $500 million, .04% of such assets from
$500 million to $1 billion, and .03% of such assets in
excess of $1 billion. Such fees are allocated daily among
these portfolios based on their relative net assets. For
the fiscal year ended August 31, 1997, the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
DISTRIBUTION
_______________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), 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 and at its own
expense, provide promotional incentives, in the form of
cash or other compensation to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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
13
<PAGE>
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
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.
...........................................................................
[>] TAXES
YOU MUST PAY TAXES ON YOUR PORTFOLIO'S EARNINGS WHETHER YOU TAKE YOUR PAYMENTS
IN CASH OR ADDITIONAL SHARES.
...........................................................................
14
<PAGE>
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.
...........................................................................
[>] DISTRIBUTIONS
THE PORTFOLIO DISTRIBUTES INCOME DIVIDENDS AND CAPITAL GAINS. INCOME DIVIDENDS
REPRESENT THE EARNINGS FROM THE PORTFOLIO'S INVESTMENTS; CAPITAL GAINS
DISTRIBUTIONS OCCUR WHEN INVESTMENTS IN THE PORTFOLIO ARE SOLD FOR MORE THAN THE
ORIGINAL PURCHASE PRICE.
...........................................................................
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
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholder during the taxable year.
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.
15
<PAGE>
ADDITIONAL
INFORMATION ABOUT
DOING BUSINESS
WITH US
____________________________________________________________________________
BUSINESS DAYS
You may buy, sell or exchange shares on days on which the
New York Stock Exchange is open for business (a "Business
Day"). All purchase, exchange and redemption requests
received in "good order" will be effective as of the
Business Day received by the Transfer Agent (or its
authorized agent) as long as the Transfer Agent (or its
authorized agent) receives the order and, in the case of a
purchase request, payment before 12:30 p.m., Eastern time,
for redemption and exchange requests, and prior to the
determination of net asset value per share of the Portfolio
for purchase requests. 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.
If an exchange request is
for shares of a portfolio whose
net asset value is calculated as
of a time earlier than 2:00
p.m., Eastern time, the exchange
request will not be effective
until the next Business Day.
Anyone who wishes to make an
exchange must have received a
current prospectus of the
portfolio into which the
exchange is being made before
the exchange will be effected.
MINIMUM INVESTMENTS
The minimum initial investment
in the Portfolio's Class D
shares is $1,000; however, the
minimum investment may be waived
at the Distributor's discretion.
All subsequent purchases must be
at least $100 ($25 for payroll
deductions authorized pursuant
to pre-approved payroll
deduction plans). The Trust reserves the right to reject a
purchase order when the Distributor determines that it is
not in the best interest of the Trust or its shareholders
to accept such order.
...........................................................................
[>] BUY, EXCHANGE AND SELL REQUESTS ARE IN "GOOD ORDER" WHEN:
- - THE ACCOUNT NUMBER AND PORTFOLIO NAME ARE SHOWN
- THE AMOUNT OF THE TRANSACTION IS SPECIFIED IN DOLLARS OR SHARES
- SIGNATURES OF ALL OWNERS APPEAR EXACTLY AS THEY ARE REGISTERED ON THE
ACCOUNT
- ANY REQUIRED SIGNATURE GUARANTEES (IF APPLICABLE) ARE INCLUDED
- OTHER SUPPORTING LEGAL DOCUMENTS (AS NECESSARY) ARE PRESENT
...........................................................................
MAINTAINING A MINIMUM
ACCOUNT BALANCE
Due to the relatively high cost of handling small
investments, the Portfolio reserves the right to redeem, at
net asset value, the shares of any shareholder if, because
of redemptions of shares by or on behalf of the
shareholder, the account of such shareholder in the
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
16
<PAGE>
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.
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 (or its authorized agent) of the redemption order.
HOW THE NET ASSET VALUE
IS
DETERMINED
The net asset value per share of the Portfolio is
determined by dividing the total market value of its
investments and other assets, less any liabilities, by the
total number of outstanding shares of the 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
INSTRUCTIONS
Redemption orders may be placed by telephone. Neither the
Trust nor the Transfer Agent will be responsible for any
loss, liability, cost or expense for acting upon wire
instructions
17
<PAGE>
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 WITHDRAWAL
PLAN ("SWP")
Please note that if withdrawals exceed income dividends,
your invested principal in the account will be depleted.
Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net
asset value per share, your original investment could be
exhausted entirely. To participate in the SWP, you must
have your dividends automatically reinvested. You may
change or cancel the SWP at any time, upon written notice
to the Transfer Agent.
HOW TO CLOSE YOUR
ACCOUNT
An account may be closed by providing written notice to the
Transfer Agent. You may also close your account by
telephone if you have previously elected telephone options
on your account application.
GENERAL INFORMATION
_______________________________________________________________________
THE TRUST
SEI 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, 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, Oaks, Pennsylvania 19456,
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.
18
<PAGE>
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class of the
Trust will vote separately on matters relating solely to
that 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 shareholder
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 Transfer
Agent, DST Systems, Inc., 1004 Baltimore Avenue, 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 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.
19
<PAGE>
DESCRIPTION OF
PERMITTED
INVESTMENTS AND RISK
FACTORS ______________________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
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.
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
20
<PAGE>
commitment or put was an integral part of the security as
originally issued, it may not be marketable or assignable;
therefore, the standby commitment or put would only have
value to the Portfolio owning the security to which it
relates. In certain cases, a premium may be paid for a
standby commitment or put, which premium will have the
effect of reducing the yield otherwise payable on the
underlying security. The Portfolio will limit standby
commitment or put transactions to institutions believed to
present minimal credit risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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 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.
21
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Management/Advisory Fees (AFTER FEE WAIVERS) (1) .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.
(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>
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
Investments Distribution Co., Oaks, Pennsylvania 19456, 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 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. Since the Portfolio often purchases securities
supported by credit
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enhancements from banks and other financial institutions,
changes in the credit quality of these institutions could
cause losses to the Portfolio and affect its share price.
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.
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
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(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. In recent years, both
the State and the City experienced 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.
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
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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., ("WPG") serves as the
Portfolio's investment adviser under an advisory agreement
with the Trust (the "Advisory Agreement"). Under the
Advisory Agreement, the Adviser invests the assets of the
Portfolio, and continuously reviews, supervises and
administers the Portfolio's investment program. The Adviser
is independent of the Manager and discharges its
responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust.
The Adviser is a limited liability company founded as
a limited partnership in 1970, and engages in investment
management, venture capital management and management
buyouts. WPG has been active since its founding in managing
portfolios of tax exempt securities. At September 30, 1997,
total assets under management were approximately $14.6
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
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<PAGE>
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,
1997, the Portfolio had not commenced operations.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), 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
the Distributor is entitled to receive a shareholder
servicing fee of up to .25% of average daily net assets
attributable to Class A shares. 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.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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<PAGE>
PURCHASE AND
REDEMPTION OF SHARES
____________________________________________________________________________
Financial institutions may acquire shares of the Portfolio
for their own account, or as a record owner on behalf of
fiduciary, agency or custody accounts, by placing orders
with the Transfer Agent (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 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 determination of net asset
value and in accordance with the procedures described below
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 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.
Information about the market value of each portfolio
security may be 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 used by 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 last
quoted sale price on each Business Day or, if there is no
such reported sale, at the most recently quoted bid price.
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<PAGE>
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
determination of net asset value and in accordance with the
procedures described below 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
seven days after the redemption order is received.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Transfer Agent will be
responsible for any loss, liability, cost or expense for
acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The
Trust and the Transfer Agent will each employ reasonable
procedures to confirm that instructions communicated by
telephone are genuine, including requiring a form of
personal identification prior to acting upon instructions
received by telephone and recording telephone instructions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE
______________________________________________________________________
From time to time, the Portfolio may advertise yield, total
return and tax equivalent yield. These figures will be
based on historical earnings and are not intended to
indicate future performance.
The yield of the Portfolio refers to the annualized
income generated by a hypothetical investment in the
Portfolio over a specified 30-day period. The yield is
calculated by assuming that the same amount of income
generated by the investment during that period is generated
in each 30-day period over one year and is shown as a
percentage of the investment.
The total return of the Portfolio refers to the
average compounded rate of return to a hypothetical
investment for designated time periods (including, but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions. The total return of the Portfolio may also
be quoted as a dollar amount or on an aggregate basis, an
actual basis.
The tax equivalent yield is calculated by determining
the rate of return that would have been achieved on a fully
taxable investment to produce the after-tax equivalent of
the Portfolio's yield, assuming certain tax brackets for a
shareholder.
The Portfolio may periodically compare its
performance to that of: (i) other mutual funds tracked by
mutual fund rating services (such as Lipper Analytical),
financial and 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
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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
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.
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<PAGE>
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholders during the taxable year.
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.
NEW YORK 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.
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 which interest would be exempt from
New York State tax if held by an individual, 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. In addition, interest or indebtedness incurred by a
shareholder to purchase or carry shares of the Portfolio is
not deductible for New York personal income tax purposes to
the extent that it relates to New York exempt-interest
dividends distributed to a shareholder during the taxable
year.
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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,
Intermediate-Term Municipal Portfolio, and Pennsylvania Tax
Free Portfolio. All consideration received by the Trust for
shares of any portfolio and all assets of such portfolio
belong to that portfolio and would be subject to
liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation material and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
TRUSTEES OF THE 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, Oaks, Pennsylvania, 19456.
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
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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.
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
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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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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 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.
14
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
The Trust................................................................. 3
Investment Objective and Policies......................................... 3
General Investment Policies............................................... 4
Risk Factors.............................................................. 4
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..................... 13
</TABLE>
15
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997, has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A CLASS B
---------- ----------
<S> <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) .00%(2) .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 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 FOR CLASS A 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>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 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>
INVESTMENT NET REALIZED AND
ACTIVITIES DISTRIBUTIONS UNREALIZED GAIN
NET ASSET ----------- -------------------------------------- (LOSS) ON
VALUE, NET NET NET INVESTMENTS AND NET ASSET
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL CAPITAL VALUE END
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS OF PERIOD
- ------------------------------------------------------------------------------------------------------------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------
INSTITUTIONAL TAX FREE PORTFOLIO
- ------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31:
1997 $ 1.00 $0.034 $ (0.034) $ -- $(0.034) $ -- $ 1.00
1996 1.00 0.035 (0.035) -- (0.035) -- 1.00
1995 1.00 0.036 (0.036) -- (0.036) -- 1.00
1994 1.00 0.025 (0.025) -- (0.025) -- 1.00
1993 1.00 0.026 (0.026) -- (0.026) -- 1.00
1992 1.00 0.036 (0.036) -- (0.036) -- 1.00
1991 1.00 0.049 (0.049) -- (0.049) -- 1.00
1990(1) 1.00 0.033 (0.033) -- (0.033) -- 1.00
FOR THE YEARS ENDED JANUARY 31:
1990 $ 1.00 $0.059 $ (0.059) -- $(0.059) -- $ 1.00
1989 1.00 0.048 (0.048) -- (0.048) -- 1.00
1988 1.00 0.042 (0.042) -- (0.042) -- 1.00
Class B
FOR THE YEARS ENDED AUGUST 31:
1997 $ 1.00 $0.031 $ (0.031) $ -- $(0.031) $ -- $ 1.00
1996 1.00 0.032 (0.032) -- (0.032) -- 1.00
1995 1.00 0.033 (0.033) -- (0.033) -- 1.00
1994 1.00 0.022 (0.022) -- (0.022) -- 1.00
1993 1.00 0.023 (0.023) -- (0.023) -- 1.00
1992 1.00 0.033 (0.033) -- (0.033) -- 1.00
1991(2) 1.00 0.038 (0.038) -- (0.038) -- 1.00
<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
RATIO OF NET ASSETS INVESTMENT NET ASSETS
NET ASSETS, EXPENSES (EXCLUDING INCOME TO (EXCLUDING
TOTAL END OF TO AVERAGE FEE AVERAGE FEE
RETURN PERIOD (000) NET ASSETS WAIVERS) NET ASSETS WAIVERS)
- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------
INSTITUTIONAL TAX FREE PORTFOL
- ------------------------------
Class A
FOR THE YEARS ENDED AUGUST 31:
1997 3.44% $ 999,946 0.33% 0.69% 3.39% 3.03%
1996 3.52% 835,388 0.33% 0.49% 3.46% 3.30%
1995 3.70% 788,877 0.33% 0.52% 3.64% 3.45%
1994 2.51% 835,516 0.33% 0.50% 2.48% 2.31%
1993 2.59% 763,040 0.33% 0.49% 2.55% 2.39%
1992 3.66% 623,689 0.33% 0.51% 3.54% 3.36%
1991 5.20% 448,390 0.33% 0.53% 4.91% 4.71%
1990(1) 3.32%+ 226,658 0.33%* 0.56%* 5.64%* 5.41%*
FOR THE YEARS ENDED JANUARY 31
1990 6.11% $ 177,342 0.52% 0.60% 5.90% 5.82%
1989 5.05% 99,774 0.55% 0.57% 4.80% 4.78%
1988 4.28% 223,653 0.55% 0.56% 4.20% 4.19%
Class B
FOR THE YEARS ENDED AUGUST 31:
1997 3.13% $ 34,783 0.63% 0.73% 3.10% 3.00%
1996 3.21% 14,156 0.63% 0.80% 3.16% 2.99%
1995 3.39% 15,084 0.63% 0.82% 3.32% 3.13%
1994 2.21% 21,725 0.63% 0.81% 2.31% 2.13%
1993 2.29% 3,040 0.63% 0.79% 2.22% 2.06%
1992 3.35% 686 0.63% 0.81% 3.22% 3.04%
1991(2) 3.89%+ 1,515 0.63%* 0.84%* 4.34%* 4.13%*
</TABLE>
* ANNUALIZED
+ RETURN IS FOR THE PERIOD INDICATED AND HAS NOT BEEN ANNUALIZED.
(1) IN AUGUST 1990, THE TRUSTEES CHANGED THE FISCAL YEAR END OF THE TRUST FROM
JANUARY 31 TO AUGUST 31.
(2) THE INSTITUTIONAL TAX-FREE PORTFOLIO--CLASS B COMMENCED OPERATIONS ON
OCTOBER 15, 1990.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class A and Class
B shares of the Trust's Institutional Tax Free Portfolio (the "Portfolio"). As
of September 30, 1997, the aggregate net assets of all classes of the
Institutional Tax Free Portfolio was $992,670,088. 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
Investments Distribution Co., Oaks, Pennsylvania 19456, 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, meet quality, maturity
and diversification requirements imposed by Rule 2a-7. 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
4
<PAGE>
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 eligible quality
securities. In general, this means 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
Weiss, Peck & Greer, L.L.C. (the "Adviser") to be of
equivalent quality. Since the Portfolio often purchases
securities supported by credit enhancements from banks and
other financial institutions, changes in the credit quality
of these institutions could cause losses to the Portfolio
and affect its share price.
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. The Portfolio's investments in non-first tier
conduit securities will be limited to 5% of the Portfolio's
assets. Conduit securities are securities issued to finance
non-governmental private projects, such as housing
developments and retirement homes, and for which the
ultimate obligor is not a governmental issuer.
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. While the Portfolio generally intends
to be fully invested in federally tax-exempt securities,
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. The Portfolio will not invest more than 10% of
its total assets in securities which are considered to be
illiquid.
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>
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.
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
6
<PAGE>
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, 1997, 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. The Adviser has been active since its founding in
managing portfolios of tax exempt securities. As of
September 30, 1997, total assets under management were
approximately $14.6 billion. The principal business address
of the Adviser 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 the Adviser, has
been associated with the Adviser's Tax Exempt Fixed Income
group since 1988, and with its predecessor since 1980.
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, 1997 the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
7
<PAGE>
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company ("SEI
Investments"), 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 Distributor is entitled
to receive 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
Distributor is entitled to receive shareholder service fees
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 to the Distributor 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.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
8
<PAGE>
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 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 determination of net asset
value and in accordance with the procedures described below
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
9
<PAGE>
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 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.
10
<PAGE>
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 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.
11
<PAGE>
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
to the extent that it relates to exempt-interest dividends
distributed to the shareholder during the taxable year.
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, 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.
12
<PAGE>
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, Oaks, Pennsylvania, 19456.
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. Dividends will be paid on the next Business Day
to shareholders who redeem all of their shares of the
Portfolio at any time during the month. Currently, capital
gains, if any, are distributed at the end of the calendar
year.
Shareholders automatically receive all income
dividends and capital gain distributions in additional
shares, unless the shareholder has elected to take such
payment in cash. Shareholders may change their election by
providing written notice to the Manager at least 15 days
prior to the distribution.
13
<PAGE>
The dividends on Class A shares of the Portfolio are
normally higher than those on Class B and Class C shares
because of the additional 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.
14
<PAGE>
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 risks.
U.S. GOVERNMENT
OBLIGATIONS
Obligations issued by the U.S. Treasury or issued or
guaranteed by agencies of the U.S. Government and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. 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., Fannie Mae
securities).
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
15
<PAGE>
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 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>
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.................................... 8
Purchase and Redemption of Shares......................................... 9
Performance............................................................... 10
Taxes..................................................................... 11
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 14
</TABLE>
17
<PAGE>
SEI TAX EXEMPT TRUST
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
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, 1997 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of
Additional Information is incorporated 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 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, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING
POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
<TABLE>
<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS) CLASS B
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
Management/Advisory Fees (AFTER FEE WAIVER) (1) .29%
12b-1 Fees None
Total Other Expenses .34%
Shareholder Servicing Fees .25%
- ------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVERS) (2) .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 B
SHARES OF THE PORTFOLIO WOULD BE .40%.
(2) ABSENT THESE FEE WAIVERS, TOTAL OPERATING EXPENSES OF THE PORTFOLIO WOULD BE
.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 B 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 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 B SHARES. THE PORTFOLIO ALSO OFFERS
CLASS A AND CLASS C SHARES, WHICH ARE SUBJECT TO THE SAME EXPENSES, EXCEPT THAT
CLASS A AND 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>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been derived from the Trust's financial statements which were
audited by Arthur Andersen LLP, independent accountants, whose report thereon,
dated October 17, 1997, was unqualified. This information should be read in
conjunction with the Trust's financial statements for the fiscal year ended
August 31, 1997, and notes thereto which are incorporated by reference to the
Trust's Statement of Additional Information. Additional performance information
is set forth in the Trust's 1997 Annual Report to Shareholders, which is
available upon request and without charge by calling 1-800-342-5734.
FOR CLASS B SHARES OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET REALIZED
AND
INVESTMENT UNREALIZED
NET ACTIVITIES DISTRIBUTIONS GAIN (LOSS)
ASSET ---------- -------------------------------------- ON
VALUE, NET NET NET INVESTMENTS
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
- ------------------------------
INSTITUTIONAL TAX FREE
PORTFOLIO
- -----------------------------
Class B
FOR THE YEARS ENDED AUGUST 31:
1997 $ 1.00 $ 0.031 $ (0.031) $ -- $ (0.031) $ --
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 (2) 1.00 0.038 (0.038) -- (0.038) --
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF NET
RATIO OF RATIO OF RATIO OF INVESTMENT
EXPENSES EXPENSES TO NET INCOME TO
NET NET ASSETS, TO AVERAGE NET INVESTMENT AVERAGE NET
ASSET END AVERAGE ASSETS INCOME TO ASSETS
VALUE END TOTAL OF PERIOD NET (EXCLUDING AVERAGE (EXCLUDING
OF PERIOD RETURN (000) ASSETS FEE WAIVERS) NET ASSETS FEE WAIVERS)
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------
- ------------------------------
INSTITUTIONAL TAX FREE
PORTFOLIO
- -----------------------------
Class B
FOR THE YEARS ENDED AUGUST 31:
1997 $ 1.00 3.13% $ 34,783 0.63% 0.73% 3.10% 3.00%
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 (2) 1.00 3.89% 1,515 0.63%* 0.84%* 4.34%* 4.13%*
- ------------------------------
- ------------------------------
</TABLE>
* 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.
3
<PAGE>
THE TRUST
_________________________________________________________________________
SEI TAX EXEMPT TRUST (the "Trust") is an open-end management investment company
that offers units of beneficial interest ("shares") in separate diversified and
non-diversified investment portfolios. This Prospectus offers Class B shares of
the Trust's Institutional Tax Free Portfolio (the "Portfolio"). As of September
30, 1997, the aggregate net assets of all classes of the Institutional Tax Free
Portfolio was $992,670,088. Investors may also purchase Class A and 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 Investments
Distribution Co., Oaks, Pennsylvania 19456, 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, meet quality,
maturity and diversification requirements imposed by Rule
2a-7. 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 assets were not so
invested. Moreover, in seeking to attain its investment
objective,
4
<PAGE>
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
eligible quality securities. In general, this means
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 Weiss, Peck & Greer, L.L.C.
(the "Adviser") to be of equivalent quality. Since the
Portfolio often purchases securities supported by credit
enhancements from banks and other financial institutions,
changes in the credit quality of these institutions could
cause losses to the Portfolio and affect its share price.
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. The Portfolio's investments in non-first tier
conduit securities will be limited to 5% of the
Portfolio's assets. Conduit securities are securities
issued to finance non-governmental private projects, such
as housing developments and retirement homes, and for
which the ultimate obligor is not a governmental issuer.
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. While the
Portfolio generally intends to be fully invested in
federally tax-exempt securities, 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. The
Portfolio will not invest more than 10% of its total
assets in securities which are considered to be illiquid.
5
<PAGE>
For a description of the permitted investments and
ratings, see the "Description of Permitted Investments and
Risk Factors" and the Statement of Additional Information.
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.
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 .63% of the average daily
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<PAGE>
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, 1997, 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. The Adviser has been active since its founding in
managing portfolios of tax exempt securities. As of
September 30, 1997, total assets under management were
approximately $14.6 billion. The principal business
address of the Adviser 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 the Adviser, has
been associated with the Adviser's Tax Exempt Fixed Income
group since 1988, and with its predecessor since 1980.
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, 1997 the Portfolio paid
advisory fees, after waivers, of .04% of its relative net
assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company ("SE
Investments"), 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
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<PAGE>
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 B shareholder service plan, the
Distributor is entitled to receive shareholder service
fees 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 to the
Distributor 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.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time and at its own
expense provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolio's
shares.
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 (or its authorized agent).
Institutions that use certain SEI proprietary systems may
place orders electronically through those systems.
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 may be purchased or redeemed
on days on which the New York Stock Exchange is open for
business ("Business Days"). However, money
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<PAGE>
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 determination of net asset
value and in accordance with the procedures described
below 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 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
9
<PAGE>
telephone are genuine, including requiring a form of
personal identification prior to acting upon instructions
received by telephone and recording telephone
instructions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by
other means.
PERFORMANCE_____________________________________________________________________
From time to time the Portfolio advertises its "current
yield," "tax equivalent yield" and "effective yield."
These figures are based on historical earnings and are not
intended to indicate future performance. The "current
yield" of the Portfolio refers to the income generated by
an investment over a seven-day period which is then
"annualized." That is, the amount of income generated by
the investment during the week is assumed to be generated
each week over a 52-week period and is shown as a
percentage of the investment. The "effective yield" (also
called "effective compound yield") is calculated similarly
but, when annualized, the income earned by an investment
is assumed to be reinvested. The "effective yield" will be
slightly higher than the "current yield" because of the
compounding effect of this assumed reinvestment. The "tax
equivalent yield" is calculated by determining the rate of
return that would have been achieved on a fully taxable
investment to produce the after-tax equivalent of the
Portfolio's yield, assuming certain tax brackets for a
shareholder.
The Portfolio may periodically compare its
performance to that of: (i) other mutual funds tracked by
mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; (ii)
broad groups of comparable mutual funds; (iii) unmanaged
indices which may assume investment of dividends but
generally do not reflect deductions for administrative and
management costs; or (iv) other investment alternatives.
The Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy and investment
techniques.
The performance 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
10
<PAGE>
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 to the extent that it relates to exempt-interest
dividends distributed to the shareholder during the
taxable year. Furthermore, the Portfolio may not be an
appropriate investment for persons (including corporations
and other business
11
<PAGE>
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, 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.
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<PAGE>
REPORTING
The Trust issues unaudited financial statements
semi-annually and audited financial statements annually.
The Trust furnishes proxy statements and other reports to
shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Manager.
SEI Fund Management, Oaks, Pennsylvania, 19456.
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. Dividends will be paid on the next Business
Day to shareholders who redeem all of their shares of the
Portfolio at any time during the 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 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.
13
<PAGE>
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 and
obligations issued or guaranteed by instrumentalities of
the U.S. Government. Some of these securities are
supported by the full faith and credit of the U.S.
Treasury (e.g., Government National Mortgage Association
securities),
14
<PAGE>
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., Fannie Mae
securities).
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 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>
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>
SEI TAX EXEMPT TRUST
Manager:
SEI Fund Management
Distributor:
SEI Investments Distribution Co.
Investment Advisers and Sub-Advisers:
Morgan Grenfell Capital Management Incorporated
SEI Investments 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, 1997. Prospectuses may be obtained by
writing the Trust's distributor, SEI Investments Distribution Co., Oaks,
Pennsylvania 19456, or by calling 1-800-342-5734.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust............................................................................. S-2
Description of Permitted Investments.................................................. S-2
Description of Ratings................................................................ S-5
Investment Limitations................................................................ S-6
State Specific Disclosure............................................................. S-8
The Manager........................................................................... S-9
The Advisers and Sub-Adviser.......................................................... S-10
Distribution and Shareholder Servicing................................................ S-10
Trustees and Officers of the Trust.................................................... S-12
Performance........................................................................... S-14
Determination of Net Asset Value...................................................... S-16
Purchase and Redemption of Shares..................................................... S-17
Shareholder Services.................................................................. S-18
Taxes................................................................................. S-18
Portfolio Transactions................................................................ S-20
Description of Shares................................................................. S-22
Limitation of Trustees' Liability..................................................... S-22
Shareholder Liability................................................................. S-22
5% Shareholders....................................................................... S-23
Experts............................................................................... S-25
Financial Statements.................................................................. S-25
</TABLE>
December 31, 1997
<PAGE>
THE TRUST
SEI Tax Exempt Trust (the "Trust") is an open-end management investment
company established as a Massachusetts business trust pursuant to a Declaration
of Trust dated March 15, 1982. The Declaration of Trust permits the Trust to
offer separate series ("portfolios") of units of beneficial interest ("shares")
and separate classes of portfolios. This Statement of Additional Information
relates to the following portfolios: Tax Free, Institutional Tax Free,
California Tax Exempt, Intermediate-Term Municipal, Pennsylvania Municipal,
Pennsylvania Tax Free, 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 CNI Class 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
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 entities. 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 a
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 a 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 a 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.
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
S-2
<PAGE>
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. Each Portfolio or its agent will have actual or constructive
possession of the securities held as collateral for the repurchase agreement.
Each 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 a 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.
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,
S-3
<PAGE>
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 and Pennsylvania Municipal
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. 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.
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-
S-4
<PAGE>
issued securities are subject to market fluctuation, and no interest accrues to
the purchaser during this period. The payment obligation and the interest rate
that will be received on the securities are each fixed at the time the purchaser
enters into the commitment. Purchasing obligations on a when-issued basis is a
form of leveraging and can involve a risk that the yields available in the
market when the delivery takes place may actually be higher than those obtained
in the transaction itself. In that case there could be an unrealized loss at the
time of delivery.
The Portfolios will establish segregated accounts with the Custodian and
will maintain liquid assets in an amount at least equal in value to the
Portfolios' commitments to purchase when-issued securities.
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. 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.
S-5
<PAGE>
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 and Pennsylvania Tax
Free 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 each Portfolio may purchase or hold debt instruments
in accordance with its investment objective and policies and may enter into
repurchase agreements, provided that repurchase agreements maturing in more
than seven days, restricted securities and other illiquid securities are not
to exceed, in the aggregate, 10% of the Portfolio's net assets, except for
the Intermediate-Term Municipal and New York Intermediate-Term Municipal
Portfolios, for which it cannot exceed 15% of the Portfolio's net assets.
4. Pledge, mortgage or hypothecate assets except to secure temporary borrowings
permitted by (1) above in aggregate amounts not to exceed 10% of the net
assets of such Portfolio taken at current value at the time of the
incurrence of such loan.
5. Invest in companies for the purpose of exercising control.
S-6
<PAGE>
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 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 (except the limitation on borrowing) 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 New
York Intermediate-Term Municipal Portfolio investment limitations 2, 4, 8, 11,
12, 13 and 14 are not fundamental and do not require shareholder approval to be
amended. It is a fundamental policy of the Intermediate-Term Municipal and
Pennsylvania Municipal Portfolios to abide by the maturity restrictions and to
invest solely in the permitted investments described in this Statement of
Additional Information and in their respective Prospectuses.
S-7
<PAGE>
STATE SPECIFIC DISCLOSURE
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.
ADDITIONAL CONSIDERATIONS. With respect to Municipal Securities issued by
the State of California and its political subdivisions, as well as certain other
governmental issuers such as the Commonwealth of Puerto Rico, the Trust cannot
predict what legislation, if any, may be proposed in the California State
Legislature as regards the California State personal income tax status of
interest on such obligations, or which proposals, if any, might be enacted. Such
proposals, if enacted, might materially adversely affect the availability of
California Municipal Securities for investment by the Portfolios and the value
of the Portfolios' investments.
SPECIAL CONSIDERATIONS RELATING TO 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.
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
significant financial assistance from the State in recent years.
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 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.
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.
S-8
<PAGE>
THE MANAGER
The Trust and SEI Fund Management ("SEI Management" or the "Manager") have
entered into a Management Agreement (the "Management Agreement"). Formerly, SEI
Financial Management Corporation ("SFM") served as the manager to the Trust. The
Management Agreement provides that the Manager shall not be liable for any error
of judgement 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 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.
SEI Management, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in SEI Management. SEI
Investments and its subsidiaries and affiliates, including SEI Management, are
leading providers of funds evaluation services, trust accounting systems, and
brokerage and information services to financial institutions, institutional
investors, and money managers. SEI Management and its affiliates also serve as
administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK
Funds, Bishop Street Funds, Boston 1784 Funds-Registered Trademark-, CoreFunds,
Inc., CrestFunds, Inc., CUFUND, The Expedition Funds, FMB Funds, Inc., First
American Funds, Inc., First American Investment Funds, Inc., First American
Strategy Funds, Inc., HighMark Funds, Marquis Funds-Registered Trademark-,
Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, Profit Funds Investment Trust,
Rembrandt Funds-Registered Trademark-, Santa Barbara Group of Mutual Funds,
Inc., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI International Trust, SEI Institutional
Managed Trust, SEI Liquid Asset Trust, STI Classic Funds, STI Classic Variable
Trust, and TIP Funds.
For the fiscal years ended August 31, 1995, 1996, and 1997 the Portfolios
paid management fees, after waivers and/or reimbursements as follows:
<TABLE>
<CAPTION>
FEES WAIVED OR
FEES PAID (000) REIMBURSED (000)
---------------------- ----------------------
PORTFOLIO 1995 1996 1997 1995 1996 1997
- -------------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio................................ $ 991 $1,099 $1,420 $ 207 $ 158 $ 0
Institutional Tax Free Portfolio.................. $1,548 $1,697 $2,472 $1,567 $1,283 $1,080
California Tax Exempt Portfolio................... $ 486 $ 581 $ 848 $ 330 $ 305 $ 158
Intermediate-Term Municipal Portfolio............. $ 288 $ 279 $ 412 $ 125 $ 74 $ 40
Pennsylvania Municipal Portfolio.................. $ 132 $ 183 $ 200 $ 253 $ 174 $ 140
Pennsylvania Tax Free Portfolio................... $ 42 $ 66 $ 93 $ 33 $ 43 $ 43
New York Intermediate-Term Municipal
Portfolio....................................... * * * * * *
</TABLE>
- ------------------------
* Not in operation during the period.
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<PAGE>
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, 1995, 1996 and 1997, the Portfolios
paid advisory fees, after waivers and/or reimbursements as follows:
<TABLE>
<CAPTION>
FEES WAIVED OR
FEES PAID (000) REIMBURSED (000)
---------------- ----------------
PORTFOLIO 1995 1996 1997 1995 1996 1997
- -------------------------------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Tax Free Portfolio................................ $129 $137 $153 $ 0 $ 0 $ 0
Institutional Tax Free Portfolio.................. $334 $325 $384 $ 0 $ 0 $ 0
California Tax Exempt Portfolio................... $137 $151 $170 $ 0 $ 0 $ 0
Intermediate-Term Municipal Portfolio+............ $131 $254 $622 $60 $ 0 $ 0
Pennsylvania Municipal Portfolio.................. $262 $202 $195 $ 4 $ 0 $ 0
Pennsylvania Tax Free Portfolio................... $ 8 $ 12 $ 15 $ 0 $ 0 $ 0
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 SIMC, who
paid Standish, Ayer & Wood out this advisory fee.
DISTRIBUTION AND SHAREHOLDER SERVICING
The Trust has adopted Distribution Plans for Class D and CNI Class 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.
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<PAGE>
The Plans provide that the Trust will pay the Distributor a fee on the Class
D and CNI Class 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 CNI Class 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, 1997, the Portfolios paid the following
amounts pursuant to the Distribution Plans:
<TABLE>
<CAPTION>
AMOUNT PAID TO
THIRD PARTIES
BY DISTRIBUTOR
OF PROSPECTUS
DISTRIBUTION- PRINTING & COSTS
TOTAL BASIS RELATED SALES MAILING ASSOCIATED WITH
PORTFOLIO/CLASS AMOUNT POINTS SERVICES EXPENSES COSTS REGISTRATION
- ------------------------------------ ---------- ------ -------------- -------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
California Tax Exempt Portfolio --
CNI Class+........................ $ 972,801 .25% $ 972,801 $ 0 $ 0 $ 0
Tax Free Portfolio -- Class D....... $ 4 .25% $ 4 $ 0 $ 0 $ 0
</TABLE>
- ------------------------
+ Formerly the Class C shares; converted to Class G shares on March 18, 1996,
and renamed CNI Class shares effective on December 31, 1997.
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, 1995, 1996 and 1997, 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>
1995 $38,648 $3,468
1996 $17,368 $1,614
1997 $ 0 $ 0
</TABLE>
S-11
<PAGE>
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and
executive officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some 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, The
Expedition Funds, FMB Funds, Inc., First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., HighMark Funds,
Marquis Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell Investment
Trust, The PBHG Funds, Inc., The Pillar Funds, Profit Funds Investment Trust,
Rembrandt Funds-Registered Trademark-, Santa Barbara Group of Mutual Funds,
Inc., Boston 1784 Funds, 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, STI Classic Funds, STI
Classic Variable Trust and TIP Funds, open-end management investment companies
which are managed by SEI Fund Management or its affiliates and, except for and
with the exception of Profit Funds Investment Trust, Rembrandt
Funds-Registered Trademark-, and Santa Barbara Group of Mutual Funds, Inc., are
distributed by SEI Investments Distribution Co. (the "Distributor").
ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees*--Currently performs various services on behalf of SEI for which Mr.
Nesher is compensated. Executive Vice President of SEI, 1986-1994. Director and
Executive Vice President of the Manager and the Distributor, 1981-1994. Trustee
of the Arbor Fund, Marquis Funds-Registered Trademark-, The Advisors' Inner
Circle Fund, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Liquid
Asset Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI Institutional
Investments Trust, SEI International Trust, Insurance Investment Products Trust,
Boston 1784 Funds-Registered Trademark-, Pillar Funds, and Rembrandt
Funds-Registered Trademark-.
WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Manager and Distributor, Director and Secretary of SEI and
Secretary of the Manager and Distributor. Trustee of the Arbor Fund, Marquis
Funds-Registered Trademark-, The Advisors' Inner Circle Fund, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Liquid Asset Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional Investments Trust, and
SEI International Trust.
F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--P.O. Box 190, Paoli, IN 47454.
President, Orange County Publishing Co., Inc. from October 1981 to January 1,
1997. 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 Daily Income Trust, SEI Liquid Asset 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-Registered Trademark-, The Advisors'
Inner Circle Fund, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Liquid Asset Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional Investments Trust, and SEI International Trust.
JAMES M. STOREY (DOB 04/12/31)--Trustee**--89A Mt. Vernon Street, Boston, MA
02108.-- Partner, Dechert Price & Rhoads, from September 1987 - December 1993.
Trustee of the Arbor Fund, Marquis Funds-Registered Trademark-, The Advisors'
Inner Circle Fund, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Liquid Asset Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional Investments Trust, and SEI International Trust.
S-12
<PAGE>
GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--48 Catherine Drive,
Peabody, MA 01960. General Partner, Teton Partners, L.P., since 1991; Chief
Financial Officer, Noble Partners, L.P., since 1991; Treasurer and Clerk, Peak
Asset Management, Inc., since 1991; Trustee, Navigator Securities Lending Trust,
since 1995. Trustee of SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Liquid Asset Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional Investments Trust, and SEI International Trust.
DAVID G. LEE (DOB 04/16/52)--President and Chief Executive Officer--Senior
Vice President of the Manager and 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 and Assistant Secretary--Vice
President and Assistant Secretary of the Manager and Distributor since 1988.
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President, General Counsel of SEI, the Manager and
Distributor since 1994. Vice President and Assistant Secretary of SEI, the
Manager and Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law
firm), 1988-1992.
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.
KATHRYN L. STANTON (DOB 11/19/58)--Vice President and Assistant
Secretary--Deputy General Counsel, Vice President and Assistant Secretary of
SEI, the Manager and Distributor since 1994, General Counsel, Investment Systems
& Services since 1997. Associate, Morgan, Lewis & Bockius LLP (law firm),
1989-1994.
MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Fund Resources and the
Manager since 1996. Vice President of Fund Accounting, BISYS Fund Services
(1995-1996). Fidelity Investments (1981-1995).
TODD CIPPERMAN (DOB 02/14/66)--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 06/18/56)--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 06/19/57)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI, the Manager 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).
- ------------------------
*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.
S-13
<PAGE>
The following table sets forth information about the compensation paid to
the Trustees for the fiscal year ended August 31, 1997:
<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION
AGGREGATE RETIREMENT ESTIMATED FROM REGISTRANT
COMPENSATION BENEFITS ACCRUED ANNUAL AND FUND COMPLEX
FROM REGISTRANT AS PART OF BENEFITS UPON PAID TO DIRECTORS
NAME OF PERSON AND POSITION FOR FYE 8/31/97 FUND EXPENSES RETIREMENT FOR FYE 8/31/97
- ---------------------------------------- --------------- ------------------- --------------- ----------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee............... $ -- N/A N/A $ --
William M. Doran, Trustee............... $ -- N/A N/A $ --
F. Wendell Gooch, Trustee............... $ 12,162 N/A N/A $96,750 on services on
8 boards
Frank E. Morris, Trustee................ $ 12,162 N/A N/A $96,750 on service on
8 boards
James M. Storey, Trustee................ $ 12,162 N/A N/A $96,750 on service on
8 boards
George J. Sullivan, Trustee............. $ 12,162 N/A N/A $96,750 on services on
8 boards
</TABLE>
Mr. Edward W. Binshadler is a Trustee Emeritus of the Trust. Mr. Binshadler
serves as a consultant to the Audit Committee and receives as compensation,
$5,000 per Audit Committee meeting attended.
PERFORMANCE
From time to time, the Portfolios may advertise yield and/or total return.
These figures will be based on historical earnings and are not intended to
indicate future performance.
The current yield of the Portfolios that are money market funds is
calculated daily based upon the 7 days ending on the date of calculation ("base
period"). The yield is computed by determining the net change (exclusive of
capital changes) in the value of a hypothetical pre-existing shareholder account
having a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts and dividing
such net change by the value of the account at the beginning of the same period
to obtain the base period return and multiplying the result by (365/7). Realized
and unrealized gains and losses are not included in the calculation of the
yield.
The Portfolios compute their effective compound yield by determining the net
changes, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula: Effective Yield = {(Base Period Return + 1)(365/7)} - 1. The
current and the effective yields reflect the reinvestment of net income earned
daily on portfolio assets.
From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal,
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:
Yield = 2([(a-b)/(cd) + 1)](6) - 1) where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of reimbursement); c
= the current daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share on
the last day of the period.
S-14
<PAGE>
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, 1997, 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 3.18% 3.23% 5.26% 5.35%
Class D 2.84% 2.88% 4.93% 5.00%
Institutional Tax Free Portfolio........ Class A 3.34% 3.40% 5.53% 5.63%
Class B 3.04% 3.09% 5.03% 5.12%
Class C 2.84% 2.88% 4.70% 4.77%
California Tax Exempt Portfolio......... Class A 3.07% 3.12% 6.01% 6.11%
Class B * * * *
Class C * * * *
CNI Class+ 2.57% 2.60% 5.03% 5.09%
Pennsylvania Tax Free Portfolio......... Class A 3.15% 3.20% 5.47% 5.56%
</TABLE>
- ------------------------
* Not in operation during the period
+ Formerly the Class C shares; converted to Class G shares on March 18, 1996,
and renamed CNI Class shares effective on December , 1997.
For the 30-day period ended August 31, 1997, yields on the Portfolios other
than the money market Portfolios were as follows:
<TABLE>
<CAPTION>
YIELD
--------------------------
30-DAY
PORTFOLIO CLASS 30-DAY TAX EQUIVALENT
- ------------------------------------------------------------------- --------- --------- ---------------
<S> <C> <C> <C>
New York Intermediate-Term Municipal Portfolio..................... Class A * *
Pennsylvania Municipal Portfolio................................... Class A 4.83% 8.39%
Intermediate-Term Municipal Portfolio.............................. Class A 4.22% 6.99%
</TABLE>
- ------------------------
* Not in operation during the period.
From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal
and New York Intermediate-Term Municipal Portfolios may advertise total return.
The total return of a Portfolio refers to the average compounded rate of return
to a hypothetical investment for designated time periods (including, but not
limited to, the period from which the Portfolio commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period. In particular, total return will be calculated according to the
following formula: P(1 + T)n = ERV, where P = a hypothetical initial payment of
$1,000; T = average annual total return; n = number of years; and ERV = ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
designated time period as of the end of such period.
S-15
<PAGE>
Based on the foregoing, the average annual total returns for the Portfolios
from inception through August 31, 1997 and for the one, five and ten year
periods ended August 31, 1997 were as follows:
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------------------------------
SINCE
PORTFOLIO CLASS ONE YEAR FIVE YEAR TEN YEAR INCEPTION
- -------------------------------------- ------------------------------ ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Tax Free Portfolio.................... Class A(1) 3.31% 2.92% 3.88% 4.19%
Class D -- Offering Price(9) 2.86% * * 3.02%
Institutional Tax Free Portfolio...... Class A(3) 3.44% 3.15% 4.10 4.30%
Class B(4) 3.13% 2.84% * 3.15%
Class C(5) 2.93% * * 2.96%
California Tax Exempt Portfolio....... Class A 3.30% 2.99% * 3.44%
CNI Class+ 2.79% * * 2.81%
Pennsylvania Municipal Portfolio...... Class A(6) 8.08% 5.74% * 6.54%
Pennsylvania Tax Free Portfolio....... Class A(7) 3.39% * * 3.28%
Intermediate-Term Municipal
Portfolio........................... Class A(8) 7.93% 5.65% * 6.36%
</TABLE>
- --------------------------
* Not in operation during the period.
+ Formerly the Class C shares; converted to Class G shares on March 18, 1996,
and renamed CNI Class shares effective on December 31, 1997.
(1) Commenced operations 2/1/84
(2) Commenced operations 10/15/90
(3) Commenced operations 5/14/90
(4) Commenced operations 1/5/94
(5) Commenced operations 5/11/94
(6) Commenced operations 8/14/89
(7) Commenced operations 1/21/94
(8) Commenced operations 9/5/89
(9) Commenced operations 11/1/94
Each Portfolio may, from time to time, compare its performance to other
mutual funds tracked by mutual fund rating services, to broad groups of
comparable mutual funds or to unmanaged indices which may assume investment of
dividends but generally do not reflect deductions for sales charges,
administrative and management costs.
DETERMINATION OF NET ASSET VALUE
Securities of the Tax Free, Institutional Tax Free, California Tax Exempt
and the Pennsylvania Tax Free Portfolios will be valued by the amortized cost
method which involves valuing a security at its cost on the date of purchase and
thereafter (absent unusual circumstances) assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuations in
general market rates of interest on the value of the instrument. While this
method provides certainty in valuation, it may result in periods during which
value, as determined by this method is higher or lower than the price the Trust
would receive if it sold the instrument. During periods of declining interest
rates, the daily yield of a Portfolio may tend to be higher than a like
computation made by a company with identical investments utilizing a method of
valuation based upon market prices and estimates of market prices for all of its
portfolio securities. Thus, if the use of amortized cost by a Portfolio resulted
in a lower aggregate portfolio value on a particular day, a prospective investor
in a Portfolio would be able to obtain a somewhat higher yield than would result
from investment in a company utilizing solely market values, and existing
shareholders in the Portfolio would experience a lower yield. The converse would
apply in a period of rising interest rates.
A Portfolio's use of amortized cost valuation and the maintenance of the
Portfolio's net asset value at $1.00 are permitted by Rule 2a-7 under the 1940
Act, provided that certain conditions are met. Under Rule 2a-7 a money market
portfolio must maintain a dollar-weighted average maturity of 90 days or less,
and not purchase any instrument having a remaining maturity of more than 397
days. In addition, money market funds may acquire only U.S. dollar denominated
obligations that present minimal credit risks and
S-16
<PAGE>
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 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
S-17
<PAGE>
agreement with the Distributor, are entitled to the following percentage-based
discounts from the otherwise applicable sales charge:
<TABLE>
<CAPTION>
PERCENTAGE DATE OFFER
NAME OF GROUP DISCOUNT STARTS
- -------------------------------------------------------------------- ----------- ----------------------
<S> <C> <C>
Countrywide Funding Corp............................................ 100% July 27, 1994
50% September 23, 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.
EXCHANGE PRIVILEGE: A shareholder may exchange the shares of the Tax Free
Portfolio 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.
S-18
<PAGE>
Each Portfolio will decide whether to distribute or retain all or part of
any net capital gains (the excess of net long-term capital gains over net
short-term capital losses) in any year for reinvestment. If any such gains are
retained, the Portfolio will pay federal income tax thereon, and, if the
Portfolio makes an election, the shareholders will include such undistributed
gains in their income and shareholders subject to tax will be able to claim
their share of the tax paid by the Portfolio as a credit against their federal
income tax liability.
A gain or loss realized by a shareholder on the sale or exchange of shares
of a Portfolio held as a capital asset will be capital gain or loss, and such
gain or loss will be long-term if the holding period for the shares exceeds one
year, and otherwise will be short-term. Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed of are replaced within the
61-day period beginning 30 days before and ending 30 days after the shares are
disposed of. Any loss realized by a shareholder on the disposition of shares
held 6 months or less is treated as a long-term capital loss to the extent of
any distributions of net long-term capital gains received by the shareholder
with respect to such shares or any inclusion of undistributed capital gain with
respect to such shares.
Each Portfolio will generally be subject to a nondeductible 4% federal
excise tax to the extent it fails to distribute by the end of any calendar year
at least 98% of its ordinary income and 98% of its capital gain net income (the
excess of short- and long-term capital gains over short- and long-term capital
losses) for the one-year period ending on October 31 of that year, plus certain
other amounts.
Each Portfolio is required by federal law to withhold 31% of reportable
payments (which may include dividends, capital gains distributions, and
redemptions) paid 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
S-19
<PAGE>
defined in Section 56(g) of the Code, in calculating the corporation's
alternative minimum taxable income for purposes of determining the Alternative
Minimum Tax and the Environmental Tax.
The percentage of income that constitutes "exempt-interest dividends" will
be determined for each year for the Portfolios and will be applied uniformly to
all dividends declared with respect to the Portfolios during that year. This
percentage may differ from the actual percentage for any particular day.
Interest on indebtedness incurred by shareholders to purchase or carry
shares of the Portfolios will not be deductible for federal income tax purposes
to the extent that the Portfolios distribute exempt-interest dividends during
the taxable year. The deduction otherwise allowable to property and casualty
insurance companies for "losses incurred" will be reduced by an amount equal to
a portion of exempt-interest dividends received or accrued during any taxable
year. Certain foreign corporations engaged in a trade or business in the United
States will be subject to a "branch profits tax" on their "dividend equivalent
amount" for the taxable year, which will include exempt-interest dividends.
Certain Subchapter S corporations may also be subject to taxes on their "passive
investment income," which could include exempt-interest dividends. Up to 85% of
the Social Security benefits or railroad retirement benefits received by an
individual during any taxable year will be included in the gross income of such
individual if the individual's "modified adjusted gross income" (which includes
exempt-interest dividends) plus one-half of the Social Security benefits or
railroad retirement benefits received by such individual during that taxable
year exceeds the base amount described in Section 86 of the Code.
Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by industrial development bonds or
private activity bonds should consult their tax advisors before purchasing
shares of the Portfolios. "Substantial user" is defined generally as including a
"non-exempt person" who regularly uses in 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
S-20
<PAGE>
generally seek reasonably competitive spreads or commissions, the Trust will not
necessarily be paying the lowest spread or commission available. The Trust's
policy of investing in securities with short maturities will result in high
portfolio turnover. The Trust will not purchase portfolio securities from any
affiliated person acting as principal except in conformity with the regulations
of the SEC.
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 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
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<PAGE>
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 years ended August 31, 1995, 1996, and 1997, the Portfolios
paid no brokerage commissions.
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, 1996 and 1997, the portfolio
turnover rate for each of the following Portfolios was:
<TABLE>
<CAPTION>
TURNOVER RATE
------------------------
PORTFOLIO 1997 1996
- ----------------------------------------------------------------------------------------- ----- -----
<S> <C> <C>
Pennsylvania Municipal Portfolio......................................................... 34% 66%
Intermediate-Term Municipal Portfolio.................................................... 16% 41%
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 CNI Class distribution expenses. Shareholders have no
preemptive rights. The Declaration of Trust provides that the Trustees of the
Trust may create additional portfolios of shares or classes of portfolios. Share
certificates representing the shares will not be issued.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for
his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or administrators, shall not be liable
for any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his wilful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a Trust could,
under certain circumstances, be held personally liable as partners for the
obligations of the Trust. Even if, however, the Trust were held to be a
partnership, the possibility of the shareholders' incurring financial loss for
that reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because, the Declaration of Trust
S-22
<PAGE>
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 1, 1997, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Portfolios. The Trust believes that most of the shares
referred to below were held by the persons indicated in accounts for their
fiduciary, agency, or custodial customers.
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES FUNDS
- ------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
TAX FREE PORTFOLIO:
Naidot & Co. .................................................... 121,840,100.000 23.23%
c/o Bessemer Trust Company
Attn: Peter Scully
630 Fifth Avenue 38th Floor
New York, NY 10111-0100
SEI Trust Company ............................................... 71,514,729.720 13.64%
c/o SEI Corporation
Attn: Sandra Crawford
P.O. Box 1100
Oaks, PA 19456-1100
EAMCO ........................................................... 36,711,457.660 7.01%
c/o Riggs Bank NA
Attn: Pat Murrell
5700 Rivertech Court R5300
Riverdale, MD 20737-1250
Smith & Co. ..................................................... 71,075,552.600 13.55%
c/o First Security Bank of Utah
Attn: Rick Parr
P.O. Box 30007
Salt Lake City, UT 84130-0007
INSTITUTIONAL TAX FREE PORTFOLIO:
Bank of America NT & SA ......................................... 91,351,968.860 10.12%
Attn: Common Trust Funds
P.O. Box 3577 Terminal Annex
Los Angeles, CA 90051-1577
First American National Bank .................................... 75,697,335.860 8.39%
Attn: Jeff Eubanks
800 First American Center
Nashville, TN 37237
</TABLE>
S-23
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES FUNDS
- ------------------------------------------------------------------- ----------------- ---------------
Whitcust & Co. .................................................. 69,909,192.880 7.75%
c/o Whitney National Bank
Attn: Darryl Fricke
228 St. Charles Ave.
New Orleans, LA 70130-2601
<S> <C> <C>
Calhoun & Co. ................................................... 70,227,692.130 7.78%
c/o Comerica Bank
Attn: Dennis Miriani
P.O. Box 1319, 7th Floor
Detroit, MI 48231
CENCO ........................................................... 60,189,418.550 6.67%
Compass Bank Trust Division
Attn: Bobby Morris
P.O. Box 10566
Birmingham, AL 35296-0001
Unit & Co. ...................................................... 57,935,823.000 6.42%
c/o US National Bank of Oregon
Attn: Jeanene Wine
P.O. Box 3168
Portland, OR 97208-3168
CALIFORNIA TAX EXEMPT PORTFOLIO:
Union Investors ................................................. 3,407,956.730 6.11%
c/o SEI Financial Management
One Freedom Valley Road
Oaks, PA 19456
Bank of America NT & SA ......................................... 8,454,939.520 15.17%
Attn: Common Trust Funds
P.O. Box 3577 Terminal Annex
Los Angeles, CA 90051-1577
Union Bank of California ........................................ 36,995,438.600 66.38%
Attn: Jeanne Chizek or Julie Parra
P.O. Box 109
San Diego, CA 92112-4103
INTERMEDIATE-TERM MUNICIPAL PORTFOLIO:
TRANSCO & Company ............................................... 1,788,386.524 6.44%
c/o Intrust Bank, NA
Attn: Pat Wills
P.O. Box 48698
Wichita, KS 67201-8698
</TABLE>
S-24
<PAGE>
<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES FUNDS
- ------------------------------------------------------------------- ----------------- ---------------
SEI Trust Company ............................................... 17,286,729.814 62.23%
Attn: Jacqueline Esposito
One Freedom Valley Road
Oaks, PA 19456
<S> <C> <C>
PENNSYLVANIA MUNICIPAL PORTFOLIO:
Sheldon & Co. (Integra) ......................................... 6,495,591.389 69.74%
c/o National City
Attn: Trust Mutual Funds
P.O. Box 94777, LOC 5312
Cleveland, OH 44101-4777
SEI Trust Company ............................................... 701,741.429 7.53%
ATTN: Jacqueline Esposito
One Freedom Valley Road
Oaks, PA 19456
Meg & Co. ....................................................... 787,636.673 8.46%
c/o United States National Bank
Attn: Debbie Moraca
P.O. Box 520
Johnstown, PA 15907-0520
PENNSYLVANIA TAX FREE PORTFOLIO:
The Farmers Company ............................................. 2,434,000.000 5.95%
c/o Darmer First Bank
Attn: Wendy Basehoar
P.O. Box 1000
Lititz, PA 17543-7000
The Fulton Company .............................................. 36,407,607.810 89.04%
c/o Fulton Bank Trust Dept.
Attn: Dennis Patrice
One Penn Square
Lancaster, PA 17602-2853
</TABLE>
EXPERTS
The financial statements incorporated by reference in this Statement of
Additional Information have been audited by Arthur Andersen LLP, independent
accountants, as indicated in their report with respect thereto, and are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
FINANCIAL STATEMENTS
The Trust's financial statements for the fiscal year ended August 31, 1997,
including notes thereto and the report of Arthur Andersen LLP thereon, are
herein incorporated by reference. A copy of the 1997 Annual Report must
accompany the delivery of this Statement of Additional Information.
S-25
<PAGE>
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements
(1) Part A: Financial Highlights
(2) Part B: The following audited financial statements for the Tax
Free, Institutional Tax Free, California Tax Exempt,
Intermediate-Term Municipal, Pennsylvania Municipal, Pennsylvania
Tax Free and New York Intermediate-Term Municipal Portfolios for
the fiscal year ended August 31, 1997, and the report of the
independent auditors, Arthur Andersen LLP dated October 17, 1997,
are incorporated by reference to the Statement of Additional
Information from Form N-30D filed on October 30, 1997, with
Accession Number 0000935069-97-000176.
Schedule of Investments
Statement of Assets & Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(b) Additional Exhibits
<TABLE>
<S> <C>
(1)(a) Registrant's Declaration of Trust is filed herewith.
(1)(b) Amendment to the Registrant's Declaration of Trust, dated July 30, 1982, is
filed herewith.
(1)(c) Amendment to the Registrant's Declaration of Trust, dated May 23, 1986, is
filed herewith.
(1)(d) Amendment to the Registrant's Declaration of Trust, dated April 8, 1987, is
filed herewith.
(1)(e) Amendment to the Registrant's Declaration of Trust, dated December 23, 1988,
is filed herewith.
(1)(f) Amendment to the Registrant's Declaration of Trust, dated June 16, 1989, is
filed herewith.
(1)(g) Amendment to the Registrant's Declaration of Trust, dated July 5, 1989, is
filed herewith.
(1)(h) Amendment to the Registrant's Declaration of Trust, dated November 15, 1989,
is filed herewith.
(2)(a) Registrant's By-Laws are filed herewith.
(2)(b) Amended By-Laws are filed herewith.
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Investment Advisory Agreement with Weiss, Peck and Greer Advisers, Inc. is
filed herewith
(5)(b) Investment Advisory Agreement with Bessemer Trust Company as filed with 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)(c) Investment Advisory Agreement with First National Bank in Wichita (now
INTRUST Bank, NA in Wichita) as filed with 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.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(5)(d) Investment Advisory Agreement with Woodbridge Capital Management, Inc. as
filed with 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)(e) Investment Advisory Agreement with State Street Bank and Trust Company as
filed with 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)(f) Schedule E dated August 5, 1992 to Investment Advisory Agreement with Weiss,
Peck & Greer Advisers, Inc. as filed with 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)(g) 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) is filed herewith.
(5)(h) 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) is filed herewith.
(5)(i) Investment Advisory Agreement with Morgan Grenfell Capital Management, Inc.,
is filed herewith.
(5)(j) Investment Advisory Agreement with SEI Financial Management Corporation, is
filed herewith.
(5)(k) Investment Sub-Advisory Agreement with Standish, Ayer & Wood, Inc., is filed
herewith.
(6) Distribution Agreement is filed herewith.
(7) Not Applicable.
(8) Custodian Agreement is filed herewith.
(9)(a) Management Agreement is filed herewith.
(9)(b) Schedule E dated August 5, 1992 to Management Agreement as filed with 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).
(9)(c) Schedule F dated August 5, 1992 to Management Agreement as filed with 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).
(9)(d) Schedule G, dated October 29, 1993, to Management Agreement (adding
Pennsylvania Tax Free Portfolio) is filed herewith.
(9)(e) Schedule H, dated October 29, 1993, to Management Agreement (adding New York
Intermediate-Term Municipal Portfolio) is filed herewith.
(9)(f) Schedule I, dated October 29, 1993, to Management Agreement (adding
California Intermediate-Term Municipal Portfolio) is filed herewith.
(9)(g) Consent to Assignment and Assumption of the Administration Agreement between
the Trust and SEI Financial Management Corporation to SEI Fund Resources,
is filed herewith.
(10) Opinion and Consent of Counsel is filed herewith
(11) Consent of Independent Public Accountants is filed herewith.
(12) Not Applicable.
(13) Not Applicable.
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
(14) Not Applicable.
(15)(a) Distribution Plan is filed herewith.
(15)(b) Distribution Plan for Kansas Tax Free Income Portfolio Class B as filed with
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 Class D shares (formerly, ProVantage Funds) is filed
herewith.
(15)(d) Distribution Plan for Class C shares of California Tax Exempt Portfolio and
Institutional Tax Free Portfolio is filed herewith.
(15)(e) Amended and Restated Class D Distribution Plan is incorporated herein by
reference to Post Effective Amendment No. 40 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and
Exchange Commission on December 23, 1996.
(15)(f) Class G Distribution Plan incorporated herein by reference to Post Effective
Amendment No. 40 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
23, 1996.
(16) Performance Quotation Computation is filed herewith.
(17) Financial Data Schedules are filed herewith.
(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.
(18)(b) Amendment No. 1 to Rule 18f-3 Plan relating to Class A, B, C, D and G shares
is incorporated herein by reference to Post Effective Amendment No. 40 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 23, 1996.
(24) Powers of Attorney for Robert A. Nesher, Mark E. Nagle, William M. Doran, F.
Wendell Gooch, Frank E. Morris, James M. Storey, David G. Lee and George
J. Sullivan, Jr., are filed herewith.
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES:
As of December 6, 1997:
<TABLE>
<CAPTION>
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
- ---------------------------------------------------------------------------------- -------------
<S> <C>
Units of beneficial interest, without par value
Tax Free Portfolio, Class A....................................................... 42
Tax Free Portfolio, Class D....................................................... 1
Institutional Tax Free Portfolio, Class A......................................... 81
Institutional Tax Free Portfolio, Class B......................................... 8
Institutional Tax Free Portfolio, Class C......................................... 10
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, CNI Class........................................ 2
Intermediate-Term Municipal Portfolio, Class A.................................... 116
Pennsylvania Municipal Portfolio, Class A......................................... 35
</TABLE>
C-3
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
- ---------------------------------------------------------------------------------- -------------
<S> <C>
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.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS:
WEISS, PECK & GREER L.L.C.
The principal address of Weiss, Peck & Greer L.L.C. is One New York Plaza,
New York, NY 10004. Weiss, Peck & Greer L.L.C. is an investment adviser
registered under the Advisers Act.
The list required by this item 28 of officers and directors of Weiss, Peck &
Greer L.L.C., 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 Weiss, Peck & Greer L.L.C. to the Advisers Act (SEC
File No. 801-6604).
SEI INVESTMENTS MANAGEMENT CORPORATION
The principal address of SEI Investment Management Corporation ("SIMC") is
Oaks, PA 19456. SIMC is an investment adviser registered under the Advisers Act.
The list required by this item 28 of officers and directors of SIMC,
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 SIMC to the Advisers Act (SEC File No. 801-24593).
MORGAN GRENFELL CAPITAL MANAGEMENT INC.
The principal address of Morgan Grenfell Capital Management Inc. ("Morgan
Grenfell") is 885 Third Avenue, 32nd Floor, New York, NY 10022. Morgan Grenfell
is an investment adviser registered under the Advisers Act.
The list required by this item 28 of officers and directors of Morgan
Grenfell, together with information as to any other business profession,
vocation, or employment of a substantial nature engaged
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<PAGE>
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 Morgan Grenfell to the
Advisers Act (SEC File No. 801-27291).
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).
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 Investments Distribution Co., 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-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds-Registered Trademark- August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
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>
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<PAGE>
SEI Investments Distribution Co. 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, Oaks, PA 19456.
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <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
Dennis J. McGonigle Executive Vice President --
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 --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Secretary Vice President &
Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh 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 --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
</TABLE>
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<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President & Treasurer --
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 --
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 --
Joanne Nelson Vice President --
Kim Rainey Vice President --
Cynthia M. Parrish Vice President & Assistant Secretary --
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 --
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.
Broad and Chestnut Street
P.O. Box 7618
Philadelphia, PA 19101
(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 Fund Management
Oaks, PA 19456
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(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:
SEI Investments Management Corporation
Oaks, PA 19456
Weiss, Peck & Greer L.L.C.
One New York Plaza
New York, NY 10004
Morgan Grenfell Capital Management
Incorporated
885 Third Avenue, 32nd Floor
New York, NY 19102
Standish, Ayer & Wood, Inc.
One Financial Center, Suite 26
Boston, MA 02111
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.
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.
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<PAGE>
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 16th day of December, 1997.
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.
*
- ------------------------------ Trustee December 16, 1997
George J. Sullivan, Jr.
*
- ------------------------------ Trustee December 16, 1997
William M. Doran
*
- ------------------------------ Trustee December 16, 1997
F. Wendell Gooch
*
- ------------------------------ Trustee December 16, 1997
Frank E. Morris
*
- ------------------------------ Trustee December 16, 1997
Robert A. Nesher
*
- ------------------------------ Trustee December 16, 1997
James M. Storey
/s/ DAVID G. LEE
- ------------------------------ President & Chief December 16, 1997
David G. Lee Executive Officer
/s/ MARK NAGLE
- ------------------------------ Controller, Chief December 16, 1997
Mark Nagle Financial Officer
*By: /s/ DAVID G. LEE
-------------------------
David G. Lee,
ATTORNEY-IN-FACT
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
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<S> <C>
EX-99.B1a Registrant's Declaration of Trust is filed herewith.
EX-99.B1b Amendment to the Registrant's Declaration of Trust, dated July 30, 1982, is filed
herewith.
EX-99.B1c Amendment to the Registrant's Declaration of Trust, dated May 23, 1986, is filed
herewith.
EX-99.B1d Amendment to the Registrant's Declaration of Trust, dated April 8, 1987, is filed
herewith.
EX-99.B1e Amendment to the Registrant's Declaration of Trust, dated December 23, 1988, is filed
herewith.
EX-99.B1f Amendment to the Registrant's Declaration of Trust, dated June 16, 1989, is filed
herewith.
EX-99.B1g Amendment to the Registrant's Declaration of Trust, dated July 5, 1989, is filed
herewith.
EX-99.B1h Amendment to the Registrant's Declaration of Trust, dated November 15, 1989, is filed
herewith.
EX-99.B2a Registrant's By-Laws are filed herewith.
EX-99.B2b Amended By-Laws are filed herewith.
EX-99.B3 Not Applicable.
EX-99.B4 Not Applicable.
EX-99.B5a Investment Advisory Agreement with Weiss, Peck and Greer Advisers, Inc. is filed
herewith.
EX-99.B5b Investment Advisory Agreement with Bessemer Trust Company as filed with 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.B5c Investment Advisory Agreement with First National Bank in Wichita (now INTRUST Bank, NA
in Wichita) as filed with 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.B5d Investment Advisory Agreement with Woodbridge Capital Management, Inc. as filed with
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.B5e Investment Advisory Agreement with State Street Bank and Trust Company as filed with
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.B5f Schedule E dated August 5, 1992 to Investment Advisory Agreement with Weiss, Peck &
Greer Advisers, Inc. as filed with 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.B5g 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) is filed herewith.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- ----------------
<S> <C>
EX-99.B5h 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) is filed herewith.
EX-99.B5i Investment Advisory Agreement with Morgan Grenfell Capital Management, Inc., is filed
herewith.
EX-99.B5j Investment Advisory Agreement with SEI Financial Management Corporation, is filed
herewith.
EX-99.B5k Investment Sub-Advisory Agreement with Standish, Ayer & Wood, Inc, is filed herewith.
EX-99.B6 Distribution Agreement is filed herewith.
EX-99.B7 Not Applicable.
EX-99.B8 Custodian Agreement is filed herewith.
EX-99.B9a Management Agreement is filed herewith.
EX-99.B9b Schedule E dated August 5, 1992 to Management Agreement as filed with 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.B9c Schedule F dated August 5, 1992 to Management Agreement as filed with 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.B9d Schedule G, dated October 29, 1993, to Management Agreement (adding Pennsylvania Tax
Free Portfolio) is filed herewith.
EX-99.B9e Schedule H, dated October 29, 1993, to Management Agreement (adding New York
Intermediate-Term Municipal Portfolio) is filed herewith.
EX-99.B9f Schedule I, dated October 29, 1993, to Management Agreement (adding California
Intermediate-Term Municipal Portfolio) is filed herewith.
EX-99.B9g Consent to Assignment and Assumption of the Administration Agreement between the Trust
and SEI Financial Management Corporation to SEI Fund Resources, is filed herewith.
EX-99.B10 Opinion and Consent of Counsel is filed herewith.
EX-99.B11 Consent of Independent Public Accountants is filed herewith.
EX-99.B12 Not Applicable.
EX-99.B13 Not Applicable.
EX-99.B14 Not Applicable.
EX-99.B15a Distribution Plan is filed herewith.
EX-99.B15b Distribution Plan for Kansas Tax Free Income Portfolio Class B as filed with 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 Class D shares (formerly ProVantage Funds), is filed herewith.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- ----------------
<S> <C>
EX-99.B15d Distribution Plan for Class C shares of California Tax Exempt Portfolio and
Institutional Tax Free Portfolio is filed herewith.
EX-99.B15e Amended and Restated Class D Distribution Plan is incorporated herein by reference to
Post-Effective Amendment No. 40 to Registrant's Registration Statement on Form N-1A
(File No. 2-76990) filed with the Securities and Exchange Commission on December 23,
1996.
EX-99.B15f Class G Distribution Plan is incorporated herein by reference to Post-Effective
Amendment No. 40 to Registrant's Registration Statement on Form N-1A (File No.
2-76990) filed with the Securities and Exchange Commission on December 23, 1996.
EX-99.B16 Performance Quotation Computation is filed herewith.
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
incorporated herein by reference to Post-Effective Amendment No. 40 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) filed with the Securities and
Exchange Commission on December 23, 1996.
EX-99.B24 Powers of Attorney for Robert A. Nesher, Mark E. Nagle, William M. Doran, F. Wendell
Gooch, Frank E. Morris, James M. Storey, David G. Lee and George J. Sullivan, Jr., are
filed herewith.
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 CNI Class
EX-99.B27.4 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
</TABLE>
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
AGREEMENT AND DECLARATION OF TRUST
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts, this
15th day of March, 1982, by the Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of an
investment company; and
WHEREAS, the Trustees have agreed to manage all property coming into their
hands as trustees of a Massachusetts voluntary association with transferable
shares in accordance with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all cash,
securities and other assets, which they - may from time to time acquire in
any manner as Trustees hereunder IN TRUST to manage and dispose of the same
upon the following terms and conditions for the pro rata benefit of the
holders from time to time of Shares in this Trust as hereinafter set forth.
ARTICLE 1
NAME AND DEFINITIONS
NAME
SECTION 1. This Trust shall be known as the "TrustFunds Tax Exempt
Trust" and the Trustees shall conduct the business of the Trust under that name
or any other name as they may from time to time determine.
DEFINITIONS
SECTION 2. Whenever used herein, unless otherwise required by the
context or specifically provided:
<PAGE>
(a) The "Trust" refers to the Massachusetts voluntary association
established by this Agreement and Declaration of Trust, as amended from
time to time;
(b) "Trustees" refers to the Trustees of the Trust named herein or
elected in accordance with Article IV and then in office;
(c) "Shares" mean the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided
from time to time or, if more than one series of Shares is authorized by
the Trustees, the equal proportionate transferable units into which each
series of Shares shall be divided from time to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Affiliated Person", "Assignment", "Commission",
"Interested Person", "Principal Underwriter" and "Majority Shareholder
Vote" (the 67% or 50% requirement of the third sentence of Section 2(a)(42)
of the 1940 Act, whichever may be applicable) shall have the meanings given
them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and
(h) "By-Laws" shall mean the By-Laws of the Trust as amended from
time to time.
ARTICLE II
PURPOSE
The purpose of the Trust is to provide investors one or more managed
investment portfolios consisting primarily of securities, including debt
instruments or obligations, the income from which is exempt from federal
income taxation.
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<PAGE>
ARTICLE III
SHARES
DIVISION OF BENEFICIAL INTEREST
SECTION 1. The Shares of the Trust shall be issued in one or more
series as the Trustees may, without shareholder approval, authorize. Each
series shall be preferred over all other series in respect of the assets
allocated to that series. The beneficial interest in each series shall at all
times be divided into Shares, without par value, each of which shall represent
an equal proportionate interest in the series with each other Share of the same
series, none having priority or preference over another. The number of Shares
authorized shall be unlimited, and the Shares so authorized may be represented
in part by fractional shares. The Trustees may from time to time divide or
combine the Shares of any series into a greater or lesser number without
thereby changing the proportionate beneficial interests in the series.
OWNERSHIP OF SHARES
SECTION 2. The ownership of Shares shall be recorded on the books of the
Trust or its transfer or similar agent. No certificates certifying the
ownership of Shares shall be issued except as the Trustees may otherwise
determine from time to time. The Trustees may make such rules as they
consider appropriate for the issuance of Share certificates, the transfer of
Shares and similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent of the Trust, as the case may be,
shall be conclusive as to who are the Shareholders of each series and as to
the number of Shares of each series held from time to time by each
Shareholder.
INVESTMENTS IN THE TRUST; ASSETS OF THE SERIES
SECTION 3. The Trustees may accept investments in the Trust from such
persons and on such terms and, subject to any requirements of law, for such
consideration, which may consist of cash or tangible or intangible property
or a combination thereof, as they may from time to time authorize.
All consideration received by the Trust for the issue or sale of Shares of
each series, together with all income, earnings, profits, and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
and any funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall irrevocably belong to the series of Shares
with respect to which the same were received by the Trust for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust and are herein referred to as "assets of" such series.
-3-
<PAGE>
NO PREEMPTIVE RIGHTS
SECTION 4. Shareholders shall have no preemptive or other right to
receive, purchase or subscribe for any additional Shares or other securities
issued by the Trust.
STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY
SECTION 5. Shares shall be deemed to be personal property giving only
the rights provided in this instrument. Every Shareholder by virtue of having
become a Shareholder shall be held to have expressly assented and agreed to the
terms of this Declaration of Trust and to have become a party thereto. The
death of a Shareholder during the continuance of the Trust shall not operate to
terminate the same nor entitle the representative of any deceased Shareholder to
an accounting or to take any action in court or elsewhere against the Trust or
the Trustees, but only to the rights of said decedent under this Trust.
Ownership of Shares shall not entitle the Shareholder to any title in or to the
whole or any part of the Trust property or right to call for a partition or
division of the same or for an accounting, nor shall the ownership of Shares
constitute the Shareholders partners. Neither the Trust nor the Trustees, nor
any officer, employee or agent of the Trust shall have any power to bind
personally any Shareholder, nor except as specifically provided herein to call
upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay.
ARTICLE IV
THE TRUSTEES
ELECTION
SECTION 1. In each year beginning 1984, at the annual meeting of
Shareholders or at any special meeting held in lieu thereof, or at any
special meeting held before 1984, the Shareholders shall elect a Board of not
less than three nor more than fifteen Trustees, each of whom shall serve
until the next annual meeting or special meeting in lieu thereof and until
the election and qualification of his or her successor, or until he or she
sooner dies, resigns or is removed. The number of Trustees to be so elected
each year shall be fixed by the Trustees in advance of the giving of notice
of the meeting at which Trustees are to be elected for such year, or if not
so fixed, by vote of the Shareholders at such meeting. The number of
Trustees so fixed may be increased either by the Shareholders or by the
Trustees by a vote of a majority of the Trustees then in office. The number
of Trustees so fixed may be decreased either by the Shareholders or by the
Trustees by vote of a majority of the Trustees then in office, but only to
eliminate vacancies existing by reason of the death, resignation or removal
of one or more Trustees. The initial Trustees, each of whom shall serve
until the first meeting of Shareholders at which Trustees are elected and
until his or her successor is elected and qualified, or until he or
-4-
<PAGE>
she sooner dies, resigns or is removed, shall be William M. Doran and such other
persons as the Trustee or Trustees then in office shall, prior to any sale of
Shares pursuant to public offering, appoint. By vote of the Shareholders
holding a majority of the Shares entitled to vote, the Shareholders may remove a
Trustee with or without cause. By vote of a majority of the Trustees then in
office, the Trustees may remove a Trustee for cause. Any Trustee may, but need
not, be a Shareholder.
EFFECT OF DEATH, RESIGNATION, ETC., OF A TRUSTEE
SECTION 2. The death, declination, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration of Trust.
POWERS
SECTION 3. Subject to the provisions of this Declaration of Trust,
the business of the Trust shall be managed by the Trustees, and they shall
have all powers necessary or convenient to carry out that responsibility.
Without limiting the foregoing, the Trustees may adopt By-Laws not
inconsistent with this Declaration of Trust providing for the conduct of the
business of the Trust and may amend and repeal them to the extent that such
By-Laws do not reserve that right to the Shareholders; they may fill
vacancies in their number, including vacancies resulting from increases in
their number, and may elect and remove such officers and appoint and
terminate such agents as they consider appropriate; they may appoint from
their own number, and terminate, any one or more committees consisting of two
or more Trustees, including an executive committee which may, when the
Trustees are not in session, exercise some or all of the powers and authority
of the Trustees as the Trustees may determine; they may appoint an advisory
board, the members of which shall not be Trustees and need not be
shareholders; they may employ one or more investment advisers or managers as
provided in Section 7 of this Article IV; they may employ one or more
custodians of the assets of the Trust and may authorize such custodians to
employ subcustodians and to deposit all or any part of such assets in a
system or systems for the central handling of securities, retain a transfer
agent or a Shareholder services agent, or both, provide for the distribution
of Shares by the Trust, through one or more principal underwriters or
otherwise, set record dates for the determination of Shareholders with
respect to various matters, and in general delegate such authority as they
consider desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such custodian
or underwriter.
Without limiting the foregoing, the Trustees shall have power and
authority:
(a) To invest and reinvest cash, and to hold cash uninvested;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate, write
options on and lease any or all of the assets of the Trust;
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(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such person or persons as the
Trustees shall deem proper, granting to such person or persons such power
and discretion with relation to securities or property as the Trustees
shall deem proper;
(d) To exercise powers and rights of subscription or otherwise which
in any manner arise out of ownership of securities;
(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a custodian,
subcustodian or other depositary or a nominee or nominees or otherwise;
(f) To allocate assets, liabilities and expenses of the Trust to a
particular series of Shares or to apportion the same among two or more
series;
(g) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer, any security or
property of which is or was held in the Trust; to consent to any contract,
lease, mortgage, purchase or sale of property by such corporation or
issuer, and to pay calls or subscriptions with respect to any security held
in the Trust;
(h) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection
to deposit any security with, or transfer any security to, any such
committee, depositary or trustee, and to delegate to them such power and
authority with relation to any security (whether or not so deposited or
transferred) as the Trustees shall deem proper, and to agree to pay, and to
pay, such portion of the expenses and compensation of such committee,
depositary or trustee as the Trustees shall deem proper;
(i) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including but not
limited to claims for taxes;
(j) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;
(k) To borrow funds;
(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge
the Trust property or any part thereof to secure any of or all such
obligations;
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(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers or managers,
principal underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature arising by
reason of holding, being or having held any such office or position, or by
reason of any action alleged to have been taken or omitted by any such
person as Shareholder, Trustee, officer, employee, agent, investment
adviser or manager, principal underwriter, or independent contractor,
including any action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to indemnify such
person against such liability; and
(n) To pay pensions for faithful service, as deemed appropriate by
the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions,
including the purchasing of life insurance and annuity contracts as a means
of providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
The Trustees shall not in any way be bound or limited by any present or
future law or custom in regard to investments by trustees. Except as otherwise
provided herein or from time to time in the By-Laws, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (if a quorum be present), within or without Massachusetts, including
any meeting held by means of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can
communicate with each other simultaneously and participation by such means shall
constitute presence in person at a meeting, or by written consents of a majority
of the Trustees then in office.
PAYMENT OF EXPENSES BY TRUST
SECTION 4. The Trustees are authorized to pay or to cause to be paid
out of the principal or income of the Trust, or partly out of principal and
partly out of income, as they deem fair, all expenses, fees, charges, taxes and
liabilities incurred or arising in connection with the Trust, or in connection
with the management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser or manager, principal underwriter,
auditor, counsel, custodian, transfer agent, Shareholder services agent, and
such other agents or independent contractors and such other expenses and charges
as the Trustees may deem necessary or proper to incur.
SECTION 5. The Trustees shall have the power, as frequently as they may
determine, to cause each Shareholder to pay directly, in advance or arrears, for
charges of the Trust's custodian
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or transfer or Shareholder services or similar agent, an amount fixed from time
to time by the Trustees, by setting off such charges due from such Shareholder
from declared but unpaid dividends owed such Shareholder and/or by reducing the
number of Shares in the account of such Shareholder by that number of full
and/or fractional Shares which represents the outstanding amount of such charges
due from such Shareholder.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 6. Title to all of the assets of the Trust shall at all times
be considered as vested in the Trustees.
ADVISORY, MANAGEMENT AND DISTRIBUTION
SECTION 7. Subject to a favorable Majority Shareholder Vote, the
Trustees may, at any time and from time to time, contract for exclusive or
nonexclusive advisory and/or management services with SEI Financial Services
Company (the "Advisor"), a Pennsylvania corporation, and/or any other
corporation, trust, association or other organization, every such contract to
comply with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms interpretive of
or in addition to said requirements and restrictions as the Trustees may
determine, including, without limitation, authority to determine from time to
time what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held uninvested and to
make changes in the Trust's investments. The Trustees may also, at any time
and from to time, contract with the Advisor and/or any other corporation,
trust, association or other organization, appointing it exclusive or
nonexclusive distributor or principal underwriter for the Shares, every such
contract to comply with such requirements and restrictions as may be set
forth in the By-Laws; and any such contract may contain such other terms
interpretive of or in addition to said requirements and restrictions as the
Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
advisor, principal underwriter, or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for
any parent or affiliate of any organization, with which an advisory or
management or principal underwriter's or distributor's contract, or
transfer, Shareholder services or other agency contract may have been or
may hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the Trust, or
that
(ii) any corporation, trust, association or other organization
with which an advisory or management or principal underwriter's or
distributor's contract, or transfer, Shareholder services or other agency
contract may have been or may hereafter be made
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also has an advisory or management contract, or principal underwriter's or
distributor's contract, or transfer, Shareholder services or other agency
contract with one or more other corporations, trusts, associations, or
other organizations, or has other businesses or interests shall not
affect the validity of any such contract or disqualify any Shareholder,
Trustee or officer of the Trust from voting upon or executing the same or
create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. The Shareholders shall have power to vote only (i) for the
election or removal of Trustees as provided in Article IV, Section 1, (ii)
with respect to any investment advisor or manager as provided in Article IV,
Section 7, (iii) with respect to any termination of the Trust or any series
to the extent and as provided in Article IX, Section 4, (iv) with respect to
any amendment of this Declaration of Trust to the extent and as provided in
Article IX, Section 7, (v) to the same extent as the stockholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
and (vi) with respect to such additional matters relating to the Trust as may
be required by law, this Declaration of Trust, the By-Laws or any
registration of the Trust with the Commission (or any successor agency) or
any state, or as the Trustees may consider necessary or desirable.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. On any matter submitted to a vote of
Shareholders all Shares of the Trust then entitled to vote, irrespective of
shall be voted in the aggregate and not by series, except (1) when required
by the 1940 Act, Shares shall be voted individual series, in which event,
unless otherwise required by the 1940 Act, a vote of Shareholders of all
shares of the Trust, irrespective of series, shall not be required; and (2)
when the Trustees have determined that the matter affects only the interests
of one or more series, then only Shareholders of such series shall be
entitled to vote thereon. There shall be no cumulative voting in the election
of Trustees. Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the
exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior
to its exercise and the burden of proving invalidity shall rest on the
challenger.
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Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of
Trust or the By-Laws to be taken by Shareholders.
VOTING POWER AND MEETINGS
SECTION 2. There shall be an annual meeting of the Shareholders on
the date fixed in the By-Laws at the principal office of the Trust, or at any
such other place within the United States as may be designated in the call
thereof, which call shall be made by the Trustees or the president of the
Trust. In the event that such meeting is not held in any year on the date
fixed in the By-Laws, whether the omission be by oversight or otherwise, a
subsequent special meeting may be called and held in lieu of the annual
meeting with the same force and effect as though held on such date.
Special meetings may also be called and held from time to time for the
purpose of taking action upon any matter requiring the vote or authority of
the Shareholders as herein provided or upon any other matter deemed by the
Trustees to be necessary or desirable. Special meetings may be called by the
Trustees or such other person or persons as may be specified in the By-Laws
and shall be called by the Trustees or such other person or persons as may be
specified in the By-Laws upon written application by Shareholders holding at
least 25% of the Shares then outstanding requesting that a meeting be called
for a purpose requiring action by the Shareholders as provided herein or in
the By-Laws.
Shareholders shall be entitled to at least seven days' written notice of
any meeting of the Shareholders.
QUORUM AND REQUIRED VOTE
SECTION 3. A majority of the Shares entitled to vote shall be a
quorum for the transaction of business at a Shareholders' meeting, except
that where any provision of law or of this Declaration of Trust permits or
requires that holders of any series shall vote as a series, then a majority
of the aggregate number of Shares of that series entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that
series. Any lesser number, however, shall be sufficient for adjournments.
Any adjourned session or sessions may be held within a reasonable time after
the date set for the original meeting without the necessity of further notice.
Except when a larger vote is required by any provisions of this
Declaration of Trust or the By-Laws, a majority of the Shares voted on any
matter shall decide such matter and a plurality shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
permits or requires that the holders of any series vote as a series, then a
majority of the Shares of that series voted on the matter shall decide that
matter insofar as that series is concerned.
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ACTION BY WRITTEN CONSENT
SECTION 4. Any action taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on the matter (or such
larger vote as shall be required by any provision of this Declaration of
Trust or the By-Laws) consent to the action in writing and such written
consents are filed with the records of the meetings of Shareholders. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ADDITIONAL PROVISIONS
SECTION 5. The By-Laws may include further provisions for Shareholders'
votes and meetings and related matters.
ARTICLE VI
DISTRIBUTIONS, REDEMPTIONS AND REPURCHASES,
AND DETERMINATION OF NET ASSET VALUE
DISTRIBUTIONS
SECTION 1. The Trustees may, but need not, each year distribute to
the Shareholders of each series such income and gains, accrued or realized,
as the Trustees may determine, after providing for actual and accrued
expenses and liabilities (including such reserves as the Trustees may
establish) determined in accordance with good accounting practices. The
Trustees shall have full discretion to determine which items shall be treated
as income and which items as capital and their determination shall be binding
upon the Shareholders. Distributions of each year's income of each series, if
any be made, may be made in one or more payments, which shall be in Shares,
in cash or otherwise and on a date or dates determined by the Trustees. At
any time and from time to time in their discretion, the Trustees may
distribute to the Shareholders of any one or more series as of a record date
or dates determined by the Trustees, in Shares, in cash or otherwise, all or
part of any gains realized on the sale or disposition of property of the
Trust or otherwise, or all or part of any other principal of the Trust. Each
distribution pursuant to this Section 1 shall be made ratably according to
the number of Shares of the series held by the several Shareholders on the
applicable record date thereof, provided that no distributions need be made
on Shares purchased pursuant to orders received, or for which payment is
made, after such time or times as the Trustees may determine. Any such
distribution paid in Shares will be paid at the net asset value thereof as
determined in accordance with this Declaration of Trust.
REDEMPTIONS AND REPURCHASES
SECTION 2. Any holder of Shares of the Trust may be presentation of a
written request, together with his certificates, if any, for such Shares, in
proper form for transfer, at the office of the Trust, the Advisor, the
underwriter or the distributors, or at a principal office of a transfer or
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shareholder service agent appointed by the Trust (as the Trustees may
determine), redeem his shares for the net asset value thereof determined and
computed in accordance with the provisions of Section 5 of Article VI of this
Declaration of Trust.
Upon receipt by the Trust, the Advisor, the underwriter or the distributor,
or the Trust's transfer or Shareholder services agent of such written request
for redemption of Shares, such Shares shall be redeemed at the net asset value
per share of the particular series next determined after such Shares are
tendered in proper form for transfer to the Trust or determined as of such other
time fixed by the Trustees as may be permitted or required by the 1940 Act,
provided that no such tender shall be required in the case of Shares for which a
certificate or certificates have not been issued, and in such case such Shares
shall be redeemed at the net asset value per share of the particular series next
determined after such demand has been received or determined at such other time
fixed by the Trustees as may be permitted or required by the 1940 Act.
The obligation of the Trust to redeem its Shares of each series as set
forth above in this Section 2 shall be subject to the conditions that during any
time of emergency, as hereinafter defined, such obligation may be suspended by
the Trust by or under authority of the Trustees for such period or periods
during such time of emergency as shall be determined by or under authority of
the Trustees. If there is such a suspension, any Shareholder may withdraw any
demand for redemption and any tender of Shares which has been received by the
Trust during any such period and any tender of Shares the applicable net asset
value of which would but for such suspension be calculated as of a time during
such period. Upon such withdrawal, the Trust shall return to the Shareholder
the certificates therefor, if any. For the purposes of any such suspension
"time of emergency" shall mean, either with respect to all Shares or any series
of Shares, any period during which:
a. the New York Stock Exchange is closed other than for customary
weekend and holiday closings; or
b. the Trustees or authorized officers of the Trust shall have
determined, in compliance with any applicable rules and regulations of the
Commission, either that trading on the New York Stock Exchange is
restricted, or that an emergency exists as a result of which (i) disposal
by the Trust of securities owned by it is not reasonably practicable or
(ii) it is not reasonably practicable for the Trust fairly to determine the
current value of its net assets; or
c. the suspension or postponement of such obligations is permitted
by order of the Commission.
The Trust may also purchase, repurchase or redeem Shares in accordance with
such other methods, upon such other terms and subject to such other conditions
as the Trustees may from time to time authorize at a price not exceeding the net
asset value of such Shares in effect when the purchase or repurchase or any
contract to purchase or repurchase is made.
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PAYMENT IN KIND
SECTION 3. Subject to any generally applicable limitation imposed by
the Trustees, any payment on redemption, purchase or repurchase by the Trust
of Shares may, if authorized by the Trustees, be made wholly or partly in
kind, instead of in cash. Such payment in kind shall be made by distributing
securities or other property, constituting, in the opinion of the Trustees, a
fair representation of the various types of securities and other property
then held by the series of Shares being redeemed, purchased or repurchased
(but not necessarily involving a portion of each of the series' holdings) and
taken at their value used in determining the net asset value of the Shares in
respect of which payment is made.
ADDITIONAL PROVISIONS RELATING TO REDEMPTIONS AND REPURCHASES
SECTION 4. The completion of redemption, purchase or repurchase of
Shares shall constitute a full discharge of the Trust and the Trustees with
respect to such Shares and the Trustees may require that any certificate or
certificates issued by the Trust to evidence the ownership of such Shares shall
be surrendered to the Trustees for cancellation or notation.
DETERMINATION OF NET ASSET VALUE
SECTION 5. The term "net asset value" of the Shares of each series
shall mean: (i) the value of all the assets of such series; (ii) less total
liabilities of such series; (iii) divided by the number of Shares of such series
outstanding, in each case at the time of each determination. The "number of
Shares of such series outstanding" for the purposes of such computation shall be
exclusive of any Shares of such series to be redeemed, purchased or repurchased
by the Trust and not then redeemed, purchased or repurchased as to which the
price has been determined, but shall include Shares of such series presented for
redemption, purchase or repurchase by the Trust and not then redeemed, purchased
or repurchased as to which the price has not been determined and Shares of such
series the sale of which has been confirmed. Any fractions involved in the
computation of net asset value per share shall be adjusted to the nearer cent
unless the Trustees shall determine to adjust such fractions to a fraction of a
cent.
The Trustees, or any officer, or officers or agent of the Trust designated
for the purpose by the Trustees shall determine the net asset value of the
Shares of each series, and the Trustees shall fix the times as of which the net
asset value of the Shares of each series shall be determined
and shall fix the periods during which any such net asset value shall be
effective as to sales, redemptions and repurchases of, and other transactions
in, the Shares of such series, except as such times and periods for any such
transaction may be fixed by other provisions of this Declaration of Trust or by
the By-Laws.
In valuing the portfolio investments of any series for determination of net
asset value per share of such series, securities for which market quotations are
readily available shall be valued at prices which, in the opinion of the
Trustees or any officer, or officers or agent of the Trust
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designated for the purpose by the Trustees, most nearly represent the market
value of such securities which may, but need not, be the most recent bid price
obtained from one or more of the market makers for such securities; other
securities and assets shall be valued at fair value as determined by or pursuant
to the direction of the Trustees. Notwithstanding the foregoing, short-term
debt obligations, commercial paper, and repurchase agreements may be, but need
not be, valued on the basis of quoted yields for securities of comparable
maturity, quality and type, or on the basis of amortized cost. In the
determination of net asset value of any series, dividends receivable and
accounts receivable for investments sold and for Shares sold shall be stated at
the amounts to be received therefor; and income receivable accrued daily on
bonds and notes owned shall be stated at the amount to be received. Any other
assets shall be stated at fair value as determined by the Trustees or such
officer, officers or agent pursuant to the Trustees' authority, except that no
value shall be assigned to good will, furniture, lists, reports, statistics or
other noncurrent assets other than real estate. Liabilities of any series for
accounts payable, for investments purchased and for Shares tendered for
redemption, purchase or repurchase by the Trust and not then redeemed, purchased
or repurchased as to which the price has been determined shall be stated at the
amounts payable therefor. In determining net asset value of any series, the
person or persons making such determination on behalf of the Trust may include
in liabilities such reserves, estimated accrued expenses and contingencies as
such person or persons may in its, his or their best judgment deem fair and
reasonable under the circumstances. Any income dividends and gains
distributions payable by the Trust shall be deducted as of such time or times on
the record date therefor as the Trustees shall determine.
The manner of determining the net assets of any series or of determining
the net asset value of the Shares of any series may from time to time be altered
as necessary or desirable in the judgment of the Trustees to conform to any
other method prescribed or permitted by any applicable law or regulation or
generally accepted accounting practice.
Determinations in accordance with Section 5 made in good faith shall be
binding on all parties concerned.
MAINTENANCE OF CONSTANT NET ASSET VALUE
SECTION 6. The Trust will use its best efforts to maintain the net
asset value per Share of each series at $1.00. In the event that the Trust, or
any series, incurs a loss or liability, which the Trustees, in their sole
discretion, determine to be significant with respect to the maintenance by the
Trust of a constant net asset value of $1.00 per Share for each series, the
Trustees shall have the power (i) to reduce the number of Shares of the Trust,
or the series, as the case may be, by that number of full and fractional Shares
which represent the amount of such loss or liability, by reducing the number of
Shares in the account of each Shareholder of the Trust or the series, as the
case may be, on a pro rata basis; (ii) to offset the pro rata share of such loss
or liability from the accrued dividend account of each Shareholder of the Trust
or the series, as the case may be, and/or (iii) to cause to be recorded on the
books of the Trust or the series, as the case may be, an
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asset account in the amount of any such loss or liability, which account may be
reduced by the amount of dividends declared thereafter upon the Shares of the
Trust or the series, as the case may be, outstanding on the day any such loss or
liability is incurred, until such asset account is reduced to zero.
ARTICLE VII
COMPENSATION AND LIMITATION
OF LIABILITY OF TRUSTEES
COMPENSATION
SECTION 1. The Trustees as such shall be entitled to reasonable
compensation from the Trust; they may fix the amount of their compensation.
Nothing herein shall in any way prevent the employment of any Trustee for
advisory, management, legal, accounting, investment banking or other services
and payment for the same by the Trust.
LIMITATION OF LIABILITY
SECTION 2. The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, investment
advisor or manager, principal underwriter or custodian, nor shall any Trustee be
responsible for the act or omission of any other Trustee, but nothing herein
contained shall protect any Trustee against any liability to which he or she
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his or
her office. Every note, bond, contract, instrument, certificate, Share or
undertaking and every other act or thing whatsoever executed or done by or on
behalf of the Trust or the Trustees or any of them in connection with the Trust
shall be conclusively deemed to have been executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
ARTICLE VIII
INDEMNIFICATION
Subject to the exceptions and limitations contained in this Article, every
person who is, or has been, a Trustee or officer of the Trust shall be
indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in settlement thereof.
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No indemnification shall be provided hereunder to a Trustee or officer:
(a) against any liability to the Trust or its Shareholders by reason of a
final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office;
(b) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief
that his action was in the best interests of the Trust;
(c) in the event of a settlement or other disposition not involving a
final adjudication (as provided in paragraph (a) or (b)) and resulting
in a payment by a Trustee or officer, unless there has been either a
determination that such director or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office by the court or other
body approving the settlement or other disposition or a reasonable
determination, based on a review of readily available facts (as
opposed to a full trial-type inquiry) that he did not engage in such
conduct:
(i) by a vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees
then in office act on the matter);or
(ii) by written opinion of independent legal counsel.
The rights of indemnification hereinafter provided may be insured against
by policies maintained by the Trust, shall be severable, shall not affect any
other rights to which any Trustee or officer may now or hereafter be entitled,
shall continue as to a person who has ceased to be such Trustee or officer and
shall inure to the benefit of the heirs, executors and administrators of such a
person. Nothing contained herein shall affect any rights to indemnification to
which Trust personnel other than Trustees and officers may be entitled by
contract or otherwise under law.
Expenses of preparation and presentation of a defense to any claim, action,
suit or proceeding of the character described in the next to the last paragraph
of this Article shall be advanced by the Trust prior to final disposition
thereof upon receipt of an undertaking by or on behalf of the recipient to repay
such amount if it is ultimately determined that he is not entitled to
indemnification under this Article, provided that either:
(a) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising
out of any such advances; or
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(b) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or independent legal counsel in a written opinion shall
determine, based upon a review of the readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Article, a "Disinterested Trustee" is one (i) who is not an
"interested person" of the Trust (as defined by the 1940 Act)) (including anyone
who has been exempted from being an "interested person" by any rule, regulation
or order of the Securities and Exchange Commission), and (ii) against whom none
of such actions, suits or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or has been pending.
As used in this Article, the words "claim", "action", "suit" or
"proceeding" shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened; and the words
"liability" and expenses" shall include without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
In case any Shareholder or former Shareholder shall be held to be
personally liable solely by reason of his or her being or having been a
Shareholder and not because of his or her acts or omissions or for some other
reason, the Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a corporation or
other entity, its corporate or other general successor) shall be entitled out of
the assets of the Trust to be held harmless from and indemnified against all
loss and expense arising from such liability.
ARTICLE IX
MISCELLANEOUS
TRUSTEES, SHAREHOLDERS, ETC., NOT PERSONALLY LIABLE; NOTICE
SECTION 1. All persons extending credit to, contracting with or having any
claim against the Trust shall look only to the assets of the Trust for payment
under such credit, contract or claim; and neither the Shareholders nor the
Trustees, nor any of the Trust's officers, employees or agents, whether past,
present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect any Trustee against any liability to which
such Trustee would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustees.
Every note, bond, contract, instrument, certificate or undertaking made or
issued by the Trustees or by any officers or officer shall give notice that this
Declaration of Trust is on file with the Secretary of The Commonwealth of
Massachusetts and shall recite that the same was executed or made by or on
behalf of the Trust or by them as Trustees or Trustee or as officers or
-17-
<PAGE>
officer and not individually and that the obligations of such instrument are not
binding upon any of them or the Shareholders individually but are binding only
upon the assets and property of the Trust, and may contain such further recital
as he or she or they may deem appropriate, but the omission thereof shall not
operate to bind any Trustees or Trustee or officers or officer or Shareholders
or Shareholder individually.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE,
NO BOND OR SURETY
SECTION 2. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be liable
for his or her own willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
for nothing else, and shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts
with respect to the meaning and operation of this Declaration of Trust, and
shall be under no liability for any act or omission in accordance with such
advice or for failing to follow such advice. The Trustees shall not be required
to give any bond as such, nor any surety if a bond is required.
LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES
SECTION 3. No person dealing with the Trustees shall be bound to make
any inquiry concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
DURATION AND TERMINATION OF TRUST
SECTION 4. Unless terminated as provided herein, the Trust shall
continue without limitation of time. The Trust may be terminated at any time by
vote of Shareholders holding at least a majority of the Shares entitled to vote
or by the Trustees by written notice to the Shareholders. Any series of Shares
may be terminated at any time by vote of Shareholders holding at least a
majority of the Shares of such series entitled to vote or by the Trustees by
written notice to the Shareholders of such series.
Upon termination of the Trust or of any one or more series of Shares, after
paying or otherwise providing for all charges, taxes, expenses and liabilities,
whether due or accrued or anticipated, of the Trust or of the particular series
as may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets to
distributable form in cash or Shares or other securities, or any combination
thereof, and distribute the proceeds to the Shareholders of the series involved,
ratably according to the number of Shares of such series held by the several
Shareholders of such series on the date of termination.
-18-
<PAGE>
FILING OF COPIES, REFERENCES, HEADINGS
SECTION 5. The original or a copy of this instrument and of each
amendment hereto shall be kept at the office of the Trust where it may be
inspected by any Shareholder. A copy of this instrument and of each
amendment hereto shall be filed by the Trust with the Secretary of The
Commonwealth of Massachusetts and with the Boston City Clerk, as well as any
other governmental office where such filing may from time to time be
required. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been made
and as to any matters in connection with the Trust hereunder; and, with the
same effect as if it were the original, may rely on a copy certified by an
officer of the Trust to be a copy of this instrument or of any such
amendments. In this instrument and in any such amendment, references to this
instrument, and all expressions like "herein", "hereof", and "hereunder",
shall be deemed to refer to this instrument as amended from time to time.
Headings are placed herein for convenience of reference only and shall not be
taken as a part hereof or control or affect the meaning, construction or
effect of this instrument. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
APPLICABLE LAW
SECTION 6. This Declaration of Trust is made in The Commonwealth of
Massachusetts, and it is created under and is to be governed by and construed
and administered according to the laws of said Commonwealth. The Trust shall be
of the type commonly called a Massachusetts business trust, and without limiting
the provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
AMENDMENTS
SECTION 7. This Declaration of Trust may be amended at any time by an
instrument in writing signed by a majority of the then Trustees when authorized
so to do by vote of Shareholders holding a majority of the Shares entitled to
vote, except that an amendment which shall affect the holders of one or more
series of Shares but not the holders of all outstanding series shall be
authorized by vote of the Shareholders holding a majority of the Shares entitled
to vote of each series affected and no vote of Shareholders of a series not
affected shall be required. Amendments having the purpose of changing the name
of the Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision contained
herein shall not require authorization by Shareholder vote.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal in
the City of Boston, Massachusetts for himself and his assigns, as of the day and
year first above written.
-19-
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
Suffolk, ss. Boston March 15, 1982
Then personally appeared the above-named William M. Doran and acknowledged
the foregoing instrument to be his free act and deed, before me,
/s/ Debra Lynch
-----------------------------------
Notary Public
My commission expires:
DEBRA LYNCH, Notary Public
My Commission Expires April 2, 1982
(Notary's Seal)
-20-
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE
DECLARATION OF TRUST
The undersigned, being a majority of the Trustees of TrustFunds Tax Exempt
Trust, a business trust organized under The Commonwealth of Massachusetts
pursuant to a Declaration of Trust dated March 15, 1982, and being authorized to
effect this Amendment, do hereby amend, effective upon the filing of this
instrument in the office of the Secretary of State of The Commonwealth of
Massachusetts, the Declaration of Trust by amending Article VI of said
Declaration of Trust by adding thereto a new Section 7 captioned and reading as
follows:
REDEMPTIONS AT THE OPTION OF THE TRUST
Section 7. The Trust shall have the right at its option and at any
time to redeem Shares at the net asset value thereof if such Shares are not held
in an account of a customer of the Advisor or an affiliated person of the
Advisor or in such other account as the Trustees may determine from time to
time.
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned swear
that the foregoing is their free act and deed and they have signed these
presents on the dates indicated.
/s/ EDWARD W. BINSHADLER July 30, 1982
- ------------------------------
Edward W. Binshadler
/s/ RICHARD F. BLANCHARD July 30, 1982
- ------------------------------
Richard F. Blanchard
/s/ WILLIAM M. DORAN July 30, 1982
- ------------------------------
William M. Doran
/s/ F. WENDELL GOOCH July 30, 1982
- ------------------------------
F. Wendell Gooch
/s/ ALFRED P. WEST, JR. July 30, 1982
- ------------------------------
Alfred P. West, Jr.
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE
AGREEMENT AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees of TrustFunds
Tax Exempt Trust, a business trust organized under the laws of the Commonwealth
of Massachusetts pursuant to an Agreement and Declaration of Trust dated March
15, 1982 (the "Declaration of Trust"), and being authorized by the shareholders
of said Trust to effect this Amendment, do hereby amend, pursuant to Section 7
of Article IX of the Declaration of Trust, effective upon the signing of this
instrument, the Declaration of Trust as follows:
Article IV, Section 7, and Article V, Section 1 of the Declaration of Trust
are hereby amended in their entirety to read as follows:
ARTICLE IV
Section 7. The Trustees may, at any time and from time to time, contract
for exclusive or nonexclusive advisory and/or management services with SEI
Financial Management Corporation (the "Manager") a Delaware corporation, and/or
any other corporation, trust, association or other organization, every such
contract to comply with such requirements and restrictions as may be set forth
in the By-Laws; and any such contract may contain such other terms interpretive
of or in addition to said requirements and restrictions as the Trustees may
determine, including, without limitation, authority to determine from time to
time what investments shall be purchased, held, sold, or exchanged and what
portion, if any, of the assets of the Trust shall be held uninvested and to make
changes in the Trust's investments. The Trustees may also, at any time and from
time to time, contract with any other corporation, trust, association or other
organization, appointing it exclusive or nonexclusive distributor or principal
underwriter for the Shares, every such contract may contain such other terms
interpretive of or in addition to said requirements and restrictions as the
Trustees may determine.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, or distributor or agent of or for any
corporation, trust, association, or other organization, or of or for any parent
or affiliate of any organization, with which an advisory or management or
principal underwriter's or distributor's contract, or transfer, Shareholders
services or other agency contract may have been or may hereafter be made, or
that any such organization, or any parent or affiliate thereof, is a Shareholder
or has an interest in the Trust, or that
(ii) any corporation, trust, association or other organization with
which an advisory or management or principal underwriter's or distributor's
contract, or transfer, Shareholder services or other agency contract may have
been or may hereafter be made also has
<PAGE>
an advisory or management contract, or principal underwriter's or distributor's
contract, or transfer, Shareholder services or other agency contract with one or
more other corporations, trusts, associations, or other organizations, or has
other businesses or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting or executing the same
or create any liability or accountability to the Trust or its Shareholders.
ARTICLE V
Section 1. The Shareholders shall have power to vote only (i) for the
election or removal of Trustees as provided in Article IV. Section 1, (ii) with
respect to the approval of any investment advisory contract as provided in
Article IV, Section 7, (iii) with respect to any termination of the Trust to the
extent and as provided in Article IX, Section 4, (iv) with respect to any
amendment of this Declaration of Trust to the extent and as provided in Article
IX, Section 7, (v) to the same extent as the stockholders of a Massachusetts
business corporation as to whether or not a court action, proceeding or claim
should or should not be brought or maintained derivatively or as a class action
on behalf of the Trust or the Shareholders, and (vi) with respect to any
additional matters relating to the trust as may be required by law, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable.
Each whole Share shall be entitled to none vote as to any mater on which it
is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote. On any matter submitted to a vote of
Shareholders all Shares of the Trust then entitled to vote, irrespective of
series, shall be voted in the aggregate and not by series, except, (1) when
required by the 1940 Act, shares shall be voted by individual series, in which
event, unless otherwise required by the 1940 Act, a vote of Shareholders of all
shares of the Trust, irrespective of series, shall not be required; and (2) when
the Trustees have determined that the matter affects only the interests of one
or more series, than only Shareholders of such series shall be entitled to vote
thereon. There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy.
A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by any one of them unless at or prior to the exercise
of the proxy the Trust receives a specific written notice to the contrary from
any one of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise
and the burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by Shareholders.
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY the undersigned swear
that the foregoing is their free act and deed and they have set the respective
hands hereunder as of this 23rd of May, 1986.
/s/ Alfred P. West, Jr. /s/ William M. Doran
- ----------------------------------- -----------------------------------
Alfred P. West, Jr. William M. Doran
/s/ Edward W. Binshadler /s/ F. Wendell Gooch
- ----------------------------------- -----------------------------------
Edward W. Binshadler F. Wendell Gooch
/s/ Richard F. Blanchard
- -----------------------------------
Richard F. Blanchard
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE
AGREEMENT AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees of TrustFunds
Tax Exempt Trust, a business trust organized under the laws of the Commonwealth
of Massachusetts pursuant to an Agreement and Declaration of Trust dated March
15, 1982 (the "Declaration of Trust"), and being authorized by the Unitholders
of said Trust to effect this amendment, do hereby amend pursuant to Article IX,
Section 7 of the Declaration of Trust, effective upon the signing of this
instrument, the Declaration of Trust as follows:
Article III, Section 1, is hereby amended in the entirety to read as
follows:
ARTICLE III
Shares
Division of Beneficial Interest
Section 1. The Shares of the Trust shall be issued in one or more series
as the Trustees may, without shareholder approval, authorize. Each series shall
be preferred over all other series in respect of the assets allocated to that
series. The beneficial interest in each series shall at all times be divided
into Shares, without par value, each of which shall represent an equal
proportionate interest in the series with each other Share of the same series,
none having priority or preference over another. Each series shall be
represented by one or more classes of Shares, with each class possessing such
rights (including, notwithstanding any contrary provisions herein, voting
rights) as the Trustees may, without shareholder approval authorize. The number
of Shares authorized shall be unlimited, and the Shares so authorized may be
represented in part by fractional shares. The Trustees may from time to time
divide or combine the Shares of any series or class into a greater or lesser
number without thereby changing the proportionate beneficial interests in the
series or class.
<PAGE>
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned swear
that the foregoing is their free act and deed and they have set their respective
hands hereunder as of this 8th day of April, 1987.
/s/ Alfred P. West, Jr.
- -------------------------------------
Alfred P. West, Jr.
/s/ Edward W. Binshadler
- -------------------------------------
Edward W. Binshadler
/s/ Richard F. Blanchard
- -------------------------------------
Richard F. Blanchard
/s/ William M. Doran
- -------------------------------------
William M. Doran
/s/ F. Wendell Gooch
- -------------------------------------
F. Wendell Gooch
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE DECLARATION OF TRUST
The undersigned, being all of the Trustees of TrustFunds Tax Exempt
Trust, a business trust organized under the laws of The Commonwealth of
Massachusetts pursuant to a declaration of Trust dated March 15, 1982, do hereby
amend, effective upon the filing of this instrument in the office of the
Secretary of State of The Commonwealth of Massachusetts, the Declaration of
Trust by deleting the word "Trust Funds" wherever it appears therein and
inserting in place thereof the words "SEI".
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have signed these presents on the
dates indicated.
/s/ Alfred P. West December 23, 1988
- ---------------------------------
Alfred P. West, Jr.
- --------------------------------- December 23, 1988
William M. Doran
- --------------------------------- December 23, 1988
Edward Binshadler
- --------------------------------- December 23, 1988
Richard Blanchard
- --------------------------------- December 23, 1988
F. Wendell Gooch
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE DECLARATION OF TRUST
The undersigned, being all of the Trustees of TrustFunds Tax Exempt
Trust, a business trust organized under the laws of The Commonwealth of
Massachusetts pursuant to a declaration of Trust dated March 15, 1982, do hereby
amend, effective upon the filing of this instrument in the office of the
Secretary of State of The Commonwealth of Massachusetts, the Declaration of
Trust by deleting the word "Trust Funds" wherever it appears therein and
inserting in place thereof the words "SEI".
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have signed these presents on the
dates indicated.
- --------------------------------- December 23, 1988
Alfred P. West, Jr.
/s/ William M. Doran December 23, 1988
- ---------------------------------
William M. Doran
- --------------------------------- December 23, 1988
Edward Binshadler
- --------------------------------- December 23, 1988
Richard Blanchard
- --------------------------------- December 23, 1988
F. Wendell Gooch
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE DECLARATION OF TRUST
The undersigned, being all of the Trustees of TrustFunds Tax Exempt
Trust, a business trust organized under the laws of The Commonwealth of
Massachusetts pursuant to a declaration of Trust dated March 15, 1982, do hereby
amend, effective upon the filing of this instrument in the office of the
Secretary of State of The Commonwealth of Massachusetts, the Declaration of
Trust by deleting the word "Trust Funds" wherever it appears therein and
inserting in place thereof the words "SEI".
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have signed these presents on the
dates indicated.
- --------------------------------- December 23, 1988
Alfred P. West, Jr.
- --------------------------------- December 23, 1988
William M. Doran
/s/ Edward Binshadler December 23, 1988
- ---------------------------------
Edward Binshadler
- --------------------------------- December 23, 1988
Richard Blanchard
- --------------------------------- December 23, 1988
F. Wendell Gooch
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE DECLARATION OF TRUST
The undersigned, being all of the Trustees of TrustFunds Tax Exempt
Trust, a business trust organized under the laws of The Commonwealth of
Massachusetts pursuant to a declaration of Trust dated March 15, 1982, do hereby
amend, effective upon the filing of this instrument in the office of the
Secretary of State of The Commonwealth of Massachusetts, the Declaration of
Trust by deleting the word "Trust Funds" wherever it appears therein and
inserting in place thereof the words "SEI".
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have signed these presents on the
dates indicated.
- --------------------------------- December 23, 1988
Alfred P. West, Jr.
- --------------------------------- December 23, 1988
William M. Doran
- --------------------------------- December 23, 1988
Edward Binshadler
/s/ Richard Blanchard December 23, 1988
- ---------------------------------
Richard Blanchard
- --------------------------------- December 23, 1988
F. Wendell Gooch
<PAGE>
TRUSTFUNDS TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE DECLARATION OF TRUST
The undersigned, being all of the Trustees of TrustFunds Tax Exempt
Trust, a business trust organized under the laws of The Commonwealth of
Massachusetts pursuant to a declaration of Trust dated March 15, 1982, do hereby
amend, effective upon the filing of this instrument in the office of the
Secretary of State of The Commonwealth of Massachusetts, the Declaration of
Trust by deleting the word "Trust Funds" wherever it appears therein and
inserting in place thereof the words "SEI".
This instrument may be executed in several counterparts, each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
IN WITNESS WHEREOF, the undersigned have signed these presents on the
dates indicated.
- --------------------------------- December 23, 1988
Alfred P. West, Jr.
- --------------------------------- December 23, 1988
William M. Doran
- --------------------------------- December 23, 1988
Edward Binshadler
- --------------------------------- December 23, 1988
Richard Blanchard
/s/ F. Wendell Gooch December 23, 1988
- ---------------------------------
F. Wendell Gooch
<PAGE>
SEI TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE AGREEMENT
AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees, of SEI Tax
Exempt Trust, a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated March 15,
1982 (the "Declaration of Trust"), and being authorized by the unitholders of
the Pennsylvania Municipal Portfolio of said Trust to effect this amendment, do
hereby amend pursuant to Article IX, Section 7 of the Declaration of Trust,
effective upon the signing of this instrument, the Declaration of Trust as
follows:
Article IV, Section 3 is hereby amended by adding the following after
paragraph (n):
Investments held by the Pennsylvania Municipal Portfolio may not be
varied except to:
(a) eliminate unsafe investments and investments not consistent with
the preservation of the capital or the tax status of investments
of the Portfolio;
(b) honor redemption orders, meet anticipated redemption
requirements, and negate gains from discount purchases;
(c) maintain a certain net asset value per unit pursuant to, or in
compliance with, an order or rule of the Securities and Exchange
Commission'
(d) reinvest the earnings from securities in like securities; or
(e) defray normal administrative expenses.
This instrument may be executed in several counterparts each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 16th day of June, 1989.
/s/ Alfred P. West, Jr.
- --------------------------------
Alfred P. West, Jr.
- --------------------------------
William M. Doran
- --------------------------------
Edward W. Binshadler
- --------------------------------
Richard F. Blanchard
- --------------------------------
F. Wendell Gooch
2
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 16th day of June, 1989.
- --------------------------------
Alfred P. West, Jr.
/s/ William M. Doran
- --------------------------------
William M. Doran
- --------------------------------
Edward W. Binshadler
- --------------------------------
Richard F. Blanchard
- --------------------------------
F. Wendell Gooch
3
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 16th day of June, 1989.
- --------------------------------
Alfred P. West, Jr.
- --------------------------------
William M. Doran
/s/ Edward W. Binshadler
- --------------------------------
Edward W. Binshadler
- --------------------------------
Richard F. Blanchard
- --------------------------------
F. Wendell Gooch
4
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 16th day of June, 1989.
- --------------------------------
Alfred P. West, Jr.
- --------------------------------
William M. Doran
- --------------------------------
Edward W. Binshadler
/s/ Richard F. Blanchard
- --------------------------------
Richard F. Blanchard
- --------------------------------
F. Wendell Gooch
5
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 16th day of June, 1989.
- --------------------------------
Alfred P. West, Jr.
- --------------------------------
William M. Doran
- --------------------------------
Edward W. Binshadler
- --------------------------------
Richard F. Blanchard
/s/ F. Wendell Gooch
- --------------------------------
F. Wendell Gooch
6
<PAGE>
SEI TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE AGREEMENT
AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees, of SEI Tax
Exempt Trust, a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated March 15,
1982 (the "Declaration of Trust"), and being authorized by the unitholders of
the Pennsylvania Municipal Portfolio of said Trust to effect this amendment, do
hereby amend pursuant to Article IX, Section 7 of the Declaration of Trust,
effective upon the signing of this instrument, the Declaration of Trust as
follows:
Article IV, Section 3 is hereby amended by deleting the following
after paragraph (n):
(c) Maintain a certain net asset value per unit pursuant to, or in
compliance with, an order or rule of the Securities and Exchange
Commission;
The heading to Article VI, Section 6 is hereby amended to read in its
entirety as follows:
Maintenance of Consent Net Asset Value - Money Market Series
This instrument may be executed in several counterparts each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 5th day of July, 1989.
/s/ Alfred P. West, Jr.
- -------------------------------
Alfred P. West, Jr.
- -------------------------------
William M. Doran
- -------------------------------
Edward W. Binshadler
- -------------------------------
Richard F. Blanchard
- -------------------------------
F. Wendell Gooch
<PAGE>
SEI TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE AGREEMENT
AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees, of SEI Tax
Exempt Trust, a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated March 15,
1982 (the "Declaration of Trust"), and being authorized by the unitholders of
the Pennsylvania Municipal Portfolio of said Trust to effect this amendment, do
hereby amend pursuant to Article IX, Section 7 of the Declaration of Trust,
effective upon the signing of this instrument, the Declaration of Trust as
follows:
Article IV, Section 3 is hereby amended by deleting the following
after paragraph (n):
(c) Maintain a certain net asset value per unit pursuant to, or in
compliance with, an order or rule of the Securities and Exchange
Commission;
The heading to Article VI, Section 6 is hereby amended to read in its
entirety as follows:
Maintenance of Consent Net Asset Value - Money Market Series
This instrument may be executed in several counterparts each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 5th day of July, 1989.
- -------------------------------
Alfred P. West, Jr.
/s/ William M. Doran
- -------------------------------
William M. Doran
- -------------------------------
Edward W. Binshadler
- -------------------------------
Richard F. Blanchard
- -------------------------------
F. Wendell Gooch
<PAGE>
SEI TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE AGREEMENT
AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees, of SEI Tax
Exempt Trust, a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated March 15,
1982 (the "Declaration of Trust"), and being authorized by the unitholders of
the Pennsylvania Municipal Portfolio of said Trust to effect this amendment, do
hereby amend pursuant to Article IX, Section 7 of the Declaration of Trust,
effective upon the signing of this instrument, the Declaration of Trust as
follows:
Article IV, Section 3 is hereby amended by deleting the following
after paragraph (n):
(c) Maintain a certain net asset value per unit pursuant to, or in
compliance with, an order or rule of the Securities and Exchange
Commission;
The heading to Article VI, Section 6 is hereby amended to read in its
entirety as follows:
Maintenance of Consent Net Asset Value - Money Market Series
This instrument may be executed in several counterparts each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 5th day of July, 1989.
- -------------------------------
Alfred P. West, Jr.
- -------------------------------
William M. Doran
/s/ Edward W. Binshadler
- -------------------------------
Edward W. Binshadler
- -------------------------------
Richard F. Blanchard
- -------------------------------
F. Wendell Gooch
<PAGE>
SEI TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE AGREEMENT
AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees, of SEI Tax
Exempt Trust, a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated March 15,
1982 (the "Declaration of Trust"), and being authorized by the unitholders of
the Pennsylvania Municipal Portfolio of said Trust to effect this amendment, do
hereby amend pursuant to Article IX, Section 7 of the Declaration of Trust,
effective upon the signing of this instrument, the Declaration of Trust as
follows:
Article IV, Section 3 is hereby amended by deleting the following
after paragraph (n):
(c) Maintain a certain net asset value per unit pursuant to, or in
compliance with, an order or rule of the Securities and Exchange
Commission;
The heading to Article VI, Section 6 is hereby amended to read in its
entirety as follows:
Maintenance of Consent Net Asset Value - Money Market Series
This instrument may be executed in several counterparts each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 5th day of July, 1989.
- -------------------------------
Alfred P. West, Jr.
- -------------------------------
William M. Doran
- -------------------------------
Edward W. Binshadler
/s/ Richard F. Blanchard
- -------------------------------
Richard F. Blanchard
- -------------------------------
F. Wendell Gooch
<PAGE>
SEI TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE AGREEMENT
AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees, of SEI Tax
Exempt Trust, a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated March 15,
1982 (the "Declaration of Trust"), and being authorized by the unitholders of
the Pennsylvania Municipal Portfolio of said Trust to effect this amendment, do
hereby amend pursuant to Article IX, Section 7 of the Declaration of Trust,
effective upon the signing of this instrument, the Declaration of Trust as
follows:
Article IV, Section 3 is hereby amended by deleting the following
after paragraph (n):
(c) Maintain a certain net asset value per unit pursuant to, or in
compliance with, an order or rule of the Securities and Exchange
Commission;
The heading to Article VI, Section 6 is hereby amended to read in its
entirety as follows:
Maintenance of Consent Net Asset Value - Money Market Series
This instrument may be executed in several counterparts each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 5th day of July, 1989.
- -------------------------------
Alfred P. West, Jr.
- -------------------------------
William M. Doran
- -------------------------------
Edward W. Binshadler
- -------------------------------
Richard F. Blanchard
/s/ F. Wendell Gooch
- -------------------------------
F. Wendell Gooch
<PAGE>
SEI TAX EXEMPT TRUST
WRITTEN INSTRUMENT AMENDING THE AGREEMENT
AND DECLARATION OF TRUST
The undersigned, being at least a majority of the Trustees, of SEI Tax
Exempt Trust, a business trust organized under the laws of the Commonwealth of
Massachusetts pursuant to an Agreement and Declaration of Trust dated March 15,
1982 (the "Declaration of Trust"), and being authorized by the unitholders of
the Pennsylvania Tax Free Portfolio of said Trust to effect this amendment, do
hereby amend pursuant to Article IX, Section 7 of the Declaration of Trust,
effective upon the signing of this instrument, the Declaration of Trust as
follows:
Article IV, Section 3 is hereby amended by adding the following after
paragraph (n):
Investments held by the Pennsylvania Tax Free Portfolio may not be
varied except to:
(a) eliminate unsafe investments and investments not consistent with
the preservation of the capital or the tax status of investments
of the Portfolio;
(b) honor redemption orders, meet anticipated redemption
requirements, and negate gains from discount purchases;
(c) maintain a certain net asset value per unit pursuant to, or in
compliance with, an order or rule of the Securities and Exchange
Commission'
(d) reinvest the earnings from securities in like securities; or
(e) defray normal administrative expenses.
This instrument may be executed in several counterparts each of which
shall be deemed an original, but all taken together shall constitute one
instrument.
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 15th day of November, 1989.
/s/ Robert A. Nesher
- -------------------------
Robert A. Nesher
- -------------------------
William M. Doran
- -------------------------
Edward W. Binshadler
- -------------------------
Richard F. Blanchard
- -------------------------
F. Wendell Gooch
2
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 15th day of November, 1989.
- -------------------------
Robert A. Nesher
/s/ William M. Doran
- -------------------------
William M. Doran
- -------------------------
Edward W. Binshadler
- -------------------------
Richard F. Blanchard
- -------------------------
F. Wendell Gooch
3
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 15th day of November, 1989.
- -------------------------
Robert A. Nesher
- -------------------------
William M. Doran
/s/ Edward W. Binshadler
- -------------------------
Edward W. Binshadler
- -------------------------
Richard F. Blanchard
- -------------------------
F. Wendell Gooch
4
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 15th day of November, 1989.
- -------------------------
Robert A. Nesher
- -------------------------
William M. Doran
- -------------------------
Edward W. Binshadler
/s/ Richard F. Blanchard
- -------------------------
Richard F. Blanchard
- -------------------------
F. Wendell Gooch
5
<PAGE>
IN WITNESS WHEREOF AND UNDER PENALTIES OF PERJURY, the undersigned
swear that the foregoing is their free act and deed and they have set their
respective hands hereunder as of this 15th day of November, 1989.
- -------------------------
Robert A. Nesher
- -------------------------
William M. Doran
- -------------------------
Edward W. Binshadler
- -------------------------
Richard F. Blanchard
/s/ F. Wendell Gooch
- -------------------------
F. Wendell Gooch
6
<PAGE>
BY- LAWS
OF
TRUSTFUNDS TAX EXEMPT TRUST
SECTION 1. AGREEMENT AND DECLARATION OF
TRUST AND PRINCIPAL OFFICE
1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject to the
Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of TRUSTFUNDS TAX EXEMPT TRUST, the Massachusetts
business trust established by the Declaration of Trust (the "Trust").
1.2 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust shall be
located in Boston, Massachusetts.
SECTION 2. SHAREHOLDERS
2.1 ANNUAL MEETING. The annual meeting of the shareholders shall be at such
time and on such date in each year as the president or Trustees may from time to
time determine.
2.2 SPECIAL MEETING IN PLACE OF ANNUAL MEETING. If no annual meeting has been
held in accordance with the foregoing provisions, a special meeting of the
shareholders may h~. held in place thereof, and any action taken at such special
meeting shall have the same force and effect as if taken at the annual meeting,
and in such case all references in these By-Laws to the annual meeting of the
shareholders shall be deemed to refer to such special meeting.
2.3 SPECIAL MEETINGS. A special meeting of the shareholders may be called at
any time by the Trustees, by the president or, if the Trustees and the president
shall fail to call any meeting of shareholders for a period of 30 days after
written application of one or more shareholders who hold at least 25% of all
shares issued and outstanding and entitled to vote at the meeting, then such
shareholders may call such meeting. Each call of a meeting shall state the
place, date, hour and purposes of the meeting.
2.4 PLACE OF MEETINGS. All meetings of the shareholders shall be held at the
principal office of the Trust, or, to the extent permitted by the Declaration of
Trust, at such other place within the United States as shall be designated by
the Trustees or the president of the Trust.
<PAGE>
2.5 NOTICE OF MEETINGS. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least seven days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his address as it appears in the records of the Trust. Such notice shall be
given by the secretary or an assistant secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.
2.6 BALLOTS. No ballot shall be required for any election unless requested by
a shareholder present or represented at the meeting and entitled to vote in the
election.
2.7 PROXIES. Shareholders entitled to vote may vote either in person or by
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting.
SECTION 3. TRUSTEES
3.1 COMMITTEES AND ADVISORY BOARD. The Trustees may appoint from their number
an executive committee and other committees. Except as the Trustees may
otherwise determine, any such committee may make rules for conduct of its
business. The Trustees may appoint an advisory board to -consist of not less
than two nor more than five members. The members of the advisory board shall be
compensated in such manner as the Trustees may determine and shall confer with
and advise the Trustees regarding the investments and other affairs of the
Trust. Each member of the advisory board shall hold office until the first
meeting of the Trustees following the next annual meeting of the shareholders
and until his successor is elected and qualified, or until he sooner dies,
resigns, is removed, or becomes disqualified, or until the advisory board is
sooner abolished by the Trustees.
3.2 REGULAR MEETINGS. Regular meetings of the Trustees maybe held without call
or notice at such places and at such times as the Trustees may from time to time
determine, provided that notice of the first regular meeting following any such
determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as the annual meeting of the shareholders.
3.3 SPECIAL MEETINGS. Special meetings of the Trustees maybe held at any time
and at any place designated in the call of the meeting, when called by the
Chairman of the Board, the president or the treasurer or by two or more
Trustees, sufficient notice thereof being given to
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<PAGE>
each Trustee by the secretary or an assistant secretary or by the officer or one
of the Trustees calling the meeting.
3.4 NOTICE. It shall be sufficient notice to a Trustee to send notice by mail
at least forty-eight hours or by telegram at least twenty-four hours before the
meeting addressed to the Trustee at his or her usual or last known business or
residence address or to give notice to him or her in person or by telephone at
least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor
a waiver of a notice need specify the purposes of the meeting.
3.5 QUORUM. At any meeting of the Trustees one-third of -the Trustees then in
office shall constitute a quorum; provided, however, a quorum shall not be less
than two. Any meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
SECTION 4. OFFICERS AND AGENTS
4.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
president, a treasurer, a secretary and such other officers, if any, as the
Trustees from time to time may in their discretion elect or appoint. The Trust
may also have such agents, if any, as the Trustees from time to time may in
their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
4.2 POWERS. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
4.3 ELECTION. The president, the treasurer and the secretary shall be elected
annually by the Trustees at their first meeting following the annual meeting of
the shareholders. Other officers, if any, may be elected or appointed by the
Trustees at said meeting or at any other time.
4.4 TENURE. The president, the treasurer and the secretary shall hold office
until the first meeting of Trustees following the next annual meeting of the
shareholders and until their respective successors are chosen and qualified, or
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each agent shall retain his or her authority at the pleasure of
the Trustees.
4.5 PRESIDENT AND VICE PRESIDENTS. The president shall be the chief executive
officer of the Trust. The president shall, subject to the control of the
Trustees, have general charge and
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<PAGE>
supervision of the business of the Trust. Any vice president shall have such
duties and powers as shall be designated from time to time by the Trustees.
4.6 CHAIRMAN OF THE BOARD. If a Chairman of the Board of Trustees is elected,
he shall have the duties and powers specified in these By-laws and, except as
the Trustees shall otherwise determine, preside at all meetings of the
shareholders and of the Trustees at which he or she is present and have such
other duties and powers as may be determined by the Trustees.
4.7 TREASURER AND CONTROLLER. The treasurer shall be the chief financial
officer of the Trust and subject to any arrangement made by the Trustees with a
bank or trust company or other organization as custodian or transfer or
shareholder services agent, shall be in charge of its valuable papers and shall
have such other duties and powers as may be designated from time to time by the
Trustees or bathe president. If at any time there shall be no controller, the
treasurer shall also be the chief accounting officer of the Trust and shall have
the duties and powers prescribed herein for the controller. Any assistant
treasurer shall have such duties and powers as shall be designated from time to
time by the Trustees.
The controller, if any be elected, shall be the chief accounting officer of the
Trust and shall be in charge of its books of account and accounting records.
The controller shall be responsible for preparation of financial statements of
the Trust and shall have such other duties and powers as may be designated from
time to time by the Trustees or the president.
4.8 SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the secretary from any meeting of shareholders or Trustees, an assistant
secretary, or if there be none or he or she is absent, a temporary clerk chosen
at the meeting shall record the proceedings thereof in the aforesaid books.
SECTION 5. RESIGNATION AND REMOVALS
Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the Chairman of the Board, the
president, the treasurer or the secretary or to a meeting the Trustees. The
Trustees may remove any officer elected by them with or without cause by the
vote of a majority of the Trustees then in office. Except to the extent
expressly provided in a written agreement with the Trust, no Trustee, officer,
or advisory board member resigning, and no officer or advisory board member
removed shall have any right to any compensation for any period following his or
her resignation or removal, or any right to damages on account of such removal.
SECTION 6. VACANCIES
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the president, the treasurer
and the secretary, until his or her
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<PAGE>
successor is chosen and qualified, or in each case until he or she sooner dies,
resigns, is removed or becomes disqualified.
SECTION 7. SHARES OF BENEFICIAL INTEREST
7.1 SHARE CERTIFICATES. No certificates certifying the ownership of shares
shall be issued except as the Trustees may otherwise authorize. In the event
that the Trustees authorize the issuance of share certificates, subject to the
provisions of Section 7.3, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the president or a vice president and by the treasurer or an assistant
treasurer. Such signatures may be facsimiles if the certificate is signed by a
transfer or shareholder services agent or by a registrar, other than a Trustee,
officer or employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
7.2 LOSS OF CERTIFICATES. In the case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
7.3 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
SECTION 8. RECORD DATE
The Trustees may fix in advance a time, which shall not be more than 60 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date.
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<PAGE>
SECTION 9. SEAL
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word"Massachusetts", together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
SECTION 10. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed
bathe Trust shall be signed, and any transfers of securities standing in the
name of the Trust shall be executed, by the president or by one of the vice
presidents or by the treasurer or by whomsoever else shall be designated for
that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
SECTION 11. FISCAL YEAR
The fiscal year of the Trust shall end on such date in each year as the Trustees
shall from time to time determine.
SECTION 12. PROVISIONS RELATING TO THE
CONDUCT OF THE TRUST'S BUSINESS
12.1 DEALINGS WITH AFFILIATES. The Trust shall not purchase or retain
securities issued by any issuer if one or more of the holders of the securities
of such issuer or one or more of the officers or directors of such issuer is an
officer or Trustee of the Trust or officer or director of -any organization,
association or corporation with which the Trust has an investment advisor's
contract ("investment advisor"), if to the knowledge of the Trust one or more of
such officers or Trustees of the Trust or such officers or directors of such
investment advisors owns beneficially more than one-half of one percent of the
shares or securities of such issuer and such officers, Trustees and directors
owning more than one-half of one percent of such shares or securities together
own beneficially more than five percent of such outstanding shares or
securities. Each Trustee and officer of the Trust shall give notice to the
secretary of the identity of all issuers whose securities are held by the Trust
of which such officer or Trustee owns as much as one-half of one percent of the
outstanding securities, and the Trust shall not be charged with the knowledge of
such holdings in the absence of receiving such notice if the Trust has requested
such information not less often than quarterly.
Subject to the provisions of the preceding paragraph, no officer, Trustee or
agent of the Trust and no officer, director or agent of any investment advisor
shall deal for or on behalf of the Trust with himself as principal or agent, or
with any partnership, association or corporation in which he has a
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<PAGE>
material financial interest; provided that the foregoing provisions shall not
prevent (a) officers and Trustees of the Trust from buying, holding or selling
shares in the Trust, or from being partners, officers or directors of or
financially interested in any investment advisor to the Trust or in any
corporation, firm or association which may at any time have a distributor's or
principal underwriter's contract with the Trust; (b) purchases or sales of
securities or other property if such transaction is permitted by or is exempt or
exempted from the provisions of the Investment Company Act of 1940 or any Rule
or Regulation thereunder and if such transaction does not involve any commission
or profit to any security dealer who is, or one or more of whose partners,
shareholders, officers or directors is, an officer or Trustee of the Trust or an
officer or director of the investment advisor, manager or principal underwriter
of the Trust; (c) employment of legal counsel, registrar, transfer agent,
shareholder services, dividend disbursing agent or custodian who is, or has a
partner, stockholder, officer or director who is, an officer or Trustee of the
Trust; (d) sharing statistical, research and management expenses, including
office hire and services, with any other company in which an officer or Trustee
of the Trust is an officer or director or financially interested.
12.2 DEALING IN SECURITIES OF THE TRUST. The Trust, the investment advisor, any
corporation, firm or association which may at any time have an exclusive
distributor's or principal underwriter's contract with the Trust
(the"distributor") and the officers and Trustees of the Trust and officers and
directors of every investment advisor and distributor, shall not take long or
short positions in the securities of the Trust, except that:
(a) the distributor may place orders with the Trust for its shares
equivalent to orders received by the distributor;
(b) shares of the Trust may be purchased at not less than net asset value
for investment by the investment advisor and by officers and directors of
the distributor, investment advisor, or the Trust and by any trust,
pension, profit-sharing or other benefit plan for such persons, no such
purchase to be in contravention of any applicable state or federal
requirement.
12.3 LIMITATION ON CERTAIN LOANS. The Trust shall not make loans to any
officer, Trustee or employee of the Trust or any investment advisor or
distributor or their respective officers, directors or partners or employees.
12.4 CUSTODIAN. All securities and cash owned by the Trust shall be
maintained in the custody of one or more banks or trust companies having
(according to its last published report) not less than two million dollars
($2,000,000)aggregate capital, surplus and undivided profits (any such bank
or trust company is hereinafter referred to as the"custodian"); provided,
however, the custodian may deliver securities as collateral on borrowings
effected by the Trust, provided, that such delivery shall be conditioned upon
receipt of the borrowed funds by the custodian except where additional
collateral is being pledged on an outstanding loan and the custodian may
deliver securities lent by the Trust against receipt of initial collateral
specified by the Trust. Subject to
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<PAGE>
such rules, regulations and orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any custodian to, deposit all
or any part of the securities owned by the Trust in a system for the central
handling of securities operated by the Federal Reserve Banks, or established by
a national securities exchange or national securities association registered
with said Commission under the Securities Exchange Act of 1934, or such other
person assay be permitted by said Commission, pursuant to which system all
securities of any particular class or series of any issue deposited with the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry, without physical delivery of such securities.
The Trust shall upon the resignation or inability to serve of its custodian or
upon change of the custodian:
(a) in the case of such resignation or inability to serve use its best
efforts to obtain a successor custodian;
(b) require that the cash and securities owned by this corporation be
delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities owned
by this Trust otherwise than to a successor custodian, the question whether
or not this Trust shall be liquidated or shall function without a
custodian.
12.5 LIMITATIONS ON INVESTMENT. Each series of shares may not:
(a) Invest in securities other than those described in the Trust's then
current prospectus as appropriate for the series of shares for which such
securities are being purchased, except that the Trust may make temporary
investments for any series of shares in notes issued by or on behalf of
municipal or corporate issuers, obligations of the United States
Government and its agencies or instrumentalities, and any such items
subject to short-term repurchase agreements.
(b) Purchase securities of any issuer (except 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 any series of
shares (based on their current value at the time of investment) would be
invested in the securities of such issuer.
(c) Invest in companies for the purpose of exercising control.
(d) Purchase any securities which would cause more than 25% of the total
assets of the series of shares, 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 shall not apply to investments in municipal
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<PAGE>
obligations or to obligations issued or guaranteed by the United States
Government, its agencies or instrumentalities.
(e) Purchase or sell real estate, commodities or commodities contracts.
However, any series of shares may invest in municipal obligations or other
obligations secured by real estate or interests therein.
(f) Purchase securities on margin, make short sales of securities or
maintain a short position, except that the Trust may obtain short-term
credits as necessary for the clearance of security transactions.
(g) Borrow money in any series of shares except for temporary or emergency
purposes of that series, and then only in an amount not exceeding 10% of
the value of the total assets of that series of shares. The Trust will
repay all borrowings in a particular series of shares before making
additional investments for that series.
(h) Make loans, except that any series of shares 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 7 days may not exceed 10% of the total assets of any
series of shares.
(i) Pledge, mortgage or hypothecate the assets of any series of shares
except to secure temporary borrowings permitted by (g) above in aggregate
amounts not to exceed 10% of the net assets of that series, at the time of
the incurrence of such loan, taken at current value.
(j) Act as an underwriter of securities of other issuers, except as it may
be deemed an underwriter in selling a portfolio security.
(k) Purchase securities of other investment companies except as permitted
by the Investment Company Act of 1940 and the rules and regulations
thereunder, and in any event may not purchase securities of other open-end
investment companies.
(l) Issue senior securities (as defined in the investment Company Act of
1940), except as permitted by(g) above or by rule, regulation or order of
the Securities and Exchange Commission.
(m) Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or of any
investment advisor 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.
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<PAGE>
(n) Purchase securities of any issuer 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 obligations which are
rated by at least two nationally recognized municipal bond rating services,
if as a result more than 5% of the total assets of any series of shares
(taken at current value) would be invested in such securities.
(o) Invest in interests in oil, gas or other mineral exploration or
development programs.
(p) Invest in securities or other instruments (except for repurchase
agreements) with legal or contractual restrictions on resale or for which
no readily available market exists.
(q) Purchase puts, calls, straddles, spreads or combinations thereof,
except that the Trust may purchase puts as permitted by its investment
objective and policies.
12.6 REPORTS TO SHAREHOLDERS; DISTRIBUTIONS FROM REALIZED GAINS. The Trust
shall send to each shareholder of record at least annually a statement of the
condition of the Trust and of the results of its operation, containing all
information required by applicable laws or regulations.
SECTION 13. AMENDMENTS
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such majority.
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<PAGE>
BY-LAWS
OF
SEI TAX EXEMPT TRUST
SECTION 1. AGREEMENT AND DECLARATION OF TRUST AND PRINCIPAL OFFICE
1.1 AGREEMENT AND DECLARATION OF TRUST. These By-Laws shall be subject to
the Agreement and Declaration of Trust, as from time to time in effect (the
"Declaration of Trust"), of SEI TAX EXEMPT TRUST, the Massachusetts business
trust established by the Declaration of Trust (the "Trust").
2.1 PRINCIPAL OFFICE OF THE TRUST. The principal office of the Trust shall
be located in Boston, Massachusetts.
SECTION 2. SHAREHOLDERS
2.1 MEETINGS. A meeting of the shareholders of the Trust or by any one or
more series of shares may be called at any time by the Trustees, by the
president or, if the Trustees and the president shall fail to call any meeting
of shareholders for a period of 30 days after written application of one or more
shareholders who at least 10% of all outstanding shares of the Trust, if
shareholders of all series are required under Declaration of Trust to vote the
aggregate and not by individual series at such meeting, or of any series, if
shareholders of such series are entitled under the Declaration of Trust to vote
by individual series at such meeting, then such shareholders may call such
meeting. If the meeting is a meeting of the shareholders of one or more series
of shares, but not a meeting of all shareholders of the Trust, then only the
shareholders of such one or more series shall be entitled to notice of and to
vote at the meeting. Each call of a meeting shall state the place, date, hour
and purpose of the meeting.
2.2 SPECIAL MEETINGS. A special meeting of the shareholders may be called at
any time by the Trustees, by the president or, if the Trustees and the president
shall fail to call any meeting of shareholders for a period of 30 days after
written application of one or more shareholders who hold at least 25% of all
shares issued and outstanding and entitled to vote at the meeting, then such
shareholders may call such meeting. Each call of a meeting shall state the
place, date, hour and purposes of the meeting.
2.3 PLACE OF MEETINGS. All meetings of the shareholders shall be held at the
principal office of the Trust, or, to the extent permitted by the Declaration of
Trust, at such other place within the United States as shall be designated by
the Trustees or the president of the Trust.
<PAGE>
2.4 NOTICE OF MEETINGS. A written notice of each meeting of shareholders,
stating the place, date and hour and the purposes of the meeting, shall be given
at least seven days before the meeting to each shareholder entitled to vote
thereat by leaving such notice with him or at his residence or usual place of
business or by mailing it, postage prepaid, and addressed to such shareholder at
his address as it appears in the records of the Trust. Such notice shall be
given by the secretary or an assistant secretary or by an officer designated by
the Trustees. No notice of any meeting of shareholders need be given to a
shareholder if a written waiver of notice, executed before or after the meeting
by such shareholder or his attorney thereunto duly authorized, is filed with the
records of the meeting.
2.5 BALLOTS. No ballot shall be required for any election unless requested
by a shareholder present or represented at the meeting and entitled to vote in
the election.
2.6 PROXIES. Shareholders entitled to vote may vote either in person or by
proxy in writing dated not more than six months before the meeting named
therein, which proxies shall be filed with the secretary or other person
responsible to record the proceedings of the meeting before being voted. Unless
otherwise specifically limited by their terms, such proxies shall entitle the
holders thereof to vote at any adjournment of such meeting but shall not be
valid after the final adjournment of such meeting.
SECTION 3. TRUSTEES
3.1 COMMITTEES AND ADVISORY BOARD. The Trustees may appoint from their
number an executive committee and other committees. Except as the Trustees may
otherwise determine, any such committee may make rules for conduct of its
business. The Trustees may appoint an advisory board to consist of not less
than two nor more than five members. The members of the advisory board shall be
compensated in such manner as the Trustees may determine and shall confer with
and advise the Trustees regarding the investments and other affairs of the
Trust. Each member of the advisory board shall hold office until the first
meeting of the Trustees following the next annual meeting of the shareholders
and until his successor is elected and qualified, or until he sooner dies,
resigns, is removed, or becomes disqualified, or until the advisory board is
sooner abolished by the Trustees.
3.2 REGULAR MEETINGS. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from time to
time determine, provided that notice of the first regular meeting following any
such determination shall be given to absent Trustees. A regular meeting of the
Trustees may be held without call or notice immediately after and at the same
place as the annual meeting of the shareholders.
3.3 SPECIAL MEETINGS. Special meetings of the Trustees may be held at any
time and at any place designated in the call of the meetings, when called by the
Chairman of the Board, the president or the treasurer or by two or more
Trustees, sufficient notice thereof being given to each Trustee by the secretary
or an assistant secretary or by the officer or one of the Trustees calling the
meeting.
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<PAGE>
3.4 NOTICE. It shall be sufficient notice to a Trustee to send notice by
mail at least forty-eight hours or by telegram at least twenty-four hours before
the meeting addressed to the Trustee at his or her usual or last known business
or residence address or to give notice to him or her in person or by telephone
at least twenty-four hours before the meeting. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him or her
before or after the meeting, is filed with the records of the meeting, or to any
Trustee who attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of a meeting nor
a waiver of a notice need specify the purposes of the meeting.
3.5 QUORUM. At any meeting of the Trustees one-third of the Trustees then in
office shall constitute a quorum; provided, however, a quorum shall not be less
than two. Any meeting may be adjourned from time to time by a majority of the
votes cast upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
SECTION 4. OFFICERS AND AGENTS
4.1 ENUMERATION; QUALIFICATION. The officers of the Trust shall be a
president, a treasurer, a secretary and such other officers, if any, as the
Trustees from time to time may in their discretion elect or appoint. The Trust
may also have such Agents, if any, as the Trustees from time to time may in
their discretion appoint. Any officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same person.
4.2 POWERS. Subject to the other provisions of these By-Laws, each officer
shall have, in addition to the duties and powers herein and in the Declaration
of Trust set forth, such duties and powers as are commonly incident to his or
her office as if the Trust were organized as a Massachusetts business
corporation and such other duties and powers as the Trustees may from time to
time designate.
4.3 ELECTION. The president, the treasurer and the secretary shall be
elected annually by the Trustees at their first meeting following the annual
meeting of the shareholders. Other officers, if any, may be elected or
appointed by the Trustees at said meeting or at any other time.
4.4 TENURE. The president, the treasurer and the secretary shall hold office
until the first meeting of Trustees following the next annual meeting of the
shareholders and until their respective successors are chosen and qualified, or
in each case until he or she sooner dies, resigns, is removed or becomes
disqualified. Each agent shall retain his or her authority at the pleasure of
the Trustees.
4.5 PRESIDENT AND VICE PRESIDENTS. The president shall be the chief
executive officer of the Trust. The president shall, subject to the control of
the Trustees, have general charge and supervision of the business of the Trust.
Any vice president shall have such duties and powers as shall be designated from
time to time by the Trustees.
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<PAGE>
4.6 CHAIRMAN OF THE BOARD. If a Chairman of the Board of Trustees is
elected, he shall have the duties and powers specified in these By-Laws and,
except as the Trustees shall otherwise determine, preside at all meetings of the
shareholders and of the Trustees at which he or she is present and have such
other duties and powers as may be determined by the Trustees.
4.7 TREASURER AND CONTROLLER. The treasurer shall be the chief financial
officer of the Trust and subject to any arrangement made by the Trustees with a
bank or trust company or other organization as custodian or transfer or
shareholder services agent, shall be in charge of its valuable papers and shall
have such other duties and powers as may be designated from time to time by the
Trustees or by the president. If at any time there shall be no controller, the
treasurer shall also be the chief accounting officer of the Trust and shall have
the duties and powers prescribed herein for the controller. Any assistant
treasurer shall have such duties and powers as shall be designated from time to
time by the Trustees.
The controller, if any be elected, shall be the chief accounting officer of the
Trust and shall be in charge of its books of account and accounting records.
The controller shall be responsible for preparation of financial statements of
the Trust and shall have such other duties and powers as may be designated from
time to time by the Trustees or the president.
4.8 SECRETARY AND ASSISTANT SECRETARIES. The secretary shall record all
proceedings of the shareholders and the Trustees in books to be kept therefor,
which books shall be kept at the principal office of the Trust. In the absence
of the secretary from any meeting of shareholders or Trustees, an assistant
secretary, or if there be none or he or she is absent, a temporary clerk chosen
at the meeting shall record the proceedings thereof in the aforesaid books.
SECTION 5. RESIGNATION AND REMOVALS
Any Trustee, officer or advisory board member may resign at any time by
delivering his or her resignation in writing to the Chairman of the Board, the
president, the treasurer or the secretary or to a meeting of the Trustees. The
Trustees may remove any officer elected by them with or without cause by a vote
of a majority of the Trustees then in office. Except to the extent expressly
provided in a written agreement with the Trust, no Trustee, officer, or advisory
board member resigning, and no officer or advisory board member removed shall
have any right to any compensation for any period following his or her
resignation or removal, or any right to damages on account of such removal.
SECTION 6. VACANCIES
A vacancy in any office may be filled at any time. Each successor shall hold
office for the unexpired term, and in the case of the president, the treasurer
and the secretary, until his or her successor is chosen and qualified, or in
each case until he or she sooner dies, resigns, is removed or becomes
disqualified.
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<PAGE>
SECTION 7. SHARES
7.1 SHARE CERTIFICATES. No certificates certifying the ownership of shares
shall be issued except as the Trustees may otherwise authorize. In the event
that the Trustees authorize the issuance of share certificates, subject to the
provisions of Section 7.3, each shareholder shall be entitled to a certificate
stating the number of shares owned by him or her, in such form as shall be
prescribed from time to time by the Trustees. Such certificate shall be signed
by the president or a vice president and by the treasurer or an assistant
treasurer. Such signatures may be facsimiles if the certificate is signed by a
transfer or shareholder services agent or by a registrar, other than a Trustee,
officer or employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the Trust
with the same effect as if he or she were such officer at the time of its issue.
In lieu of issuing certificates for shares, the Trustees or the transfer or
shareholder services agent may either issue receipts therefor or may keep
accounts upon the books of the Trust for the record holders of such shares, who
shall in either case be deemed, for all purposes hereunder, to be the holders of
certificates for such shares as if they had accepted such certificates and shall
be held to have expressly assented and agreed to the terms hereof.
7.2 LOSS OF CERTIFICATES. In the case of the alleged loss or destruction or
the mutilation of a share certificate, a duplicate certificate may be issued in
place thereof, upon such terms as the Trustees may prescribe.
7.3 DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Trustees may at any time
discontinue the issuance of share certificates and may, by written notice to
each shareholder, require the surrender of share certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the ownership of
shares in the Trust.
SECTION 8. RECORD DATE
The Trustees may fix in advance a time, which shall not be more than 60 days
before the date of any meeting of shareholders or the date for the payment of
any dividend or making of any other distribution to shareholders, as the record
date for determining the shareholders having the right to notice and to vote at
such meeting and any adjournment thereof or the right to receive such dividend
or distribution, and in such case only shareholders of record on such record
date shall have such right, notwithstanding any transfer of shares on the books
of the Trust after the record date.
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<PAGE>
SECTION 9. SEAL
The seal of the Trust shall, subject to alteration by the Trustees, consist of a
flat-faced circular die with the word "Massachusetts", together with the name of
the Trust and the year of its organization, cut or engraved thereon; but, unless
otherwise required by the Trustees, the seal shall not be necessary to be placed
on, and its absence shall not impair the validity of, any document, instrument
or other paper executed and delivered by or on behalf of the Trust.
SECTION 10. EXECUTION OF PAPERS
Except as the Trustees may generally or in particular cases authorize the
execution thereof in some other manner, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts and other obligations made, accepted or endorsed by
the Trust shall be signed, and any transfers of securities standing in the name
of the Trust shall be executed, by the president or by one of the vice
presidents or by the treasurer or by whomsoever else shall be designated for
that purpose by the vote of the Trustees and need not bear the seal of the
Trust.
SECTION 11. FISCAL YEAR
The fiscal year of the Trust shall end on such date in each year as the Trustees
shall from time to time determine.
SECTION 12. PROVISIONS RELATING TO THE
CONDUCT OF THE TRUST'S BUSINESS
12.1 DEALINGS WITH AFFILIATES. No officer, Trustee or agent of the Trust and
no officer, director or agent of any investment advisor shall deal for or on
behalf of the Trust with himself as principal or agent, or with any partnership,
association or corporation in which he has a material financial interest;
provided that the foregoing provisions shall not prevent (a) officers and
Trustees of the Trust from buying, holding or selling shares in the Trust, or
from being partners, officers or directors of or financially interested in any
investment advisor to the Trust or in any corporation, firm or association which
may at any time have a distributor's or principal underwriter's contract with
the Trust; (b) purchases or sales of securities or other property if such
transaction is permitted by or is exempt or exempted from the provisions of the
Investment Company Act of 1940 or any Rule or Regulation thereunder and if such
transaction does not involve any commission or profit to any security dealer who
is, or one or more of whose partners, shareholders, officers or directors is, an
officer or Trustees of the Trust or an officer or director of the investment
advisor, manager or principal underwriter of the Trust; (c) employment of legal
counsel, registrar, transfer agent, shareholder services, dividend disbursing
agent or custodian who is, or has a partner, stockholder, officer or director
who is, an officer or Trustee of the Trust; (d) sharing statistical, research
and management expenses, including
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<PAGE>
office hire and services, with any other company in which an officer or Trustee
of the Trust is an officer or director or financially interested.
12.2 DEALING IN SECURITIES OF THE TRUST. The Trust, the investment advisor,
any corporation, firm or association which may at any time have an exclusive
distributor's or principal underwriter's contract with the Trust (the
"distributor") and the officers and Trustees of the Trust and officers and
directors of every investment advisor and distributor, shall not take long or
short positions in the securities of the Trust, except that:
(a) the distributor may place orders with the Trust for its shares
equivalent to orders received by the distributor;
(b) shares of the Trust may be purchased at not less than net asset
value for investment by the investment advisor and by officers and
directors of the distributor, investment advisor, or the Trust and by any
trust, pension, profit-sharing or other benefit plan for such persons, no
such purchase to be in contravention of any applicable state or federal
requirement.
12.3 LIMITATION ON CERTAIN LOANS. The Trust shall not make loans to any
officer, Trustee or employee of the Trust or any investment advisor or
distributor or their respective officers, directors or partners or employees.
12.4 CUSTODIAN. All securities and cash owned by the Trust shall be
maintained in the custody of one or more banks or trust companies having
(according to its last published report) not less than two million dollars
($2,000,000) aggregate capital, surplus and undivided profits (any such bank or
trust company is hereinafter referred to as the "custodian"); provided, however,
the custodian may deliver securities as collateral on borrowings effected by the
Trust, provided, that such delivery shall be conditioned upon receipt of the
borrowed funds by the custodian except where additional collateral is being
pledged on an outstanding loan and the custodian may deliver securities lent by
the Trust against receipt of initial collateral specified by the Trust. Subject
to such rules, regulations and orders, if any, as the Securities and Exchange
Commission may adopt, the Trust may, or may permit any custodian to, deposit all
or any part of the securities owned by the Trust in a system for the central
handling of securities operated by the Federal Reserve Banks, or established by
a national securities exchange or national securities association registered
with said Commission under the Securities Exchange Act of 1934, or such other
person as may be permitted by said Commission, pursuant to which system all
securities of any particular class or series of any issue deposited with the
system are treated as fungible and may be transferred or pledged by bookkeeping
entry, without physical delivery of such securities.
The Trust shall upon the resignation or inability to serve of its custodian or
upon change of the custodian:
(a) in the case of such resignation or inability to serve use its
best efforts to obtain a successor custodian;
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<PAGE>
(b) require that the case and securities owned by this corporation be
delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit to
the shareholders, before permitting delivery of the case and securities
owned by this Trust otherwise than to a successor custodian, the question
whether or not this Trust shall be liquidated or shall function without a
custodian.
12.5 REPORTS TO SHAREHOLDERS; DISTRIBUTIONS FROM REALIZED GAINS. The Trust
shall send to each shareholder of record at least annually a statement of the
condition of the Trust and of the results of its operation, containing all
information required by applicable laws or regulations.
SECTION 13. AMENDMENTS
These By-Laws may be amended or repealed, in whole or in part, by a majority of
the Trustees then in office at any meeting of the Trustees, or by one or more
writings signed by such majority.
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<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 12th day of April, 1989, by and between SEI Tax Exempt
Trust, a Massachusetts business trust (the "Trust"), and Weiss, Peck & Greer
Advisers, Inc., a Delaware Corporation (the "Adviser").
WHEREAS, the Trust Is an open-end, diversified management investment company
registered under the Investment Company Act of 1940, as amended, consisting of
several series of shares, each having its own investment policies; and
WHEREAS, the Trust has retained SEI financial Management Corporation (the
"Manager") to provide administration of the Trust's operations, subject to the
control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment management
services with respect to its Intermediate-Term Municipal Portfolio and such
other portfolios as the Trust and the Adviser may agree upon (the "Portfolios")
and the Adviser is willing to render such services;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
l. Duties of Adviser. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold or
exchanged and what portion, if any, of the assets of the Portfolios
shall be held uninvested and on behalf of the portfolios, to make
changes in investments, to provide the manager and the Trust with
records concerning the Adviser's activities which the Trust is
required to maintain, and to render regular reports to the Manager and
to the Trust's officers and Trustees concerning the Adviser's
discharge of the foregoing responsibilities. The Adviser shall
discharge the foregoing responsibilities subject to the control of the
officers and the Trustees of the Trust and in compliance with such
policies as the Trustees may from time to time establish, and
incompliance with the objectives, policies, and limitations for each
such Portfolio set forth in the Trust's prospectus from time to time,
and applicable laws and regulations. The Adviser accepts such
employment and agrees, at its own expense, to render services and to
provide office space, furnishings and equipment and the personnel
required by it to perform the services on the terms and for the
compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers and dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use its
best efforts to obtain the best net results as described in the
Trust's prospectus from time to time. The Adviser will promptly
<PAGE>
communicate to the Manager and to the officers and the Trustees of the
Trust such information relating to portfolio transactions as they may
reasonably request.
3. COMPENSATION OF THE ADVISER. for the services to be rendered by
the Adviser as provided in Sections l and 2 of this Agreement, the
Trust shall pay to the Adviser compensation at the rate specified In
the schedule(s) which are attached hereto and made a part of this
Agreement. Such compensation shall be paid to the Adviser at the end
of each month, and calculated by applying a daily rate, based on the
annual percentage rates as specified in the attached Schedule(s) to
the assets. The fee shall be based on the average daily net assets
for the month involved.
4. OTHER SERVICES. At the request of the Trust or the manager, the
Adviser in its discretion may make available to the Trust office
facilities, equipment, personnel, and other services. Such office
facilities, equipment, personnel and services shall be provided for or
rendered by the Adviser and billed to the Trust or the Manager at the
Adviser's cost.
5. REPORTS. The Trust and the Adviser agree to furnish to each
other, if applicable, current prospectuses, proxy statements, reports
to shareholders, certified copies of their financial statements, and
such other information with regard to their affairs as each may
reasonably request.
6. STATUS OF ADVISER. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser shall be free to render
similar services to others so long as its services to the Trust are
not impaired thereby. The Adviser shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
7. CERTAIN RECORDS. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule 3la-2
promulgated under the Investment Company Act of 1940 which are
prepared or maintained by the Adviser on behalf of the Trust are the
property of the Trust and will be surrendered promptly to the Trust on
request.
8. LIABILITY OF ADVISER. The Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the
Manager, the Trust, or any portfolio in connection with the matters to
which this Agreement relates, provided however that no provision of
this Agreement shall be deemed to protect the Adviser against any
liability to the Trust or its shareholders to which it might otherwise
be subject by willful misfeasance, bad faith or gross negligence in
the
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<PAGE>
performance of its duties or reckless disregard of its obligations under
this Agreement.
9. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the
Trust are or may be interested In the Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and shareholders of
the Adviser are or may be interested in the Trust as Trustees,
shareholders or otherwise; and the Adviser (or any successor) thereof
is or may be interested in the Trust as a shareholder or otherwise.
10. DURATION AND TERMINATION. This Agreement, unless sooner
terminated as provided herein, shall continue for two years after its
initial approval as to each Portfolio and thereafter, for periods of
one year so long as such continuance thereafter is specifically
approved at least annually (a) by the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or
Interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided, however, that if the
shareholders of any Portfolio fail to approve the Agreement as
provided herein, the Adviser may continue to serve hereunder in the
manner and to the extent permitted by the Investment Company Act of
1940 and the rules and regulations thereunder. The foregoing
requirement that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent
with the investment Company Act of 1940 and the rules and regulations
thereunder. This Agreement may be terminated as to any Portfolio at
any time, without the payment of any penalty by vote of a majority of
the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered, or
mailed postpaid, to the other party at the following address:
To the Trust: c/o SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087-1658
To the Adviser: One New York Plaza
New York, NY 10004-19
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<PAGE>
As used in this Section 10, the terms "assignment," "interested
persons," and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the
Investment Company Act of 1940 and the rules and regulations
thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
11. SEVERABILITY. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
The Commonwealth of Massachusetts, and notice is hereby given that this
Instrument is executed on behalf of the Trustees of the Trust as Trustees, and
are not binding upon any of the Trustees, officers, or shareholders of the Trust
Individually but binding only upon the assets and property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
WEISS, PECK & GREER ADVISERS, INC. SEI TAX EXEMPT TRUST
By: signed-signature illegible By: /s/ Sandra M. Krauss
----------------------------- ----------------------------
Its: Vice President Its: Vice President
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<PAGE>
Schedule A
Fee Schedule - SEI Tax Exempt Trust
Intermediate-Term Municipal Portfolio
Net Asset Value Annual Fee
- --------------------------------------------------------------------------------
Up to $ 150,000,000 .18%
Over 150,000,000 .16%
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<PAGE>
SCHEDULE B*
FEE SCHEDULE - SEI TAX EXEMPT TRUST
INSTITUTIONAL TAX FREE PORTFOLIO
Net Asset Value Annual Fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Up to $500,000,000 .05%
Next $500,000,000 .04%
Over $1,000,000,000 .03%
*Notwithstanding any other provision in Paragraph 10 (Duration and Termination)
of this Agreement, this Agreement shall terminate automatically (with respect
to the institutional Tax Free Portfolio) without penalty 120 days after its
initial effective date unless approved by the majority of the outstanding voting
securities of the Portfolio.
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<PAGE>
SCHEDULE C*
FEE SCHEDULE - SEI TAX EXEMPT TRUST
PENNSYLVANIA TAX FREE PORTFOLIO
Net Asset Value Annual Fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Up to $500,000,000 .05%
Next $500,000,000
Over $1,000,000,000 .03%
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<PAGE>
SCHEDULE D*
FEE SCHEDULE - SEI TAX EXEMPT TRUST
CALIFORNIA TAX EXEMPT PORTFOLIO
Net Asset Value Annual Fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Up to $500,000,000 .05%
Next $500,000,000 .04%
Over $1,000,000,000 .03%
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<PAGE>
SCHEDULE E
FEE SCHEDULE - SEI TAX EXEMPT TRUST
BAINBRIDGE PORTFOLIO
AUGUST 5, 1992
Net Assets Annual Fee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Up to $500 million .05%
$500 million to $1 billion .04%
Over $1 billion .03%
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<PAGE>
SCHEDULE F
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SEI TAX EXEMPT TRUST
AND
WEISS, PECK & GREER ADVISERS, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Institutional Tax Free Portfolio
Pennsylvania Tax Free Portfolio
California Tax Exempt Portfolio
Bainbridge Portfolio
Net Asset Value Annual Fee
- --------------- ----------
Up to $500,000,000 .05%
Next $500,000,000 .04%
Over $1,000,000,000 .03%
The fees for the Institutional Tax Free Portfolio, Pennsylvania Tax Free
Portfolio, California Tax Exempt Portfolio and the Bainbridge Portfolio shall be
calculated by aggregating the assets of the four portfolios, applying the above
fee schedule and then allocating the fee to each of those portfolios based upon
their relative net assets.
This fee schedule dated December 10, 1993 replaces Schedules B, C, D and E of
this Agreement.
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<PAGE>
SCHEDULE G
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SEI TAX EXEMPT TRUST
AND
WEISS, PECK & GREER ADVISERS, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Intermediate-Term Municipal Portfolio
California Intermediate-Term Municipal Portfolio
New York Intermediate-Term Municipal Portfolio
Net Asset Value Annual Fee
- --------------- ----------
Up to $150,000,000 .18%
Over $150,000,000 .16%
The fees for the Intermediate-Term Municipal Portfolio, California
Intermediate-Term Municipal Portfolio and the New York Intermediate-Term
Municipal Portfolio shall be calculated by aggregating the assets of the four
portfolios, applying the above fee schedule and then allocating the fee to each
of those portfolios based upon their relative net assets.
This fee schedule dated December 10, 1993 replaces Schedule A of this Agreement.
<PAGE>
SCHEDULE H
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SEI TAX EXEMPT TRUST
AND
WEISS, PECK & GREER ADVISERS, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Institutional Tax Free Portfolio
Pennsylvania Tax Free Portfolio
California Tax Exempt Portfolio
Bainbridge Portfolio
Tax Free Portfolio
Net Asset Value Annual Fee
- --------------- ----------
Up to $500,000,000 .05%
Next $500,000,000 .04%
Over $1,000,000,000 .03%
The fees for the Institutional Tax Free Portfolio, Pennsylvania Tax Free
Portfolio, California Tax Exempt Portfolio, Bainbridge Portfolio and the Tax
Free Portfolio shall be calculated by aggregating the assets of the five
portfolios, applying the above fee schedule and then allocating the fee to each
of the portfolios based upon their relative net assets.
This fee schedule dated March 8, 1994 replaces Schedule F to this Agreement.
<PAGE>
INVESTMENT ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this 3rd day of July, 1995, by and between SEI Tax Exempt
Trust, a Massachusetts business trust, (the "Trust") and Morgan Grenfell Capital
Management Incorporated (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series of shares, each having its own
investment policies; and
WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Administrator") to provide administration of the Trust's operations, subject to
the control of the Board of Trustees; and
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the portfolio(s) listed in Schedule A to
this Agreement and such other portfolios as the Trust and the Adviser may agree
upon (the "Portfolios"), and the Adviser is willing to render such services;
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Trust employees the Adviser to manage the
investment and reinvestment of the assets, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to render
regular reports to the Administrator and to the Trust's Officers and
Trustees concerning the Adviser's discharge of the foregoing
responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the Board of Trustees of the Trust and in compliance with such
policies as the Trustees may from time to time establish, and in compliance
with the objectives, policies, and limitations for each such Portfolio set
forth in the Trust's prospectus and statement of additional information as
amended from time to time, and applicable laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on the
terms and for the compensation provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the brokers or
dealers that will execute the purchases and sales of portfolio securities
for the Portfolios and is directed to use its best efforts to obtain the
best net results as described in the Trust's prospectus and statement of
additional information from time to time. The Adviser will promptly
communicate to the Administrator and to the officers and the Trustees of
the Trust such information relating to portfolio transactions as they may
reasonably request.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust shall
pay to the Adviser compensation at the rate specified in Schedule A which
is attached hereto and made a part of this Agreement. Such com-
<PAGE>
pensation shall be paid to the Adviser at the end of each month, and
calculated by applying a daily rate, based on the annual percentage rates
as specified in Schedule A, to the assets. The fee shall be based on the
average daily net assets for the month involved.
All rights of compensation under this Agreement for services performed as
of the termination date shall survive the termination of this Agreement.
4. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
5. STATUS OF THE ADVISER. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not impaired
thereby. The Adviser shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
6. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under
the 1940 Act which are prepared or maintained by the Adviser on behalf of
the Trust are the property of the Trust and will be surrendered promptly to
the Trust on request.
7. LIMITATION OF LIABILITY OF THE ADVISER The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are
assumed by or may be assessed against the Adviser hereunder. The Adviser
shall not be liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance,
bad faith or gross negligence in the performance of its duties, or by
reasons of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby. (As used in this Section 7,
the term "Adviser" shall include directors, officer, employees and other
corporate agents of the Adviser as well as that corporation itself).
8. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust are
or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors,
partners, officers, agents, and shareholders of the Adviser are or may be
interested in the Trust as Trustees, shareholders or otherwise; and the
Adviser (or any successor) is or may be interested in the Trust as a
shareholder or otherwise. In addition, brokerage transactions for the
Trust may be effected through affiliates of the Adviser if approved by the
Board of Trustees, subject to the rules and regulations of the Securities
and Exchange Commission.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a) by
the vote of a majority of those Trustees of the Trust who are not parties
to this Agreement or interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by
the Trustees of the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided, however, that if the
shareholders of any Portfolio fail to approve the
-2-
<PAGE>
Agreement as provided herein, the Adviser may continue to serve hereunder
in the manner and to the extent permitted by the 1940 Act and rules and
regulations thereunder. The foregoing requirement that continuance of this
Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
This Agreement may be terminated as to any Portfolio at any time, without
the payment of any penalty by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Portfolio on not less than 30 days nor more than 60 days written notice to
the Adviser, or by the Adviser at any time without the payment of any
penalty, on 90 days written notice to the Trust. This Agreement will
automatically and immediately terminate in the event of its assignment.
Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at any office of such
party.
As used in this Section 9, the terms "assignment", "interested persons",
and a "vote of a majority of the outstanding voting securities" shall have
the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder; subject to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
10. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
11. NOTICE: Any notice required or permitted to be given by either party to the
other shall be deemed sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice to the other party at
the last address furnished by the other party to the party giving notice:
If to the Trust, at: 680 East Swedesford Road
Wayne, PA 19807
Attention: President
and if to the Adviser at: Morgan Grenfell Capital Management, Inc.
885 third Avenue, 32nd Floor
New York, NY 10022-4802
12. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, is not binding upon any of the Trustees, officers or shareholders of
the Trust individually but binding only upon the assets and property of the
Trust.
No portfolio of the Trust shall be liable for the obligations of any other
portfolio of the Trust. Without limiting the generality of the foregoing, the
Adviser shall look only to the assets of the Portfolios for payment of fees for
services rendered to the Portfolio.
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory
Agreement to be executed as of the day and year first above written.
SEI TAX EXEMPT TRUST MORGAN GRENFELL CAPITAL
MANAGEMENT INCORPORATED
By: /s/ Robert B. Carroll By: /s/ James E. Minnick
--------------------------- ---------------------------
Name: Robert B. Carroll Name: James E. Minnick
------------------------- -------------------------
Attest: /s/ Jennifer Klass Attest: /s/ Mark G. Arthus
----------------------- -----------------------
Name: Jennifer Klass Name: Mark G. Arthus
------------------------- -------------------------
-4-
<PAGE>
SCHEDULE A DATED JULY 3, 1995
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED JULY 3, 1995
BETWEEN
SEI TAX EXEMPT TRUST
AND
MORGAN GRENFELL CAPITAL MANAGEMENT INCORPORATED
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Pennsylvania Municipal Portfolio .20%
<PAGE>
INVESTMENT ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this 16th day of April, 1996, by and between SEI Tax Exempt
Trust, a Massachusetts business trust (the "Trust"), and SEI Financial
Management Corporation, (the "Adviser").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several portfolios of shares, each having its own investment
policies; and
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its Intermediate-Term Municipal Portfolio
and such other portfolios as the Trust and the Adviser may agree upon (the
"Portfolios"), and the Adviser is willing to render such services:
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Trust employs the Adviser to manage the
investment and reinvestment of the assets, to hire (subject to the approval
of the Trust's Board of Trustees and, except as otherwise permitted under
the terms of any exemptive relief obtained by the Adviser from the
Securities and Exchange Commission, or by rule or regulation, a majority of
the outstanding voting securities of any affected Portfolio(s)) and
thereafter supervise the investment activities of one or more sub-advisers
deemed necessary to carry out the investment program of any Portfolios of
the Trust, and to continuously review, supervise and (where appropriate)
administer the investment program of the Portfolios, to determine in its
discretion (where appropriate) the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to render
regular reports to the Administrator and to the Trust's officers and
Trustees concerning the Adviser's discharge of the foregoing
responsibilities. The retention of a sub-adviser by the Adviser shall not
relieve the adviser of its responsibilities under this Agreement.
The Adviser shall discharge the foregoing responsibilities subject to the
control of the Board of Trustees of the Trust and in compliance with such
policies as the Trustees may from time to time establish, and in compliance
with the objectives, policies, and limitations for each such Portfolio set
forth in the Trust's prospectus and statement of additional information, as
amended from time to time (referred to collectively as the "Prospectus"),
and applicable laws and regulations. The Trust will furnish the Adviser
from time to time with copies of all amendments or supplements to the
Prospectus, if any.
The Adviser accepts such employment and agrees, at its own expense to
render the services and to provide the office space, furnishings and
equipment and the personnel (including any sub-advisers) required by it to
perform the services on the terms and for the compensation
<PAGE>
provided herein. The Adviser will not, however, pay for the cost of
securities, commodities, and other investments (including brokerage
commissions and other transaction charges, if any) purchased or sold for
the Trust.
2. DELIVERY OF DOCUMENTS. The Trust has furnished the Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as presently in effect and as it shall from time to
time be amended, is herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio(s).
3. OTHER COVENANTS. The Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with other applicable law;
(b) will place orders pursuant to its investment determinations for the
Portfolios either directly with the issuer or with any broker or dealer.
In executing Portfolio transactions and selecting brokers or dealers, the
Adviser will use its best efforts to seek on behalf to he Portfolio the
best overall terms available. In assessing the best overall terms
available for any transaction, the Adviser shall consider all factors that
it deems relevant, including the breadth of the market in the security, the
price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker-dealer to
execute a particular transaction the Adviser may also consider the
brokerage and research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) provided to the
Portfolio and/or other accounts over which the Adviser or an affiliate of
the Adviser may exercise investment discretion. The Adviser is authorized,
subject to the prior approval of the Trust's Board of Trustees, to pay to a
broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for any of the Portfolios
which is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if, but only if, the
Adviser determines in good faith that such commission was reasonable in
relation to the value of the brokerage and research services provided by
such broker or dealer -- viewed in terms of that particular transaction or
terms of the overall responsibilities of the Adviser to the Portfolio. In
addition, the Adviser if authorized to
-2-
<PAGE>
allocate purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with the Adviser
or the Trust's principal underwriter)to take into account the sale of
shares of the Trust if the Adviser believest hat the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will any Portfolio's
securities be purchased from or sold to the Adviser, any sub-adviser
engaged with respect to that Portfolio, the Trust's principal underwriter,
or any affiliated person of either the Trust, the Adviser, and sub-adviser
or the principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange Commission
and the 1940 Act.
4. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust shall
pay to the Adviser compensation at the rate(s) specified in the Schedule(s)
which are attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Adviser at the end of each month, and
calculated by applying a daily rate, based on the annual percentage rates
as specified in the attached Schedule(s), to the assets of the Portfolio.
The fee shall be based on the average daily net assets for the month
involved. The Adviser may, in its discretion and from time to time, waive a
portion of its fee.
All rights of compensation under this Agreement for services performed as
of the termination date shall survive the termination of this Agreement.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but excluding
interest, taxes, brokerage costs, litigation, and other extraordinary
costs) as calculated every business day would exceed the expense
limitations imposed on investment companies by any applicable statute or
regulatory authority of any jurisdiction in which Shares are qualified for
offer and sale; the Adviser shall bear such excess cost.
However, the Adviser will not bear expenses of the Trust or any Portfolio
which would result in the Trust's inability to qualify as a regulated
investment company under provisions of the Internal Revenue Code. Payment
of expenses by the Adviser pursuant to this Section 5 shall be settled on a
monthly basis (subject to fiscal year end reconciliation) by a waiver of
the Adviser's fees provided for hereunder, and such waiver shall be treated
as a reduction in the purchase price of the Adviser's services.
6. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request. The Adviser further agrees to furnish to the Trust, if
applicable, the same such documents and information pertaining to any
sub-adviser as the Trust may reasonably request.
-3-
<PAGE>
7. STATUS OF THE ADVISER. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser shall be free to render similar
services to others so long as its services to the Trust are not impaired
thereby. The Adviser shall be deemed to be an independent contractor and
shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust. To the extent that the purchase or sale of securities
or other investments of any issuer may be deemed by the Adviser to be
suitable for two or more accounts managed by the Adviser, the available
securities or investments may be allocated in a manner believed by the
Adviser to be equitable to each account. It is recognized that in some
cases this may adversely affect the price paid or received by the Trust or
the size or position obtainable for or disposed by the Trust or any
Portfolio.
8. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under
the 1940 Act which are prepared or maintained by the Adviser (or any
sub-adviser) on behalf of the Trust are the property of the Trust and will
be surrendered promptly to the Trust on request. The Adviser further
agrees to preserve for the periods prescribed in Rule 31a-2 under the 1940
Act the records required to be maintained under Rule 31a-1 under the 1940
Act.
9. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser shall be
confined to those expressly set forth herein, and no implied duties are
assumed by or may be asserted against the Adviser hereunder. The Adviser
shall not be liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance,
bat faith or gross negligence in the performance of its duties, or by
reason of reckless disregard of its obligations and duties hereunder,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby. (As used in this Section 9,
the term "Adviser" shall include directors, officers, employees and other
corporate agents of the Adviser as well as that corporation itself).
10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust are
or may be interests in the Adviser (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise; directors, partners,
officers, agents, and shareholders of the Adviser are or may be interested
in the Trust as Trustees, officers, shareholders or otherwise; and the
Adviser (or any successor) is or may be interested int he trust as a
shareholder or otherwise subject to the provisions of applicable law. All
such interests shall be fully disclosed between the parties on an ongoing
basis and in the Trust's Prospectus as required by law. In addition,
brokerage transactions for the Trust may be effected through affiliates of
the Adviser or any sub-adviser if approved by the Board of Trustees,
subject to the rules and regulations of the Securities and Exchange
Commission.
11. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one
-4-
<PAGE>
year so long as such continuance thereafter is specifically approved at
least annually (a) by the vote of a majority of those Trustees of the Trust
who are not parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a majority of
the outstanding voting securities of each Portfolio; provided, however,
that if the shareholders of any Portfolio fail to approve the Agreement as
provided herein, the Adviser may continue to serve hereunder in the manner
and to the extent permitted by the 1940 Act and rules and regulations
thereunder. The foregoing requirement that continuance of this Agreement
be "specifically approved at least annually" shall be construed in a manner
consistent with the 1940 Act and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time, without
the payment of any penalty by vote of a majority of the Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the
Portfolio on not less than 30 days nor more than 60 days written notice to
the Adviser, or by the Adviser at any time without payment of any penalty,
on 90 days written notice to the Trust. This Agreement will automatically
and immediately terminate in the event of its assignment.
As used in this Section 11, the terms "assignment", "interested persons",
and a "vote of a majority of the outstanding voting securities" shall have
the respective meanings set forth in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
12. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however that nothing herein shall be construed as
being inconsistent with the 1940 Act.
13. NOTICE. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party.
To the Adviser at: SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attn: Legal Department
To the Trust at: SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attn: Legal Department
-5-
<PAGE>
14. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statue, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees, and
is not binding upon any of the Trustees, officers, or shareholders of the Trust
individually but binding only upon the assets and property of the Trust.
No Portfolio of the Trust shall be liable for the obligations of any other
Portfolio of the Trust. Without limiting the generality of the foregoing, the
Adviser shall look only to the assets of a particular Portfolio for payment of
fees for services rendered to that Portfolio.
Where the effect of a requirement of the 1940 Act reflected in any provision of
this Agreement is altered by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
SEI Tax Exempt Trust SEI Financial Management Corporation
By: /S/ KEVIN ROBINS By: /S/ TODD CIPPERMAN
------------------------------ ---------------------------------
Attest: /S/ JENNIFER L. KLASS Attest: /S/ KEVIN ROBINS
-------------------------- -----------------------------
-6-
<PAGE>
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SEI TAX EXEMPT TRUST
AND
SEI FINANCIAL MANAGEMENT CORPORATION
Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual
rate as follows:
Intermediate-Term Municipal Portfolio .33%
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI TAX EXEMPT TRUST
AGREEMENT made this 16th day of April, 1996, between SEI Financial
Management Corporation, (the "Adviser") and Standish, Ayer & Wood, Inc. (the
"Sub-Adviser").
WHEREAS, SEI Tax Exempt Trust, a Massachusetts business trust (the "Trust")
is registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated April 16, 1996 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Intermediate-Term
Municipal Portfolio (the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the
direction of the Adviser, determine from time to time what Assets will
be purchased, retained or sold by the Portfolio, and what portion of
the Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement,
the Sub-Adviser shall act in conformity with the Trust's Declaration
of Trust (as defined herein) and the Prospectus and with the written
instructions and directions of the Adviser and of the Board of
Trustees of the Trust delivered to the Sub-Adviser and will conform to
and comply with the applicable requirements of the 1940 Act,
Subchapter M of the Internal Revenue Code of 1986, and all other
applicable federal and state laws and regulations, as each is amended
from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by
the Portfolio as provided in subparagraph (a) and will place orders
with or through such persons, brokers or dealers to carry out the
policy with respect to brokerage set forth in the Portfolio's
Prospectus delivered to the Sub-Adviser or as the Board of Trustees or
the Adviser may in writing direct from time to time, in conformity
with federal securities laws. In executing Portfolio transactions and
selecting brokers or dealers, the Sub-Adviser will use its best
efforts to seek on behalf of the Portfolio the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors
<PAGE>
that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness
of the commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available, and
in selecting the broker-dealer to execute a particular transaction,
the Sub-Adviser may also consider the brokerage and research services
provided (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934). Consistent with the policies of the
Trust, as disclosed in the Prospectus, the Sub-Adviser is authorized
to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if,
but only if, the Sub-Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer -- viewed in
terms of that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to its discretionary clients,
including the Portfolio. In addition, the Sub-Adviser is authorized
to allocate purchase and sale orders for securities to brokers or
dealers (including brokers and dealers that are affiliated with the
Adviser, Sub-Adviser or the Trust's principal underwriter) to take
into account the sale of shares of the Trust if the Sub-Adviser
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no
instance, however, will the Portfolio's Assets be purchased from or
sold to the Adviser, Sub-Adviser, the Trust's principal underwriter or
any affiliated person of either the Trust, Adviser, the Sub-Adviser or
the principal underwriter, acting as principal in the transaction,
except to the extent permitted by the Securities and Exchange
Commission ("SEC"), the Investment Advisers Act of 1940, as amended,
and the 1940 Act, and the rules and regulations thereunder.
On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
clients, the Sub-Adviser, to the extent permitted by applicable laws
and regulations, may aggregate the securities to be sold or purchased
in order to obtain the best execution and/or a lower brokerage
commission, if any. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Sub-Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary
obligations to the Portfolio and to such clients.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the
1940 Act. The Sub-Adviser shall provide to the Adviser or the Board
of Trustees such periodic and special reports, balance sheets or
financial information, and such other information with regard to its
affairs as the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the
Assets required to be maintained by the Sub-Adviser under this
Agreement and shall timely furnish to the Adviser all information
relating to the Sub-Adviser's services under this Agreement needed by
the Adviser to keep the other books and records of the Portfolio
required by Rule 31a-1 under the 1940 Act. The Sub-Adviser shall also
furnish to the Adviser any
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<PAGE>
other information within the possession or control of the Sub-Adviser
relating to the Assets that is required to be filed by the Adviser or
the Trust with the SEC or sent to shareholders under the 1940 Act
(including the rules adopted thereunder or any exemptive or other
relief that the Adviser or the Trust obtains from the SEC). The
Sub-Adviser agrees that all records that it maintains on behalf of the
Portfolio are property of the Portfolio and the Sub-Adviser will
surrender promptly to the Portfolio any of such records upon the
Portfolio's request; provided, however, that the Sub-Adviser may
retain a copy of such records. In addition, for the duration of this
Agreement, the Sub-Adviser shall preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any such records as are required to
be maintained by it pursuant to this Agreement, and shall transfer
said records to any successor sub-adviser upon the termination of this
Agreement (or, if there is no successor sub-advisor, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each
business day with information relating to all transactions concerning
the Portfolio's Assets and shall provide the Adviser with such
information upon request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under
this Agreement are not to be deemed exclusive and the Sub-Adviser
shall be free to render similar services to others, as long as such
services to not impair the services rendered to the Adviser or the
Trust. In addition, nothing in this agreement will in any way
restrict the Sub-Adviser, its officers, Directors or employees from
trading in securities for its or their own accounts as permitted by
the 1940 Act and the Sub-Adviser's Code of Ethics, provided that the
Sub-Adviser's Code of Ethics materially complies with the then current
Code of Ethics recommendations of the Investment Company Institute.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to
fulfill its commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
Assets. The Adviser shall instruct the custodian and other parties
providing services to the Portfolio to forward promptly all such
proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's directors, officers or
employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the written instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, Subchapter M of the Internal Revenue Code of 1986, and all other
applicable federal and state laws and regulations, as each is amended from
time to time.
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<PAGE>
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) the Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such
Agreement and Declaration of Trust, as in effect on the date of this
Agreement and as amended from time to time, herein called the
"Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, herein called the
"By-Laws");
(c) the Prospectus;
(d) any order issued by the SEC or other regulatory authority applicable
to the Trust, the Portfolio or the Adviser; and
(e) any other written instructions, directions or policies of the Adviser
or the Trust's board of Trustees applicable to the Sub-Adviser's
duties hereunder.
The Adviser will promptly furnish to the Sub-Adviser any and all amendments or
other changes to the documents specified in this Section 3, and the Sub-Adviser
shall not be charged with complying with any such document or amendment not so
delivered to the Sub-Adviser, unless the Sub-Adviser reasonably should have
known the terms of such document or amendment.
4. COMPENSATION TO THE SUB-ADVISER; EXPENSES. For the services to be provided
by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accepts as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser's management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
The Sub-Adviser shall be responsible for its own expenses in performing its
duties hereunder but shall not be responsible for the expenses of the Trust
or the Portfolio. Without limiting the generality of the foregoing, the
Sub-Adviser shall not be responsible for brokerage commissions, transfer
taxes or fees or custody fees of the Portfolio.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorneys' fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
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<PAGE>
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorneys' fees and other related expenses) howsoever arising
from or in connection with the performance of the Sub-Adviser's obligations
under this Agreement; provided, however, that the Sub-Adviser's obligation
under this Section 5 shall be reduced to the extent that the claim against,
or the loss, liability or damage experienced by the Adviser, is caused by
or is otherwise directly related to the Adviser's own willful misfeasance,
bad faith or negligence, or to the reckless disregard of its duties under
this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. This Agreement shall
continue in effect for a period of more than two years from the date hereof
only so long as continuance is specifically approved at least annually in
conformance with the 1940 Act; provided, however, that this Agreement may
be terminated with respect to the Portfolio (a) by the Portfolio at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio. (b) by the Adviser at any
time, without the payment of any penalty, on no more than 60 days' nor less
than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice
to the Adviser. This Agreement shall terminate automatically and
immediately in the event of its assignment, or in the event of a
termination of the Adviser's agreement with the Trust. As used in this
Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this Agreement
shall be deemed sufficient if delivered or mailed by registered, certified
or overnight mail, postage prepaid, addressed by the party giving notice to
the other party at the last address furnished by the other party:
To the Adviser at: SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19807
Attention: Legal Department
To the Sub-Adviser at: Standish, Ayer & Wood, Inc.
One Financial Center, Suite 26
Boston, MA 02111
Attention: President
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<PAGE>
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
11. MISCELLANEOUS.
(a) A copy of the Declaration of Trust is on file with the Secretary of
State of the Commonwealth of Massachusetts, and notice is hereby given
that the obligations of this instrument are not binding personally
upon any of the Trustees, officers or shareholders of the Portfolio or
the Trust.
(b) Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order
of the SEC, whether of special or general application, such provision
shall be deemed to incorporate the effects of such rule, regulation or
order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
SEI Financial Management Corporation Standish, Ayer & Wood, Inc.
By: /s/ Todd Cipperman By: /s/ David W. Murray
------------------------------- -------------------------------
Name: Todd Cipperman Name: David W. Murray
----------------------------- ----------------------------
Title: Vice President Title: Treasurer
----------------------------- ---------------------------
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<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
STANDISH, AYER & WOOD, INC.
Pursuant to Section 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Intermediate-Term Municipal Portfolio .18% on the first $125 million
.15% over $125 million
0
<PAGE>
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this 3rd day of December , 1982, between
TrustFunds Tax Exempt Trust, a Massachusetts business trust ("Trust"), and SEI
Financial Services Company, a Pennsylvania corporation ("Distributor").
NOW THEREFORE, in consideration of the mutual covenants hereinafter
contained, the Trust and Distributor hereby agree as follows:
1. SALE OF UNITS. The Trust grants to the Distributor the right to sell
units of the Trust, as agent and on behalf of the Trust, during the term of this
Agreement and subject to the registration requirements of the Securities Act of
1933, as amended (the "Act"), and of the laws governing the sale of securities
in the various states ("Blue Sky laws").
2. SALE OF UNITS BY THE TRUST. The rights granted to the Distributor
shall be nonexclusive, and the Trust reserves the right to sell its units
directly to investors on applications received and processed by the Trust's
Transfer Agent.
3. SOLICITATION OF SALES In consideration of these rights granted to
the Distributor, the Distributor agrees to use all reasonable efforts,
consistent with its other business, to obtain purchasers for shares of the
Trust, provided, however, that the Distributor shall not be prevented from
entering into like arrangements with other issuers. The provisions of this
paragraph do not obligate the Distributor to register as a broker or dealer
under the Blue Sky laws of any jurisdiction which it determines would be
unreasonable to do so or to maintain its registration in any jurisdiction in
which it is now registered.
<PAGE>
4. AUTHORIZED REPRESENTATIONS. The Distributor is not authorized by the
Trust to give any information or to make any representations other than those
contained in the appropriate registration statements or prospectuses filed
with the Securities and Exchange Commission under the Act (as these
registration statements and prospectuses may be amended from time to time), or
contained in unitholder reports or other material that may be prepared by or on
behalf of the Trust for the Distributor's use. The Distributor may prepare and
distribute sales literature and any material as it may deem appropriate,
provided it has been cleared with the Trust.
5. PORTFOLIO SECURITIES. Portfolio securities of the Trust may not be
bought or sold by or through the Distributor.
6. REGISTRATION OF SHARES. The Trust agrees that it will take all action
necessary to register shares under the Act so that there will be available for
sale the number of units the Distributor may reasonably be expected to sell.
The Trust shall make available to the Distributor such number of copies of its
currently effective prospectus as the Distributor may reasonably request. The
Trust shall furnish to the Distributor copies of all information, financial
statements and other papers which the Distributor may reasonably request for use
in connection with the distribution of units of the Trust.
7. EXPENSES. The Trust shall pay all fees and expenses (a) in connection
with the preparation, setting in type and filing of any registration statement
and prospectus under the 1933 Act and amendments for the issue of its units,
(b) of preparing, setting in type, printing and mailing any report or other
communication to unitholders of the Trust in their capacity as such, and (c) of
preparing, setting in type, printing and mailing prospectuses sent annually to
existing unitholders. To the extent provided in the Trust's annual budget under
its Distribution Plan, the
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<PAGE>
Trust shall reimburse the Distributor for (i) costs of prospectuses, reports to
unitholders, sales literature and other materials for potential investors, (ii)
costs of complying with state and foreign securities laws pertaining to the
distribution of units, (iii) advertising, and (iv) expenses incurred in selling
units. To the extent not so provided, the Distributor shall pay expenses of (x)
any supplemental sales literature used by the Distributor in connection with
such offering, and (y) advertising in connection with such offering.
8. INDEMNIFICATION. The Trust agrees to indemnify and hold harmless the
Distributor and each of its directors and officers and each person, if any, who
controls the Distributor within the meaning of Section 15 of the Act against any
loss, liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages, or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any shares, based upon the ground that the
registration statement, prospectus, unitholder reports or other information
filed or made public by the Trust (as from time to time amended), included an
untrue statement of a material fact or omitted to state a material fact required
to be stated or necessary in order to make the statements not misleading.
However, the Trust does not agree to indemnify the Distributor or hold it
harmless to the extent that the statement or omission was made in reliance upon,
and in conformity with, information furnished to the Trust by or on behalf of
the Distributor. In no case (i) is the indemnity of the Trust in favor of the
Distributor or any person indemnified to be deemed to protect the Distributor or
any person against any liability to the Trust or its unitholders to which the
Distributor or such person would otherwise be subject by reason of wilful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its reckless disregard of its
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<PAGE>
obligations and duties under this Agreement, or (ii) is the Trust to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any person indemnified unless the
Distributor or any person shall have notified the Trust in writing of the claim
within a reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon the
Distributor or any person(or after the Distributor or the person shall have
received notice of service on any designated agent). However, failure to notify
the Trust of any claim shall not relieve the Trust from any liability which it
may have to the Distributor or any person against whom such action is brought
otherwise than on account of its indemnity agreement contained in this
paragraph. The Trust shall be entitled to in the defense, or, if it elects, to
assume the defense of any suit brought to enforce any claims, but if the Trust
elects to assume the defense, the defense shall be conducted by counsel chosen
by it and satisfactory to the Distributor or person or persons, defendant or
defendants in the suit. In the event the Trust elects to assume the defense of
any suit and retain counsel, the Distributor, officers or directors or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them. If the Trust
does not elect to assume the defense of any suit, it will reimburse the
Distributor, officers or directors or controlling person or persons, defendant
or defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any of the shares.
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<PAGE>
The Distributor also covenants and agrees that it will indemnify and hold
harmless the Trust and each of its Trustees and officers and each person, if
any, who controls the Trust within the-meaning of Section 15 of the Act, against
any loss, liability, damages, claim or expense(including the reasonable cost of
investigating or defending any alleged loss, liability, damages, claim or
expense and (including the reasonable cost of investigating or defending any
alleged loss, liability, damages, claim or expense and reasonable counsel fees
incurred in connection therewith) arising by reason of any person acquiring any
shares, based upon the Act or any other statute or common law, alleging any
wrongful act of the Distribution or any of its employees or alleging that the
registration statement, prospectus, unitholder reports or other information
filed or made public by the Trust (as from time to time amended), included an
untrue statement of a material fact or omitted to state material fact required
to be stated or necessary in order to make the statements not misleading,
insofar as the statement or omission was made in reliance upon, and in
conformity with information furnished to the Trust by or on behalf of the
Distributor. In no case (i) is the indemnity of the Distributor in favor of the
Trust or any person indemnified to be deemed to protect the Trust or any person
against any liability to which the Trust or such person would otherwise be
subject by reason of wilful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Distributor to be
liable under its indemnity agreement contained in this paragraph with respect to
any claim made against the Trustor any person indemnified unless the Trust or
person, as the case may be, shall have notified the Distributor in writing of
the claim within a reasonable time after the summons or other first written
notification giving information of the infraction shall have been served upon
the Trust or
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<PAGE>
any person (or after the Trust or such person shall have received notice of
service on any designated agent). However, failure to notify the Distributor of
any claim shall not relieve the Distributor from any liability which it may
have to the Trust or any person against whom the action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. In the
case of any notice to the Distributor, it shall be entitled to participate, at
its own expense, in the defense or, if it so elects, to assume the defense of
any suit brought to enforce the claim, but if the Distributor elects to assume
the defense, the defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, to its officers and Trustees and to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Distributor elects to assume the defense of any suit and retain counsel, the
Trust or controlling persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them. If the
Distributor does not elect to assume the defense of any suit, it will reimburse
the Trust, officers and Trustees or controlling person or persons, defendant or
defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Distributor agrees to notify the Trust promptly of the
commencement of any litigation or of any of the units.
9. EFFECTIVE DATE. This Agreement shall be effective upon its execution
or upon such later date as shall be agreed upon by the President of the Trust
and the President of the Distributor, and unless terminated as provided, shall
continue in force for two (2) years from the date of its execution and
thereafter from year to year, provided continuance after the two (2) year period
is approved by (i) either the vote of a majority of the Trustees of the Trust or
the vote of a majority of the outstanding voting securities of the Trust, and
(ii) the vote of a majority of those
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<PAGE>
Trustees of the Trust who are not parties to this Agreement or interested
persons of any party, case in person at a meeting called for the purpose of
voting on the approval. This Agreement shall automatically terminate, in the
event of its assignment. As used in this paragraph the terms "vote of a
majority of the outstanding voting securities," "assignment," and "interested
person," shall have the respective meanings specified in the Investment Company
Act of 1940 as now in effect or as hereafter amended. In addition to
termination by failure to approve continuance or by assignment, this Agreement
may at any time be terminated by either party upon not less than sixty days
prior written notice to the other party.
10. NOTICES. Any notice required or permitted shall be deemed sufficient
if sent by the party giving notice to the other party at the last address
furnished by the other party to the party giving notice: if to the Trust, at 28
State Street, Boston, Massachusetts, and if to the Distributor, at 680 E.
Swedesford Road, Wayne, Pennsylvania 19087.
11. LIMITATION OF LIABILITY. A copy of the Declaration of Trust of the
Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed on
behalf of the Trustees of the Trust as Trustees, and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or unitholders of the Trust individually but binding only upon the
assets and property of the Trust.
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<PAGE>
IN WITNESS, the Trust and Distributor have each duly executed this
Agreement, as of the day and year above written.
TRUSTFUNDS TAX EXEMPT TRUST
Attest: /s/ Peter Mac Dougall By /s/ David B. Robb, Jr.
-------------------------- ---------------------------------
Secretary
SEI FINANCIAL SERVICES COMPANY
Attest: /s/ Carmen Romeo By /s/ David B. Robb, Jr.
-------------------------- ---------------------------------
Secretary
-8-
<PAGE>
SEI Tax Exempt Trust
SUPPLEMENT DATED MAY 10, 1989 TO THE
DISTRIBUTION AGREEMENT DATED DECEMBER 3, 1982
WHEREAS SEI Tax Exempt Trust (the "Trust") has been authorized to issue
Class B units of beneficial interest("Units") for certain portfolios of the
Trust;
WHEREAS the Trust has authorized the distribution of Class B Units by SEI
Financial Services Company ("SFS") in accordance with the terms of the
Distribution Agreement between the Trust and SFS dated December 3, 1982 (the
"Agreement");
WHEREAS the Trust and SFS wish to clarify the level of payments to be made
by the Trust to SFS in connection with the distribution of Class B units;
NOW THEREFORE, THE Trust and SFS hereby agree that the Agreement is hereby
supplemented as follows:
l. In addition to the reimbursement of expenses by the Trust to SFS as
provided for by Section 7 of the Agreement, the Trust shall also make monthly
payments to SFS on an annualized basis equal to .30% of the daily net assets of
all Class B units issued and outstanding.
2. The payments provided by paragraph 1 immediately above are in addition
to, and not in lieu of, any other payments provided for by the Agreement.
3. The payments provided by paragraph 1 immediately above shall be used
by SFS in whole or in part to reimburse Class B unitholders which provide
administrative services to their clients relating to the Trust.
SEI Tax Exempt Trust
By: signed- signature illegible
------------------------------------
Vice President
SEI Financial Services Company
By: /s/ Sandra M. Krauss
------------------------------------
Vice President
<PAGE>
EXHIBIT 8
CUSTODIAN AGREEMENT
This Agreement, dated as of the fifteenth day of July 1982 made by and
between TrustFunds Tax Exempt Trust (the Fund), a business trust operating as
an open-end investment company, duly organized under the laws of the
Commonwealth of Massachusetts and The Philadelphia National Bank, a national
bank;
WITNESSETH:
WHEREAS, the Fund desires to appoint The Philadelphia National Bank as custodian
of its portfolio securities and cash, and The Philadelphia National Bank is
willing to act in such capacity upon the terms and conditions herein set forth
and
WHEREAS, The Philadelphia National Bank in its capacity as custodian hereunder
will also collect and apply the dividends and interest on said securities in the
manner and to the extent herein set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the parties hereto, intending to be legally bound, do hereby
agree as follows:
SECTION 1. The terms as defined in this Section 1, wherever used in this
Agreement, or in any amendment or supplement hereto, shall have the meanings
herein specified unless the context otherwise requires.
CUSTODIAN: The term "Custodian" shall mean The Philadelphia National Bank in
its capacity as custodian under this Agreement.
PROPER INSTRUCTIONS: For purposes of this Agreement, the Custodian shall be
deemed to have received Proper Instructions upon receipt of written, telephone
or telegraphic instructions from a person or persons reasonably believed by the
Custodian to be a person or persons authorized from time to time by the Trustees
of the Fund or by the Board of Directors of an investment adviser for the fund
to give the particular class of instructions. Telephone or telegraphic
instructions shall be confirmed in writing by such person or persons as said
Trustees or said Board of Directors shall have from time to time authorized to
give the particular class of instructions in question. The Custodian may act
upon telephone or telegraphic instructions without awaiting receipt of written
confirmation, and shall not be liable for the Fund's or such investment
adviser's failure to confirm such instructions in writing.
<PAGE>
SECURITIES: The term "Securities" shall mean bonds, debentures, notes,
certificates of deposit, evidences of indebtedness, and other securities and
investments from time to time owned by the Fund.
SHAREHOLDERS: The term "Shareholders" shall mean the registered owners from
time to time of the Shares of the Fund in accordance with the registry records
maintained by the Fund or agents on its behalf.
SHARES: The term "Shares" of the Fund shall mean the shares of beneficial
interest of the Fund.
SECTION 2. The Fund shall from time to time file with the Custodian a
certified copy of each resolution of its Board of Trustees authorizing the
person or persons to give Proper Instructions and specifying the class of
instructions that may be given by each person to the Custodian under this
Agreement, together with certified signatures of such persons authorized to
sign, which shall constitute conclusive evidence of the authority of the
officers and signatories designated therein to act, and shall be considered
in full force and effect with the Custodian fully protected in acting in
reliance thereon until it receives written notice to the contrary; provided,
however, that if the certifying officer is authorized to give Proper
Instructions, the certification shall be also signed by a second officer of
the Fund.
SECTION 3. The Fund hereby appoints the Custodian as custodian of the
Securities of the Fund and cash from time to time on deposit hereunder, to be
held by the Custodian and applied as provided in this Agreement. The
Custodian hereby accepts such appointment subject to the terms and conditions
hereinafter provided. Such securities and cash shall, however, be segregated
from the assets of others and shall be and remain the sole property of the
Fund and the Custodian shall have only the bare custody thereof. The
Securities held by the Custodian shall, unless payable to bearer, be
registered in the name of the Custodian or in the name of its nominee.
Securities, excepting bearer securities, delivered from time to time to the
Custodian upon purchase or otherwise shall in all cases be in due form for
transfer or already registered as above provided.
SECTION 4. The Fund will initially deposit with the Custodian the Securities
owned by the Fund at the time this Agreement becomes effective. Thereafter the
Fund will cause to be deposited with the Custodian additional Securities as the
same are purchased or otherwise acquired from time to time.
The Fund will make an initial deposit of cash to be held and applied by the
Custodian hereunder. Thereafter the Fund will cause to be deposited with the
Custodian hereunder (i) the net proceeds of Securities sold from time to time
and (ii) the applicable net asset value of Shares sold from time to time
whether representing initial issue, other stock or reinvestments of dividends
and/or distributions payable to Shareholders.
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<PAGE>
The Fund warrants that it shall keep all of its Securities, similar investments,
cash proceeds and other cash assets of the Fund in the custody of the Custodian,
except where permitted to otherwise keep, deposit, loan, pledge or otherwise
dispose of or maintain such assets in accordance with applicable law.
SECTION 5. The Custodian will collect from time to time the dividends and
interest on the Securities held by it hereunder and will deposit the same in the
Fund's account. The Custodian is authorized to advance or pay out of said
account accrued interest on bonds purchased and dividends on securities sold and
like items. In the event that any dividends or interest payments are received
by the Fund, the Fund will endorse to the Custodian, or cause to be endorsed,
dividend and interest checks and will issue appropriate orders to the issuers of
the Securities to pay dividends and interest to the Custodian. Subject to
proper reserves for interest owing on Securities sold and like items, the
Custodian will disburse the money from time to time on deposit in the account to
or upon the order of the Fund as it may from time to time direct in accordance
with this Agreement.
SECTION 6. The Custodian is hereby authorized and directed to disburse cash
from time to time as follows:
(a) to pay the proper compensation and expenses of the Custodian upon
receipt of Proper Instructions;
(b) to transfer to the Transfer Agent or other dividend disbursing agent
to pay dividends and/or distributions which may be authorized by the Fund
upon receipt of Proper Instructions;
(c) to pay, or provide the Fund with money to pay, if any, taxes upon
receipt of Proper Instructions;
(d) for the purpose of completing the purchase of Securities purchased by
the Fund, upon receipt of (i) Proper Instructions specifying the Securities and
stating the purchase price, and the name of the broker, investment banker or
other party to or upon whose order the purchase price is to be paid; and (ii)
upon receipt of such Securities by the Custodian or, in the case of a purchase
effected through a Securities System, in accordance with Section 8 hereof;
(e) for the purpose of redeeming or purchasing Shares upon receipt of
Proper Instructions stating the applicable redemption amounts payable, to the
Transfer Agent or other appropriate party;
(f) for the purpose of paying over to the Transfer Agent or dividend
disbursing agent such amounts as may be stated in Proper Instructions,
representing proceeds of the sale of warrants, rights, stock dividends,
profit and increases in values of the Securities, as the Fund may determine
to include in dividends and/or distributions on the Shares;
(g) for the purpose of paying in whole or in part any loan of the Fund
upon receipt of Proper Instructions directing payment and stating the
Securities, if any, to be received against payment;
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<PAGE>
(h) to pay interest, investment advisory or supervisory fees,
administration, dividend and transfer agency fees and costs, compensation of
personnel, or operating expenses (including, without limitation, fees for
legal purposes). Before making any such payment or disbursement, however,
the Custodian shall receive (and may conclusively rely upon) Proper
Instructions requesting such payment or disbursement and stating that it is
for one or more of the purposes hereinabove enumerated, provided that if the
disbursement is for any other purposes, the instructions shall be in writing
and shall state that the disbursement was authorized by resolution of the
Board of Trustees of the Fund (a copy of which resolution shall be attached)
and is for a proper purpose.
SECTIONS 7. The Custodian is hereby authorized and directed to deliver
Securities from time to time as follows:
(a) for the purpose of completing sales of Securities sold by the Fund,
upon receipt of (i) the net proceeds of sale and (ii) Proper Instructions
specifying the Securities sold and stating the amount to be received and the
broker, investment banker or other party to or upon whose order the Securities
are to be delivered;
(b) for the purpose of exchanging Securities for other Securities and/or
cash upon timely receipt of (i) Proper Instructions stating Securities to be
delivered and the Securities and/or cash to be received in exchange and the
manner in which the exchange is to be made, and (ii) against receipt of the
other Securities and/or cash as specified in the Proper Instructions;
(c) for the purpose of exchanging or converting Securities pursuant to
their terms of pursuant to any plan of conversion, consolidation,
recapitalization, reorganization, readjustment or otherwise, upon timely receipt
of (i) Proper Instructions authorizing such exchange or conversion and stating
the manner in which such exchange or conversion is to be made, and (ii) against
receipt of the Securities, Certificates of deposit, interim receipts, and/or
cash to be received as specified in the Proper Instructions;
(d) for the purpose of presenting Securities for payment which have
matured or have been called for redemption upon receipt of appropriate Proper
Instructions and provided that the cash or other consideration is to be paid to
the Custodian;
(e) for the purpose of delivery of Securities upon redemption of Shares in
kind, upon receipt of appropriate Proper Instructions; or
(f) for the purpose of depositing with the lender Securities to be held as
collateral of a loan to the Fund upon receipt of Proper Instructions directing
delivery to the lender and upon receipt of the proceeds of the loan.
SECTION 8. The Custodian may deposit and/or maintain Securities owned by the
Fund in a clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain Federal agencies, collectively referred
to herein as "Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and regulations, if any, and
subject to the following provisions:
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<PAGE>
1. The Custodian may keep Securities of the Fund in a Securities System
provided that such Securities are represented in an account ("Account") of
the Custodian in the Securities System which shall not include any assets
of the Custodian other than assets held as a fiduciary, custodian, or
otherwise for customers.
2. The records of the Custodian with respect to Securities of the Fund which
are maintained in a Securities System shall identify by book-entry those
Securities belonging to the Fund.
3. The Custodian shall pay for securities purchased for the account of the
Fund upon (i) receipt of advice from the Securities System that such
Securities have been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such payment and transfer
for the account of the Fund. The Custodian shall transfer Securities sold
for the account of the Fund upon (i) receipt of advice from the Securities
System that payment for such Securities has been transferred to the
Account, and (ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund. Copies of
all advices from the Securities System of transfers of Securities for the
account of the Fund shall identify the Fund, be maintained for the Fund by
the Custodian and be provided to the Fund at its request. The Custodian
shall furnish the Fund confirmation of each transfer to or from the account
of the Fund in the form of a written advice or notice and shall furnish to
the Fund copies of daily transaction sheets reflecting each day's
transaction for the account of the Fund on the next business day.
4. The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's internal accounting control and
procedures for safeguarding securities deposited in the Securities System.
5. The Custodian shall have received an initial certificate of the Secretary
or an Assistant Secretary that the Trustees of the Fund have approved the
initial use of a particular Securities System and the Custodian shall
receive an annual certificate of the Secretary or an Assistant Secretary
that the Trustees have reviewed the use by the fund of such Securities
System, as required in each case by Rule 17f-4 under the Investment Company
Act of 1940, as amended.
6. Anything to the contrary in this Agreement notwithstanding, the Custodian
shall be liable to the Fund for any loss or damage to the Fund resulting
from use of the Securities System by reason of any negligence, misfeasance
or misconduct of the Custodian or any of its agents or of any of its or
their employees or from any failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the Securities
System; at the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claim against the
Securities System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that the Fund
has not been made whole for any such loss or damage.
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<PAGE>
SECTION 9. The Custodian's compensation shall be as set forth in Schedule A
hereto attached, or as shall be set forth in amendments to such schedule
approved by the Fund and the Custodian.
SECTION 10. The Custodian shall forward to the Fund proxies, proxy statements,
annual reports, conversions notice, call notices, or other notices or written
materials sent to the registered owners of securities and actually received by
the Custodian (hereafter referred to as "notices and materials"), exluding only
certificates representing securities and dividend and interest payments.
Responsibility for taking action thereon is the sole responsibility of the Fund
and its investment advisor, and not the responsibility of the Custodian. Upon
actual receipt by the Custodian of warrants or rights issued in connection with
the assets of the Fund, the Custodian shall enter on its ledgers appropriate
notations, indicating such receipt and shall forward notice thereof to the Fund,
but shall have no obligation whatsoever to take any action of any kind with
respect to such warrants or rights except upon receipt of Proper Instructions
authorizing the exercise or sale of such warrants or rights. The Custodian
shall make a best effort to notify the Fund with regards to call notices of
bearer bonds published in the principal trade journals but shall not be liable
for any failure in respect thereof.
SECTION 11. The Custodian assumes only the usual duties or obligations normally
performed by custodians of mutual funds. It specifically assumes no
responsibility for the management, investment or reinvestment of the Securities
from time to time owned by the Fund whether or not on deposit hereunder, it
being understood that the responsibility for the proper and timely management,
investment and reinvestment of said Securities shall be that of the Fund and its
investment advisors.
In connection with its functions under this Agreement, the Custodian shall:
(a) obtain a "due bill" for dividends, interest or other distributions of
the issuer, due the purchaser in connection with Securities delivered to the
Custodian;
(b) render to the Fund a daily report of all monies received or paid on
behalf of the Fund and such listings of Securities held by the Custodian for the
account of the Fund as may from time to time be requested by the Fund.
(c) execute ownership and other certificates and affidavits for all
Federal and State tax purposes in connection with the collection of bond and
note coupons;
(d) present for payment on the date of payment all coupons and other
periodic income items requiring presentation;
(e) monitor and record the collection of funds in accounts maintained by
the Custodian, in the name of the Fund on the same day as received;
(f) in accordance with the manager's directions as to allocation of the
securities to separate portfolios designated by the Fund, the Custodian shall
maintain records showing the respective securities comprising each such
portfolio.
(g) create, maintain and retain all records relating to its activities and
obligations under this Agreement in such manner as will meet the obligations of
the Fund with respect to said Custodian's activities in accordance with
generally
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<PAGE>
accepted accounting principles. All records maintained by the Custodian in
connection with the performance of its duties under this Agreement will remain
the property of the Fund and in the event of termination of this Agreement will
be relinquished to the Fund.
If the Custodian does not receive payment for items due under subsection (a),
(d) or (e) within a reasonable time after it has made proper demands for the
same, it shall so notify the Fund in writing, including copies of all demand
letters, any written responses thereto, and memoranda of all oral responses
thereto and to telephonic demands, and await Proper Instructions; the Custodian
shall not be obliged to take legal action for collection except by its consent
and unless and until reasonably indemnified to its satisfaction. The Custodian
shall also notify the Fund as soon as reasonably practicable whenever income due
on Securities is not collected in due course.
The Custodian shall not be liable for any taxes, assessments, or governmental
charges which may be levied or assessed upon the Securities held by it
hereunder, or upon the income therefrom or otherwise whatsoever. The Custodian
may pay any such tax, assessment or charge and reimburse itself out of the
monies of the Fund or out of the Securities held hereunder.
SECTION 12. No liability of any kind shall be attached to or incurred by the
Custodian by reason of its custody of the funds, assets, or shares held by it
from time to time under this Agreement, or otherwise by reason of its position
as custodian hereunder except only for its own negligence, bad faith, or willful
misconduct in the performance of its duties as specifically set forth in the
Agreement. Without limiting the generality of the foregoing sentence, the
Custodian:
(a) may rely upon the advice of counsel, who may be counsel for the Fund
or for the Custodian, and upon statements of accountants, brokers and other
persons believed by it in good faith to be expert in the matters upon which they
are consulted; and for any action taken or suffered in good faith based upon
such advice or statements the Custodian shall not be liable to anyone;
(b) shall not be liable for anything done or suffered to be done in good
faith in accordance with any request or advice of, or based upon information
furnished by, the Fund or its authorized officers or agents;
(c) is authorized to accept a certificate of the Secretary or Assistant
Secretary of the Fund, or Proper Instructions, to the effect that a resolution
in the form submitted has been duly adopted by its Board of Trustees or by the
Shareholders, as conclusive evidence that such resolution has been duly adopted
and is in full force and effect;
(d) may rely and shall be protected in acting upon any signature, written
(including telegraph or other mechanical) instructions, request, letter of
transmittal, certificate, opinion of counsel, statement, instrument, report,
notice, consent, order, or other paper or document reasonably believed by it to
be genuine and to have been signed, forwarded or presented by the purchaser,
Fund or other proper party or parties.
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<PAGE>
SECTION 13. The Fund, its successors and assigns hereby indemnify and hold
harmless the Custodian, its successors and assigns, of and from any and all
liability whatsoever arising out of or in connection with the Custodian's
status, acts, or omissions under this Agreement, except only for liability
arising out of the Custodian's own negligence, bad faith, or willful misconduct
in the performance of its duties specifically set forth in this Agreement.
Without limiting the generality of the foregoing, the Fund, its successors and
assigns do hereby fully indemnify and hold harmless the Custodian its successors
and assigns, from any and all loss, liability, claims, demand, actions, suits
and expenses of any nature as the same may arise from the failure of the Fund to
comply with any law, rule, regulation or order of the United States, any State
or any other jurisdiction, governmental authority, body, or board relating to
the sale, registration, qualification of shares of beneficial interest in the
Fund, or from the failure of the Fund to perform any duty or obligation under
this Agreement.
Upon written request of the Custodian, the Fund shall assume the entire defense
of any claim subject to the foregoing indemnity, or the joint defense with the
Custodian of such claim, as the Custodian shall request. The indemnities and
defense provisions of this SECTION 13 shall indefinitely survive termination of
this Agreement.
SECTION 14. The Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with accountants' reports on the accounting system,
internal accounting control and procedures for safeguarding securities,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under this Agreement; such
reports, which shall be of sufficient scope and in sufficient detail to
provide reasonable assurance that any material inadequacies would be
disclosed, shall state in detail material inadequacies disclosed by such
examination, and, if there are no such inadequacies, shall so state.
Notwithstanding the foregoing the Custodian shall not be required by the
provision of this Section 14 to have such a report, which is not required for
other purposes, prepared by independent public accountants, unless the Fund
agrees to reimburse the Custodian for the reasonable charges of such
independent public accountants for preparing such report.
SECTION 15. This agreement may be amended from time to time without notice to
or approval of the Shareholders by a supplemental agreement executed by the Fund
and the Custodian and amending and supplementing this Agreement in the manner
mutually agreed.
SECTION 16. Either the Fund or the Custodian may give one hundred twenty (120)
days written notice to the other of the termination of this Agreement, such
termination to take effect at the time specified in the notice. In case such
notice of termination is given either by the Fund or by the Custodian, the
Trustees of the Fund shall, by resolution duly adopted, promptly appoint a
Successor Custodian which Successor Custodian shall be a bank, trust company or
a bank and trust company in good standing, with legal capacity to accept custody
of the securities of a mutual fund. Upon receipt of written notice from the
Fund of the appointment of such successor and upon receipt of Proper
Instructions, the Custodian shall deliver such Securities and cash as it may
then be holding hereunder directly and only to the Successor Custodian. Unless
or until a Successor Custodian has been appointed as above provided, the
Custodian then acting shall continue to act as Custodian under this Agreement.
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<PAGE>
Every Successor Custodian appointed hereunder shall execute and deliver an
appropriate written acceptance of its appointment and shall thereupon become
vested with the rights, powers, obligations and custody of its predecessor
Custodian. The Custodian ceasing to act shall nevertheless, upon request of the
Fund and the Successor Custodian and upon payment of its charges and
disbursements, execute an instrument in form approved by its counsel
transferring to the Successor Custodian all the predecessor Custodian's rights,
duties obligations and custody.
In case the Custodian shall consolidate with or merge into any other
corporation, the corporation remaining after or resulting from such
consolidation or merger shall ipso facto, without the execution of filing of any
papers or other documents, succeed to and be substituted for the Custodian
with like effect as though originally named as such.
SECTION 17. This Agreement shall take effect when assets of the Fund are
first delivered to the Custodian.
SECTION 18. This Agreement may be executed in two or more counterparts, each of
which when so executed shall be deemed to be an original, but such counterparts
shall together constitute but one and the same instrument.
SECTION 19. The Custodian may, at any time or times appoint (and may at any
time remove) and other bank or trust company which is itself qualified under the
Investment Company Act of 1940, as amended, to act as a custodian, as its agent
to carry out such of the provisions of this Agreement as the Custodian may from
time to time direct, provided, however, that the appointment of such agent shall
not relieve the Custodian of any of its responsibilities under this Agreement.
SECTION 19A. Whenever authorized by resolution of the Board of Trustees of the
Fund, the Custodian may employ one or more Sub-Custodians, provided that the
Custodian shall have no more responsibility or liability to the Fund on account
of any actions or omissions of any Sub-Custodian so employed than any such
Sub-Custodian has to the Custodian.
SECTION 20. A copy of the Declaration of Trust of the Fund is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the Fund
as Trustees and not individually and that the obligations of this instrument
are not binding upon any of the Trustees, officers or shareholders of the
Fund individually, but binding only upon the assets and property of the Fund.
SECTION 21. The Custodian shall create and maintain all records relating to
its activities and obligations under this Agreement in such manner as will meet
the obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable Federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund.
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<PAGE>
Subject to security requirements of the Custodian applicable to its own
employees having access to similar records within the Custodian and such
regulations as to the conduct of such monitors as may be reasonably imposed by
the Custodian after prior consultation with an officer of the Fund the Books and
records of the Custodian pertaining to its actions under this Agreement shall be
open to inspection and audit at any reasonable time by officers of, attorneys
for, and auditors employed by, the Fund.
SECTION 22. Nothing contained in the Agreement is intended to or shall require
the Custodian in any capacity hereunder to perform any functions or duties on
any holiday or other day of special observance on which the Custodian is closed.
Functions or duties normally scheduled to be performed on such days shall be
performed on, and as of, the next business day the Custodian is open.
SECTION 23. This Agreement shall extend to and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that this Agreement shall not be assignable by the Fund without the written
consent of the Custodian, or by the Custodian without the written consent of the
Fund, authorized or approved by a resolution of its Board of Trustees.
IN WITNESS WHEREOF, the Fund and the Custodian have caused this Agreement to be
signed by their respective officers as of the day and year first above written.
TRUSTFUNDS TAX EXEMPT TRUST
By: "Signature Illegible"
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President
THE PHILADELPHIA NATIONAL BANK
By: "Signature Illegible"
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Vice President
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<PAGE>
MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of this 23rd day of May, 1986 by and between
TrustFunds Tax Exempt Trust (the "Trust"), a Massachusetts business trust, and
SEI Financial Management Corporation (the "Manager"), a Delaware corporation.
WHEREAS the Trust is a diversified open-end investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS the Manager is willing to provide management, administrative,
transfer agent and unitholder servicing services to the Trust's Eastern
Portfolio, Western Portfolio and such other portfolios as the Trust and the
Manager may agree on ("Portfolios"), on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, the Trust and the Manager hereby agree as follows:
ARTICLE 1. RETENTION OF THE MANAGER. The Trust hereby retains the Manager
to act as the Manager and Unitholder Servicing Agent of the Portfolios and to
furnish the Portfolios with the management, administrative, transfer agent and
unitholder servicing services as set forth below. The Manager hereby accepts
such employment to perform the duties set forth below. The Manager shall, for
all purposes herein, be deemed to be an independent contractor and, unless
otherwise expressly provided or authorized, shall have no authority to act for
or represent the Trust in any way and shall not be deemed an agent of the Trust.
All of the Manager's duties shall be subject always to the objectives, policies
and restrictions contained in the Trust's current registration statement under
the 1940 Act, to the Trust's Declaration of Trust and By-Laws, to the provisions
of the 1940 Act, and to any other guidelines that may be established by the
Trust's Trustees. The Manager shall calculate the daily net asset value of the
Portfolios in accordance with the procedures prescribed in the Trust's
Registration Statement and such other procedures as may be established by the
Trustees of the Trust.
ARTICLE 2. EVALUATION SERVICES. The Manager shall oversee and monitor the
performance of the Portfolios' investment advisers and shall furnish to the
Trust such information, evaluations, analyses and opinions regarding said
performance as the Trustees may, from time to time, reasonably request;
provided, however, that the Manager shall have no authority to make and shall
not make investment decisions for the Portfolios nor furnish any advice with
respect to the desirability of making such investment decisions.
ARTICLE 3. TRANSFER AGENT SERVICES. The Manger will act as Transfer Agent
for the Portfolios and, as such, will record in an account (the "Account") the
total number of units of beneficial interest ("Units") of each Portfolio issued
and outstanding from time to time and will maintain Unit transfer records in
which it will note the names and addresses of Unitholders, and the number of
Units from time to time owned by each of them. Each Unitholder will be assigned
one or more account numbers. The Manager is authorized to set up accounts and
record transactions in the accounts on the basis of instructions received from
Unitholders when accompanied by remittance in appropriate
<PAGE>
amount as provided in the Trust's then current prospectus. The Trust will not
issue certificates representing its Units. Whenever Units are purchased or
issued, the Manager shall credit the Account with the Units issued, and credit
the proper number of Units to the appropriate Unitholder. Likewise, whenever
the Manager has occasion to redeem Units owned by a Unitholder, the Trust
authorizes the Manager to process the transaction by making appropriate entries
in its Unit transfer records and debiting the Account.
Upon receipt by the Trust's Wire Agent (currently the United States
National Bank of Oregon) on behalf of the Manager of funds through the Federal
Reserve wire system or conversion into Federal funds of funds transmitted by
other means for the Purchase of Units in accordance with the Trust's current
prospectus, the Manager shall notify the Trust of such deposits on a daily
basis. The Manager shall credit the Unitholder's account with the number of
shares purchased according to the price of the Units in effect for such
purchases determined in the manner set forth in the Trust's then current
prospectus. The Manager shall process each order for the redemption of Units
from or on behalf of a Unitholder, and shall cause cash proceeds to be wired in
Federal funds. The requirements as to instruments of transfer and other
documentation, the applicable redemption price and the time of payment shall be
as provided in the then current prospectus, subject to such supplemental
requirements consistent with such Prospectus as may be established by mutual
agreement between the Trust and Manager. If the Manager or the Trust determines
that a request for redemption does not comply with the requirements for
redemption, the Manager shall promptly so notify the Unitholder, together with
the reason therefor, and shall effect such redemption at the price next
determined after receipt of documents complying with said standards. On each
day that the Trust's custodian banks and the New York Stock Exchange are open
for business ("Business Day"), the Manager shall notify the Custodian of the
amount of cash or other assets required to meet payments made pursuant to the
provisions of this paragraph, and the Trust shall instruct the Custodian to make
available from time to time sufficient funds or other assets therefor. The
authority of the Manager to perform its responsibilities under this paragraph
shall be suspended upon receipt by it of notification from the Securities and
Exchange Commission or the Trustees of the suspension of the determination of
the Trust's net asset value.
In registering transfers, the Manager may rely upon the opinion of counsel
in not requiring complete documentation, in registering transfers without
inquiry into adverse claims, in delaying registration for purposes of such
inquiry, or in refusing registration where in its judgment an adverse claim
requires such refusal.
The Trust warrants that it has or shall deliver to the Manager, as transfer
agent:
(a) a copy of the Declaration of Trust of the Trust, incorporating
all amendments thereto, certified by the Secretary or Assistant Secretary
of the Trust;
(b) an opinion of counsel to the Trust with respect to (i) the
legality and continuing existence of the Trust, (ii) the legality of its
outstanding Units of beneficial interest, and
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<PAGE>
(iii) the number of Units authorized for issuance and stating that upon
issuance they will be validly issued and nonassessable; and
(c) the Trust's Secretary's or Assistant Secretary's certificate as
to the authorized outstanding Units of the Trust, its address to which
notices may be sent, the names and specimen signatures of its officers who
are authorized to sign instructions or requests to the Manager on behalf of
the Trust, and the name and address of legal counsel to the Trust. In the
event of any future amendment or change in respect of any of the foregoing,
prompt written notification of such change shall be given by the Trust to
the Manager, together with copies of all relevant resolutions, instruments
or other documents, specimen Signatures, certificates, opinions or the like
as the Manager may deem necessary or appropriate.
ARTICLE 4. DIVIDEND DISBURSING AGENT. The Manager shall act as Dividend
Disbursing Agent for the Trust and, as such, in accordance with the provisions
of the Trust's Declaration of Trust and then current prospectus, shall prepare
and wire or credit income and capital gains distributions to Unitholders. The
Trust agrees that it shall promptly inform the Manager of the declaration of any
dividend or distribution on its Units, and that on or before the payment date of
a distribution, it shall instruct the Custodian to make available, at the
instruction of the Dividend Disbursing Agent, sufficient funds for the cash
amount to be paid out. If a Unitholder is entitled to receive additional Units
by virtue of any such distribution or dividend, appropriate credits will be made
to the Unitholder's account.
ARTICLE 5. OTHER ADMINISTRATIVE SERVICES. In addition to the services
described above, the Manager shall perform or supervise the performance by
others of other administrative services in connection with the operations of the
Portfolios, and, on behalf of the Trust, will investigate, assist in the
selection of and conduct relations with Custodians, depositories, accountants,
underwriters, brokers and dealers, corporate fiduciaries, insurers, banks and
persons in any other capacity deemed to be necessary or desirable for the
Portfolio's operation. The Manager shall provide the Trust with regulatory
reporting and related bookkeeping services, all necessary office space,
equipment, personnel compensation and facilities (including facilities for
Unitholders' and Trustees' meetings)for handling the affairs of the Portfolios
and such other services as the Manager shall, from time to time, determine to be
necessary to perform its obligations under this Agreement. The Manager shall
make reports to the Trust's Trustees concerning the performance of its
obligations hereunder; furnish advice and recommendations with respect to other
aspects of the business and affairs of the Portfolios as the Trust shall
determine desirable; and shall provide the Portfolios' Unitholders with the
reports described in the Trust's current Prospectus. Also, the Manager will
perform other services for the Trust as agreed from time to time, including, but
not limited to, preparation and mailing of appropriate federal income tax forms;
mailing the annual reports of the Trust; preparing an annual list of
Unitholders; furnishing the Trust with such reports regarding the sale and
redemption of Units as may be required in order to comply with federal and state
securities law; and mailing notices of Unitholders' meetings, proxies and proxy
statements, for all of which the Trust will pay the Manager's out-of-pocket
expenses.
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<PAGE>
ARTICLE 6. ALLOCATION OF CHARGES AND EXPENSES.
(A) THE MANAGER. The Manager shall furnish at its own expense the
executive, supervisory and clerical personnel necessary to perform its
obligations under this Agreement. The Manager shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Manager or any affiliated corporation;
provided, however, that unless otherwise specifically provided, the Manager
shall not be obligated to pay the compensation of any employee of the Trust
retained by the Trustees of the Trust to perform services on behalf of the
Trust.
(B) THE TRUST. The Trust assumes and shall pay or cause to be paid all
other expenses of the Trust not otherwise allocated herein, including, without
limitation, organizational costs, taxes, expenses for legal and auditing
services, the expenses of preparing (including typesetting), printing and
mailing reports, prospectuses, statements of additional information, proxy
solicitation material and notices to existing Unitholders, all expenses incurred
in connection with issuing and redeeming Trust Units, the costs of custodial
services, the cost of initial and ongoing registration of the Trust's Units
under federal and state securities laws, fees and out-of-pocket expenses of
Trustees who are not affiliated persons of the Manager or any affiliated
corporation, insurance, interest, brokerage costs, litigation and other
extraordinary or nonrecurring expenses, all fees and charges of investment
advisers to the Trust, and distribution expenses in accordance with the Trust's
Distribution Plan.
ARTICLE 7. COMPENSATION OF THE MANAGER.
(A) MANAGEMENT FEE. For the services to be rendered, the facilities
furnished and the expenses assumed by the Manager pursuant to this Agreement,
the Trust shall pay to the Manager compensation at an annual rate of .36% of the
average daily net assets of each Portfolio. (The annual rate of compensation
with respect to any Portfolio other than the Eastern Portfolio or Western
Portfolio shall be as agreed upon by the parties to this Agreement.) Such
compensation shall be calculated and accrued daily, and paid to the Manager
monthly (subject to any expenses to be borne by the Manager under Article 7(B)
herein). If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Manager's compensation
for that part of the month in which this Agreement is in effect shall be
prorated in a manner consistent with the calculation of the fees as set forth
above. Payment of the Manager's compensation for the preceding month shall be
made promptly after completion of the computations contemplated by paragraph (B)
of this Article 7.
(B) EXCESS EXPENSES. If the expenses of any Portfolio for any fiscal year
(including fees and other amounts payable to the Manager, but excluding
interest, taxes, brokerage costs, litigation and other extraordinary costs) as
calculated every Business Day would exceed (i) an annual rate of 1.0% of a
Portfolio's average daily net asset value (or, with respect to a Portfolio other
than the Eastern Portfolio or Western Portfolio, such other annual rate as
agreed to by the parties to this Agreement), or (ii) the expense limitations
imposed on investment companies by any applicable statute or regulatory
authority of any jurisdiction in which Units are qualified for offer and sale,
the
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<PAGE>
manager shall bear such excess cost. However, the Manager will not bear
expenses of the Trust to an extent which would result in the Trust's inability
to qualify as a regulated investment company under provisions of the Internal
Revenue Code. Payment of expenses by the Manager pursuant to this Article 7(B)
shall be settled on a monthly basis (subject to fiscal year end reconciliation)
by a reduction in the fee payable to Manager for such month pursuant to
Article 7(A) above and, if such reduction shall be insufficient to offset such
expenses, by reimbursing the Trust. Any excess expenses borne under
Article 7(B)(i) (including any fees waived by the Manager) or such excess
expenses of any Portfolio borne by the Manager since May 25, 1984 pursuant to
earlier agreements between the Manager and the Trust may be recovered by the
Manager from the Trust when such recovery would not cause the Trust's expenses
to exceed the expense limitation set forth in this paragraph.
(C) COMPENSATION FROM TRANSACTIONS. The Trust hereby authorizes any
entity or person associated with the Manager which is a member of a national
securities exchange to effect any transaction on the exchange for the account of
the Trust which is permitted by Section 11(a) of the Securities Exchange Act of
1934 and Rule 11a2-2(T) thereunder, and the Trust hereby consents to the
retention of compensation for such transactions in accordance with
Rule 11a2-2(T)(a)(2)(iv).
(D) SURVIVAL OF COMPENSATION RATES. All rights of compensation under this
Agreement shall survive the termination of this Agreement.
ARTICLE 8. LIMITATION OF LIABILITY OF THE MANAGER. The duties of the
Manager shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against the Manager hereunder. The
Manager shall not be liable for any error of judgment or mistake of law or for
any loss arising out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder, except as may
otherwise be provided under provisions of applicable state law which cannot be
waived or modified hereby. (As used in this Article 8, the term "Manager" shall
include directors, officers, employees and other corporate agents of the Manager
as well as that corporation itself.) So long as the Manager acts in good faith
and with due diligence and without gross negligence, the Trust assumes full
responsibility and shall indemnify the Manager and hold it harmless from and
against any and all actions, suits and claims, whether groundless or otherwise,
and from and against any and all losses, damages, costs, charges, reasonable
counsel fees and disbursements, payments, expenses and liabilities (including
reasonable investigation expenses) arising directly or indirectly out of said
management and transfer, dividend disbursing and Unitholder servicing agency
relationship to the Trust or any other service rendered to the Trust hereunder.
The indemnity and defense provisions set forth herein shall indefinitely survive
the termination of this Agreement. The rights hereunder shall include the right
to reasonable advances of defense expenses in the event of any pending or
threatened litigation with respect to which indemnification hereunder may
ultimately be merited. In order that the indemnification provision contained
herein shall apply, however, it is understood that if in any case the Trust may
be asked to indemnify or hold the Manager harmless, the Trust shall be fully and
promptly advised of all pertinent facts concerning the situation in question,
and it is further understood that the Manager will use all reasonable care to
identify and notify the Trust promptly concern-
-5-
<PAGE>
ing any situation which presents or appears likely to present the probability of
such a claim for indemnification against the Trust, but failure to do so in good
faith shall not effect the rights hereunder.
The Manager may apply to the Trust at any time for instructions and may
consult counsel for the Trust or its own counsel and with accountants and other
experts with respect to any matter arising in connection with the Manager's
duties, and the Manager shall not be liable or accountable for any action taken
or omitted by it in good faith in accordance with such instruction or with the
opinion of such counsel, accountants or other experts. Also, the Manager shall
be protected in acting upon any document which it reasonably believes to be
genuine and to have been signed or presented by the proper person or persons.
Nor shall the Manager be held to have notice of any change of authority of any
officer, employee or agent of the Trust until receipt of written notice thereof
from the Trust.
ARTICLE 9. ACTIVITIES OF THE MANAGER. The services of the Manager
rendered to the Trust are not to be deemed to be exclusive. The Manager is free
to render such services to others and to have other businesses and interests.
It is understood that Trustees, officers, employees and Unitholders of the Trust
are or may be or become interested in the Manager, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Manager and its counsel are or may be or become
similarly interested in the Trust, and that the Manager may be or become
interested in the Trust as a Unitholder or otherwise.
ARTICLE 10. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement,
unless terminated sooner as provided herein, shall remain in effect for two
years after the date of the Agreement and shall continue in effect for
successive periods of one year if such continuance is specifically approved at
least annually (i) by the Trustees of the Trust and (ii) by the vote of a
majority of the Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a Board of Trustees
meeting called for the purpose of voting on such approval. This Agreement may
be terminated at any time and without penalty by the Trustees of the Trust or by
the Manager on not less than 30 days nor more than 60 days written notice to the
other party hereto. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at the
designated mailing address of such party.
This Agreement shall not be assignable by either party without the written
consent of the other party.
ARTICLE 11. AMENDMENTS. This Agreement may be amended by the parties
hereto only if such amendment is specifically approved (i) by the vote of a
majority of the Trustees of the Trust, and (ii) by the vote of a majority of the
Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Trustees meeting called
for the purpose of voting on such approval. For special cases, the parties
hereto may amend such procedures set forth herein as may be appropriate or
practical under the circumstances, and the Manager may conclusively assume that
any special procedure which has been approved by the Trust does not conflict
with or violate any requirements of its Declaration of Trust, By-Laws or
prospectus, or any rule, regulation or requirement of any regulatory body.
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<PAGE>
ARTICLE 12. TRUSTEES' LIABILITY. A copy of the Declaration of Trust of
the Trust is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of the Trust as Trustees and not individually and that
the obligations of this instrument are not binding upon any of the Trustees,
officers or Unitholders of the Trust individually, but binding only upon the
assets and property of the Trust.
ARTICLE 13. CERTAIN RECORDS. The Manager shall maintain customary records
in connection with its duties as specified in this Agreement. Any records
required to be maintained and preserved pursuant to Rules 31a-1 and 31a-2 under
the 1940 Act which are prepared or maintained by the Manager on behalf of the
Trust shall be prepared and maintained at the expense of the Manager, but shall
be the property of the Trust and will be made available to or surrendered
promptly to the Trust on request. In case of any request or demand for the
inspection of such records by another party, the Manager shall notify the Trust
and follow the Trust's instructions as to permitting or refusing such
inspection; provided that the Manager may exhibit such records to any person in
any case where it is advised by its counsel that it may be held liable for
failure to do so, unless (in cases involving potential exposure only to civil
liability) the Trust has agreed to indemnify the Manager against such liability.
ARTICLE 14. DEFINITIONS OF CERTAIN TERMS. The terms "interested person"
and "affiliated person," when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 15. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts, or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 16. MULTIPLE ORIGINALS. This Agreement may be executed in two or
more counterparts, each of which when so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
TRUSTFUNDS TAX EXEMPT TRUST
By /s/ David B. Robb, Jr.
------------------------------
President
SEI FINANCIAL MANAGEMENT CORPORATION
By /s/ David B. Robb, Jr.
------------------------------
Senior Vice President
-8-
<PAGE>
SCHEDULE G
FEE SCHEDULE - SEI TAX EXEMPT TRUST
PENNSYLVANIA TAX FREE PORTFOLIO
OCTOBER 29, 1993
The Manager will be paid a fee which is calculated daily and paid monthly at an
annual rate of .36% of the Portfolio's average daily net assets.
<PAGE>
SCHEDULE H
FEE SCHEDULE - SEI TAX EXEMPT TRUST
NEW YORK INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
OCTOBER 29, 1993
The Manager will be paid a fee which is calculated daily and paid monthly at an
annual rate of .39% of the Portfolio's average daily net assets.
<PAGE>
SCHEDULE I
FEE SCHEDULE - TAX EXEMPT TRUST
CALIFORNIA INTERMEDIATE-TERM MUNICIPAL PORTFOLIO
OCTOBER 29, 1993
The Manager will be paid a fee which is calculated daily and paid monthly at an
annual rate of .39% of the Portfolio's average daily net assets.
<PAGE>
CONSENT TO ASSIGNMENT AND ASSUMPTION
1. SEI Financial Management Corporation ("Assignor") hereby notifies SEI
Tax Exempt Trust ("Trust") that it intends to assign all of its rights
and delegate its obligations under the Administration Agreement
between the Trust and SEI Financial Management Corporation, dated
August 30, 1988, as amended (the "Assignment and Assumption
Agreement") to SEI Fund Management, ("Assignee"), no later than June
1, 1996, in connection with the transition of Assignor's fund
administration and distribution business to Assignee.
2 Trust releases Assignor from its rights and obligations under the
Agreement on or after the date the Assignment and Assumption Agreement
is executed and any liability or responsibility for (i) breach of the
Agreement by Assignee or (ii) demands and claims made against the
Trust or damages, losses or expenses incurred by the Trust on or after
the date of the Assignment and Assumption Agreement, unless such
demands, claims, losses, damages or expenses arose out of or resulted
from an act or omission of Assignor prior tot he date of the
Assignment and Assumption Agreement.
3. This consent is not a waiver or estoppel with respect to any rights
the Trust may have by reason of the past performance or failure to
perform by Assignor.
4. This consent is conditioned upon the execution of an Assignment and
Assumption Agreement between Assignor and Assignee that require(s)
Assignee (i) to assume all rights and obligations of Assignor under
the Agreement and (ii) to be liable to the trust for any default or
Breach of the Agreement to the extent the default or breach occurs on
or after the date of execution of the Assignment and Assumption
Agreement.
5. Except as provided herein, neither this consent not the Assignment and
Assumption Agreement shall alter or modify the terms or conditions of
the Agreement.
Trust: Assignor:
SEI Tax Exempt Trust SEI Financial Management Corporation
By: /s/ Marc Cahn By: /s/ Marc Cahn
------------------------ --------------------------------
Title: Vice President Title: Vice President
------------------------ --------------------------------
Date: May 31, 1996 Date: May 31, 1996
------------------------ --------------------------------
<PAGE>
exhibit 10
July 19, 1982
TrustFunds Tax Exempt Trust
28 State Street
Boston, Massachusetts 02109
Gentlemen:
We are furnishing this opinion with respect to the proposed offer and
sale from time to time of an indefinite number of shares of beneficial interest
(the "Shares") of TrustFunds Tax Exempt Trust (the "Trust"), being registered
under the Securities Act of 1933 by Registration Statement on Form N-1 No.
2-76990 of the Trust.
We have acted as counsel for the Trust since its organization and are
familiar with the action taken by its Trustees to authorize the issuance of the
Shares. We have examined its records of shareholder action, its By-Laws and its
Agreement and Declaration of Trust on file at the Office of the Secretary of The
Commonwealth of Massachusetts. We have examined a certificate of the Treasurer
of the Trust dated today stating that there are issued an outstanding 100,000
shares of beneficial interest, and that the Trust has received the appropriate
consideration for such outstanding shares. We have also examined such other
documents as we deem necessary for the purpose of this opinion.
We supervised the action taken by the Trust to effect registration
with the Securities and Exchange Commission as a management investment company
by the filing of a Notification of Registration on Form N-8A under the
Investment Company Act of 1940. We have examined copies of a Registration
Statement, as amended, under said Act and under the Securities Act of 1933 on
Form N-1, in the forms filed or to be filed with the Securities and Exchange
Commission.
We assume that appropriate action will be taken to register or qualify
the sale of the Shares under any applicable state and federal laws regulating
sales and offerings of securities and that upon sales of the Shares the Trust
will receive the net asset value thereof.
Based upon the foregoing, we are of the opinion that:
1. The Trust is a legally organized and validly existing
unincorporated voluntary association under the laws of The Commonwealth of
Massachusetts and is authorized to issue an unlimited number of shares, of which
100,000 shares are presently issued and outstanding.
<PAGE>
TrustFunds Tax Exempt Trust -2- July 19, 1982
2. Upon the issue of any of the Shares for cash at net asset value
and receipt by the Trust of the authorized consideration therefor, the Shares so
issued will be validly issued, fully paid and nonassessable by the Trust.
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Agreement and Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation, or instrument entered into or executed
by the Trust or the Trustees. The Agreement and Declaration of Trust provides
for indemnification out of the Trust property for all loss and expense of any
shareholder held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Trust itself would be unable
to meet its obligations.
We understand that this opinion is to be used in connection with the
registration of the Shares for offering and sale pursuant to the Securities Act
of 1933. We consent to the filing of this opinion with and as a part of said
Registration Statement on Form N-1 and amendments thereto, and to our being
named as legal counsel under the caption "Counsel and Independent Accountants"
in the Prospectus included in said Registration Statement.
Very truly yours,
Ropes & Gray
<PAGE>
EXHIBIT 11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated October 17, 1997, on the August 31, 1997 financial statements of SEI
Tax Exempt Trust, included in the Post-Effective Amendment No. 41 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. 41 to Registration Statement File No. 2-76990.
/s/ Arthur Andersen LLP
Philadelphia, Pa.
December 16, 1997
<PAGE>
exhibit 15(a)
DISTRIBUTION PLAN
(As amended November 5, 1982)
SECTION 1. TrustFunds Tax Exempt Trust (the "Trust") has adopted this
Distribution Plan (the "Plan") pursuant to which it may directly or indirectly
bear expenses relating to the distribution of securities of which it is the
issuer, pursuant to Section 12(b) of the Investment Company Act of 1940 (the
"Act"), and the rules and regulations promulgated thereunder, as the same may
be, from time to time, issued or amended.
SECTION 2. A majority of the Qualified Trustees shall approve a
budget for expenses which the Trust may incur pursuant to this Plan during the
12 month period following the date on which this Plan shall first become
effective and a similar budget for each succeeding 12 month period (or portion
thereof). A majority of the Qualified Trustees may from time to time change
such budgets to increase or decrease the total amount authorized to be spent, to
change the allocation of amounts among expenditure items, to suspend
expenditures or otherwise. No expenditures under this Plan shall be made in
excess of those provided for in budgets approved by a majority of the Qualified
Trustees from time to time. All expenditures pursuant to such budgets shall be
made only pursuant to authorization by the President, any Vice President or the
Treasurer of the Trust for an expense permitted pursuant to this Plan and,
unless otherwise authorized by a majority of the Qualified Trustees, no such
expenditures shall be made if SEI Financial Services Company shall object
thereto in writing. Expenses incurred pursuant to this Plan shall constitute
expenses subject to the annual limitation on expenses (with certain exceptions)
provided in Article 3(b) of the Trust's Management Agreement with SEI Financial
Services Company dated July 15, 1982. Expenses incurred pursuant to this Plan
shall be allocated among the Portfolios on the basis of their relative net asset
values, unless otherwise determined by a majority of the Qualified Trustees.
Expenses incurred pursuant to this Plan shall not exceed .3% of the Trust's
average daily assets during any fiscal year of the Trust.
SECTION 3. Expenses permitted pursuant to this Plan shall include,
and be limited, to the following:
A. The incremental printing cost incurred as the result of producing
for persons other than current unitholders of the Trust, reports,
prospectuses, notices and similar materials that are prepared by
the Trust for current unitholders, and of distributing the same
to other than current unitholders of the Trust.
B. The cost of registering the Trust's units under state and foreign
laws and other costs involved in complying with such laws in the
distribution of the Trust's units.
C. Advertising.
<PAGE>
D. The costs of preparing, printing and distributing any literature
not covered in A and used in connection with the offering of the
Trust's units.
E. Expenses incurred in connection with the promotion and sale of
the Trust's units (including, without limitation, travel).
SECTION 4. This Plan shall not take effect until it has been approved
by a vote of at least a majority of the outstanding voting securities of the
Trust.
SECTION 5. This Plan shall not take effect until it has been
approved, together with any related agreements, by votes of the majority (or
whatever greater percentage may, from time to time, be required by Section 12(b)
of the Act or the rules and regulations thereunder) of both (a) the Trustees of
the Trust and (b) the Qualified Trustees cast in person at a meeting called for
the purpose of voting on this Plan or such agreement.
SECTION 6. This Plan shall continue in effect for a period of more
than one year after it takes effect only so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in Section 5.
SECTION 7. Any person authorized to direct the disposition of monies
paid or payable by the Trust pursuant to this Plan or any related agreement
shall provide to the Trustees of the Trust, and the Trustees shall review, at
least quarterly, a written report of the amounts so expended and the purposes
for which such expenditures were made.
SECTION 8. This Plan may be terminated at any time by vote of a
majority of the Qualified Trustees, or by vote of a majority of the Trust's
outstanding voting securities.
SECTION 9. All agreements with any person relating to implementation
of this Plan shall be in writing, and any agreement related to this Plan shall
provide:
A. That such agreement may be terminated at any time, without
payment of any penalty, by vote of a majority of the Qualified
Trustees or by vote of a majority of the Trust's outstanding
voting securities, on no more than 60 days' written notice to any
other party to the agreement; and
B. That such agreement shall terminate automatically in the event of
its assignment.
SECTION 10. This Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 2 hereof without
the approval of a majority of the outstanding voting securities of the Trust,
and all material amendments to this Plan shall be approved in the manner
provided for approval of this Plan in Section 5.
2
<PAGE>
SECTION 11. As used in this Plan, (a) the term "Qualified Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, and (b) the terms "assignment" and
"interested person" shall have the respective meanings specified in the Act and
the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
3
<PAGE>
DISTRIBUTION PLAN
CLASS D SHARES
(FORMERLY, PRO VANTAGE FUNDS)
WHEREAS, SEI Tax Exempt Trust (the "Trust") is engaged in business as an
open-end investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act"); and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the
Trust's Class D and the owners of units of beneficial interest ("Shareholders")
in the Trust's Class D;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this Distribution
Plan pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust has adopted this Class D Distribution Plan ("Plan")
to enable the Trust to directly or indirectly bear expenses relating to the
distribution of Pro Vantage Funds securities of which the Trust is the issuer.
SECTION 2. The Trust may incur expenses for the items stipulated in
Section 3 of this Plan in an amount equal to .30% of the average daily net
assets of the Class D Portfolios. All expenditures pursuant to authorization by
the President, any Vice President or the Treasurer of the Trust. If there
should be more than one series of Trust shares, expenses incurred pursuant to
this Plan shall be allocated among the several series of the Trust on the basis
of their relative net asset values, unless otherwise determined by a majority of
the Qualified Trustees.
In addition, the Trust will pay the Distributor a fee on the Class D shares of
the Portfolios up to the amount set forth on Exhibit A. 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.
SECTION 3. Expenses permitted pursuant to this Plan shall include, and be
limited to, the following:
(a) The incremental printing costs incurred in producing for and
distributing to persons other than current Shareholders of the Trust
the reports, prospectuses, notices and similar materials that are
prepared by the Trust for current Shareholders;
<PAGE>
(b) advertising;
(c) the costs of preparing, printing and distributing any literature used
in connection with the offering of the Trust's Shares and not covered
by Section 3(a) of this Plan; and
(d) expenses incurred in connection with the promotion and sale of the
Trust's Shares including, without limitation, travel and communication
expenses and expenses for the compensation of and benefits for sales
personnel.
SECTION 4. This Plan shall not take effect until it has been approved (a)
by a vote of at least a majority of the outstanding voting securities of the
Trust's Class D; and (b) together with any related agreements, by votes of the
majority of both (i) the Trustees of the Trust and (ii) the Qualified Trustees,
cast in person at a Board of Trustees meeting called for the purpose of voting
on this Plan or such agreement.
SECTION 5. This Plan shall continue in effect for a period of more than
one year after it takes effect only for so long as such continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 4 herein for the approval of this Plan.
SECTION 6. Any person authorized to direct the disposition of monies paid
or payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
SECTION 7. This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of the outstanding
voting securities of the Trust's Pro Vantage Funds Class.
SECTION 8. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the voting of a majority of the Qualified Trustees or by the
vote of Shareholders holding a majority of the Trust's outstanding voting
securities, on not more than 60 days written notice to any other party to the
agreement; and (b) that such agreement shall automatically in the event of its
assignment.
SECTION 9. This Plan may not be amended to increase materially the amount
of distribution expenses permitted pursuant to Section 2 hereof without the
approval of Shareholders holding a majority of the outstanding voting securities
of the Trust, and all material amendments to this Plan shall be approved in the
manner provided in Part (b) of Section 4 herein for the approval of this Plan.
2
<PAGE>
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees" shall
mean those Trustees of the Trust who are not interested persons of the Trust,
and have no direct or indirect financial interest in the operation of this Plan
or any agreements related to it, and (b) the terms "assignment" and "interested
person" shall have the respective meanings specified in the 1940 Act and the
rules and regulations thereunder, subject to such exemptions as may be granted
by the Securities and Exchange Commission.
SECTION 11. While this Plan is in effect, the selection and nomination of
those Trustees who are not interested persons of the Trust within the meaning of
Section 2(a)(19) of the 1940 Act shall be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
SECTION 12. This Plan shall not obligate the Trust or any other party to
enter into an agreement with any particular person.
3
<PAGE>
EXHIBIT A
Tax Free Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25%
California Tax Exempt Portfolio. . . . . . . . . . . . . . . . . . . . . . 25%
Intermediate-Term Municipal Portfolio. . . . . . . . . . . . . . . . . . . 30%
Massachusetts Intermediate-Term Municipal Portfolio. . . . . . . . . . . . 30%
Pennsylvania Municipal Portfolio . . . . . . . . . . . . . . . . . . . . . 30%
4
<PAGE>
EXHIBIT A
Tax Free Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25%
California Tax Exempt Portfolio. . . . . . . . . . . . . . . . . . . . . . 25%
Intermediate-Term Municipal Portfolio. . . . . . . . . . . . . . . . . . . 30%
Massachusetts Intermediate-Term Municipal Portfolio. . . . . . . . . . . . 30%
Pennsylvania Municipal Portfolio . . . . . . . . . . . . . . . . . . . . . 30%
Pennsylvania Tax Free Portfolio. . . . . . . . . . . . . . . . . . . . . . 25%
New York Intermediate-Term Municipal Portfolio . . . . . . . . . . . . . . 30%
California Intermediate-Term Municipal Portfolio . . . . . . . . . . . . . 30%
Amended December 10, 1993
5
<PAGE>
DISTRIBUTION PLAN
SEI TAX EXEMPT TRUST
CLASS C
WHEREAS, SEI Tax Exempt Trust (the "Trust") is engaged in business as an
open-end investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act"); and
WHEREAS, the Trustees of the Trust have determined that there is a reasonable
likelihood that the following Distribution Plan will benefit the Trust and the
owners of units of beneficial interest ("Shareholders") in Class C of the Trust;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this Distribution Plan
pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust has adopted this Class C Distribution Plan ("Plan") to
enable the Trust to directly or indirectly bear expenses relating to the
distribution of Class C securities of which the Trust is the issuer.
SECTION 2. The Trust may incur expenses for the items stipulated in Section 3
of this Plan, provided that in no event shall the Trust incur reimbursable
expenses for Class C that exceed an annual rate of .30% of the Trust's average
daily net assets during any fiscal year of the Trust. All expenditures pursuant
to this Plan shall be made only pursuant to authorization by the President, any
Vice President or the Treasurer of the Trust. If there should be more than one
series of Trust shares, expenses incurred pursuant to this Plan shall be
allocated among the several series of the Trust on the basis of their relative
net asset values, unless otherwise determined by a majority of the Qualified
Trustees.
In addition, the Trust will pay the Distributor a fee of up to .50% of the Class
C Portfolios' average daily net assets. Compensation of broker/dealers and
service providers which provide specified services shall be made by the
Distributor from such fees. The actual fee paid will be negotiated based on the
extent and quality of services provided.
SECTION 3. Expenses permitted pursuant to this Plan shall include, and be
limited to, the following:
(a) The incremental printing costs incurred in producing for and distributing
to persons other than current Shareholders of the Trust the reports,
prospectuses, notices and similar materials that are prepared by the Trust for
current Shareholders;
(b) advertising;
<PAGE>
(c) the costs of preparing, printing and distributing any literature used in
connection with the offering of the Trust's Shares and not covered by Section
3(a) of this Plan; and
(d) expenses incurred in connection with the promotion and sale of the Trust's
Shares including, without limitation, travel and communication expenses and
expenses for the compensation of and benefits for sales personnel.
SECTION 4. This Plan shall not take effect until it has been approved (a) by a
vote of at least a majority of the outstanding voting securities of the Class C
shares of the Trust; and (b) together with any related agreements, by votes of
the majority of both (i) the Trustees of the Trust and (ii) the Qualified
Trustees, cast in person at a Board of Trustees meeting called for the purpose
of voting on this Plan or such agreement.
SECTION 5. This Plan shall continue in effect for a period of more than one
year after it takes effect only for so long as such continuance is specifically
approved at least annually in the manner provided in Part (b) of Section 4
herein for the approval of this Plan.
SECTION 6. Any person authorized to direct the disposition of monies paid or
payable by the Trust pursuant to this Plan or any related agreement shall
provide to the Trustees of the Trust, at least quarterly, a written report of
the amounts so expended and the purposes for which such expenditures were made.
SECTION 7. This Plan may be terminated at any time by the vote of a majority of
the Qualified Trustees or by vote of a majority of the Class C shares of the
Trust's outstanding voting securities.
SECTION 8. All agreements with any person relating to implementation of this
Plan shall be in writing, and any agreement related to this Plan shall provide
(a) that such agreement may be terminated at any time, without payment of any
penalty, by the vote of a majority of the Qualified Trustees or by the vote of
Shareholders holding a majority of the Class C shares of the Trust's outstanding
voting securities, on not more than 60 days written notice to any other party to
the agreement and (b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 9. This Plan may not be amended to increase materially the amount of
distribution expenses permitted pursuant to Section 2 hereof without the
approval of Shareholders holding a majority of the outstanding voting securities
of the Class C shares of the Trust and all material amendments to this Plan
shall be approved in the manner provided in Part (b) of Section 4 herein for the
approval of this Plan.
SECTION 10. As used in this Plan, (a) the term "Qualified Trustees" shall mean
those Trustees of the Trust who are not interested persons of the Trust, and
have no direct or indirect financial interest in the operation of this Plan or
any agreements related to it, and (b) the terms
2
<PAGE>
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act and the rules and regulations thereunder, subject to
such exemptions as may be granted by the Securities and Exchange Commission.
SECTION 11. White this Plan is in effect, the selection and nomination of those
Trustees who are not interested persons of the Trust within the meaning of
Section 2(a)(19) of the 1940 Act shall be committed to the discretion of the
Trustees then in office who are not interested persons of the Trust.
SECTION 12. This Plan shall not obligate the Trust or any other party to enter
into an agreement with any particular person.
3
<PAGE>
SEI TAX EXEMPT TRUST
TOTAL RETURN FOR THE YEAR ENDED 8/31/93
TOTAL RETURN: P(1 + T)n = ERV
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Institutional Institutional California Bainbridge
Tax Free (Class A) Tax Free (Class A) Tax Free (Class B) Tax Exempt (Class A) Tax Exempt:
P = 1,000 P = 1,000 P = 1,000 P = 1,000 P = 1,000
n = 1 n = 1 n = 1 n = 1 n = 1
ERV = 1,022.90 ERV = 1,025.90 ERV = 1,022.90 ERV = 1,024.10 ERV = 1,025.10
T = 2.28% T = 2.59% T = 2.29% T = 2.41% T = 2.61%
(Fiscal Year (Fiscal Year (Fiscal Year (Fiscal Year (For the Period
Ended 8/31/93) Ended 8/31/93) Ended 8/31/93) Ended 8/31/93) 11/8/92 to 8/31/93)
<S> <C> <C> <C>
Immediate-Term Pennsylvania Kansas Massachusetts Intermediate-
Municipal (Class A) Municipal (Class A) Tax Free Income Term Municipal (Class A)
P = 1,000 P = 1,000 P = 1,000 P = 1,000
n = 1 n = 1 n = 1 n = 1
ERV = 1,088.20 ERV = 1,089.10 ERV = 1,103.80 ERV = 1,084.30
T = 8.62% T = 8.91% T = 10.38% T = 8.43%
(Fiscal Year (Fiscal Year (Fiscal Year (For the Period
Ended 8/31/93) Ended 8/31/93) Ended 8/31/93) 9/18/92 to 8/31/93)
TOTAL RETURN (SINCE INCEPTION)
<S> <C> <C> <C>
Institutional Institutional California
Tax Free (Class A) Tax Free (Class A) Tax Free (Class B) Tax Exempt (Class A)
P = 1,000 P = 1,000 P = 1,000 P = 1,000
n = 10.58 n = 10.58 n = 2.83 n = 3.25
ERV = 1,624.80 ERV = 1,638.80 ERV = 1,098.30 ERV = 1,131.50
T = 4.69% T = 3.78% T = 3.37% T = 3.88%
(Fiscal Year (Fiscal Year (Fiscal Year (Fiscal Year
Ended 8/31/93) Ended 8/31/93) Ended 8/31/93) Ended 8/31/93)
<S> <C> <C>
Immediate-Term Pennsylvania Kansas
Municipal (Class A) Municipal (Class A) Tax Free Income
P = 1,000 P = 1,000 P = 1,000
n = 3.99 n = 4.05 n = 2.73
ERV = 1,350.10 ERV = 1,371.20 ERV = 1,273.80
T = 7.82% T = 8.12% T = 9.30%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
(Fiscal Year Ended 8/31/93) (Fiscal Year Ended 8/31/93) (Fiscal Year Ended 8/31/93
5 YEAR TOTAL RETURN
<S> <C>
Institutions
Tax Free (Class A) Tax Free (Class A)
P = 1,000 P = 1,000
n = 6 n = 6
ERV = 1,239.00 ERV = 1,255.00
T = 4.38% T = 4.65%
(Fiscal Year Ended 8/31/93) (Fiscal Year Ended 8/31/93)
10 YEAR TOTAL RETURN
<S> <C>
Institutions
Tax Free (Class A) Tax Free (Class A)
P = 1,000 P = 1,000
n = 10 n = 10
ERV = 1,573.60 ERV = 1,588.50
T = 4.64% T = 4.74%
(Fiscal Year Ended 8/31/93) (Fiscal Year Ended 8/31/93
</TABLE>
<PAGE>
SCHEDULE FOR COMPUTATION OF PERFORMANCE QUOTATIONS
FOR THE SEVEN-DAY PERIOD ENDING AUGUST 31, 1993
LAST 7 DAILY DIVIDEND FACTORS
<TABLE>
<CAPTION>
INST. TAX INST. TAX CALIFORNIA BAINBRIDGE
TAX FREE EXEMPT A EXEMPT B TAX EXEMPT TAX EXEMPT
<S> <C> <C> <C> <C> <C>
DAY 1 0.000058755 0.000068458 0.000060250 0.000060420 0.000067698
DAY 2 0.000059688 0.000068738 0.000060530 0.000060892 0.000067477
DAY 3 0.000059688 0.000068738 0.000060530 0.000060892 0.000067477
DAY 2 0.000059688 0.000066738 0.000060530 0.000060892 0.000067477
DAY 4 0.000059688 0.000068738 0.000060530 0.000060892 0.000067477
DAY 5 0.000060428 0.000068481 0.000060288 0.000061269 0.000067848
DAY 6 0.000059058 0.000067715 0.000059508 0.000063109 0.000067725
DAY 7 0.000058734 0.000066716 0.000060608 0.000062872 0.000066675
TOTAL 0.000417040 0.000479594 0.000422139 0.000430346 0.000472387
Base Period Return
Annualized Yield = (bpr/1) x 365.17 2.18 2.50 2.20 2.25 2.47
Effective Yield = (bpr +1) to the
365/7 power - 1 2.21 2.51 2.22 2.27 2.50
Tax - Equivalent Yield = T/(1-R) 3.62 4.14 3.64 3.73 4.09
Tax Equivalent Effective Yield =
T/(1-R) 3.88 4.16 3.67 3.76 4.14
</TABLE>
<PAGE>
This schedule is included to illustrate 30-day yield, total return, and
average annual total reutrn for the First American Portfolios below. The
examples presented utilize actual data from these Portfolios which have
fiscal years ended 8/31/93.
30-Day Yield for the Month Ended 8/31/93
Yield = 2[(a-b + 1)6-1]
cd
<TABLE>
<CAPTION>
Intermediate Term Pennsylvania Kansas Massachusetts
<S> <C> <C> <C>
a = 462,850.66 a = 571,503.57 a = 240,916.50 a = 25,881.48
b = 52,941.19 b = 59,333.56 b = 8,883.85 b = 3,428.83
c = 10,944,192.22 c = 13,862,517.50 c = 5,310,407.49 c = 677,302.411
d = 10.84 d = 10.94 d = 10.91 d = 10.41
Yield = 4.19% Yield = 4.08% Yield = 4.84% Yield = 3.86%
</TABLE>
<PAGE>
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/ Mark E. Nagle Date:March 4, 1997
- ----------------- -------------
Mark E. Nagle
Controller and Chief Financial Officer
<PAGE>
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>
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>
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:Oct. 18, 1996
- ------------------- -------------
Frank E. Morris
Trustee
<PAGE>
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>
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>
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
<PAGE>
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
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