<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 1998
FILE NO. 2-76990
FILE NO. 811-3447
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 42 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 44 /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
EDWARD D. LOUGHLIN
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
/ / On December 31, 1997, pursuant to paragraph (b), or
/ / 60 days after filing pursuant to paragraph (a), or
/X/ On July 29, 1998 pursuant to paragraph (a) of Rule 485
</TABLE>
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<PAGE>
SEI TAX EXEMPT TRUST
POST-EFFECTIVE AMENDMENT NO. 42
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
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<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.................. *
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
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<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............................. *
</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.
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* Not Applicable
** Information required by Item 5A is contained in the 1997 Annual Report to
Shareholders
(ii)
<PAGE>
SEI TAX EXEMPT TRUST
JULY 31, 1998
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MASSACHUSETTS MUNICIPAL BOND FUND
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This Prospectus sets forth concisely information about the above-referenced
Portfolio that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated July 31, 1998, 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
Massachusetts Municipal Bond Fund (the "Portfolio"), a fixed income portfolio.
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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>
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<CAPTION>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) CLASS A
<S> <C>
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Management/Advisory Fees (AFTER FEE WAIVER) (1) .55%
12b-1 Fees None
Total Other Expenses .05%
Shareholder Servicing Fees (2) .00%
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Total Operating Expenses (AFTER FEE WAIVER) (3) .60%
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</TABLE>
(1) SEI INVESTMENTS MANAGEMENT CORPORATION ("SIMC") HAS WAIVED, ON A VOLUNTARY
BASIS, A PORTION OF ITS FEE, 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) REFLECTS THE CURRENT LEVEL OF SHAREHOLDER SERVICING FEES. PLEASE SEE
"DISTRIBUTION AND SHAREHOLDER SERVICING."
(3) ABSENT THIS WAIVER, TOTAL OPERATING EXPENSES OF THE PORTFOLIO ARE ESTIMATED
TO BE .62%.
EXAMPLE
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1 YR. 3 YRS.
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<S> <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
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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 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>
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 Massachusetts Municipal Bond Fund (the "Portfolio"), a
non-diversified 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 OBJECTIVE
AND POLICIES
___________________________________________________________________________
The Portfolio's investment objective is to seek as high a
level of income exempt from federal and Massachusetts
income taxes that can be obtained, as is 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 has a fundamental policy. Under normal
conditions, to be fully invested in obligations which
produce interest that is exempt from both federal and
Massachusetts state income tax (collectively "Municipal
Securities"). Under normal circumstances, 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 alterative 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 Portfolio may purchase the following types of
municipal obligations, but only if such securities, at the
time of purchase, either have the requested rating or, if
not rated, are of comparable quality as determined by
Standish, Ayer & Wood, Inc., the Portfolio's investment
sub-adviser ("SAW"): (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 SAW, it does not substantially impact the
market value of the Portfolio.
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.
3
<PAGE>
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
The Portfolio will not invest more than 25% of its assets
in Municipal Securities the interest on which is derived
from revenues of similar type projects. This restriction
does not apply to Municipal Securities in any of the
following categories: public housing authorities; general
obligations of states and localities; state and local
housing finance authorities; or municipal utilities
systems. 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.
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 may invest in variable and floating
rate obligations, purchase futures contracts and options,
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. 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.
RISK FACTORS
______________________________________________________________________
MASSACHUSETTS
RISK FACTORS
Under normal conditions, the Portfolio will be fully
invested in obligations which produce income exempt from
federal income tax and Massachusetts state tax.
Accordingly, the Portfolio will have considerable
investments in Massachusetts municipal obligations. As a
result, the Portfolio will be more susceptible to factors
which adversely affect issuers of
4
<PAGE>
Massachusetts obligations than a mutual fund which does not
have as great a concentration in Massachusetts municipal
obligations.
An investment in the Portfolio will be affected by
the many factors that affect the financial condition of the
Commonwealth of Massachusetts. For example, financial
difficulties of the Commonwealth, its counties,
municipalities and school districts that hinder efforts to
borrow and credit ratings are factors which may affect the
Portfolio.
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 Municipal 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 certain investment limitations
are fundamental policies of the Portfolio. Fundamental
policies cannot be changed with respect to the Trust or the
Portfolio without the consent of the holders of a majority
of the Trust's or the Portfolio's outstanding shares.
THE PORTFOLIO MAY NOT:
1. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on current
value at the time of such purchase, to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities or
to investments in tax-exempt securities issued by
governments or political subdivisions of governments.
2. Borrow money in an amount exceeding 33 1/3% of the value
of its total assets, provided that, for purposes of this
limitation, investment strategies which either obligate
the Portfolio to purchase securities or require the
Portfolio to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5%
of its assets, (i) all borrowings will be repaid before
making additional investments and any interest paid on
such borrowings will reduce income, and (ii) asset
coverage of at least 300% is required.
5
<PAGE>
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional fundamental and
non-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 and dividend disbursing 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.
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
$ billion in assets as of April 30, 1998.
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
6
<PAGE>
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. 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.
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
April 30, 1998 were $ 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 aggregate assets of the
Portfolios of the Trust 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 Portfolio may pay the Distributor a negotiated
shareholder servicing fee at a rate of up to .25% of
average daily net assets attributable to Class A shares
that are subject to the arrangement. Under the Service
Plan, the
7
<PAGE>
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.
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"). The minimum initial investment
in a Portfolio is $100,000; however, the minimum investment
may be waived at the Distributor's discretion. All
subsequent purchases must be at least $1,000.
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.
8
<PAGE>
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 as
of the regularly-scheduled close of normal trading on the
New York Stock Exchange (normally 4:00 p.m., Eastern time)
on each Business Day.
If there is no readily ascertainable market value for
a security, SEI Management will make a good faith
determination as to the "fair value" of the security.
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).
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
9
<PAGE>
achieved on a fully taxable investment to produce the
after-tax equivalent of the Portfolio's yield, assuming
certain tax brackets for a shareholder.
The total return of the Portfolio refers to the
average compounded rate of return to a hypothetical
investment for designated time periods (including, but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions.
The Portfolio may periodically compare its
performance to that of: (i) other mutual funds tracked by
mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; (ii)
broad groups of comparable mutual funds; (iii) unmanaged
indices which may assume investment of dividends but
generally do not reflect deductions for administrative and
management costs; or (iv) other investment alternatives.
The Portfolio may quote Morningstar, Inc., a service that
ranks mutual funds on the basis of risk-adjusted
performance, and Ibbotson Associates of Chicago, Illinois,
which provides historical returns of the capital markets in
the U.S. The Portfolio may use long-term performance of
these capital markets to demonstrate general long-term risk
versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The
Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy, and investment
techniques.
The Portfolio may quote various measures of
volatility and benchmark correlation in advertising and may
compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price
fluctuations or total returns to a benchmark while measures
of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot
be calculated precisely.
TAXES
______________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative 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 the
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>
MASSACHUSETTS INCOME
TAXES
The Portfolio is not liable for any income or franchise tax
in the Commonwealth of Massachusetts as long as it
qualifies as a regulated investment company under the Code.
Under current law, as long as the Portfolio qualifies
as a regulated investment company under the Code,
distributions from the Portfolio which qualify as
exempt-interest dividends for Federal income tax purposes
are exempt from Massachusetts personal income taxation, to
the extent that the distributions are derived from interest
on tax-exempt municipal bonds of Massachusetts and certain
other tax-exempt obligations and are properly designated as
such to shareholders. In addition, as long as the Portfolio
qualifies as a regulated investment company under the Code,
distributions which qualify as capital gain dividends for
federal income tax purposes also are exempt from
Massachusetts personal income taxation, to the extent that
the distributions are attributable to gains from the sale
or exchange of certain Massachusetts obligations, issued
pursuant to legislation which specifically exempts such
gain from Massachusetts personal income taxation, and are
properly designated as such to shareholders.
State and local tax consequences in other states may
differ from the federal income tax consequences and
Massachusetts tax consequences described above.
Shareholders should consult their own tax advisors
regarding the particular tax consequences of an investment
in the Portfolio.
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, Ohio Tax Free Fund, New Jersey Municipal Bond
Fund, California Municipal Bond Fund, Pennsylvania
Municipal Portfolio, New York Municipal Bond Fund, 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.
12
<PAGE>
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class will vote
separately on matters relating solely to that portfolio or
class, such as any distribution plan. As a Massachusetts
business trust, the Trust is not required to hold annual
meetings of shareholders, but approval will be sought for
certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining
Trustees or by shareholders at a special meeting called
upon written request of shareholders owning at least 10% of
the outstanding shares of the Trust. In the event that such
a meeting is requested, the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
REPORTING
The Trust issues unaudited financial statements
semi-annually and audited financial statements annually.
The Trust furnishes proxy statements and other reports to
shareholders of record.
SHAREHOLDER 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.
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:
13
<PAGE>
FUTURES AND OPTIONS ON
FUTURES
Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of a
specific security at a specified future time and at a
specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise
price during the term of the option. A Portfolio may use
futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to
a particular market or instrument. A Portfolio will
minimize the risk that it will be unable to close out a
futures contract by only entering into futures contracts
that are traded on national futures exchanges.
An index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the bond index value at
the close of trading of the contract and the price at which
the futures contract is originally struck. No physical
delivery of the bonds comprising the index is made:
generally contracts are closed out prior to the expiration
date of the contract.
In order to avoid leveraging and related risks, when
a Portfolio invests in futures contracts, it will cover its
position by depositing an amount of cash or liquid
securities equal to the market value of the futures
positions held, less margin deposits, in a segregated
account and that amount will be marked to market on a daily
basis.
A Portfolio may enter into futures contracts and
options on futures contracts traded on an exchange
regulated by the Commodities Futures Trading Commission
("CFTC"), so long as, to the extent that such transactions
are not for "bona fide hedging purposes," the aggregate
initial margin and premiums on such positions (excluding
the amount by which such options are in the money) do not
exceed 5% of the Portfolio's net assets.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in
markets and movements in interest rates, (2) there may be
an imperfect or no correlation between the changes in
market value of the securities held by the Portfolio and
the prices of futures and options on futures, (3) there may
not be a liquid secondary market for a futures contract or
option, (4) trading restrictions or limitations may be
imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and options on
futures.
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.
14
<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 the
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).
15
<PAGE>
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.
16
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
The Trust................................................................. 3
Investment Objective and Policies......................................... 3
General Investment Policies............................................... 4
Risk Factors.............................................................. 4
Investment Limitations.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 6
The Sub-Adviser........................................................... 7
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>
17
<PAGE>
SEI TAX EXEMPT TRUST
JULY 31, 1998
- --------------------------------------------------------------------------------
NEW JERSEY MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
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 July 31, 1998, 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 Jersey Municipal Bond Fund (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 (2) .00%
- ------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVER) (3) .60%
- ------------------------------------------------------------------------------
</TABLE>
(1) SEI INVESTMENTS MANAGEMENT CORPORATION ("SIMC") HAS WAIVED, ON A VOLUNTARY
BASIS, A PORTION OF ITS FEE, 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) REFLECTS THE CURRENT LEVEL OF SHAREHOLDER SERVICING FEES. PLEASE SEE
"DISTRIBUTION AND SHAREHOLDER SERVICING."
(3) ABSENT THIS WAIVER, TOTAL OPERATING EXPENSES OF THE PORTFOLIO ARE ESTIMATED
TO BE .62%.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS.
------- -------
<S> <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
- -----------------------------------------------------------------------------------------------------------------------
</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>
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 Jersey Municipal Bond Fund (the "Portfolio"), a non-diversified
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 OBJECTIVE
AND POLICIES
___________________________________________________________________________
The Portfolio's investment objective is to seek as high a
level of income exempt from federal and New Jersey income
taxes that can be obtained, as is 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 has a fundamental policy, under normal
conditions, to be fully invested in obligations which
produce interest that is exempt from both federal and New
Jersey state income tax (collectively "Municipal
Securities"). Under normal circumstances, 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. In addition, for
temporary defensive purposes when, in the opinion of its
advisers, such securities are not readily available or of
sufficient quality, the Portfolio can invest up to 100% of
its assets in securities which pay interest which is exempt
only from federal income taxes or in taxable securities as
described below.
The Portfolio may purchase the following types of
municipal obligations, but only if such securities, at the
time of purchase, either have the requisite rating or, if
not rated, are of comparable quality as determined by Van
Kampen American Capital Management, Inc., the Portfolio's
investment sub-adviser ("Van Kampen") (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 Moodys'; 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 will be sold at a time when, in the
judgment of Van Kampen, it does not substantially impact
the market value of the Portfolio.
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.
3
<PAGE>
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
The Portfolio will not invest more than 25% of its assets
in Municipal Securities the interest on which is derived
from revenues of similar type projects. This restriction
does not apply to Municipal Securities in any of the
following categories: public housing authorities; general
obligations of states and localities; state and local
housing finance authorities; or municipal utilities
systems. 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.
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 may invest in variable and floating
rate obligations, purchase futures contracts and options,
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. 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.
RISK FACTORS
______________________________________________________________________
NEW JERSEY
RISK FACTORS
Under normal conditions, the Portfolio will be fully
invested in obligations which produce income exempt from
federal income tax and New Jersey state tax. Accordingly,
the Portfolio will have considerable investments in New
Jersey municipal obligations. As a result, the Portfolio
will be more susceptible to factors which adversely affect
issuers of
4
<PAGE>
New Jersey obligations than a mutual fund which does not
have a great concentration in New Jersey municipal
obligations.
An investment in the Portfolio will be affected by
the many factors that affect the financial condition of the
State of New Jersey. For example, financial difficulties of
the State, its counties, municipalities and school
districts that hinder efforts to borrow and credit ratings
are factors which may affect the Portfolio.
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 Municipal 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 imitation applies
to 50% of the Portfolio's total assets..
INVESTMENT
LIMITATIONS
________________________________________________________________________
The investment objective and certain investment limitations
are fundamental policies of the Portfolio. Fundamental
policies cannot be changed with respect to the Trust or the
Portfolio without the consent of the holders of a majority
of the Trust's or the Portfolio's outstanding shares.
THE PORTFOLIO MAY NOT:
1. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on current
value at the time of such purchase, to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities or
to investments in tax-exempt securities issued by
governments or political subdivisions of governments.
2. Borrow money in an amount exceeding 33 1/3% of the value
of its total assets, provided that, for purposes of this
limitation, investment strategies which either obligate
the Portfolio to purchase securities or require the
Portfolio to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5%
of its assets. (i) all borrowings will be repaid before
making additional investments and any interest paid on
such borrowings will reduce income; and (ii) asset
coverage of at least 300% is required.
5
<PAGE>
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional fundamental and
non-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 and dividend disbursing 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.
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
$ billion in assets as of April 30, 1998.
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
6
<PAGE>
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. 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.
THE SUB-ADVISER
__________________________________________________________________
VAN KAMPEN AMERICAN
CAPITAL MANAGEMENT, INC
Van Kampen American Capital Management, Inc. ("Van
Kampen"), acts as investment sub-adviser to the Portfolio.
Van Kampen is an indirect, wholly-owned subsidiary of
Morgan Stanley Dean Witter & Co., and was founded in
. As of April 23, 1998, Van Kampen had
approximately $ billion of assets under management. The
principal business address of Van Kampen is One Parkview
Plaza, Oakbrook Terrace, Illinois 60181.
, a of Van
Kampen, serves as portfolio manager of the Portfolio.
has years of investment experience,
and has been employed by Van Kampen since 19 .
SIMC pays Van Kampen a fee based on a percentage of
average the monthly market value of the assets of the
Portfolio managed by Van Kampen.
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 Portfolio may pay the Distributor a negotiated
shareholder servicing fee at a rate of up to .25% of
average daily net assets attributable to Class A shares
that are subject to the arrangement. 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
7
<PAGE>
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.
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"). The minimum initial investment
in a Portfolio is $100,000; however, the minimum investment
may be waived at the Distributor's discretion. All
subsequent purchases must be at least $1,000.
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,
8
<PAGE>
less any liabilities, by the total number of outstanding
shares of the Portfolio. Net asset value per share is
determined as of the regularly-scheduled close of normal
trading on the New York Stock Exchange (normally 4:00 p.m.,
Eastern time) on each Business Day.
If there is no readily ascertainable market value for
a security, SEI Management will make a good faith
determination as to the "fair value" of the security.
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).
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),
9
<PAGE>
assuming that the entire investment is redeemed at the end
of each period and assuming the reinvestment of all
dividend and capital gain distributions.
The Portfolio may periodically compare its
performance to that of: (i) other mutual funds tracked by
mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; (ii)
broad groups of comparable mutual funds; (iii) unmanaged
indices which may assume investment of dividends but
generally do not reflect deductions for administrative and
management costs; or (iv) other investment alternatives.
The Portfolio may quote Morningstar, Inc., a service that
ranks mutual funds on the basis of risk-adjusted
performance, and Ibbotson Associates of Chicago, Illinois,
which provides historical returns of the capital markets in
the U.S. The Portfolio may use long-term performance of
these capital markets to demonstrate general long-term risk
versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The
Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy, and investment
techniques.
The Portfolio may quote various measures of
volatility and benchmark correlation in advertising and may
compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price
fluctuations or total returns to a benchmark while measures
of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot
be calculated precisely.
TAXES
______________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative 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
10
<PAGE>
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 the
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>
NEW JERSEY INCOME TAXES
The following is a general, abbreviated summary of certain
of the provisions of the New Jersey tax code presently in
effect as they directly govern the taxation of shareholders
subject to New Jersey tax. These provisions are subject to
change by legislative or administrative action, and any
such change may be retroactive.
The Portfolio intends to invest primarily in
obligations that produce interest exempt from federal and
New Jersey taxes. If the Portfolio invests in obligations
that pay interest that is not exempt for New Jersey
purposes but is exempt for federal purposes, a portion of
the Portfolio's distributions will be subject to New Jersey
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 Portfolio, the Trust consists
of the following portfolios: Tax Free Portfolio,
Institutional Tax Free Portfolio, California Tax Exempt
Portfolio, Ohio Tax Free Fund, Massachusetts Municipal Bond
Fund, California Municipal Bond Fund, Pennsylvania
Municipal Portfolio, New York Municipal Bond Fund, 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.
12
<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
Substantially all of the net investment income (exclusive
of capital gains) of the Portfolio is declared daily and
paid monthly as a dividend. Shareholders of record on the
last record date of each period will be entitled to receive
the dividend distribution, which is generally paid on the
10th Business Day of the following month. If any net
capital gains are realized, they will be distributed by the
Portfolio annually.
Shareholders automatically receive all income
dividends and capital gain distributions in additional
shares at the net asset value next determined following the
record date, unless the shareholder has elected to take
such payment in cash. Shareholders may change their
election by providing written notice to the Manager at
least 15 days prior to the distribution.
COUNSEL AND INDEPENDENT
PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Arthur Andersen LLP serves as the independent public
accountants of the Trust.
CUSTODIAN AND WIRE AGENT
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
7618, Philadelphia, Pennsylvania 19101, serves as Custodian
of the Trust's assets and acts as wire agent of the Trust.
The Custodian holds cash, securities and other assets of
the Trust as required by the 1940 Act.
DESCRIPTION OF
PERMITTED
INVESTMENTS AND RISK
FACTORS ______________________________________________________________________
The following is a description of certain of the permitted
investments for the Portfolio, and the associated risk
factors:
FUTURES AND OPTION ON
FUTURES
Futures contracts provided for the future sale by one party
and purchase by another party of a specified amount of a
specific security at a specified future time and at a
specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise
price during the term of the option. A Portfolio may use
futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to
a particular market or instrument. A Portfolio will
minimize the risk that it will be unable to close out a
futures contract by only entering into futures contracts
that are traded on national futures exchanges.
13
<PAGE>
An index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the bond index value at
the close of trading of the contract and the price at which
the futures contract is originally struck. No physical
delivery of the bonds comprising the index is made:
generally contracts are closed out prior to the expiration
date of the contract.
In order to avoid leveraging and related risks, when
a Portfolio invests in futures contacts, it will cover its
position by depositing an amount of cash or liquid
securities equal to the market value of the futures
positions held, less margin deposits, in a segregated
account and that amount will be marked to market on a daily
basis.
A Portfolio may enter into futures contracts and
options on futures contracts traded on an exchange
regulated by the Commodities Futures Trading Commission
("CFTC"), so long as, to the extent that such transactions
are not for "bona fide hedging purposes," the aggregate
initial margin and premiums on such positions (excluding
the amount by which such options are in the money) do not
exceed 5% of the Portfolio's net assets.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in
markets and movements in interest rates, (2) there may be
an imperfect or no correlation between the changes in
market value of the securities held by the Portfolio and
the prices of futures and options on futures, (3) there may
not be a liquid secondary market for a futures contract or
option, (4) trading restrictions or limitations may be
imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and options on
futures.
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
14
<PAGE>
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
(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......................................................
The Trust................................................................. 3
Investment Objective and Policies......................................... 3
General Investment Policies............................................... 4
Investment Limitations.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 6
The Sub-Adviser........................................................... 7
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>
17
<PAGE>
SEI TAX EXEMPT TRUST
JULY 31, 1998
- --------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
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 July 31, 1998, 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
California Municipal Bond Fund (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 (2) .00%
- ------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVER) (3) .60%
- ------------------------------------------------------------------------------
</TABLE>
(1) SEI INVESTMENTS MANAGEMENT CORPORATION ("SIMC") HAS WAIVED, ON A VOLUNTARY
BASIS, A PORTION OF ITS FEE, 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) REFLECTS THE CURRENT LEVEL OF SHAREHOLDER SERVICING FEES. PLEASE SEE
"DISTRIBUTION AND SHAREHOLDER SERVICING."
(3) ABSENT THIS FEE WAIVER, TOTAL OPERATING EXPENSES OF THE PORTFOLIO ARE
ESTIMATED TO BE .62%.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS.
------- -------
<S> <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
- -----------------------------------------------------------------------------------------------------------------------
</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>
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 California Municipal Bond Fund (the "Portfolio"), a non-diversified
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 OBJECTIVE
AND POLICIES
___________________________________________________________________________
The Portfolio's investment objective is to seek as high a
level of current income exempt from both federal and
California income taxes as is 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 has a fundamental policy under normal
conditions, to be fully invested in obligations which
produce interest that is exempt from both federal and
California state income tax (collectively "Municipal
Securities"). Under normal circumstances, 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. 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 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 Van
Kampen American Capital Management, Inc., the Portfolio's
investment sub-adviser ("Van Kampen"): (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 Portfolio which become less than the prescribed
investment quality will be sold at a time when, in the
judgment of Van Kampen, it does not substantially impact
the market value of the Portfolio.
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.
3
<PAGE>
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
The Portfolio will not invest more than 25% of its assets
in Municipal Securities the interest on which is derived
from revenues of similar type projects. This restriction
does not apply to Municipal Securities in any of the
following categories: public housing authorities; general
obligations of states and localities; state and local
housing finance authorities; or municipal utilities
systems. 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.
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 may invest in variable and floating
rate obligations, purchase futures contracts and options,
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. 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.
RISK FACTORS
______________________________________________________________________
CALIFORNIA RISK FACTORS
Under normal conditions, the Portfolio will be fully
invested in obligations which produce income exempt from
federal income tax and California state income tax.
Accordingly, the Portfolio will have considerable
investments in California municipal obligations. As a
result, the Portfolio will be more susceptible to factors
which adversely affect issuers of California
4
<PAGE>
obligations than a mutual fund which does not have as great
a concentration in California municipal obligations.
An investment in the Portfolio will be affected by
the many factors that affect the financial condition of the
State of California. For example, financial difficulties of
the State, its counties, municipalities and school
districts that hinder efforts to borrow and credit ratings
are factors which may affect the Portfolio.
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 Municipal 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 certain investment limitations
are fundamental policies of the Portfolio. Fundamental
policies cannot be changed with respect to the Trust or the
Portfolio without the consent of the holders of a majority
of the Trust's or the Portfolio's outstanding shares.
THE PORTFOLIO MAY NOT:
1. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on current
value at the time of such purchase, to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities or
to investments in tax-exempt securities issued by
governments or political subdivisions of governments.
2. Borrow money in an amount exceeding 33 1/3% of the value
of its total assets, provided that, for purposes of this
limitation, investment strategies which either obligate
the Portfolio to purchase securities or require the
Portfolio to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5%
of its assets, (i) all borrowings will be repaid before
making additional investments and any interest paid on
such borrowings will reduce income, and (ii) asset
coverage of at least 300% is required.
5
<PAGE>
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional fundamental and
non-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 and dividend disbursing 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.
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
$ billion in assets as of April 30, 1998.
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
6
<PAGE>
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. 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.
THE SUB-ADVISER
__________________________________________________________________
VAN KAMPEN AMERICAN
CAPITAL MANAGEMENT, INC.
Van Kampen American Capital Management, Inc. ("Van
Kampen"), acts as investment sub-adviser to the Portfolio.
Van Kampen is an indirect, wholly-owned subsidiary of
Morgan Stanley Dean Witter & Co., and was founded in
. As of April 23, 1998, Van Kampen had approximately
$ billion of assets under management. The principal
business address of Van Kampen is One Parkview Plaza,
Oakbrook Terrace, Illinois 60181.
, a of Van Kampen, serves as
portfolio manager of the Portfolio. has years of
investment experience, and has been employed by Van Kampen
since 19 .
SIMC pays Van Kampen a fee based on a percentage of
average the monthly market value of the assets of the
Portfolio managed by Van Kampen.
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 Portfolio may pay the Distributor a negotiated
shareholder servicing fee at a rate of up to .25% of
average daily net assets attributable to Class A shares
that are subject to the arrangement. 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;
7
<PAGE>
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.
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"). The minimum initial investment
in a Portfolio is $100,000; however, the minimum investment
may be waived at the Distributor's discretion. All
subsequent purchases must be at least $1,000.
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
8
<PAGE>
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 as of the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally
4:00 p.m., Eastern time) on each Business Day.
If there is no readily ascertainable market value for
a security. SEI Management will make a good faith
determination as to the "fair value" of the security.
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).
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
9
<PAGE>
period from which the Portfolio commenced operations
through the specified date), assuming that the entire
investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions.
The Portfolio may periodically compare its
performance to that of: (i) other mutual funds tracked by
mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; (ii)
broad groups of comparable mutual funds; (iii) unmanaged
indices which may assume investment of dividends but
generally do not reflect deductions for administrative and
management costs; or (iv) other investment alternatives.
The Portfolio may quote Morningstar, Inc., a service that
ranks mutual funds on the basis of risk-adjusted
performance, and Ibbotson Associates of Chicago, Illinois,
which provides historical returns of the capital markets in
the U.S. The Portfolio may use long-term performance of
these capital markets to demonstrate general long-term risk
versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The
Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy, and investment
techniques.
The Portfolio may quote various measures of
volatility and benchmark correlation in advertising and may
compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price
fluctuations or total returns to a benchmark while measures
of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot
be calculated precisely.
TAXES
______________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative 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.
10
<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.
Any dividends paid out of income realized by the
Portfolio on taxable securities will be taxable to
shareholders as ordinary income (whether received in cash
or in additional shares) to the extent of the Portfolio's
earnings and profits and will not qualify for the
dividends-received deduction for corporate shareholders.
Distributions to shareholders of net capital gains of the
Portfolio also will not qualify for the dividends received
deduction and will be taxable to shareholders as long-term
capital gain, whether received in cash or additional
shares, and regardless of how long a shareholder has held
the shares.
Dividends declared by the Portfolio in October,
November or December of any year and payable to
shareholders of record on a date in any such month will be
deemed to have been paid by the Portfolio and received by
the shareholders on December 31 of that year if paid by the
Portfolio at any time during the following January. The
Portfolio intends to make sufficient distributions prior to
the end of each calendar year to avoid liability for the
federal excise tax applicable to 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.
CALIFORNIA INCOME TAXES
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
11
<PAGE>
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.
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. The Portfolio
will notify its shareholders of the amount of
exempt-interest dividends each year.
Corporations subject to California franchise tax that
invest in the Portfolio may not be entitled to exclude
California exempt-interest dividends from income.
Dividend distributions that do not qualify for
treatment as California exempt-interest dividends
(including those dividend 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.
The foregoing 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 with respect to Portfolio transactions.
Shareholders are advised to consult with their own tax
advisers for more detailed information concerning
California tax matters.
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, Ohio Tax Free Fund, Massachusetts Municipal Bond
Fund, New Jersey Municipal Bond Fund, Pennsylvania
Municipal Portfolio, New York Municipal Bond Fund, 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.
12
<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 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.
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.
13
<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:
FUTURES AND OPTIONS ON
FUTURES
Futures contracts provide for the future sale by one party
and purchase by another party of a specified amount of a
specific security at a specified future time and at a
specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise
price during the term of the option. A Portfolio may use
futures contracts and related options for BONA FIDE hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to
a particular market or instrument. A Portfolio will
minimize the risk that it will be unable to close out a
futures contract by only entering into futures contracts
that are traded on national futures exchanges.
An index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the bond index value at
the close of trading of the contract and the price at which
the futures contract is originally struck. No physical
delivery of the bonds comprising the index is made:
generally contracts are closed out prior to the expiration
date of the contract.
In order to avoid leveraging and related risks, when
a Portfolio invests in futures contracts, it will cover its
position by depositing an amount of cash or liquid
securities equal to the market value of the futures
positions held, less margin deposits, in a segregated
account and that amount will be marked to market on a daily
basis.
A Portfolio may enter into futures contracts and
options on futures contracts traded on an exchange
regulated by the Commodities Futures Trading Commission
("CFTC"), so long as, to the extent that such transactions
are not for "bona fide hedging purposes," the aggregate
initial margin and premiums on such positions (excluding
the amount by which such options are in the money) do not
exceed 5% of the Portfolio's net assets.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in
markets and movements in interest rates, (2) there may be
an imperfect or no correlation between the changes in
market value of the securities held by the Portfolio and
the prices of futures and options on futures, (3) there may
not be a liquid secondary market for a futures contract or
option, (4) trading
14
<PAGE>
restrictions or limitations may be imposed by an exchange,
and (5) government regulations may restrict trading in
futures contracts and options on futures.
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
(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.
15
<PAGE>
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.
16
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights......................................................
The Trust................................................................. 3
Investment Objective and Policies......................................... 3
General Investment Policies............................................... 4
Investment Limitations.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 6
The Sub-Adviser........................................................... 7
Distribution and Shareholder Servicing.................................... 7
Purchase and Redemption of Shares......................................... 8
Performance............................................................... 9
Taxes..................................................................... 10
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 14
</TABLE>
17
<PAGE>
SEI TAX EXEMPT TRUST
JULY 31, 1998
- --------------------------------------------------------------------------------
NEW YORK MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------
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 July 31, 1998, 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 Municipal Bond Fund (formerly, the 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 WAIVER) (1) .55%
12b-1 Fees None
Total Other Expenses (2) .05%
Shareholder Servicing Fees (3) .00%
- ------------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVER) (4) .60%
- ------------------------------------------------------------------------------------------------------------------------
</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) REFLECTS THE CURRENT LEVEL OF SHAREHOLDER SERVICING FEES. PLEASE SEE
"DISTRIBUTION AND SHAREHOLDER SERVICING."
(4) ABSENT THIS FEE WAIVER. TOTAL OPERATING EXPENSES FOR CLASS A SHARES OF THE
PORTFOLIO ARE ESTIMATED TO BE .62%.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS.
----------- -----------
<S> <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
- ------------------------------------------------------------------------------------------------------------------------------
</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 Municipal Bond Fund (the "Portfolio"), a non-diversified
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 OBJECTIVE
AND POLICIES
___________________________________________________________________________
The investment objective of the Portfolio is as high a
level of current income, exempt from both federal and New
York state and city personal income taxes, as is consistent
with the preservation of principal. There can be no
assurance that the Portfolio will achieve its investment
objective.
The Portfolio has a fundamental policy, under normal
conditions, to be fully invested in obligations which
produce interest that is exempt from both federal and New
York state and city income tax (collectively "Municipal
Securities"). Under normal circumstances, 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. 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 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
Standish, Ayer & Wood, Inc., the Portfolio's investment
sub-adviser ("SAW"); (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
Portfolio which become less than the prescribed investment
quality will be sold at a time when, in the judgment of
SAW, it does not substantially impact the market value of
the Portfolio.
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.
3
<PAGE>
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
The Portfolio will not invest more than 25% of its assets
in Municipal Securities the interest on which is derived
from revenues of similar type projects. This restriction
does not apply to Municipal Securities in any of the
following categories: public housing authorities; general
obligations of states and localities; state and local
housing finance authorities; or municipal utilities
systems. 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.
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 may invest in variable and floating
rate obligations, purchase futures contracts and options,
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. 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
(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
4
<PAGE>
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 the recent past, both the State and
the City experienced financial difficulties related to poor
economic performance and recurring deficits. The State's
credit standing has been reduced, and its ability to
provide assistance to its public authorities and political
subdivisions could be impaired.
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 Municipal 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 certain investment limitations
are fundamental policies of the Portfolio. Fundamental
policies cannot be changed with respect to the Trust or the
Portfolio without the consent of the holders of a majority
of the Trust's or the Portfolio's outstanding shares.
THE PORTFOLIO MAY NOT:
1. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on current
value at the time of such purchase, to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities or
to investments in tax-exempt securities issued by
governments or political subdivisions of governments.
2. Borrow money in an amount exceeding 33 1/3% of the value
of its total assets, provided that for purposes of this
limitation, investment strategies which either obligate
the Portfolio to purchase securities or require the
Portfolio to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5%
of its assets,
5
<PAGE>
(i) all borrowings will be repaid before making
additional investments and any interest paid on such
borrowings will reduce income; and (ii) asset coverage
of at least 300% is required.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional fundamental and
non-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 and dividend disbursing 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 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
.60% 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
_______________________________________________________________________
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
$ billion in assets as of April 30, 1998.
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
6
<PAGE>
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. 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.
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
April 30, 1998 were $ 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 1998.
SIMC pays SAW a fee based on a percentage of the
average monthly market value of the aggregate assets of the
Portfolios of the Trust 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 Portfolio may pay the Distributor a negotiated
7
<PAGE>
shareholder servicing fee at a rate of up to .25% of
average daily net assets attributable to Class A shares
that are subject to the arrangement. 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.
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"). The minimum initial investment
in a Portfolio is $100,000; however, the minimum investment
may be waived at the Distributor's discretion. All
subsequent purchases must be at least $1,000.
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
8
<PAGE>
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 as
of the regularly-scheduled close of normal trading on the
New York Stock Exchange (normally, 4:00 p.m., Eastern time)
on each Business Day.
If there is no readily ascertainable market value for
a security, SEI Management will make a good faith
determination as to the "fair value" of the security.
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).
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
9
<PAGE>
during that period is generated in each 30-day period over
one year and is shown as a percentage of the investment.
The tax equivalent yield is calculated by determining
the rate of return that would have been achieved on a fully
taxable investment to produce the after-tax equivalent of
the Portfolio's yield, assuming certain tax brackets for a
shareholder.
The total return of the Portfolio refers to the
average compounded rate of return to a hypothetical
investment for designated time periods (including, but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions. The total return of the Portfolio may also
be quoted as a dollar amount or on an aggregate basis, an
actual basis.
The Portfolio may periodically compare its
performance to that of: (i) other mutual funds tracked by
mutual fund rating services (such as Lipper Analytical),
financial and business publications and periodicals; (ii)
broad groups of comparable mutual funds; (iii) unmanaged
indices which may assume investment of dividends but
generally do not reflect deductions for administrative and
management costs; or (iv) other investment alternatives.
The Portfolio may quote Morningstar, Inc., a service that
ranks mutual funds on the basis of risk-adjusted
performance, and Ibbotson Associates of Chicago, Illinois,
which provides historical returns of the capital markets in
the U.S. The Portfolio may use long-term performance of
these capital markets to demonstrate general long-term risk
versus reward scenarios and could include the value of a
hypothetical investment in any of the capital markets. The
Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy, and investment
techniques.
The Portfolio may quote various measures of
volatility and benchmark correlation in advertising and may
compare these measures to those of other funds. Measures of
volatility attempt to compare historical share price
fluctuations or total returns to a benchmark while measures
of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot
be calculated precisely.
TAXES
______________________________________________________________________________
The following summary of federal, state and local income
tax consequences is based on current tax laws and
regulations, which may be changed by legislative, judicial
or administrative action. No attempt has been made to
present a detailed explanation of the federal, state or
local income tax treatment of the Portfolio or its
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.
10
<PAGE>
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 the
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.
11
<PAGE>
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.
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 Municipal Bond
Fund, Ohio Tax Free Fund, Massachusetts Municipal Bond
Fund, New Jersey Municipal Bond Fund, Pennsylvania
Municipal Portfolio, California Tax Exempt 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.
12
<PAGE>
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each portfolio or class will vote
separately on matters relating solely to that portfolio or
class, such as any distribution plan. As a Massachusetts
business trust, the Trust is not required to hold annual
meetings of shareholders, but approval will be sought for
certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining
Trustees or by shareholders at a special meeting called
upon written request of shareholders owning at least 10% of
the outstanding shares of the Trust. In the event that such
a meeting is requested, the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
REPORTING
The Trust issues unaudited financial statements
semi-annually and audited financial statements annually.
The Trust furnishes proxy statements and other reports to
shareholders of record.
SHAREHOLDER 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 periodic dividend distribution, which is generally paid
on the 10th Business day of the following month. If any net
capital gains are realized, they will be distributed by the
Portfolio annually.
Shareholders automatically receive all income
dividends and capital gain distributions in additional
shares, unless the shareholder has elected to take such
payment in cash. Shareholders may change their election by
providing written notice to the Manager at least 15 days
prior to the distribution.
COUNSEL AND INDEPENDENT
PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Arthur Andersen LLP serves as the independent public
accountants of the Trust.
CUSTODIAN AND WIRE AGENT
CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
7618, Philadelphia, Pennsylvania 19101, serves as Custodian
of the Trust's assets and acts as wire agent of the Trust.
The Custodian holds cash, securities and other assets of
the Trust as required by the 1940 Act.
13
<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:
FUTURES AND OPTIONS ON
FUTURES
Futures contracts provided for the future sale by one party
and purchase by another party of a specified amount of a
specific security at a specified future time and at a
specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise
price during the term of the option. A Portfolio may use
futures contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to
a particular market or instrument. A Portfolio will
minimize the risk that it will be unable to close out a
futures contract by only entering into futures contracts
that are traded on national futures exchanges.
An index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the bond index value at
the close of trading of the contract and the price at which
the futures contract is originally struck. No physical
delivery of the bonds comprising the index is made:
generally contracts are closed out prior to the expiration
date of the contract.
In order to avoid leveraging and related risks, when
a Portfolio invests in futures contacts, it will cover its
position by depositing an amount of cash or liquid
securities equal to the market value of the futures
positions held, less margin deposits, in a segregated
account and that amount will be marked to market on a daily
basis.
A Portfolio may enter into futures contracts and
options on futures contracts traded on an exchange
regulated by the Commodities Futures Trading Commission
("CFTC"), so long as, to the extent that such transactions
are not for "bona fide hedging purposes," the aggregate
initial margin and premiums on such positions (excluding
the amount by which such options are in the money) do not
exceed 5% of the Portfolio's net assets.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in
markets and movements in interest rates, (2) there may be
an imperfect or no correlation between the changes in
market value of the securities held by the Portfolio and
the prices of futures and options on futures, (3) there may
not be a liquid secondary market for a futures contract or
option, (4) trading restrictions or limitations may be
imposed by an exchange, and (5) government regulations may
restrict trading in futures contracts and options on
futures.
14
<PAGE>
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 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.
15
<PAGE>
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.
16
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
The Trust................................................................. 3
Investment Objective and Policies......................................... 3
General Investment Policies............................................... 4
Risk Factors.............................................................. 4
Investment Limitations.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 6
The Sub-Adviser........................................................... 7
Distribution and Shareholder Servicing.................................... 7
Purchase and Redemption of Shares......................................... 8
Performance............................................................... 9
Taxes..................................................................... 10
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 14
</TABLE>
17
<PAGE>
SEI TAX EXEMPT TRUST
JULY 31, 1998
- --------------------------------------------------------------------------------
OHIO TAX FREE FUND
- --------------------------------------------------------------------------------
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 July 31, 1998, 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, Class B
and Class C shares of the Trust's Ohio Tax Free Fund (the "Portfolio").
AN INVESTMENT IN THE OHIO TAX FREE FUND 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 OHIO
TAX FREE FUND 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>
OHIO TAX FREE
FUND
----------------------------------------
CLASS A CLASS B CLASS C
------------ ------------ ------------
<S> <C> <C> <C>
Management/Advisory Fees (AFTER FEE WAIVER) (1) .29% .29% .29%
12b-1 Fees (2) None None None
Total Other Expenses .06% .36% .56%
Shareholder Servicing Fees (AFTER FEE WAIVER) .00%(2) .25% .25%
- -------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVERS) (3) .35% .65% .85%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE MANAGER HAS WAIVED, ON A VOLUNTARY BASIS, A PORTION OF ITS FEE, AND THE
MANAGEMENT/ADVISORY FEES SHOWN REFLECT THIS VOLUNTARY WAIVER. THE MANAGER
RESERVES THE RIGHT TO TERMINATE ITS WAIVER AT ANY TIME IN ITS SOLE
DISCRETION. ABSENT SUCH WAIVER, MANAGEMENT/ADVISORY FEES FOR THE PORTFOLIO
WOULD BE .40%.
(2) REFLECTS THE ANTICIPATED LEVEL OF SHAREHOLDER SERVICING FEES FOR CLASS A
SHARES. PLEASE SEE "DISTRIBUTION AND SHAREHOLDER SERVICING."
(3) ABSENT THIS FEE WAIVER, TOTAL OPERATING EXPENSES FOR CLASS A, CLASS B AND
CLASS C SHARES OF THE PORTFOLIO WOULD BE .46%, .76% AND .96%, RESPECTIVELY.
ADDITIONAL INFORMATION MAY BE FOUND UNDER "THE ADVISER" AND "THE MANAGER."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS.
------- -------
<S> <C> <C>
An investor in the Portfolio would pay the following expenses on a $1,000 investment assuming (1) a
5% annual return and (2) redemption at the end of each time period:
Class A $ 4 $ 11
Class B 7 21
Class C 9 27
- -----------------------------------------------------------------------------------------------------------------------
</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 OHIO TAX FREE FUND. 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>
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 Ohio Tax Free Fund (the "Portfolio"). The
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 OBJECTIVE
AND POLICIES
___________________________________________________________________________
OHIO TAX FREE FUND
The Portfolio's investment objective is a high level of
current income, free from federal income tax and, to the
extent possible, Ohio income taxes, consistent with
preservation of capital. The Portfolio will also attempt to
maintain a constant net asset value of $1.00 per share.
It is a fundamental policy of the 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 Ohio income tax ("Ohio Securities"). Ohio
Securities constitute municipal obligations of the State of
Ohio 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 Portfolio may invest up
to 100% of its assets in municipal obligations of states
other than Ohio or taxable money market instruments.
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."
There can be no assurance that the Portfolio will be
able to achieve its investment objective, or that the
Portfolio will be able to maintain a constant $1.00 net
asset value per share.
3
<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
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
comparable 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.
The Portfolio will invest no 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
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.
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.
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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
______________________________________________________________________
OHIO RISK FACTORS
Under normal conditions the Portfolio will invest primarily
in obligations which produce interest income exempt from
federal income tax and Ohio State income tax. Accordingly,
the Portfolio will have considerable investments in Ohio
municipal obligations. As a result, the Portfolio will be
more susceptible to factors which adversely affect issuers
of Ohio obligations than a mutual fund which does not have
as great a concentration in Ohio municipal obligations.
An investment in the Portfolio will be affected by
the many factors that affect the financial condition of the
State of Ohio. For example, financial difficulties of the
State, 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 Ohio Municipal Securities" in
the Statement of Additional Information.
NON-DIVERSIFICATION
INVESTMENT IN THE 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 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 certain 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.
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THE PORTFOLIO MAY NOT:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government,
its agencies or instrumentalities) if, as a result, more
than 5% of the total assets of the Portfolio would be
invested in the securities of such issuer. This
limitation does not apply to the Portfolio to the extent
permitted by Rule 2a-7.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio, based on current
value at the time of such purchase, to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
U.S. Government or its agencies and instrumentalities or
to investments in tax-exempt securities issued by
governments or political subdivisions of governments.
3. Borrow money in an amount exceeding 33 1/3% of the value
of its total assets, provided that, for purposes of this
limitation, investment strategies which either obligate
a Portfolio to purchase securities or require a
Portfolio to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5%
of its assets, (i) all borrowings will be repaid before
making additional investments and any interest paid on
such borrowings will reduce income; and (ii) asset
coverage of at least 300% is required.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
fundamental and non-fundamental 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 and dividend disbursing 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 may voluntarily waive a portion of
its fees in order to limit the total operating expenses of
the Portfolio. The Manager reserves the right, in its sole
discretion, to terminate these voluntary fee waivers at any
time.
THE ADVISER
_______________________________________________________________________
WEISS, PECK & GREER,
L.L.C.
Weiss, Peck & Greer, L.L.C. ("WPG"), acts as investment
adviser for the 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
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April 30, 1998, total assets under management were
approximately $ 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 Managing Director 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.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly owned subsidiary of SEI Investments Company ("SEI"),
serves as the Portfolio's distributor pursuant to a
distribution agreement (the "Distribution Agreement") with
the Trust.
The Portfolio has adopted plans under which firms,
including the Distributor, that provide shareholder and
administrative services may receive compensation therefor.
The Class A, B and C plans differ in a number of ways,
including the amounts that may be paid. Under each plan,
the Distributor may provide those services itself or may
enter into arrangements under which third parties provide
such services and are compensated by the Distributor. Under
such arrangements the Distributor may retain as a profit
any difference between the fee it receives and the amount
it pays such third party. In addition, the Portfolio may
enter into such arrangements directly.
Under the Class A plan, the Portfolio may pay the
Distributor a negotiated shareholder servicing fee at a
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 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
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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, shares of the
Portfolio 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 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. 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.
Purchases will be made in full or 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 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
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<PAGE>
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 on each Business Day as of 2:00 p.m.,
Eastern time, for the Portfolio.
Shareholders who desire to redeem shares of the
Portfolio must place their redemption orders with the
Transfer 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 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 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 its "current
yield" and "effective yield." The Portfolio may also
advertise a "tax equivalent yield." These figures are based
on historical earnings and are not intended to indicate
future performance.
The "current yield" 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 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.
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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 of the 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.
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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Any dividends paid out of income realized by the
Portfolio on taxable securities will be taxable to
shareholders as ordinary income (whether received in cash
or in additional shares) to the extent of the Portfolio's
earnings and profits and will not qualify for the
dividends-received deduction for corporate shareholders.
Distributions to shareholders of net capital gains of the
Portfolio also will not qualify for the dividends received
deduction and will be taxable to shareholders as long-term
capital gain, whether received in cash or additional
shares, and regardless of how long a shareholder has held
the shares.
Dividends declared by the Portfolio in October,
November or December of any year and payable to
shareholders of record on a date in any such month will be
deemed to have been paid by the Portfolio and received by
the shareholders on December 31 of that year if paid by the
Portfolio at any time during the following January. The
Portfolio intends to make sufficient distributions prior to
the end of each calendar year to avoid liability for the
federal excise tax applicable to 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 shareholders.
OHIO INCOME TAXES
The distributions received from the portfolio are exempt
from Ohio personal income tax, Ohio School District income
taxes, and Ohio municipal income taxes to the extent they
are derived from interest on obligations issued by the
State of Ohio, or its political subdivisions, or
authorities ("Ohio State Securities"), provided the Fund
continues to qualify as a regulated investment company for
Federal income tax purposes and that at all times at least
50% of the value of the total assets of the Fund consist of
Ohio State securities or similar obligations of other
states or their subdivisions. It is assumed for purposes of
this discussion of Ohio taxation that these requirements
are satisfied. All distributions received from the
portfolio are excluded from the net income base of the Ohio
corporation franchise tax to the extent that they are
either exempt from Federal income tax or derived from
interest on Ohio State securities, but the shares will be
included in the computation of net worth for purposes of
such tax.
Distribution of capital gain with respect to shares
of the portfolio will be exempt from Ohio personal income
tax, Ohio School District income tax, and Ohio Municipal
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<PAGE>
income taxes, and will be excluded from the net income base
of the Ohio corporation franchise tax in each case to the
extent that such distributions are attributable to the
profit made on the sale, exchange or other distribution by
the portfolio of Ohio State Securities. Distributions that
are attributable to interest on obligations in the United
States or any authority, commission or instrumentality of
the United States, or obligations of Puerto Rico, the
Virgin Islands, or Guam, or their authorities or
instrumentalities, will be exempt from Ohio personal income
tax, Ohio School District income taxes, and Ohio Municipal
income taxes, and are excluded from the base of the Ohio
corporation franchise tax in each case, to the same extent
that such interest would be so exempt if excluded if the
obligations were held directly by the shareholders.
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, Pennsylvania Municipal Portfolio, Pennsylvania
Tax Free Portfolio, Massachusetts Municipal Bond Fund, New
Jersey Municipal Bond Fund, California Municipal Bond Fund,
Intermediate-Term Municipal Portfolio, and New York
Municipal Bond Fund. 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
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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. The 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
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.
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.
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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
(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).
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VARIABLE AND FLOATING
RATE INSTRUMENTS
Certain of the obligations purchased by the Portfolio may
carry variable or floating rates of interest and may
involve a conditional or unconditional demand feature. Such
obligations may include variable amount master demand
notes. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market
rates or indices. The interest rates on these securities
may be reset daily, weekly, quarterly or at some other
interval, and may have a floor or ceiling on interest rate
changes. There is a risk that the current interest rate on
such obligations may not accurately reflect existing market
interest rates. A demand instrument with a demand notice
period exceeding seven days may be considered illiquid if
there is no secondary market for such security.
WHEN-ISSUED AND DELAYED
DELIVERY SECURITIES
When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. The Portfolio will maintain with the
custodian a separate account with liquid securities or cash
in an amount at least equal to these commitments. The
interest rate realized on these securities is fixed as of
the purchase date, and no interest accrues to the Portfolio
before settlement.
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
The Trust................................................................. 3
Investment Objective and Policies......................................... 3
General Investment Policies............................................... 4
Risk Factors.............................................................. 5
Investment Limitations.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 6
Distribution and Shareholder Servicing.................................... 7
Purchase and Redemption of Shares......................................... 8
Performance............................................................... 9
Taxes..................................................................... 10
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 13
</TABLE>
16
<PAGE>
SEI TAX EXEMPT TRUST
Manager:
SEI Fund Management
Distributor:
SEI Investments Distribution Co.
Investment Advisers and Sub-Advisers:
SEI Investments Management Corporation
Standish, Ayer & Wood, Inc.
Van Kampen American Capital Management, Inc.
This STATEMENT OF ADDITIONAL INFORMATION is not a Prospectus. It is intended
to provide additional information regarding the activities and operations of
certain Portfolios of SEI Tax Exempt Trust (the "Trust") and should be read in
conjunction with certain of the Trust's Prospectuses dated July 31, 1998.
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
Non-Fundamental Policies.............................................................. S-6
State Specific Disclosure............................................................. S-7
The Manager........................................................................... S-8
The Advisers and Sub-Adviser.......................................................... S-8
Trustees and Officers of the Trust.................................................... S-9
Performance........................................................................... S-11
Determination of Net Asset Value...................................................... S-13
Purchase and Redemption of Shares..................................................... S-14
Taxes................................................................................. S-14
Portfolio Transactions................................................................ S-16
Description of Shares................................................................. S-18
Limitation of Trustees' Liability..................................................... S-18
Shareholder Liability................................................................. S-18
Experts............................................................................... S-18
</TABLE>
July 31, 1998
<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: California Municipal Bond, Massachusetts
Municipal Bond, New Jersey Municipal Bond, Ohio Tax Free, and New York Municipal
Bond (formerly, New York Intermediate-Term Municipal Portfolio) Funds (each a
"Portfolio," and collectively, the "Portfolios"), and any different classes of
the Portfolios. Except for differences between the Class A, Class B, and Class C
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
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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 AND 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,
S-3
<PAGE>
the issuer, or a third party (the "writer") at an agreed-upon price at any time
during a stated period or on a certain date. Such a right is generally denoted
as a "standby commitment" or a "put." The purpose of engaging in transactions
involving puts is to maintain flexibility and liquidity to permit the Portfolios
to meet redemptions and remain as fully invested as possible in municipal
securities. The right to put the securities depends on the writer's ability to
pay for the securities at the time the put is exercised. The Portfolios would
limit their put transactions to institutions which the Adviser or Sub-Adviser
believes present minimum credit risks, and the Adviser or Sub-Adviser would use
its best efforts to initially determine and continue to monitor the financial
strength of the sellers of the options by evaluating their financial statements
and such other information as is available in the marketplace. It may, however,
be difficult to monitor the financial strength of the writers because adequate
current financial information may not be available. In the event that any writer
is unable to honor a put for financial reasons, a Portfolio would be a general
creditor (I.E., on a parity with all other unsecured creditors) of the writer.
Furthermore, particular provisions of the contract between a Portfolio and the
writer may excuse the writer from repurchasing the securities; for example, a
change in the published rating of the underlying securities or any similar event
that has an adverse effect on the issuer's credit or a provision in the contract
that the put will not be exercised except in certain special cases, for example,
to maintain portfolio liquidity. A Portfolio could, however, at any time sell
the underlying portfolio security in the open market or wait until the portfolio
security matures, at which time it should realize the full par value of the
security.
The securities purchased subject to a put, may be sold to third persons at
any time, even though the put is outstanding, but the put itself, unless it is
an integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to the Portfolio.
Sale of the securities to third parties or lapse of time with the put
unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, a Portfolio could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Portfolio, the Portfolio could, of course, sell the
security. The maturity of the underlying security will generally be different
from that of the put. The 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-issued securities are subject
to market fluctuation, and no interest accrues to the purchaser during this
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<PAGE>
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. 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
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<PAGE>
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. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that each Portfolio may (i) purchase or hold
debt instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) lend its securities.
2. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Portfolio may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts, and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
3. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
4. Issue senior securities (as defined in the Investment Company Act of 1940,
as amended (the "1940 Act"), except as permitted by rule, regulation or
order of the SEC.
5. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies and may be
changed without shareholder approval.
1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Portfolio's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each
Portfolio may (i) obtain short-term credits as necessary for the clearance
of security transactions, (ii) provide initial and variation
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margin payments in connection with transactions involving futures contracts
and options on such contracts, and (iii) make short sales "against the box"
or in compliance with the SEC's position regarding the asset segregation
requirements of Section 18 of the 1940 Act.
4. Purchase securities which are not readily marketable if, in the aggregate,
more than 15% of its total assets would be invested in such securities.
5. Purchase or hold illiquid securities, I.E., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its total
assets would be invested in illiquid securities.
6. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
The foregoing percentages will apply at the time of the purchase of a
security and shall not be violated unless an excess or deficiency occurs,
immediately after or as a result of a purchase of such security.
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 the past.
SPECIAL CONSIDERATIONS RELATING TO MASSACHUSETTS MUNICIPAL SECURITIES
[To Come]
SPECIAL CONSIDERATIONS RELATING TO OHIO MUNICIPAL SECURITIES
[To Come]
SPECIAL CONSIDERATIONS RELATING TO NEW JERSEY MUNICIPAL SECURITIES
[To Come]
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THE MANAGER
The Trust and SEI Fund Management ("SEI Management" or the "Manager") have
entered into a Management Agreement (the "Management Agreement"). 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.
The Manager, 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 the Manager. SEI Investments and its
subsidiaries and affiliates, including the Manager, are leading providers of
funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors, and
money managers. The Manager and its affiliates also serve as administrator 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, Oak Associates Funds, The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, Santa Barbara Group of Mutual
Funds, Inc., SEI Asset Allocation Trust, SEI Index Funds, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI International Trust, SEI
Liquid Asset Trust, SEI Daily Income Trust, STI Classic Funds, STI Classic
Variable Trust, TIP Funds and TIP Institutional Funds.
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.
The Portfolios have adopted shareholder servicing plans for their Class A,
Class B, and Class C shares (the "Service Plans"), and Administrative Services
Plans for their Class B and Class C shares. Under these Service and
Administrative Services Plans, the Distributor may perform, or may compensate
other service
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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.
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 each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Bishop Street Funds, 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,
Oak Associates Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc.,
The Pillar Funds, Santa Barbara Group of Mutual Funds, Inc., SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Investments Trust, SEI Institutional Mangaged Trust, SEI International Trust,
SEI Liquid Asset Trust, STI Classic Funds, STI Classic Variable Trust, TIP Funds
and TIP Institutional Funds, each of which is an open-end management investment
company managed by SEI Fund Management or its affiliates and, except for Santa
Barbara Group of Mutual Funds, Inc., distributed by SEI Investments Distribution
Co.
ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees*--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Adviser, the Manager and
the Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds,
Marquis Funds-Registered Trademark-, Oak Associates Funds, Pillar Funds, SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional Managed Trust, SEI Institutional International Trust and SEI
Liquid Asset Trust.
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, SEI Investments, the Adviser, the Manager and the Distributor.
Director and Secretary of SEI Investments and Secretary of the Adviser, the
Manager and the Distributor. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust ,SEI
Institutional International Trust and SEI Liquid Asset Trust.
F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--President, Orange County
Publishing Co., Inc.; Publisher, Paoli News and Paoli Republican; and Editor,
Paoli Republican, October 1981-January 1997. 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 SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI
Institutional Managed Trust, SEI Institutional International Trust, SEI Liquid
Asset Trust, STI Classic Funds and STI Classic Variable Trust.
FRANK E. MORRIS (DOB 12/30/23)--Trustee**--Peter Drucker Professor of
Management, Boston College, 1989-1990. President, Federal Reserve Bank of
Boston, 1968-1988. Trustee of the Advisors' Inner
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Circle Fund, The Arbor Fund, The Expedition Funds, Marquis
Funds-Registered Trademark-, Oak Associates Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional Investments Trust,
SEI Institutional Managed Trust, SEI Institutional International Trust and SEI
Liquid Asset Trust.
JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads,
from September 1987-December 1993. Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust and SEI Liquid Asset Trust.
GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991-December 1996; Chief Financial Officer, Noble Partners, L.P.,
March 1991-December 1996; 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 Index Funds, SEI Liquid
Asset Trust, SEI Institutional Investments Trust, SEI Institutional Managed
Trust and SEI Institutional International Trust.
EDWARD D. LOUGHLIN (DOB [ / / ])--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments, the Adviser and the Manager since [ ]. Senior Vice
President, SEI Investments, 1986-1991; Vice President, SEI Investments,
1981-1986.
TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, the
Adviser, the Manager and the Distributor since 1995. Associate, Dewey Ballantine
(law firm), 1994-1995. Associate, Winston & Strawn (law firm), 1991-1994.
LYDIA A. GAVALIS (DOB 06/05/64)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange, 1989-1998.
KATHY HEILIG (DOB 12/21/58)--Vice President and Assistant
Secretary--Treasurer of SEI Investments Company since 1997; Assistant Controller
of SEI Investments Company since 1995; Vice President of SEI Investments Company
since 1991; Director of Taxes of SEI Investments Company 1987 to 1991. Tax
Manager, Arthur Anderson LLP prior to 1987.
JOSEPH M. O'DONNELL (DOB 11/13/54)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Adviser, the
Administrator and the Distributor since 1998. Vice President and General
Counsel, FPS Services, Inc., 1993-1997. Staff Counsel and Secretary, Provident
Mutual Family of Funds, 1990-1993.
SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant
Secretary--Secretary of the Distributor since 1998; Vice President of the
Distributor since 1988. Vice President and Assistant Secretary of the Adviser,
and the Manager since 1988. Assistant Secretary of the Distributor from
1988-1998.
CYNTHIA M. PARRISH (DOB [ / / ])--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, the
Adviser, the Manager and the Distributor since August 1997. Branch Chief,
Division of Enforcement, U.S. Securities and Exchange Commission, January
1995-August 1997. Senior Counsel--Division of Enforcement, U.S. Securities and
Exchange Commission, September 1992-January 1995. Staff Attorney--Division of
Enforcement, U.S. Securities and Exchange Commission [ ].
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, the
Adviser, the Manager and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Adviser and the Manager since 1994.
Vice President, General Counsel and Assistant Secretary of the Adviser, the
Manager and the Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP
(law firm), 1988-1992.
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KATHRYN L. STANTON (DOB 11/19/58)--Vice President and Assistant
Secretary--General Counsel, Investment Systems and Services since 1997. Deputy
General Counsel of SEI Investments since 1996. Vice President and Assistant
Secretary of SEI Investments, the Adviser, the Manager and the Distributor since
1994; Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994
LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.
(1997-1998). Partner, Groom and Nordberg, Chartered, 1996-1997. Associate
General Counsel, Riggs Bank, N.A., 1991-1995.
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, SEI Investments, the Adviser, the Manager and the Distributor.
MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Fund Resources and Vice
President of the Manager since 1996. Vice President of the Distributor since
December 1997. Vice President, Fund Accounting, BISYS Fund Services, September
1995 to November 1996. Senior Vice President and Site Manager, Fidelity
Investments 1981 to September 1995.
- ------------------------
* 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.
The following table sets forth information about the compensation paid to
the Trustees for the Trust's 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.
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The current yield of the Ohio Tax Free Fund 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 Portfolio computes its 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 California Municipal, Massachusetts Municipal, New
Jersey Municipal, and New York Municipal Funds 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.
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 funds; however, yields of other 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.
From time to time, the California Municipal, Massachusetts Municipal, New
Jersey Municipal and New York Municipal Funds 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.
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.
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DETERMINATION OF NET ASSET VALUE
Securities of the Ohio Tax Free Fund 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.
The Ohio Tax Free Fund's use of amortized cost valuation and the maintenance
of the Portfolio's net asset value at $1.00 are permitted by Rule 2a-7 under the
1940 Act, provided that certain conditions are met. Under Rule 2a-7 a money
market portfolio must maintain a dollar-weighted average maturity of 90 days or
less, and not purchase any instrument having a remaining maturity of more than
397 days. In addition, money market funds may acquire only U.S. dollar
denominated obligations that present minimal credit risks and that are "eligible
securities," which means they are: (i) rated, at the time of investment, by at
least two nationally recognized statistical rating organizations (one if it is
the only organization rating such obligation) in the highest short-term rating
category or, if unrated, determined to be of comparable quality (a "first tier
security"), or (ii) rated according to the foregoing criteria in the second
highest short-term rating category or, if unrated, determined to be of
comparable quality ("second tier security"). The Advisers will determine that an
obligation presents minimal credit risk or that unrated instruments are of
comparable quality in accordance with guidelines established by the Trustees.
In the event a first tier security of the Portfolio is downgraded below
first tier security status after purchase, or the Adviser of the 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 the 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 the Portfolio's current net asset value per unit calculated using available
market quotations from the 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 the Portfolio incurs a
significant loss or liability, the Trustees have the authority to reduce pro
rata the number of shares of the 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 California Municipal, Massachusetts Municipal, New Jersey
Municipal, and New York Municipal Funds may be 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
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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.
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.
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.
TAXES
FEDERAL INCOME TAX
The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. New legislation, as well as administrative changes or court
decisions, may significantly change the conclusions expressed herein, and may
have a retroactive effect with respect to the transactions contemplated herein.
Each Portfolio will decide whether to distribute or retain all or part of
any net capital gains (the excess of net long-term capital gains over net
short-term capital losses) in any year for reinvestment. If any such gains are
retained, the Portfolio will pay federal income tax thereon, and, if the
Portfolio makes an election, the shareholders will include such undistributed
gains in their income and shareholders subject to tax will be able to claim
their share of the tax paid by the Portfolio as a credit against their federal
income tax liability.
A gain or loss realized by a shareholder on the sale or exchange of shares
of a Portfolio held as a capital asset will be capital gain or loss, and such
gain or loss will be long-term if the holding period for the shares exceeds one
year, and otherwise will be short-term. Any loss realized on a sale or exchange
will be disallowed to the extent the shares disposed of are replaced within the
61-day period beginning 30 days before and ending 30 days after the shares are
disposed of. Any loss realized by a shareholder on the disposition of shares
held 6 months or less is treated as a long-term capital loss to the extent of
any distributions of net long-term capital gains received by the shareholder
with respect to such shares or any inclusion of undistributed capital gain with
respect to such shares.
Each Portfolio will generally be subject to a nondeductible 4% federal
excise tax to the extent it fails to distribute by the end of any calendar year
at least 98% of its ordinary income and 98% of its capital gain
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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 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
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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.
If a Portfolio qualifies to pay dividends to shareholders that are exempt
from California personal income tax ("California exempt-interest dividends"),
dividends distributed to shareholders will be considered California
exempt-interest dividends (1) if they are designated as exempt-interest
dividends by the Portfolio in a written notice to shareholders mailed within 60
days of the close of the Portfolio's taxable year and (2) to the extent the
interest received by the Portfolio during the year on California Tax Exempt
Obligations exceeds expenses of the Portfolio that would be disallowed under
California personal income tax law as allocable to tax exempt interest if the
Portfolio were an individual. If the aggregate dividends so designated exceed
the amount that may be treated as California exempt-interest dividends, only
that percentage of each dividend distribution equal to the ratio of aggregate
California exempt-interest dividends to aggregate dividends so designated will
be treated as a California exempt-interest dividend.
For taxable years beginning after August 5, 1997, the Taxpayer Relief Act of
1997 repealed the 30 percent gross income test or "short-short" rules (the
"30-percent test") under which a regulated investment company had to derive less
than 30 percent of its gross income from the sale or disposition of certain
short-term assets held for less than three months. However, California has not
yet conformed to this federal legislation. Although the California legislature
may enact tax conforming legislation in 1998 that would be retroactive to August
5, 1997, no assurances can be given that California will provide a dividends
paid deduction to the Portfolio, or treat dividends paid by the Portfolio to its
shareholders as California exempt-interest dividends, if the Portfolio fails to
meet the 30-percent test. It is the intention of the management of the Portfolio
to continue to meet the 30-percent test for all years for which California does
not conform to the federal legislation.
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
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responsible for placing orders to execute Portfolio transactions. In placing
orders, it is the Trust's policy to seek to obtain the best net results taking
into account such factors as price (including the applicable dealer spread),
size, type and difficulty of the transaction involved, the firm's general
execution and operational facilities, and the firm's risk in positioning the
securities involved. While the Advisers and Sub-Adviser generally seek
reasonably competitive spreads or commissions, the Trust will not necessarily be
paying the lowest spread or commission available. The Trust's policy of
investing in securities with short maturities will result in high portfolio
turnover. The Trust will not purchase portfolio securities from any affiliated
person acting as 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
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services required to be performed by an Adviser or Sub-Adviser under the
Advisory or Sub-Advisory Agreements. If in the judgement of an Adviser or
Sub-Adviser the Portfolios, or other accounts managed by the Adviser or
Sub-Adviser, will be benefitted by supplemental research services, the Adviser
or Sub-Adviser is authorized to pay brokerage commissions to a broker furnishing
such services which are in excess of commissions which another broker may have
charged for effecting the same transaction. The expenses of an Adviser or
Sub-Adviser will not necessarily be reduced as a result of the receipt of such
supplemental information.
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.
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 class specific expenses. Shareholders have no preemptive rights. The
Declaration of Trust provides that the Trustees of the Trust may create
additional portfolios of shares or classes of portfolios. Share certificates
representing the shares will not be issued.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for
his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or administrators, shall not be liable
for any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his wilful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a Trust could,
under certain circumstances, be held personally liable as partners for the
obligations of the Trust. Even if, however, the Trust were held to be a
partnership, the possibility of the shareholders' incurring financial loss for
that reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because, the Declaration of Trust provides for indemnification out
of the Trust property for any shareholders held personally liable for the
obligations of the Trust.
EXPERTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust. Arthur Andersen
LLP serves as the independent public accounts of the Trust.
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PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements
(1) Part A: Not Applicable
(2) Part B: Not Applicable
(b) Additional Exhibits
<TABLE>
<S> <C>
(1)(a) Registrant's Declaration of Trust is incorporated herein by reference to
Post Effective Amendment No. 41 to Registrant's Registration Statement on
Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
(1)(b) Amendment to the Registrant's Declaration of Trust, dated July 30, 1982, is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(1)(c) Amendment to the Registrant's Declaration of Trust, dated May 23, 1986, is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(1)(d) Amendment to the Registrant's Declaration of Trust, dated April 8, 1987, is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(1)(e) Amendment to the Registrant's Declaration of Trust, dated December 23, 1988,
is incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(1)(f) Amendment to the Registrant's Declaration of Trust, dated June 16, 1989, is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(1)(g) Amendment to the Registrant's Declaration of Trust, dated July 5, 1989, is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(1)(h) Amendment to the Registrant's Declaration of Trust, dated November 15, 1989,
is incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(2)(a) Registrant's By-Laws are incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
18, 1997.
(2)(b) Amended By-Laws are incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
18, 1997.
(3) Not Applicable.
(4) Not Applicable.
</TABLE>
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<TABLE>
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(5)(a) Investment Advisory Agreement with Weiss, Peck and Greer Advisers, Inc. is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(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.
(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 incorporated herein by reference to Post
Effective Amendment No. 41 to Registrant's Registration Statement on Form
N-1A (File No. 2-76990) filed with the Securities and Exchange Commission
on December 18, 1997.
(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 incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
18, 1997.
(5)(i) Investment Advisory Agreement with Morgan Grenfell Capital Management, Inc.,
is incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(5)(j) Investment Advisory Agreement with SEI Financial Management Corporation, is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(5)(k) Investment Sub-Advisory Agreement with Standish, Ayer & Wood, Inc., is
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
</TABLE>
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(6) Distribution Agreement is incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
18, 1997.
(7) Not Applicable.
(8) Custodian Agreement is incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
18, 1997.
(9)(a) Management Agreement is incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
18, 1997.
(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 incorporated herein by reference to
Post Effective Amendment No. 41 to Registrant's Registration Statement on
Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
(9)(e) Schedule H, dated October 29, 1993, to Management Agreement (adding New York
Intermediate-Term Municipal Portfolio) is incorporated herein by reference
to Post Effective Amendment No. 41 to Registrant's Registration Statement
on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
(9)(f) Schedule I, dated October 29, 1993, to Management Agreement (adding
California Intermediate-Term Municipal Portfolio) is incorporated herein
by reference to Post Effective Amendment No. 41 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) filed with the
Securities and Exchange Commission on December 18, 1997.
(9)(g) Consent to Assignment and Assumption of the Administration Agreement between
the Trust and SEI Financial Management Corporation to SEI Fund Resources,
is incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(10) Opinion and Consent of Counsel is incorporated herein by reference to Post
Effective Amendment No. 41 to Registrant's Registration Statement on Form
N-1A (File No. 2-76990) filed with the Securities and Exchange Commission
on December 18, 1997.
(11) Not Applicable.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
</TABLE>
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<TABLE>
<S> <C>
(15)(a) Distribution Plan is incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December
18, 1997.
(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
incorporated herein by reference to Post Effective Amendment No. 41 to
Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
(15)(d) Distribution Plan for Class C shares of California Tax Exempt Portfolio and
Institutional Tax Free Portfolio is incorporated herein by reference to
Post Effective Amendment No. 41 to Registrant's Registration Statement on
Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
(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 incorporated herein by reference to
Post Effective Amendment No. 41 to Registrant's Registration Statement on
Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
(17) Not Applicable
(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, James M. Storey, Edward D. Loughlin 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 May 1, 1998:
<TABLE>
<CAPTION>
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
- ---------------------------------------------------------------------------------- -------------
<S> <C>
Units of beneficial interest, without par value
Tax Free Portfolio, Class A....................................................... 45
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
- ---------------------------------------------------------------------------------- -------------
<S> <C>
Tax Free Portfolio, Class D....................................................... 1
Institutional Tax Free Portfolio, Class A......................................... 75
Institutional Tax Free Portfolio, Class B......................................... 9
Institutional Tax Free Portfolio, Class C......................................... 12
California Tax Exempt Portfolio, Class A.......................................... 13
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.................................... 112
Pennsylvania Municipal Portfolio, Class A......................................... 31
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
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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 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).
The principal address of Van Kampen American Capital Management, Inc. is One
Parkview Plaza, Oakbrook Terrace, IL 60181 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 Van Kampen American Capital Management,
Inc. to the Advisers Act (SEC File no. 801-40808).
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>
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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
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
</TABLE>
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<TABLE>
<S> <C>
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 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
TIP Funds April 30, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
TIP Institutional Funds January 1, 1998
Oak Associates Funds February 27, 1998
</TABLE>
The Distributor 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 --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Edward D. Loughlin Senior Vice President President and Chief
Executive Officer
</TABLE>
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<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President and
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President and
Assistant Secretary
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Kathy Heilig Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President Controller and Chief
Financial Officer
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President and
Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President and
Assistant Secretary
Cynthia M. Parrish Vice President & Assistant Secretary Vice President and
Assistant Secretary
Donald Pepin Vice President & Managing Director --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President and
Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
</TABLE>
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<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
Wayne M. Withrow Vice President & Managing Director --
</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
(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
Van Kampen American Capital Management, Inc.
One Parkview Plaza
Oakbrook Terrace, IL 60181
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.
C-9
<PAGE>
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.
C-10
<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
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 Oaks, Commonwealth of Pennsylvania on the 12th day of May, 1998.
SEI TAX EXEMPT TRUST
By: /s/ EDWARD D. LOUGHLIN
-----------------------------------------
Edward D. Loughlin
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 May 12, 1998
George J. Sullivan, Jr.
*
- ------------------------------ Trustee May 12, 1998
William M. Doran
*
- ------------------------------ Trustee May 12, 1998
F. Wendell Gooch
*
- ------------------------------ Trustee May 12, 1998
Frank E. Morris
*
- ------------------------------ Trustee May 12, 1998
Robert A. Nesher
*
- ------------------------------ Trustee May 12, 1998
James M. Storey
/s/ EDWARD D. LAUGHLIN
- ------------------------------ President & Chief May 12, 1998
Edward D. Laughlin Executive Officer
/s/ MARK NAGLE
- ------------------------------ Controller, Chief May 12, 1998
Mark Nagle Financial Officer
*By: /s/ EDWARD D. LOUGHLIN
-------------------------
Edward D. Loughlin,
ATTORNEY-IN-FACT
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
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EX-99.B1a Registrant's Declaration of Trust is incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File No.
2-76990) filed with the Securities and Exchange Commission on December 18, 1997.
EX-99.B1b Amendment to the Registrant's Declaration of Trust, dated July 30, 1982, is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
EX-99.B1c Amendment to the Registrant's Declaration of Trust, dated May 23, 1986, is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
EX-99.B1d Amendment to the Registrant's Declaration of Trust, dated April 8, 1987, is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
EX-99.B1e Amendment to the Registrant's Declaration of Trust, dated December 23, 1988, is
incorporated herein by reference to Post Effective Amendment No. 41 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) filed with the Securities and
Exchange Commission on December 18, 1997.
EX-99.B1f Amendment to the Registrant's Declaration of Trust, dated June 16, 1989, is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
EX-99.B1g Amendment to the Registrant's Declaration of Trust, dated July 5, 1989, is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
EX-99.B1h Amendment to the Registrant's Declaration of Trust, dated November 15, 1989, is
incorporated herein by reference to Post Effective Amendment No. 41 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) filed with the Securities and
Exchange Commission on December 18, 1997.
EX-99.B2a Registrant's By-Laws are incorporated herein by reference to Post Effective Amendment
No. 41 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
EX-99.B2b Amended By-Laws are incorporated herein by reference to Post Effective Amendment No. 41
to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with the
Securities and Exchange Commission on December 18, 1997.
EX-99.B3 Not Applicable.
EX-99.B4 Not Applicable.
EX-99.B5a Investment Advisory Agreement with Weiss, Peck and Greer Advisers, Inc. is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- ----------------
<S> <C>
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 incorporated herein
by reference to Post Effective Amendment No. 41 to Registrant's Registration Statement
on Form N-1A (File No. 2-76990) filed with the Securities and Exchange Commission on
December 18, 1997.
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 incorporated herein by reference to
Post Effective Amendment No. 41 to Registrant's Registration Statement on Form N-1A
(File No. 2-76990) filed with the Securities and Exchange Commission on December 18,
1997.
EX-99.B5i Investment Advisory Agreement with Morgan Grenfell Capital Management, Inc., is
incorporated herein by reference to Post Effective Amendment No. 41 to Registrant's
Registration Statement on Form N-1A (File No. 2-76990) filed with the Securities and
Exchange Commission on December 18, 1997.
EX-99.B5j Investment Advisory Agreement with SEI Financial Management Corporation, is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
EX-99.B5k Investment Sub-Advisory Agreement with Standish, Ayer & Wood, Inc, is incorporated
herein by reference to Post Effective Amendment No. 41 to Registrant's Registration
Statement on Form N-1A (File No. 2-76990) filed with the Securities and Exchange
Commission on December 18, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- ----------------
<S> <C>
EX-99.B6 Distribution Agreement is incorporated herein by reference to Post Effective Amendment
No. 41 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed
with the Securities and Exchange Commission on December 18, 1997.
EX-99.B7 Not Applicable.
EX-99.B8 Custodian Agreement is incorporated herein by reference to Post Effective Amendment No.
41 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with
the Securities and Exchange Commission on December 18, 1997.
EX-99.B9a Management Agreement is incorporated herein by reference to Post Effective Amendment No.
41 to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with
the Securities and Exchange Commission on December 18, 1997.
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 incorporated herein by reference to Post Effective Amendment No. 41
to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with the
Securities and Exchange Commission on December 18, 1997.
EX-99.B9e Schedule H, dated October 29, 1993, to Management Agreement (adding New York
Intermediate-Term Municipal Portfolio) is incorporated herein by reference to Post
Effective Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December 18, 1997.
EX-99.B9f Schedule I, dated October 29, 1993, to Management Agreement (adding California
Intermediate-Term Municipal Portfolio) is incorporated herein by reference to Post
Effective Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File
No. 2-76990) filed with the Securities and Exchange Commission on December 18, 1997.
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 incorporated herein
by reference to Post Effective Amendment No. 41 to Registrant's Registration Statement
on Form N-1A (File No. 2-76990) filed with the Securities and Exchange Commission on
December 18, 1997.
EX-99.B10 Opinion and Consent of Counsel is incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File No.
2-76990) filed with the Securities and Exchange Commission on December 18, 1997.
EX-99.B11 Not Applicable.
EX-99.B12 Not Applicable.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
- ----------------
<S> <C>
EX-99.B13 Not Applicable.
EX-99.B14 Not Applicable.
EX-99.B15a Distribution Plan is incorporated herein by reference to Post Effective Amendment No. 41
to Registrant's Registration Statement on Form N-1A (File No. 2-76990) filed with the
Securities and Exchange Commission on December 18, 1997.
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 incorporated herein
by reference to Post Effective Amendment No. 41 to Registrant's Registration Statement
on Form N-1A (File No. 2-76990) filed with the Securities and Exchange Commission on
December 18, 1997.
EX-99.B15d Distribution Plan for Class C shares of California Tax Exempt Portfolio and
Institutional Tax Free Portfolio is incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File No.
2-76990) filed with the Securities and Exchange Commission on December 18, 1997.
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 incorporated herein by reference to Post Effective
Amendment No. 41 to Registrant's Registration Statement on Form N-1A (File No.
2-76990) filed with the Securities and Exchange Commission on December 18, 1997.
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, James M. Storey, Edward D. Loughlin and George J. Sullivan, Jr., are filed
herewith.
</TABLE>
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS 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 Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or 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 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 hand and seal as
of the date set forth below.
/s/ William M. Doran Date: 5/11/98
- ------------------------------- -----------------------
William M. Doran, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS 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 Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or 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 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 hand and seal as
of the date set forth below.
/s/ F. Wendell Gooch Date: 5/12/98
- ------------------------------- -----------------------
F. Wendell Gooch, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS 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 Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or 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 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 hand and seal as
of the date set forth below.
/s/ James M. Storey Date: 5/11/98
- ------------------------------- -----------------------
James M. Storey, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS 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 Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or 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 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 hand and seal as
of the date set forth below.
/s/ Robert A. Nesher Date: 5/12/98
- ------------------------------- -----------------------
Robert A. Nesher, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS 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 Kevin P. Robins and Mark Nagle, each of them singly,
his true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or 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 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 hand and seal as
of the date set forth below.
/s/ Edward D. Loughlin Date: 5/13/98
- ------------------------------- -----------------------
Edward D. Loughlin, President and
Chief Executive Officer
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS 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 Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or 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 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 hand and seal as
of the date set forth below.
/s/ George J. Sullivan Date: 5/11/98
- ------------------------------- -----------------------
George J. Sullivan, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS 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 Edward D. Loughlin and Kevin P. Robins, each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or 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 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 hand and seal as
of the date set forth below.
/s/ Mark E. Nagle Date:
- ------------------------------- -----------------------
Mark E. Nagle, Controller and
Chief Financial Officer
