SEI TAX EXEMPT TRUST, 485APOS, 1998-11-02

SEI TAX EXEMPT TRUST
485APOS, 1998-11-02

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 2, 1998

FILE NO. 2-76990
FILE NO. 811-3447
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 43 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 45 /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 2000 One Logan Square
Philadelphia, Pennsylvania 19103 Philadelphia, Pennsylvania 19103

------------------------

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 [date], pursuant to paragraph (b), or
/X/ 60 days after filing pursuant to paragraph (a), or
/ / On [date] pursuant to paragraph (a) of Rule 485
</TABLE>

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- --------------------------------------------------------------------------------
<PAGE>

[LOGO]SEI TAX
EXEMPT TRUST

CLASS A SHARES

PROSPECTUS
DECEMBER 31, 1998

-----------------------------------------------

FIXED INCOME FUNDS MONEY MARKET FUNDS

INTERMEDIATE-TERM MUNICIPAL FUND INSTITUTIONAL TAX FREE FUND
CALIFORNIA MUNICIPAL BOND FUND TAX FREE FUND
MASSACHUSETTS MUNICIPAL BOND FUND CALIFORNIA TAX EXEMPT FUND
NEW JERSEY MUNICIPAL BOND FUND OHIO TAX FREE FUND
NEW YORK MUNICIPAL BOND FUND PENNSYLVANIA TAX FREE FUND
PENNSYLVANIA MUNICIPAL BOND FUND

-----------------------------------------------

MANAGERS:
SEI INVESTMENTS MANAGEMENT CORPORATION
MORGAN GRENFELL CAPITAL MANAGEMENT INCORPORATED
STANDISH, AYER & WOOD, INC.
VAN KAMPEN MANAGEMENT, INC.
WEISS, PECK & GREER, L.L.C.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

<PAGE>

SEI Tax
Exempt Trust

HOW TO READ THIS PROSPECTUS
- -------------------------------------------------------------------------------

SEI Tax Exempt Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the Class A Shares of the Funds that you should know before
investing. Please read this prospectus and keep it for future reference.

We arranged the prospectus into different sections so that you can easily review
this important information. On the next page, we discuss general information
you should know about investing in the Funds. If you would like more detailed
information about each Fund, please see:

EACH FUND'S PRINCIPAL INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . .
THE ADVISERS, SUB-ADVISERS AND THE PORTFOLIO MANAGERS. . . . . . . . . . . . . .
PURCHASING, SELLING AND EXCHANGING FUND SHARES . . . . . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . . .
HOW FUND SHARES ARE DISTRIBUTED. . . . . . . . . . . . . . . . . . . . . . . . .
HISTORICAL FINANCIAL INFORMATION ABOUT EACH FUND . . . . . . . . . . . . . . . .
HOW TO OBTAIN MORE INFORMATION ABOUT THE FUNDS . . . . . . . . . . . .Back Cover

2
<PAGE>

INTRODUCTION
- -------------------------------------------------------------------------------

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities, like stocks and
bonds. Before you invest, you should know a few things about investing in
mutual funds.

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of its Investment Adviser.
For certain funds, SEI Investments Management Corporation (SIMC) acts as
"manager of managers" and ensures that the Funds' Sub-Advisers comply with the
Funds' investment policies and guidelines. We cannot guarantee that a Fund will
achieve its goal. SIMC and the other Advisers and Sub-Advisers (the "Advisers")
make judgments about the market, the economy, or interest rates and these
judgments may not reflect actual market movements, economic conditions or issuer
performance, and these judgments may affect the return of your investment. In
fact no matter how good a job the Advisers do, you could lose money on your
investment in a Fund, just as you could with other investments. A Fund share is
not a bank deposit, and it is not insured or guaranteed by the FDIC or any
government agency.

The value of your investment in a Fund (other than a money market fund) is based
on the market value of the securities the Fund holds. These prices change daily
due to economic and other events that affect the securities markets generally,
as well as those that affect particular issuers. These price movements,
sometimes called volatility, will vary depending on the types of securities the
Fund owns and the markets in which they trade. The effect on a Fund's share
price of a change in the value of a single security will depend on how widely
the Fund's holdings are diversified.

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MUNICIPAL SECURITIES

Each of the Funds invests in municipal securities. Municipal securities are
bonds and other fixed income securities issued by state and local governments
and their agencies (such as housing or hospital authorities) to finance capital
expenditures and operations. The obligation to pay principal and interest on
municipal securities may be a general obligation of the state or local
government, but may be supported only by an agency or a particular source of
revenues. Therefore, municipal securities vary in credit quality.

Municipal securities, like other fixed income securities, rise and fall in value
in response to economic and market factors, primarily changes in interest rates,
and actual or perceived credit quality. Rising interest rates will generally
cause municipal securities to decline in value. Longer-term securities respond
more sharply to interest rate changes than do shorter-term securities. A
municipal security will also lose value if, due to rating downgrades or other
factors, there are concerns about the issuers current or future ability to make
principal or interest payments. A focus on investment grade securities reduces
but does not eliminate this risk.

Generally, the income from municipal securities is exempt from Federal income
taxes, and also may be exempt from certain state or local taxes depending on an
investor's state of residence. Even so, income from certain obligations may be
subject to Federal alternative minimum taxes.
- -------------------------------------------------------------------------------

3
<PAGE>

INTERMEDIATE-TERM MUNICIPAL FUND
- -------------------------------------------------------------------------------
FUND SUMMARY

INVESTMENT GOAL The highest level of income exempt from
Federal income taxes consistent with the
preservation of capital.
SHARE PRICE VOLATILITY Medium.
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser experienced in
selecting municipal securities, the Fund
invests in investment grade municipal bonds
and other securities.
- -------------------------------------------------------------------------------

INVESTMENT STRATEGY OF THE INTERMEDIATE-TERM MUNICIPAL FUND

The Intermediate-Term Municipal Fund invests substantially all of its assets in
investment grade municipal bonds and other securities that generate income
exempt from federal income taxes. The issuers of these securities are state and
local governments and agencies located in all fifty states, the District of
Columbia, Puerto Rico and other U.S. territories and possessions. The Fund
utilizes a specialist Sub-Adviser to manage the Fund's portfolio under the
general supervision of SIMC. The Sub-Adviser will strive to maintain an average
weighted portfolio maturity of three to ten years. The Fund may, to a limited
extent, invest in securities subject to the alternative minimum tax, or in
taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN THE INTERMEDIATE-TERM MUNICIPAL FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
creditworthiness of individual issuers, including governments. Generally, fixed
income securities decrease in value if interest rates rise and vice versa.
Longer-term securities are generally more volatile, and the average maturity or
duration of these securities affects risk. The volatility of lower rated fixed
income obligations is even greater since the prospects for repayment of
principal and interest on these securities is more speculative. Some may even
be in default. As an incentive to invest in these risky securities, they tend
to offer higher returns.

There may be economic or political changes that impact the ability of issuers of
municipal securities to repay principal and to make interest payments on
securities owned by the Fund. Changes in the financial condition or credit
ratings of municipal issuers also may adversely affect the value of the Fund's
securities.

4
<PAGE>

INTERMEDIATE-TERM MUNICIPAL FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility of an
investment in the Intermediate-Term Municipal Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.

This bar chart shows changes in the This table compares the Fund's average
performance of the Fund's CLASS A annual total returns for the periods
SHARES from year to year.* ending December 31, 1997 to those of the
[______ Index].

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR 5 YEARS INCEPTION
(9/5/89)
<S> <C> <C> <C>
INTERMEDIATE-TERM
MUNICIPAL FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

- -------------------------------------------------------------------------------
WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The _______ Index is a widely recognized index of
__________.

- -------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------

FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses
in the table below are shown as a percentage of the Fund's net assets. This
table shows the highest fees and expenses that could be currently charged to the
Fund. ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND
THE DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .60%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>

CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.33%

Other Expenses 0.54%
----

Total Annual Fund Operating Expenses 0.87%
</TABLE>

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

5
<PAGE>

CALIFORNIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL The highest level of current income exempt
from Federal and California income taxes
consistent with the preservation of capital.
SHARE PRICE VOLATILITY Medium.
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser experienced in
selecting California municipal securities,
the Fund invests in investment grade
municipal bonds and other securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE CALIFORNIA MUNICIPAL BOND FUND

The California Municipal Bond Fund invests substantially all of its assets in
investment grade municipal bonds and other securities that generate income
exempt from Federal and California State income taxes. The principal issuers of
these securities are state and local governments and agencies located in
California, as well as the District of Columbia, Puerto Rico and other U.S.
territories and possessions. The Fund utilizes a specialist Sub-Adviser to
manage the Fund's portfolio under the general supervision of SIMC. The
Sub-Adviser will strive to maintain an average weighted portfolio maturity of
three to ten years. The Fund may, to a limited extent, invest in securities
subject to the alternative minimum tax or in taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN THE CALIFORNIA MUNICIPAL BOND FUND?

There may be economic or political changes that impact the ability of issuers of
California municipal securities to repay principal and to make interest payments
on securities owned by the Fund. Changes to the financial condition of
California municipal issuers also may adversely affect the value of the Fund's
securities. 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 Fund. As a result, the Fund will be
more susceptible to factors which adversely affect issuers of California
obligations than a mutual fund which does not have as great a concentration in
California municipal obligations.

As a non-diversified fund, the Fund may invest in securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse
economic or regulatory occurrence.

6
<PAGE>

CALIFORNIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

As of August 1, 1998, the California Municipal Bond Fund had not commenced
operations, and did not have a performance history.

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .60%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.33%

Other Expenses 0.54%
----

Total Annual Fund Operating Expenses 0.87%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

7
<PAGE>

MASSACHUSETTS MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL The highest level of current income exempt
from Federal and Massachusetts income taxes
while preserving capital.
SHARE PRICE VOLATILITY Medium.
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser experienced in
selecting Massachusetts municipal securities,
the Fund invests in investment grade
municipal bonds and other securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE MASSACHUSETTS MUNICIPAL BOND FUND

The Massachusetts Municipal Bond Fund invests substantially all of its assets in
investment grade municipal bonds and other securities that generate income
exempt from Federal and Massachusetts State income taxes. The principal issuers
of these securities are state and local governments and agencies located in
Massachusetts, as well as the District of Columbia, Puerto Rico and other U.S.
territories and possessions. The Fund utilizes a specialist Sub-Adviser to
manage the Fund's portfolio under the general supervision of SIMC. The
Sub-Adviser will strive to maintain an average weighted portfolio maturity of
three to ten years. The Fund may, to a limited extent, invest in securities
subject to the alternative minimum tax or in taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN THE MASSACHUSETTS MUNICIPAL BOND FUND?

There may be economic or political changes that impact the ability of issuers of
Massachusetts municipal securities to repay principal and to make interest
payments on securities owned by the Fund. Changes to the financial condition of
Massachusetts municipal issuers also may adversely affect the value of the
Fund's securities. 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 Fund. As a result, the Fund
will be more susceptible to factors which adversely affect issuers of
Massachusetts obligations than a mutual fund which does not have as great a
concentration in Massachusetts municipal obligations.

As a non-diversified fund, the Fund may invest in securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse
economic or regulatory occurrence.

8
<PAGE>

MASSACHUSETTS MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

As of August 1, 1998, the Massachusetts Municipal Bond Fund had not commenced
operations, and did not have a performance history.

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .60%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.33%

Other Expenses 0.54%
----

Total Annual Fund Operating Expenses 0.87%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

9
<PAGE>

NEW JERSEY MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL The highest level of current income exempt
from Federal and New Jersey income taxes
while preserving capital.
SHARE PRICE VOLATILITY Medium.
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser experienced in
investing in New Jersey municipal securities,
the Fund invests in investment grade bonds
and other securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE NEW JERSEY MUNICIPAL BOND FUND

The New Jersey Municipal Bond Fund invests substantially all of its assets in
investment grade municipal bonds and other securities that generate income
exempt from Federal and New Jersey State income taxes. The principal issuers of
these securities are state and local governments and agencies located in New
Jersey, as well as the District of Columbia, Puerto Rico and other U.S.
territories and possessions. The Fund utilizes a specialist Sub-Adviser to
manage the Fund's portfolio under the general supervision of SIMC. The
Sub-Adviser will strive to maintain an average weighted portfolio maturity of
three to ten years. The Fund may, to a limited extent, invest in securities
subject to the alternative minimum tax or in taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN THE NEW JERSEY MUNICIPAL BOND FUND?

There may be economic or political changes that impact the ability of issuers of
New Jersey municipal securities to repay principal and to make interest payments
on securities owned by the Fund. Changes to the financial condition of New
Jersey municipal issuers also may adversely affect the value of the Fund's
securities. 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 Fund. As a result, the Fund will be
more susceptible to factors which adversely affect issuers of New Jersey
obligations than a mutual fund which does not have a great concentration in New
Jersey municipal obligations.

As a non-diversified fund, the Fund may invest in securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse
economic or regulatory occurrence.

10
<PAGE>

NEW JERSEY MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

As of August 1, 1998, the New Jersey Municipal Bond Fund had not commenced
operations, and did not have a performance history.

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .60%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees .33%

Other Expenses .54%
---

Total Annual Fund Operating Expenses .87%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

11
<PAGE>

NEW YORK MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL The highest level of current income exempt
from Federal and New York State and City
income taxes consistent with the preservation
of capital.
SHARE PRICE VOLATILITY Medium.
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser experienced in
selecting New York municipal securities, the
Fund invests in investment grade municipal
bonds and other securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE NEW YORK MUNICIPAL BOND FUND

The New York Municipal Bond Fund invests substantially all of its assets in
investment grade municipal bonds and other securities that generate income
exempt from Federal and New York State and City income taxes. The principal
issuers of these securities are state and local governments and agencies located
in New York, as well as the District of Columbia, Puerto Rico and other U.S.
territories and possessions. The Fund utilizes a specialist Sub-Adviser to
manage the Fund's portfolio under the general supervision of SIMC. The
Sub-Adviser will strive to maintain an average weighted portfolio maturity of
three to ten years. The Fund may, to a limited extent, invest assets in
securities subject to the alternative minimum tax or in taxable municipal
securities.

WHAT ARE THE RISKS OF INVESTING IN THE NEW YORK MUNICIPAL BOND FUND?

There may be economic or political changes that impact the ability of issuers of
New York municipal securities to repay principal and to make interest payments
on securities owned by the Fund. Changes to the financial condition of New York
municipal issuers also may adversely affect the value of the Fund's securities.
For example, financial difficulties of the state, New York City, or the
counties, municipalities and school districts that hinder efforts to borrow and
credit ratings are factors which may effect the Fund. As a result, the Fund
will be more susceptible to factors which adversely affect issuers of New York
obligations than a mutual fund which does not have as great a concentration in
New York municipal obligations.

As a non-diversified fund, the Fund may invest in securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse
economic or regulatory occurrence.

12
<PAGE>

NEW YORK MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

As of August 1, 1998, the New York Municipal Bond Fund had not commenced
operations, and did not have a performance history.

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .60%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>

Investment Advisory Fees 0.33%

Other Expenses 0.54%
----

Total Annual Fund Operating Expenses 0.87%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

13
<PAGE>

PENNSYLVANIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL Current income exempt from Federal and
Pennsylvania income taxes consistent with
thepreservation of capital.
SHARE PRICE VOLATILITY Medium.
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
Pennsylvania municipal securities, the Fund
invests in investment grade municipal bonds
and other securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE PENNSYLVANIA MUNICIPAL BOND FUND

The Pennsylvania Municipal Bond Fund invests substantially all of its assets in
investment grade municipal bonds and other securities that generate income
exempt from Federal and Pennsylvania State income taxes. The principal issuers
of these securities are state and local governments and agencies located in
Pennsylvania, as well as the District of Columbia, Puerto Rico and other U.S.
territories and possessions. The Adviser will strive to maintain an average
weighted portfolio maturity of seven years or less. The Fund may, to a limited
extent, invest in securities subject to the alternative minimum tax or in
taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN THE PENNSYLVANIA MUNICIPAL BOND FUND?

There may be economic or political changes that impact the ability of issuers of
Pennsylvania municipal securities to repay principal and to make interest
payments on securities owned by the Fund. Changes to the financial condition of
Pennsylvania municipal issuers also may adversely affect the value of the Fund's
securities. For example, financial difficulties of the Commonwealth, its
counties, municipalities and school districts that hinder efforts to borrow and
lower credit ratings are factors which may affect the Fund. As a result, the
Fund will be more susceptible to factors which adversely affect issuers of
Pennsylvania obligations than a mutual fund which does not have as great a
concentration in Pennsylvania municipal obligations.

14
<PAGE>

PENNSYLVANIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility of an
investment in the Pennsylvania Municipal Bond Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.

This bar chart shows changes in the This table compares the Fund's
performance of the Fund's CLASS A average annual total returns for
SHARES from year to year.* the periods ending December 31,
1997 to those of the
[______ Index].

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
PENNSYLVANIA MUNICIPAL
BOND FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

- -------------------------------------------------------------------------------

WHAT IS AN INDEX?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The _______ Index is a widely recognized index of
__________.

- -------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.20%

Other Expenses 0.67%
----

Total Annual Fund Operating Expenses 0.87%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

15
<PAGE>

INSTITUTIONAL TAX FREE FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL Preserving principal and maintaining
liquidity while providing current income
exempt from Federal income taxes.
SHARE PRICE VOLATILITY Very Low
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
municipal securities, the Fund invests in
high quality, short-term tax-exempt money
market securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE INSTITUTIONAL TAX FREE FUND

The Institutional Tax Free Fund is a money market fund that invests
substantially all of its assets in municipal money market securities that pay
interest that is exempt from Federal income taxes. The issuers of these
securities are state and local government agencies located in all fifty states,
the District of Columbia, Puerto Rico and other U.S. territories and
possessions. The Fund may, to a limited extent, invest in securities subject to
the alternative minimum tax or in taxable municipal securities.

Money market funds invest in high quality, short-term debt securities, commonly
known as money market instruments. These include municipal bonds, notes and tax
exempt commercial paper, as well as certain taxable securities and repurchase
agreements. A money market fund follows strict rules about credit risk,
maturity and diversification of its investments.

WHAT ARE THE RISKS OF INVESTING IN THE INSTITUTIONAL TAX FREE FUND?

There may be economic or political changes that impact the ability of municipal
issuers to repay principal and to make interest payments on securities owned by
the Fund. Changes to the financial condition or credit rating of municipal
issuers also may adversely affect the value of the Fund's securities. The
Fund's securities will change in value in response to changes in interest rates
and other factors. When interest rates are rising, the Fund's securities might
decline in value.

Since the Fund 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 Fund and affect its share price.

An investment in a money market fund is not a bank deposit. Although a money
market fund seeks to keep a constant price per share of $1.00, you may lose
money by investing in the Fund.

16
<PAGE>

INSTITUTIONAL TAX FREE FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility of an
investment in the Institutional Tax Free Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.

[BAR CHART]

<TABLE>
<CAPTION>
SINCE
FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
INSTITUTIONAL TAX
FREE FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-____ to obtain the Fund's current yield.

- -------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses
in the table below are shown as a percentage of the Fund's net assets. This
table shows the highest fees and expenses that could be currently charged to the
Fund. ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND
THE DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .33%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.04%

Other Expenses 0.65%
----

Total Annual Fund Operating Expenses 0.69%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

17
<PAGE>

TAX FREE FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE TAX FREE FUND

The Tax Free Fund is a money market fund that invests substantially all of its
assets in municipal money market securities that pay interest that is exempt
from Federal income taxes. The issuers of these securities are state and local
governments and agencies located in all fifty states, the District of Columbia,
Puerto Rico and other U.S. territories and possessions. The Fund may, to a
limited extent, invest in securities subject to the alternative minimum tax or
in taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN THE TAX FREE FUND?

Although a money market fund seeks to keep a constant price per share of $1.00,
you may lose money by investing in the Fund.

18
<PAGE>

TAX FREE FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility of an
investment in the Tax Free Fund. Of course, the Fund's past performance does
not necessarily indicate how the Fund will perform in the future.

[BAR CHART]

SINCE FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
TAX FREE FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-_____ to obtain the Fund's current yield.

- -------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses
in the table below are shown as a percentage of the Fund's net assets. This
table shows the highest fees and expenses that could be currently charged to the
Fund. ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE DISTRIBUTOR IS VOLUNTARILY
WAIVING A PORTION OF ITS FEES. ACTUAL TOTAL OPERATING EXPENSES CHARGED TO
SHAREHOLDERS ARE .45%. THE DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY
WAIVERS AT ANY TIME. For more information about these fees, see "Investment
Advisers" and "Distribution of Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>

Investment Advisory Fees 0.04%

Other Expenses 0.65%
----

Total Annual Fund Operating Expenses 0.69%
</TABLE>

EXAMPLE

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

19
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL Preserving principal and maintaining
liquidity while providing current income
exempt from Federal and California personal
income taxes.
SHARE PRICE VOLATILITY Very Low
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
municipal securities, the Fund invests in
high quality, short-term California municipal
money market securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE CALIFORNIA TAX EXEMPT FUND

The California Tax Exempt Fund is a money market fund that invests substantially
all of its assets in municipal money market securities that pay interest that is
exempt from Federal and California income taxes. The principal issuers of these
securities are state and local governments and agencies located in California,
as well as the District of Columbia, Puerto Rico and other U.S. territories and
possessions. The Fund may, to a limited extent, invest in securities subject to
the alternative minimum tax or in taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN CALIFORNIA TAX EXEMPT FUND?

The Fund's securities will change in value in response to interest rate changes
and other factors. When interest rates are rising, the Fund's securities might
decline in value.

Although a money market fund seeks to keep a constant price per share of $1.00,
you may lose money by investing in the Fund.

20
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility of an
investment in the California Tax Exempt Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
CALIFORNIA TAX EXEMPT
FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-______ to obtain the Fund's current yield.

- -------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .28%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.04%

Other Expenses 0.53%
----

Total Annual Fund Operating Expenses 0.57%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

21
<PAGE>

OHIO TAX FREE FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL Preserving capital and maintaining liquidity
while providing a high level of current
income exempt from Federal and Ohio personal
income taxes.
SHARE PRICE VOLATILITY Very Low
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
municipal securities, the Fund invests in
high quality, short-term Ohio municipal money
market securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE OHIO TAX FREE FUND

The Ohio Tax Free Fund is a money market fund that invests substantially all of
its assets in municipal money market securities that pay interest that is exempt
from Federal and Ohio income taxes. The principal issuers of these securities
are state and local governments and agencies located in Ohio, as well as the
District of Columbia, Puerto Rico and other U.S. territories and possessions.
The Fund may, to a limited extent, invest in securities subject to the
alternative minimum tax or in taxable municipal securities.

WHAT ARE THE RISKS OF INVESTING IN OHIO TAX FREE FUND?

There may be economic or political changes that impact the ability of issuers of
Ohio municipal securities to repay principal and to make interest payments on
securities owned by the Fund. Changes to the financial condition of Ohio
municipal issuers also may adversely affect the value of the Fund's securities.
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 Fund. As a result, the Fund 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.

The Fund's securities will change in value in response to interest rate changes
and other factors. When interest rates are rising, the Fund's securities might
decline in value.

Although a money market fund seeks to keep a constant price per share of $1.00,
you may lose money by investing in the Fund.

As a non-diversified fund, the Fund may invest in securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse
economic or regulatory occurrence.

22
<PAGE>

OHIO TAX FREE FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

As of August 1, 1998, the Ohio Tax Free Fund had not commenced operations, and
did not have a performance history.

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .35%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES
<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.04%

Other Expenses 0.67%
----

Total Annual Fund Operating Expenses 0.71%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
CLASS A SHARES $ $
</TABLE>

- -------------------------------------------------------------------------------

23
<PAGE>

PENNSYLVANIA TAX FREE FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

INVESTMENT GOAL Preserving capital while providing current
income exempt from Federal and Pennsylvania
State personal income taxes.
SHARE PRICE VOLATILITY Very Low
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
municipal securities, the Fund invests in
high quality, short-term Pennsylvania
municipal money market securities.

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE PENNSYLVANIA TAX FREE FUND

The Pennsylvania Tax Free Fund is a money market fund that invests substantially
all of its assets in municipal money market securities that pay interest that is
exempt from Federal and Pennsylvania income taxes. The principal issuers of
these securities are state and local governments and agencies located in
Pennsylvania, as well as the District of Columbia, Puerto Rico and other U.S.
territories and possessions. The Fund may, to a limited extent, invest in
securities subject to the alternative minimum tax or in taxable municipal
securities.

WHAT ARE THE RISKS OF INVESTING IN PENNSYLVANIA TAX FREE FUND?

The Fund's securities will change in value in response to interest rate changes
and other factors. When interest rates are rising, the Fund's securities might
decline in value.

An investment in a money market fund is not a bank deposit. Although a money
market fund seeks to keep a constant price per share of $1.00, you may lose
money by investing in the Fund.

As a non-diversified fund, the Fund may invest in securities of relatively few
issuers. As a result, the Fund may be more susceptible to a single adverse
economic or regulatory occurrence.

24
<PAGE>

PENNSYLVANIA TAX FREE FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility of an
investment in the Pennsylvania Tax Free Fund. Of course, the Fund's past
performance does not necessarily indicate how the Fund will perform in the
future.

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR 5 YEARS INCEPTION
(1/24/94)
<S> <C> <C> <C>
PENNSYLVANIA TAX FREE FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-_____ to obtain the Fund's current yield.

- -------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses
in the table below are shown as a percentage of the Fund's net assets. This
table shows the highest fees and expenses that could be currently charged to the
Fund. ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND
THE DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .35%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees .04%

Other Expenses .67%
---

Total Annual Fund Operating Expenses .71%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>

CLASS A SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

25
<PAGE>

FUND INVESTMENTS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>

- -----------------------------------------------------------------------------------------------------------------------------
Intermediate Term California Massachusetts New Jersey NEW YORK PENNSYLVANIA
Municipal Municipal Municipal Municipal MUNICIPAL MUNICIPAL
Fund Bond Fund Bond Fund Bond Fund BOND FUND BOND FUND
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL x x x x x x
SECURITIES
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Institutional Tax Free California Ohio PENNSYLVANIA
Tax Free Fund Tax Exempt Tax Free TAX FREE
Fund Fund Fund FUND
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MUNICIPAL MONEY
MARKET SECURITIES x x x x x
- -----------------------------------------------------------------------------------------------------------------------------

</TABLE>

Each Fund may invest in other securities, use other strategies and engage in
investment practices other than those listed in the Fund Summaries, and they are
described in detail in our Statement of Additional Information. Of course, we
cannot guarantee that any Fund will achieve its investment goal.

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions.
During unusual economic or market conditions or for temporary defensive or
liquidity purposes, each Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations that would
not ordinarily be consistent with the Funds' objectives. The Funds will do so
only if the Adviser or Sub-Adviser believes that the risk of loss outweighs the
opportunity for taxable gains. When a Fund is investing for temporary defensive
purposes, it is not pursuing its investment goal.

INVESTMENT ADVISERS AND SUB-ADVISERS
- -------------------------------------------------------------------------------
Each Investment Adviser or Sub-Adviser makes investment decisions for the Funds
it manages and continuously reviews, supervises and administers their Funds'
investment programs. The Board of Trustees supervises the Advisers and
Sub-Advisers and establishes policies that the Advisers and Sub-Advisers must
follow in their management activities.

SEI Investments Management Corporation, serves as the Adviser to the New York
Municipal Bond, New Jersey Municipal Bond, Massachusetts Municipal Bond,
California Municipal Bond, and Intermediate-Term Municipal Funds. As of
September 30, 1998, SEI Investments Management Corporation had approximately
____ billion in assets under management. For the fiscal year ended August 31,
1998, SIMC received advisory fees of:

<TABLE>
<S> <C>
INTERMEDIATE-TERM MUNICIPAL FUND .33%
CALIFORNIA MUNICIPAL BOND FUND .33%
MASSACHUSETTS MUNICIPAL BOND FUND .33%
NEW JERSEY MUNICIPAL BOND FUND .33%
NEW YORK MUNICIPAL BOND FUND .33%

<CAPTION>
Morgan Grenfell Capital Management Incorporated, serves as the Adviser to the
Pennsylvania Municipal Bond Fund. As of September 30, 1998, Morgan Grenfell
Capital Management Incorporated had approximately $12 billion in assets under
management. For the fiscal year ended August 31, 1998, Morgan Grenfell received
advisory fees of:
<S> <C>
PENNSYLVANIA MUNICIPAL BOND FUND .20%

<CAPTION>
Weiss, Peck & Greer, L.L.C., serves as the Adviser to the California Tax Exempt,
Tax Free, Pennsylvania Tax Free, Institutional Tax Free and Ohio Tax Free Funds.
As of September 30, 1998, Weiss, Peck & Greer, L.L.C. had approximately ___
billion in assets under management. For the fiscal year ended August 31, 1998,
Weiss Peck received advisory fees of:

<S> <C>
CALIFORNIA TAX EXEMPT FUND __%
INSTITUTIONAL TAX FREE FUND __%
OHIO TAX FREE FUND __%
PENNSYLVANIA TAX FREE FUND __%
TAX FREE FUND __%
</TABLE>

26
<PAGE>

Standish, Ayer & Wood, Inc., serves as the Sub-Adviser to the Intermediate-Term
Municipal, Massachusetts Municipal Bond, and New York Municipal Bond Funds. As
of September 30, 1998, Standish, Ayer & Wood, Inc. had approximately ___ billion
in assets under management.

Van Kampen Management, Inc., serves as the Sub-Adviser to the California
Municipal Bond and New Jersey Municipal Bond Funds. As of September 30, 1998,
Van Kampen Management, Inc. had approximately $57 billion in assets under
management.

PORTFOLIO MANAGER(s)

INTERMEDIATE-TERM MUNICIPAL FUND
MASSACHUSETTS MUNICIPAL BOND FUND
NEW YORK MUNICIPAL BOND FUND

STANDISH, AYER & WOOD, INC.: Raymond J. Kubiak, CFA, is a portfolio manager at
Standish, Ayer & Wood, Inc. Mr. Kubiak has been with Standish, Ayer & Wood,
Inc. since 1988. He manages the Intermediate-Term Municipal, Massachusetts
Municipal Bond and New York Municipal Bond Funds. He has more than 16 years of
investment experience.

CALIFORNIA MUNICIPAL BOND FUND

VAN KAMPEN MANAGEMENT, INC.: Joseph A. Piraro is a Vice President of Van Kampen
Management, Inc. Mr. Piraro has been with Van Kampen Management, Inc. since
1991. He manages the California Municipal Bond Fund. He has more than 27 years
of investment experience.

NEW JERSEY MUNICIPAL BOND FUND

VAN KAMPEN MANAGEMENT, INC.: Timothy D. Haney is a Vice President of Van Kampen
Management, Inc. Mr. Haney has been with Van Kampen Management, Inc. since
1988. He manages the New Jersey Municipal Bond Fund. He has more than 8 years
of investment experience.

PENNSYLVANIA MUNICIPAL BOND FUND

MORGAN GRENFELL CAPITAL MANAGEMENT INCORPORATED: David W. Baldt is a Director
and Executive Vice President of Morgan Grenfell Capital Management Incorporated.
Mr. Baldt has been with Morgan Grenfell Capital Management since 1989. He has
managed the Pennsylvania Municipal Bond Fund since July, 1995. He has more than
nine years of investment experience.

INSTITUTIONAL TAX FREE FUND
TAX FREE FUND
CALIFORNIA TAX EXEMPT FUND
OHIO TAX FREE FUND
PENNSYLVANIA TAX FREE FUND

WEISS, PECK & GREER, L.L.C.: Janet Fiorenza is a portfolio manager at Weiss,
Peck & Greer, L.L.C. Ms. Fiorenza has been with Weiss, Peck & Greer, L.L.C.
since 1988, and with its predecessor since 1980. She manages the California Tax
Exempt, Tax Free, Pennsylvania Tax Free, Institutional Tax Free and Ohio Tax
Free Funds. She has more than 18 years of investment experience.

27
<PAGE>

PURCHASING FUND SHARES
- -------------------------------------------------------------------------------

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).

You may purchase Class A Shares directly from us by:

- - mail
- - telephone
- - wire, or
- - Automated Clearing House (ACH).

To purchase shares directly from us, please call 1-800-DIAL-SEI. Write your
check, payable in U.S. dollars, to "SEI Tax Exempt Trust" and include the name
of the appropriate Fund(s) on the check. We cannot accept third-party checks,
credit cards, credit card checks or cash. You may also purchase shares through
financial intermediaries, or other financial institutions that have executed
dealer agreements. You cannot purchase money market fund shares by Federal
Reserve wire or Federal holiday on which wire transfers are restricted. We may
reject any purchase order if we determine that accepting the order would not be
in the best interests of the Funds or their shareholders.

Certain investors who deal directly with a financial intermediary will have to
follow the intermediary's procedures for transacting with the Funds. If you
purchase, sell or exchange Fund shares through a financial institution (rather
than directly from us), you may have to transmit your purchase, sale and
exchange requests to your financial institution at an earlier time for your
transaction to become effective that day. This allows the financial institution
time to process your request and transmit it to us. For more information about
how to purchase, sell or exchange Fund shares through your financial
institution, you should contact your financial institution directly.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. NAV for one Fund
share is the value of that share's portion of all of the assets in the Fund. We
calculate each non-money market fund's NAV once each Business Day at the
regularly-scheduled close of normal trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time). We calculate each money market fund's NAV
at 2:00 p.m., Eastern time. If you want to receive the current Business Day's
NAV, generally we must receive your purchase order before 4:00 p.m. Eastern time
for each non-money market fund, and by 12:30 p.m. for each money market fund
(except for the California Tax Exempt Fund and the Ohio Tax Free Fund, for which
the cut-off time is the time that NAV is determined, usually 2:00 p.m. Eastern
time).

HOW WE CALCULATE NAV

In calculating NAV, we generally value a non-money market Fund's portfolio at
market price. If market prices are unavailable or we think that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.

For the money market funds, we value securities by utilizing the amortized cost
valuation method (as described in the SAI). If we think amortized cost is
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees. We expect each money market fund's NAV to
remain constant at $1.00 per share, although we cannot guarantee this.

MINIMUM PURCHASES

To purchase Class A Shares of the non-money market funds for the first time, you
must invest at least $100,000 in any such Fund. To purchase Class A Shares of
the Institutional Tax Free Fund for the first time, you must invest at least $50
million in the Fund. To purchase additional shares of the non-money market
funds, you must invest at least $1,000. We may accept investments of smaller
amounts at our discretion.

28
<PAGE>

SELLING FUND SHARES
- -------------------------------------------------------------------------------

HOW TO SELL YOUR FUND SHARES

You may sell (sometimes called "redeem") your shares on any Business Day by
contacting us directly by mail or telephone. You may also sell your shares by
contacting your financial institution by mail or telephone. If you would like
to sell your shares, please notify us in writing and include a signature
guarantee (a notarized signature is not sufficient). The sale price of each
share will be the next NAV determined after we receive your request.

TELEPHONE TRANSACTIONS

Purchasing, selling and exchanging Fund shares over the telephone is extremely
convenient, but not without risk. Although we have certain safeguards and
procedures to confirm the identity of callers and the authenticity of
instructions, we are not responsible for any losses or costs incurred by
following telephone instructions we reasonably believe to be genuine. If you or
your financial institution transact with us over the telephone, you will
generally bear the risk of any loss.

RECEIVING YOUR MONEY

Normally, we will send your sale proceeds within five Business Days after we
receive your request. Your proceeds can be wired to a bank account or sent to
you by check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR THROUGH ACH,
REDEMPTION PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY
TAKE UP TO 15 BUSINESS DAYS).

REDEMPTIONS IN KIND

We generally pay sale proceeds in cash. However, under unusual conditions that
make the payment of cash unwise (and for the protection of the Fund's remaining
shareholders) we might pay all or part of your redemption proceeds in liquid
securities with a market value equal to the redemption price (redemption in
kind). Although it is highly unlikely that your shares would ever be redeemed
in kind, you would probably have to pay transaction costs to sell the securities
distributed to you, as well as taxes on any capital gains from the sale as with
any redemption.

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below the required minimum, $45 million for Class
A Shares of the Institutional Tax Free Fund, you may be required to sell your
shares. You will always be given at least 60 days' written notice to give you
time to add to your account and avoid selling your shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

We may suspend your right to sell your shares if the NYSE restricts trading, the
SEC declares an emergency or for other reasons. More information about this is
in our Statement of Additional Information.

EXCHANGING FUND SHARES
- -------------------------------------------------------------------------------

HOW TO EXCHANGE YOUR SHARES

When you exchange shares, you are really selling your shares and buying other
Fund shares. So, your sale price and purchase price will be based on the NAV
next calculated after we receive your exchange request.

You may exchange your Class A shares of any Fund for Class A shares of any other
Fund on any Business Day by contacting us directly by mail or telephone. You
may also exchange shares through your financial institution by mail or
telephone. If you recently purchased shares by check or through ACH, you may
not be able to exchange your shares until your check has cleared (which may take
up to 15 Business Days). This exchange privilege may be changed or canceled at
any time upon 60 days' notice.

29
<PAGE>

OTHER INFORMATION
- -------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes its income monthly. Funds make distributions of capital
gains, if any, at least annually.

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify us in writing prior to the date of the distribution. Your election
will be effective for dividends and distributions paid after we receive your
written notice. To cancel your election, simply send us written notice.

TAXES

PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.

Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Capital gains
distributions may be taxable at different rates depending on the length of time
a Fund holds its portfolio securities. YOU MAY BE TAXED ON EACH SALE OR EXCHANGE
OF FUND SHARES.

The California Municipal Bond, Massachusetts Municipal Bond, New Jersey
Municipal Bond, New York Municipal Bond and Pennsylvania Municipal Bond Funds
tend to distribute federally tax-exempt income. Each Fund may invest a portion
of its assets in securities that generate taxable income for federal or state
income taxes. Income exempt from federal tax may be subject to state and local
taxes. Any capital gains distributed by these Funds may be taxable.

The Funds are not liable for any income or franchise taxes in the Commonwealth
of Massachusetts as long as they qualify as regulated investment companies under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. SIDCo. receives no compensation for distributing the Funds' shares.

Each Fund has adopted a shareholder service plan that allows the Fund to pay
service fees for services provided to shareholders. Because these fees are paid
out of a Fund's assets continuously, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges. For Class A Shares, shareholder service fees, as a percentage of
average daily net assets, are .25%, even though the Funds' distributor generally
waives this amount.

30
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The tables that follow present performance information about Class A Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for
a single Fund share. The total returns in the tables represent the rate that
you would have earned [or lost] on an investment in a Fund, assuming you
reinvested all of your dividends and distributions. As of August 31, 1998, the
Ohio Tax Free Fund was not open to investors.

This information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with each Fund's financial statements, appears
in our annual report that accompanies our Statement of Additional Information.
You can obtain our annual report, which contains more performance information,
at no charge by calling 1-800-DIAL-SEI.

INTERMEDIATE-TERM MUNICIPAL FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
_____________________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

31
<PAGE>

FINANCIAL HIGHLIGHTS

- -------------------------------------------------------------------------------
This information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with each Fund's financial statements, appears
in our annual report that accompanies our Statement of Additional Information.
You can obtain our annual report, which contains more performance information,
at no charge by calling 1-800-DIAL-SEI.

CALIFORNIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

32
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

MASSACHUSETTS MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
_____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

33
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

NEW JERSEY MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
_____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

34
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

NEW YORK MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

35
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

PENNSYLVANIA MUNICIPAL BOND FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
.............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

36
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

INSTITUTIONAL TAX FREE FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

37
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

TAX FREE FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

38
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

CALIFORNIA TAX EXEMPT FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

39
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

PENNSYLVANIA TAX FREE FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
_____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

40
<PAGE>

SEI Tax Exempt Trust

ADVISERS

SEI INVESTMENTS MANAGEMENT CORPORATION
MORGAN GRENFELL CAPITAL MANAGEMENT, INCORPORATED
STANDISH, AYER & WOOD, INC.
VAN KAMPEN MANAGEMENT, INC.
WEISS, PECK & GREER, L.L.C.

DISTRIBUTOR

SEI INVESTMENTS DISTRIBUTION CO.

LEGAL COUNSEL

MORGAN, LEWIS & BOCKIUS LLP
More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
- -------------------------------------------------------------------------------

The SAI dated December 31, 1998, includes more detailed information about SEI
Tax Exempt Trust. The SAI has been filed with the SEC and is incorporated by
reference into this prospectus. This means that the SAI, for legal purposes, is
a part of this prospectus.

ANNUAL AND SEMIANNUAL REPORTS
- -------------------------------------------------------------------------------

These reports list the Funds' holdings and contain information from the Funds'
managers about fund strategies and recent market conditions and trends. The
reports also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------

BY TELEPHONE: Call 1-800-DIAL-SEI
BY MAIL: Write to us at:
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY INTERNET: http://www.seic.com

FROM THE SEC: You can also obtain these documents, and other information about
the SEI Tax Exempt Trust, from the SEC's website ("http://www.sec.gov"). You may
review and copy documents at the SEC Public Reference Room in Washington, DC
(for information call 1-800-SEC-0330). You may request documents by mail from
the SEC, upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, DC 20549-6009. The
Fund's Investment Company Act registration number is 811-3447.

- -------------------------------------------------------------------------------

41
<PAGE>

[LOGO]SEI TAX
EXEMPT TRUST

CLASS B SHARES

PROSPECTUS
DECEMBER 31, 1998

-----------------------------------------------

FIXED INCOME FUND MONEY MARKET FUNDS

PENNSYLVANIA MUNICIPAL BOND FUND INSTITUTIONAL TAX FREE FUND
CALIFORNIA TAX EXEMPT FUND

-----------------------------------------------

INVESTMENT ADVISERS:
MORGAN GRENFELL CAPITAL MANAGEMENT INCORPORATED
WEISS, PECK & GREER, L.L.C.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.
<PAGE>

[LOGO]SEI TAX
EXEMPT TRUST

HOW TO READ THIS PROSPECTUS
- --------------------------------------------------------------------------------

SEI Tax Exempt Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the Class B Shares of the Pennsylvania Municipal Bond,
Institutional Tax Free and California Tax Exempt Funds that you should know
before investing. Please read this prospectus and keep it for future reference.

EACH FUND'S PRINCIPAL INVESTMENTS . . . . . . . . . . . . . . . . . . . .
THE ADVISERS AND THE PORTFOLIO MANAGERS . . . . . . . . . . . . . . . . .
PURCHASING, SELLING AND EXCHANGING FUND SHARES. . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS AND TAXES. . . . . . . . . . . . . . . . . . . .
HOW FUND SHARES ARE DISTRIBUTED . . . . . . . . . . . . . . . . . . . . .
HISTORICAL FINANCIAL INFORMATION ABOUT EACH FUND. . . . . . . . . . . . .
HOW TO OBTAIN MORE INFORMATION ABOUT THE FUNDS. . . . . . . . .Back Cover

2
<PAGE>

INTRODUCTION
- --------------------------------------------------------------------------------

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of its Investment Adviser.
We cannot guarantee that a Fund will achieve its goal. The Advisers make
judgments about the market, the economy, or interest rates and these judgments
may not reflect actual market movements, economic conditions or issuer
performance, and these judgments may affect the return of your investment. In
fact no matter how good a job the Advisers do, you could lose money on your
investment in a Fund, just as you could with other investments. A Fund share is
not a bank deposit, and it is not insured or guaranteed by the FDIC or any
government agency.

- --------------------------------------------------------------------------------

MUNICIPAL SECURITIES

Each of the Funds invests in municipal securities. Municipal securities
are bonds and other fixed income securities issued by state and local
governments and their agencies (such as housing or hospital authorities) to
finance capital expenditures and operations. The obligation to pay
principal and interest on municipal securities may be a general obligation
of the state or local government, but may be supported only by an agency or
a particular source of revenues. Therefore, municipal securities vary in
credit quality.

Municipal securities, like other fixed income securities, rise and fall in
value in response to economic and market factors, primarily changes in
interest rates, and actual or perceived credit quality. Rising interest
rates will generally cause municipal securities to decline in value.
Longer-term securities respond more sharply to interest rate changes than
do shorter-term securities. A municipal security will also lose value if,
due to rating downgrades or other factors, there are concerns about the
issuers current or future ability to make principal or interest payments.
A focus on investment grade securities reduces but does not eliminate this
risk.

Generally, the income from municipal securities is exempt from Federal
income taxes, and also may be exempt from certain state or local taxes
depending on an investor's state of residence. Even so, income from
certain obligations may be subject to Federal alternative minimum taxes.

- --------------------------------------------------------------------------------

3
<PAGE>

PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------

INVESTMENT SUMMARY

INVESTMENT GOAL Current income exempt from Federal and
Pennsylvania income taxes consistent with the
preservation of capital.
SHARE PRICE VOLATILITY Medium.
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
Pennsylvania municipal securities, the Fund
invests in investment grade municipal bonds
and other securities.

- --------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE PENNSYLVANIA MUNICIPAL BOND FUND

WHAT ARE THE RISKS OF INVESTING IN THE PENNSYLVANIA MUNICIPAL BOND FUND?

4
<PAGE>

PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION

This bar chart shows changes in the This table compares the Fund's
performance of the Fund's CLASS B average annual total returns for the
SHARES from year to year.* periods ending December 31, 1997 to
those of the [______ Index].

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
PENNSYLVANIA MUNICIPAL
BOND FUND
CLASS B SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

- --------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- --------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses
in the table below are shown as a percentage of the Fund's net assets. This
table shows the highest fees and expenses that could be currently charged to the
Fund. ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND
THE DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .48%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- --------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES
CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.20%

Other Expenses 0.72%
-----

Total Annual Fund Operating Expenses 0.92%
</TABLE>

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class B Shares $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------

5
<PAGE>

INSTITUTIONAL TAX FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT SUMMARY

- --------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE INSTITUTIONAL TAX FREE FUND

WHAT ARE THE RISKS OF INVESTING IN THE INSTITUTIONAL TAX FREE FUND?

An investment in a money market fund is not a bank deposit. Although a money
market fund seeks to keep a constant price per share of $1.00, you may lose
money by investing in the Fund.

6
<PAGE>

INSTITUTIONAL TAX FREE FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION

[BAR CHART]

<TABLE>
<CAPTION>
SINCE
FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
INSTITUTIONAL TAX
FREE FUND
CLASS B SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-____ to obtain the Fund's current yield.

- --------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- --------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses
in the table below are shown as a percentage of the Fund's net assets. This
table shows the highest fees and expenses that could be currently charged to the
Fund. ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND
THE DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .63%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- --------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES
CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.04%

Other Expenses 0.70%
-----

Total Annual Fund Operating Expenses 0.74%
</TABLE>

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class B Shares $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------

7
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENT SUMMARY

- --------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE CALIFORNIA TAX EXEMPT FUND

WHAT ARE THE RISKS OF INVESTING IN CALIFORNIA TAX EXEMPT FUND?

The Fund's securities will change in value in response to interest rate changes
and other factors. When interest rates are rising, the Fund's securities might
decline in value.

Although a money market fund seeks to keep a constant price per share of $1.00,
you may lose money by investing in the Fund.

8
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION

[BAR CHART]

<TABLE>
<CAPTION>
SINCE
FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
CALIFORNIA TAX
EXEMPT FUND
CLASS B SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-____ to obtain the Fund's current yield.

- --------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- --------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .58%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- --------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES
CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.04%

Other Expenses 0.58%
-----

Total Annual Fund Operating Expenses 0.62%
</TABLE>

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class B Shares $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------

9
<PAGE>

FUND INVESTMENTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ----------------------------------------
PENNSYLVANIA
MUNICIPAL
BOND FUND
- ----------------------------------------
<S> <C>
MUNICIPAL x
SECURITIES
- ----------------------------------------

- --------------------------------------------------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND CALIFORNIA TAX EXEMPT FUND
MUNICIPAL MONEY MARKET SECURITIES x x
- --------------------------------------------------------------------------------------------------------------
</TABLE>
Each Fund may invest in other securities, use other strategies and engage in
investment practices other than those listed in the Fund Summaries, and they are
described in detail in our Statement of Additional Information. Of course, we
cannot guarantee that any Fund will achieve its investment goal.

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions.
During unusual economic or market conditions or for temporary defensive or
liquidity purposes, each Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations that would
not ordinarily be consistent with the Funds' objectives. The Funds will do so
only if the Adviser believes that the risk of loss outweighs the opportunity for
taxable gains. When a Fund is investing for temporary defensive purposes, it is
not pursuing its investment goal.

INVESTMENT ADVISERS
- --------------------------------------------------------------------------------
Each Investment Adviser makes investment decisions for the Funds it manages and
continuously reviews, supervises and administers their Funds' investment
programs. The Board of Trustees supervises the Advisers and establishes
policies that the Advisers must follow in their management activities.

Morgan Grenfell Capital Management Incorporated, serves as the Adviser to the
Pennsylvania Municipal Bond Fund. As of September 30, 1998, Morgan Grenfell
Capital Management Incorporated had approximately $12 billion in assets under
management. For the fiscal year ended August 31, 1998, Morgan Grenfell received
advisory fees of:

<TABLE>
<CAPTION>
<S> <C>
PENNSYLVANIA MUNICIPAL BOND FUND .20%
</TABLE>

Weiss, Peck & Greer, L.L.C., serves as the Adviser to the California Tax Exempt,
Tax Free, Pennsylvania Tax Free, Institutional Tax Free and Ohio Tax Free Funds.
As of September 30, 1998, Weiss, Peck & Greer, L.L.C. had approximately ___
billion in assets under management. For the fiscal year ended August 31, 1998,
Weiss Peck received advisory fees of:

<TABLE>
<CAPTION>
<S> <C>
CALIFORNIA TAX EXEMPT FUND __%
INSTITUTIONAL TAX FREE FUND __%
</TABLE>

PORTFOLIO MANAGER(s)

PENNSYLVANIA MUNICIPAL BOND FUND

INSTITUTIONAL TAX FREE FUND
CALIFORNIA TAX EXEMPT FUND

10
<PAGE>

WEISS, PECK & GREER, L.L.C.: Janet Fiorenza is a portfolio manager at Weiss,
Peck & Greer, L.L.C. Ms. Fiorenza has been with Weiss, Peck & Greer, L.L.C.
since 1988, and with its predecessor since 1980. She manages the California Tax
Exempt and Institutional Tax Free Funds. She has more than 18 years of
investment experience.

PURCHASING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).

You may purchase Class B Shares directly from us by:

- - mail
- - telephone
- - wire, or
- - Automated Clearing House (ACH).

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. NAV for one Fund
share is the value of that share's portion of all of the assets in the Fund. We
calculate the Pennsylvania Municipal Bond Fund's NAV once each Business Day at
the regularly-scheduled close of normal trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time). We calculate the Institutional Tax Free and
California Tax Exempt Funds' NAV at 2:00 p.m., Eastern time. If you want to
receive the current Business Day's NAV, generally we must receive your purchase
order before 4:00 p.m. Eastern time for the Pennsylvania Municipal Bond Fund, by
12:30 p.m. for the Institutional Tax Free, and before the time that NAV is
determined, usually 2:00 p.m. Eastern time for the California Tax Exempt Fund.

HOW WE CALCULATE NAV

In calculating NAV, we generally value the Pennsylvania Municipal Bond Fund's
portfolio at market price. If market prices are unavailable or we think that
they are unreliable, fair value prices may be determined in good faith using
methods approved by the Board of Trustees.

For the Institutional Tax Free and the California Tax Exempt Funds, we value
securities by utilizing the amortized cost valuation method (as described in the
SAI). If we think amortized cost is unreliable, fair value prices may be
determined in good faith using methods approved by the Board of Trustees. We
expect each money market fund's NAV to remain constant at $1.00 per share,
although we cannot guarantee this.

MINIMUM PURCHASES

11
<PAGE>

To purchase Class B Shares of the Institutional Tax Free Fund for the first
time, you must invest at least $50 million in the Fund. To purchase additional
shares of the non-money market funds, you must invest at least $1,000. We may
accept investments of smaller amounts at our discretion.

SELLING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO SELL YOUR FUND SHARES

TELEPHONE TRANSACTIONS

RECEIVING YOUR MONEY

REDEMPTIONS IN KIND

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below the required minimum, $45 million for Class
B Shares of the Institutional Tax Free Fund, you may be required to sell your
shares. You will always be given at least 60 days' written notice to give you
time to add to your account and avoid selling your shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO EXCHANGE YOUR SHARES

You may exchange your Class B shares of any Fund for Class B shares of any other
Fund on any Business Day by contacting us directly by mail or telephone. You
may also exchange shares through your financial institution by mail or
telephone. If you recently purchased shares by check or through ACH, you may
not be able to exchange your shares until your check has cleared (which may take
up to 15 Business Days). This exchange privilege may be changed or canceled at
any time upon 60 days' notice.

12
<PAGE>

OTHER INFORMATION
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes its income monthly. Funds make distributions of capital
gains, if any, at least annually.

TAXES

The Pennsylvania Municipal Bond Fund tends to distribute federally tax-exempt
income. The Funds may invest a portion of their assets in securities that
generate taxable income for federal or state income taxes. Income exempt from
federal tax may be subject to state and local taxes. Any capital gains
distributed by the Funds may be taxable.

The Funds are not liable for any income or franchise taxes in the Commonwealth
of Massachusetts as long as they qualify as regulated investment companies under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. SIDCo. receives no compensation for distributing the Funds' shares.

Each Fund has adopted a shareholder service plan that allows the Fund to pay
service fees and administrative services fees for services provided to
shareholders. Because these fees are paid out of a Fund's assets continuously,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges. For Class B Shares, shareholder
service fees, as a percentage of average daily net assets, are .25%, and
administrative services fees, as a percentage of average daily net assets, are
.05%.

13
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The tables that follow present performance information about Class B Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for
a single Fund share. The total returns in the tables represent the rate that
you would have earned [or lost] on an investment in a Fund, assuming you
reinvested all of your dividends and distributions.

PENNSYLVANIA MUNICIPAL BOND FUND
- --------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
- ----------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
- --------------------
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

14
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

INSTITUTIONAL TAX FREE FUND
- --------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
- ----------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
- --------------------
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

15
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

CALIFORNIA TAX EXEMPT FUND
- --------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
- ----------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
- --------------------
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

16
<PAGE>

[LOGO]SEI Tax Exempt Trust

ADVISERS

MORGAN GRENFELL CAPITAL MANAGEMENT, INCORPORATED
WEISS, PECK & GREER, L.L.C.

DISTRIBUTOR

SEI INVESTMENTS DISTRIBUTION CO.

LEGAL COUNSEL

MORGAN, LEWIS & BOCKIUS LLP

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------

ANNUAL AND SEMIANNUAL REPORTS
- --------------------------------------------------------------------------------

TO OBTAIN MORE INFORMATION:
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

BY TELEPHONE: Call 1-800-DIAL-SEI
BY MAIL: Write to us at:
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY INTERNET: http://www.seic.com

- --------------------------------------------------------------------------------

<PAGE>

[LOGO]SEI TAX
EXEMPT TRUST

CLASS C SHARES

PROSPECTUS
DECEMBER 31, 1998

-----------------------------------------------

INSTITUTIONAL TAX FREE FUND
CALIFORNIA TAX EXEMPT FUND

-----------------------------------------------

INVESTMENT ADVISER:
WEISS, PECK & GREER, L.L.C.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.
<PAGE>

[LOGO]SEI TAX
EXEMPT TRUST

HOW TO READ THIS PROSPECTUS
- --------------------------------------------------------------------------------

SEI Tax Exempt Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the Class C Shares of the Institutional Tax Free and
California Tax Exempt Funds that you should know before investing. Please read
this prospectus and keep it for future reference.

EACH FUND'S PRINCIPAL INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . .
THE ADVISER THE PORTFOLIO MANAGER. . . . . . . . . . . . . . . . . . . . . . .
PURCHASING, SELLING AND EXCHANGING FUND SHARES . . . . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . .
HOW FUND SHARES ARE DISTRIBUTED. . . . . . . . . . . . . . . . . . . . . . . .
HISTORICAL FINANCIAL INFORMATION ABOUT EACH FUND . . . . . . . . . . . . . . .
HOW TO OBTAIN MORE INFORMATION ABOUT THE FUNDS . . . . . . . . . . .Back Cover

2
<PAGE>

INTRODUCTION
- --------------------------------------------------------------------------------

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of its Investment Adviser.
We cannot guarantee that a Fund will achieve its goal. The Adviser makes
judgments about the market, the economy, or interest rates and these judgments
may not reflect actual market movements, economic conditions or issuer
performance, and these judgments may affect the return of your investment. In
fact no matter how good a job the Adviser does, you could lose money on your
investment in a Fund, just as you could with other investments. A Fund share is
not a bank deposit, and it is not insured or guaranteed by the FDIC or any
government agency.

The value of your investment in a Fund is based on the amortized cost value of
the securities the Fund holds. These prices may change due to economic and
other events that affect the securities markets generally, as well as those that
affect particular issuers. The effect on a Fund's share price of a change in
the value of a single security will depend on how widely the Fund's holdings are
diversified.

- --------------------------------------------------------------------------------

MUNICIPAL SECURITIES

Each of the Funds invests in municipal securities. Municipal securities
are bonds and other fixed income securities issued by state and local
governments and their agencies (such as housing or hospital authorities) to
finance capital expenditures and operations. The obligation to pay
principal and interest on municipal securities may be a general obligation
of the state or local government, but may be supported only by an agency or
a particular source of revenues. Therefore, municipal securities vary in
credit quality.

Municipal securities, like other fixed income securities, rise and fall in
value in response to economic and market factors, primarily changes in
interest rates, and actual or perceived credit quality. Rising interest
rates will generally cause municipal securities to decline in value.
Longer-term securities respond more sharply to interest rate changes than
do shorter-term securities. A municipal security will also lose value if,
due to rating downgrades or other factors, there are concerns about the
issuers current or future ability to make principal or interest payments.
A focus on investment grade securities reduces but does not eliminate this
risk.

Generally, the income from municipal securities is exempt from Federal
income taxes, and also may be exempt from certain state or local taxes
depending on an investor's state of residence. Even so, income from
certain obligations may be subject to Federal alternative minimum taxes.

- --------------------------------------------------------------------------------

3
<PAGE>

INSTITUTIONAL TAX FREE FUND
- --------------------------------------------------------------------------------
INVESTMENT SUMMARY

- --------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE INSTITUTIONAL TAX FREE FUND

WHAT ARE THE RISKS OF INVESTING IN THE INSTITUTIONAL TAX FREE FUND?

An investment in a money market fund is not a bank deposit. Although a money
market fund seeks to keep a constant price per share of $1.00, you may lose
money by investing in the Fund.

4
<PAGE>

INSTITUTIONAL TAX FREE FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION

This bar chart shows changes in the This table compares the Fund's
performance of the Fund's CLASS C average annual total returns for the
SHARES from year to year.* periods ending December 31, 1997 to
those of the [______ Index].

[BAR CHART]

<TABLE>
<CAPTION>
SINCE
FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)

<S> <C> <C> <C>
INSTITUTIONAL TAX
FREE FUND
CLASS C SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-____ to obtain the Fund's current yield.

- --------------------------------------------------------------------------------

The _______ Index is a widely recognized index of __________.

- --------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from 1/1/98 to 9/30/98 was xx.xx%.

BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- --------------------------------------------------------------------------------
FUND FEES AND EXPENSES
This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
CLASS C SHARES
<S> <C>
Investment Advisory Fees 0.04%

Other Expenses 0.79%
-----

Total Annual Fund Operating Expenses 0.83%
</TABLE>

EXAMPLE

1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class C Shares $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------

5
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- --------------------------------------------------------------------------------
INVESTMENT SUMMARY

- --------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE CALIFORNIA TAX EXEMPT FUND

WHAT ARE THE RISKS OF INVESTING IN CALIFORNIA TAX EXEMPT FUND?

The Fund's securities will change in value in response to interest rate changes
and other factors. When interest rates are rising, the Fund's securities might
decline in value.

Although a money market fund seeks to keep a constant price per share of $1.00,
you may lose money by investing in the Fund.

6
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION

This bar chart shows changes in the This table compares the Fund's
performance of the Fund's CLASS A average annual total returns for the
SHARES from year to year.* periods ending December 31, 1997 to
those of the [______ Index].

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)

<S> <C> <C> <C>
CALIFORNIA TAX EXEMPT
FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-____ to obtain the Fund's current yield.

- --------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return for Class A Shares from 1/1/98 to 9/30/98 was xx.xx%. The
returns shown are for a class of shares not offered in this Prospectus that
will have substantially similar annual returns because the shares are
invested in the same portfolio of securities and the annual returns will
differ only to the extent that the classes do not have the same expenses.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- --------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .78%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
CLASS C SHARES
<S> <C>
Investment Advisory Fees 0.04%

Other Expenses 0.78%
-----

Total Annual Fund Operating Expenses 0.82%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class C Shares $ $ $ $
</TABLE>

- --------------------------------------------------------------------------------

7
<PAGE>

FUND INVESTMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND CALIFORNIA TAX EXEMPT FUND
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL MONEY MARKET SECURITIES x x
- ---------------------------------------------------------------------------------------------------------
</TABLE>

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions.
During unusual economic or market conditions or for temporary defensive or
liquidity purposes, each Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations that would
not ordinarily be consistent with the Funds' objectives. The Funds will do so
only if the Adviser believes that the risk of loss outweighs the opportunity for
taxable gains. When a Fund is investing for temporary defensive purposes, it is
not pursuing its investment goal.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------
The Investment Adviser makes investment decisions for the Funds and continuously
reviews, supervises and administers the Funds' investment programs. The Board
of Trustees supervises the Adviser and establishes policies that the Adviser
must follow in their management activities.

Weiss, Peck & Greer, L.L.C., serves as the Adviser to the California Tax Exempt
and Institutional Tax Free Funds. As of September 30, 1998, Weiss, Peck &
Greer, L.L.C. had approximately ___ billion in assets under management. For the
fiscal year ended August 31, 1998, Weiss Peck received advisory fees of:

<TABLE>
<CAPTION>
<S> <C>
CALIFORNIA TAX EXEMPT FUND __%
INSTITUTIONAL TAX FREE FUND __%
</TABLE>

PORTFOLIO MANAGER

INSTITUTIONAL TAX FREE FUND
CALIFORNIA TAX EXEMPT FUND

WEISS, PECK & GREER, L.L.C.: Janet Fiorenza is a portfolio manager at Weiss,
Peck & Greer, L.L.C. Ms. Fiorenza has been with Weiss, Peck & Greer, L.L.C.
since 1988, and with its predecessor since 1980. She manages the California Tax
Exempt and Institutional Tax Free Funds. She has more than 18 years of
investment experience.

8
<PAGE>

PURCHASING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).

You may purchase Class C Shares directly from us by:

- - mail
- - telephone
- - wire, or
- - Automated Clearing House (ACH).

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. NAV for one Fund
share is the value of that share's portion of all of the assets in the Fund. We
calculate each Fund's NAV at 2:00 p.m., Eastern time. If you want to receive
the current Business Day's NAV, generally we must receive your purchase order
before 12:30 p.m. for the Institutional Tax Free Fund, and before the time that
NAV is determined, usually 2:00 p.m. Eastern time for the California Tax Exempt
Fund.

HOW WE CALCULATE NAV

For the Funds, we value securities by utilizing the amortized cost valuation
method (as described in the SAI). If we think amortized cost is unreliable,
fair value prices may be determined in good faith using methods approved by the
Board of Trustees. We expect each Fund's NAV to remain constant at $1.00 per
share, although we cannot guarantee this.

9
<PAGE>

SELLING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO SELL YOUR FUND SHARES

TELEPHONE TRANSACTIONS

RECEIVING YOUR MONEY

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO EXCHANGE YOUR SHARES

You may exchange your Class C shares of any Fund for Class C shares of any other
Fund on any Business Day by contacting us directly by mail or telephone. You
may also exchange shares through your financial institution by mail or
telephone. If you recently purchased shares by check or through ACH, you may
not be able to exchange your shares until your check has cleared (which may take
up to 15 Business Days). This exchange privilege may be changed or canceled at
any time upon 60 days' notice.

10
<PAGE>

OTHER INFORMATION
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes its income monthly. The Funds make distributions of
capital gains, if any, at least annually.

TAXES

Each Fund may invest a portion of its assets in securities that generate taxable
income for federal or state income taxes. Income exempt from federal tax may be
subject to state and local taxes. Any capital gains distributed by these Funds
may be taxable.

The Funds are not liable for any income or franchise taxes in the Commonwealth
of Massachusetts as long as they qualify as regulated investment companies under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. SIDCo. receives no compensation for distributing the Funds' shares.

Each Fund has adopted a shareholder service plan that allows the Fund to pay
service fees and administrative service fees for services provided to
shareholders. Because these fees are paid out of a Fund's assets continuously,
over time these fees will increase the cost of your investment and may cost you
more than paying other types of sales charges. For Class C Shares, shareholder
service fees, as a percentage of average daily net assets, are .25%, and
administrative services fees, as a percentage of average daily net assets, are
.25%.

11
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The tables that follow present performance information about Class C Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for
a single Fund share. The total returns in the tables represent the rate that
you would have earned [or lost] on an investment in a Fund, assuming you
reinvested all of your dividends and distributions.

INSTITUTIONAL TAX FREE FUND
- --------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
- ----------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
- --------------------
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

12
<PAGE>

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

CALIFORNIA TAX EXEMPT FUND
- --------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
- ----------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
- --------------------
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

13
<PAGE>

[LOGO]SEI TAX EXEMPT TRUST

ADVISER

WEISS, PECK & GREER, L.L.C.

DISTRIBUTOR

SEI INVESTMENTS DISTRIBUTION CO.

LEGAL COUNSEL

MORGAN, LEWIS & BOCKIUS LLP

More information about the Funds is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
- --------------------------------------------------------------------------------

ANNUAL AND SEMIANNUAL REPORTS
- --------------------------------------------------------------------------------

TO OBTAIN MORE INFORMATION:
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

BY TELEPHONE: Call 1-800-DIAL-SEI
BY MAIL: Write to us at:
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.

BY INTERNET: http://www.seic.com

- --------------------------------------------------------------------------------

14
<PAGE>

[LOGO] SEI TAX
EXEMPT TRUST

CLASS D SHARES

PROSPECTUS
DECEMBER 31, 1998

-----------------------------------------

TAX FREE FUND

-----------------------------------------

INVESTMENT ADVISER:
WEISS, PECK & GREER, L.L.C.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

<PAGE>
SEI Tax
Exempt Trust

HOW TO READ THIS PROSPECTUS
- -------------------------------------------------------------------------------

SEI Tax Exempt Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the Class D Shares of the Tax Free Fund that you should know
before investing. Please read this prospectus and keep it for future reference.

We arranged the prospectus into different sections so that you can easily review
this important information. On the next page, we discuss general information
you should know about investing in the Fund. If you would like more detailed
information about the Fund, please see:

THE FUND'S PRINCIPAL INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . .
THE Adviser and the portfolio managers . . . . . . . . . . . . . . . . . . . . .
PURCHASING, SELLING AND EXCHANGING FUND SHARES . . . . . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . . .
HOW FUND SHARES ARE DISTRIBUTED. . . . . . . . . . . . . . . . . . . . . . . . .
HISTORICAL FINANCIAL INFORMATION ABOUT THE FUND. . . . . . . . . . . . . . . . .
HOW TO OBTAIN MORE INFORMATION ABOUT THE FUND. . . . . . . . . . . . .Back Cover

2
<PAGE>

INTRODUCTION
- -------------------------------------------------------------------------------

The Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities, like stocks and
bonds. Before you invest, you should know a few things about investing in
mutual funds.

The Fund has its own investment goal and strategies for reaching that goal. The
Fund's assets are managed under the direction of its Investment Adviser. We
cannot guarantee that the Fund will achieve its goal. The Adviser makes
judgments about the market, the economy, or interest rates and these judgments
may not reflect actual market movements, economic conditions or issuer
performance, and these judgments may affect the return of your investment. In
fact no matter how good a job the Adviser does, you could lose money on your
investment in the Fund, just as you could with other investments. A Fund share
is not a bank deposit, and it is not insured or guaranteed by the FDIC or any
government agency.

The value of your investment in the Fund is based on the amortized cost value of
the securities the Fund holds. These prices may change due to economic and
other events that affect the securities markets generally, as well as those that
affect particular issuers. The effect on the Fund's share price of a change in
the value of a single security will depend on how widely the Fund's holdings are
diversified.

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MUNICIPAL SECURITIES

The Fund invests in municipal securities. Municipal securities are bonds and
other fixed income securities issued by state and local governments and their
agencies (such as housing or hospital authorities) to finance capital
expenditures and operations. The obligation to pay principal and interest on
municipal securities may be a general obligation of the state or local
government, but may be supported only by an agency or a particular source of
revenues. Therefore, municipal securities vary in credit quality.

3
<PAGE>

TAX FREE FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE TAX FREE FUND

WHAT ARE THE RISKS OF INVESTING IN THE TAX FREE FUND?

Although a money market fund seeks to keep a constant price per share of $1.00,
you may lose money by investing in the Fund.

4
<PAGE>

TAX FREE FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR 5 YEARS INCEPTION
(__/__/__)
<S> <C> <C> <C>
TAX FREE FUND
CLASS A SHARES xx.xx% xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx% xx.xx%
</TABLE>

Please call 1-800-_____ to obtain the Fund's current yield.

- -------------------------------------------------------------------------------

What is an Index?
An index measures the market prices of a specific group of securities in a
particular market or securities in a market sector. You cannot invest directly
in an index. Unlike a mutual fund, an index does not have an investment advisor
and does not pay any commissions or expenses. If an index had expenses, its
performance would be lower. The _______ Index is a widely recognized index of
__________.

- -------------------------------------------------------------------------------

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE DISTRIBUTOR IS VOLUNTARILY
WAIVING A PORTION OF ITS FEES. ACTUAL TOTAL OPERATING EXPENSES CHARGED TO
SHAREHOLDERS ARE .80%. THE DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY
WAIVERS AT ANY TIME. For more information about these fees, see "Investment
Advisers" and "Distribution of Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.04%

Distribution and Service (12b-1) Fees 0.25%

Other Expenses 0.56%
----

Total Annual Fund Operating Expenses 0.85%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>

CLASS D SHARES $ $
</TABLE>

- -------------------------------------------------------------------------------

5
<PAGE>

FUND INVESTMENTS
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET SECURITIES x
- -------------------------------------------------------------------------------

The Fund may invest in other securities, use other strategies and engage in
investment practices other than those listed in the Fund Summaries, and they are
described in detail in our Statement of Additional Information. Of course, we
cannot guarantee that any Fund will achieve its investment goal.

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions.
During unusual economic or market conditions or for temporary defensive or
liquidity purposes, the Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations that would
not ordinarily be consistent with the Fund's objective. The Fund will do so
only if the Adviser believes that the risk of loss outweighs the opportunity for
taxable gains. When the Fund is investing for temporary defensive purposes, it
is not pursuing its investment goal.

INVESTMENT ADVISER
- -------------------------------------------------------------------------------
The Investment Adviser makes investment decisions for the Funds it manages and
continuously reviews, supervises and administers their Fund's investment
programs. The Board of Trustees supervises the Adviser and establishes policies
that the Adviser must follow in their management activities.

Weiss, Peck & Greer, L.L.C., serves as the Adviser to the Tax Free Fund. As of
September 30, 1998, Weiss, Peck & Greer, L.L.C. had approximately ___ billion in
assets under management. For the fiscal year ended August 31, 1998, Weiss Peck
received advisory fees of:

TAX FREE FUND __%

PORTFOLIO MANAGER(s)

TAX FREE FUND

WEISS, PECK & GREER, L.L.C.: Janet Fiorenza is a portfolio manager at Weiss,
Peck & Greer, L.L.C. Ms. Fiorenza has been with Weiss, Peck & Greer, L.L.C.
since 1988, and with its predecessor since 1980. She manages the Tax Free Fund.
She has more than 18 years of investment experience.

6
<PAGE>

PURCHASING FUND SHARES
- -------------------------------------------------------------------------------
HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).

You may purchase Class D Shares directly from us by:

- - mail
- - telephone
- - wire, or
- - Automated Clearing House (ACH).

To purchase shares directly from us, please call 1-800-DIAL-SEI. Write your
check, payable in U.S. dollars, to "SEI Tax Exempt Trust" and include the name
of the Fund on the check. We cannot accept third-party checks, credit cards,
credit card checks or cash. You may also purchase shares through financial
intermediaries, or other financial institutions that have executed dealer
agreements. You cannot purchase money market fund shares by Federal Reserve
wire or Federal holiday on which wire transfers are restricted. We may reject
any purchase order if we determine that accepting the order would not be in the
best interests of the Fund or its shareholders.

Certain investors who deal directly with a financial intermediary will have to
follow the intermediary's procedures for transacting with the Fund. If you
purchase or sell Fund shares through a financial institution (rather than
directly from us), you may have to transmit your purchase, sale and exchange
requests to your financial institution at an earlier time for your transaction
to become effective that day. This allows the financial institution time to
process your request and transmit it to us. For more information about how to
purchase or sell Fund shares through your financial institution, you should
contact your financial institution directly.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. NAV for one Fund
share is the value of that share's portion of all of the assets in the Fund. We
calculate the Fund's NAV at 2:00 p.m., Eastern time. If you want to receive the
current Business Day's NAV, generally we must receive your purchase order before
12:30 p.m.

HOW WE CALCULATE NAV

For the Fund, we value securities by utilizing the amortized cost valuation
method (as described in the SAI). If we think amortized cost is unreliable,
fair value prices may be determined in good faith using methods approved by the
Board of Trustees. We expect each money market fund's NAV to remain constant at
$1.00 per share, although we cannot guarantee this.

MINIMUM PURCHASES

To purchase Class D Shares of the Fund for the first time, you must invest at
least $1,000 in any such Fund. To purchase additional shares of the Fund, you
must invest at least $100. We may accept investments of smaller amounts at our
discretion.

SYSTEMATIC INVESTMENT PLAN

If you have a checking or savings account with certain banks, you may purchase
Class D Shares automatically through regular deductions from your account.
Please call 1-800-DIAL-SEI for information regarding participating banks. With
a $1,000 minimum initial investment, you may begin regularly scheduled
investments from $50 up to $250 once or twice a month. The Distributor may
close your account if you do not maintain a minimum investment of [$1,000] at
the end of two years.

7
<PAGE>

SELLING FUND SHARES
- -------------------------------------------------------------------------------

HOW TO SELL YOUR FUND SHARES

TELEPHONE TRANSACTIONS

SYSTEMATIC WITHDRAWAL PLAN

If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have an account with
certain banks, electronically transferred to your account. Please call
1-800-DIAL-SEI for information regarding banks that participate in the
Systematic Withdrawal Plan.

RECEIVING YOUR MONEY

REDEMPTIONS IN KIND

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below the required minimum, $1,000 for Class D
Shares of the Tax Free Fund, you may be required to sell your shares. You will
always be given at least 60 days' written notice to give you time to add to your
account and avoid selling your shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

8
<PAGE>

EXCHANGING FUND SHARES
- -------------------------------------------------------------------------------

HOW TO EXCHANGE YOUR SHARES

You may exchange your Class D shares of any Fund for Class D shares of any other
SEI Fund on any Business Day by contacting us directly by mail or telephone.
You may also exchange shares through your financial institution by mail or
telephone. If you recently purchased shares by check or through ACH, you may
not be able to exchange your shares until your check has cleared (which may take
up to 15 Business Days). This exchange privilege may be changed or canceled at
any time upon 60 days' notice.

OTHER INFORMATION
- -------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

The Fund distributes its income monthly. The Fund makes distributions of
capital gains, if any, at least annually.

TAXES

The Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. Capital gains
distributions may be taxable at different rates depending on the length of time
the Fund holds its portfolio securities. YOU MAY BE TAXED ON EACH SALE OR
EXCHANGE OF FUND SHARES.

The Fund may invest a portion of its assets in securities that generate taxable
income for federal or state income taxes. Income exempt from federal tax may be
subject to state and local taxes. Any capital gains distributed by the Fund may
be taxable.

The Fund is not liable for any income or franchise taxes in the Commonwealth of
Massachusetts as long as it qualifies as regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. The Fund has adopted a distribution plan that allows Class D Shares
of the Fund to pay distribution fees for the sale and distribution of its
shares. Because these fees are paid out of the Fund's assets continuously, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges. For Class D Shares of the Fund, the
distribution fee is .25% of the average daily net assets of the Fund.

9
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The tables that follow present performance information about Class D Shares of
the Tax Free Fund. This information is intended to help you understand the
Fund's financial performance for the past five years, or, if shorter, the period
of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the tables represent
the rate that you would have earned [or lost] on an investment in the Fund,
assuming you reinvested all of your dividends and distributions.

This information has been audited by Arthur Andersen LLP, independent public
accountants. Their report, along with the Fund's financial statements, appears
in our annual report that accompanies our Statement of Additional Information.
You can obtain our annual report, which contains more performance information,
at no charge by calling 1-800-DIAL-SEI.

TAX FREE FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

10
<PAGE>

SEI Tax Exempt Trust

ADVISER

WEISS, PECK & GREER, L.L.C.

DISTRIBUTOR

SEI INVESTMENTS DISTRIBUTION CO.

LEGAL COUNSEL

MORGAN, LEWIS & BOCKIUS LLP

More information about the Fund is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
- -------------------------------------------------------------------------------

ANNUAL AND SEMIANNUAL REPORTS
- -------------------------------------------------------------------------------

These reports list the Fund's holdings and contain information from the Fund's
managers about fund strategies and recent market conditions and trends. The
reports also contain detailed financial information about the Funds.

TO OBTAIN MORE INFORMATION:
- -------------------------------------------------------------------------------

BY TELEPHONE: Call 1-800-DIAL-SEI
BY MAIL: Write to us at:
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.
BY INTERNET: http://www.seic.com

11
<PAGE>

[LOGO]SEI Tax
Exempt Trust
CNI CLASS SHARES

PROSPECTUS
DECEMBER 31, 1998

---------------------------------------

CALIFORNIA TAX EXEMPT FUND

---------------------------------------

INVESTMENT ADVISER:
WEISS, PECK & GREER, L.L.C.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.
IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

<PAGE>

SEI Tax
Exempt Trust

HOW TO READ THIS PROSPECTUS
- -------------------------------------------------------------------------------

SEI Tax Exempt Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important
information about the CNI Class Shares of the California Tax Exempt Fund that
you should know before investing. Please read this prospectus and keep it for
future reference.

We arranged the prospectus into different sections so that you can easily review
this important information. On the next page, we discuss general information
you should know about investing in the Fund. If you would like more detailed
information about the Fund, please see:

THE FUND'S PRINCIPAL INVESTMENTS . . . . . . . . . . . . . . . . . . . . . . . .
THE ADVISER AND THE PORTFOLIO MANAGER. . . . . . . . . . . . . . . . . . . . . .
PURCHASING, SELLING AND EXCHANGING FUND SHARES . . . . . . . . . . . . . . . . .
DIVIDENDS, DISTRIBUTIONS AND TAXES . . . . . . . . . . . . . . . . . . . . . . .
HOW FUND SHARES ARE DISTRIBUTED. . . . . . . . . . . . . . . . . . . . . . . . .
HISTORICAL FINANCIAL INFORMATION ABOUT THE FUND. . . . . . . . . . . . . . . . .
HOW TO OBTAIN MORE INFORMATION ABOUT THE FUND. . . . . . . . . . . . .Back Cover

2
<PAGE>

INTRODUCTION
- -------------------------------------------------------------------------------

The Fund has its own investment goal and strategies for reaching that goal. The
Fund's assets are managed under the direction of its Investment Adviser. We
cannot guarantee that a Fund will achieve its goal. The Adviser makes judgments
about the market, the economy, or interest rates and these judgments may not
reflect actual market movements, economic conditions or issuer performance, and
these judgments may affect the return of your investment. In fact no matter how
good a job the Adviser does, you could lose money on your investment in the
Fund, just as you could with other investments. A Fund share is not a bank
deposit, and it is not insured or guaranteed by the FDIC or any government
agency.

- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
MUNICIPAL SECURITIES

- -------------------------------------------------------------------------------

3
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- -------------------------------------------------------------------------------
INVESTMENT SUMMARY

- -------------------------------------------------------------------------------
INVESTMENT STRATEGY OF THE CALIFORNIA TAX EXEMPT FUND

WHAT ARE THE RISKS OF INVESTING IN CALIFORNIA TAX EXEMPT FUND?

The Fund's securities will change in value in response to interest rate changes
and other factors. When interest rates are rising, the Fund's securities might
decline in value.

Although a money market fund seeks to keep a constant price per share of $1.00,
you may lose money by investing in the Fund.

4
<PAGE>

CALIFORNIA TAX EXEMPT FUND
- -------------------------------------------------------------------------------
PERFORMANCE INFORMATION

This bar chart shows changes in the This table compares the Fund's
performance of the Fund's CNI CLASS average annual total returns for
SHARES from year to year.* the periods ending December 31,
1997 to those of the
[______ Index].

[BAR CHART]

<TABLE>
<CAPTION>
SINCE FUND
1 YEAR INCEPTION
(__/__/__)
<S> <C> <C>
CALIFORNIA TAX EXEMPT
FUND CNI
CLASS SHARES xx.xx% xx.xx%
____________ INDEX xx.xx% xx.xx%
</TABLE>

Please call 1-800-______ to obtain the Fund's current yield.

- -------------------------------------------------------------------------------

*The performance information shown above is based on a calendar year. The
Fund's total return from /1/98 to 9/30/98 was xx.xx%.

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
XX.XX% XX.XX%
(XX/XX/XX) (XX/XX/XX)
</TABLE>

- -------------------------------------------------------------------------------
FUND FEES AND EXPENSES

This table describes the Fund's fees and expenses that you may pay indirectly if
you hold shares of the Fund.

- -------------------------------------------------------------------------------

FUND EXPENSES
Unlike an index, every mutual fund has operating expenses to pay for
professional advisory, shareholder, distribution, administration and custody
services. These expenses are deducted from Fund assets. The Fund's expenses in
the table below are shown as a percentage of the Fund's net assets. This table
shows the highest fees and expenses that could be currently charged to the Fund.
ACTUAL FEES AND EXPENSES ARE LOWER BECAUSE THE FUND'S ADMINISTRATOR AND THE
DISTRIBUTOR ARE VOLUNTARILY WAIVING A PORTION OF THEIR FEES. ACTUAL TOTAL
OPERATING EXPENSES CHARGED TO SHAREHOLDERS ARE .78%. THE ADMINISTRATOR AND
DISTRIBUTOR COULD DISCONTINUE THESE VOLUNTARY WAIVERS AT ANY TIME. For more
information about these fees, see "Investment Advisers" and "Distribution of
Fund Shares."

- -------------------------------------------------------------------------------

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CNI CLASS SHARES
<S> <C>
Investment Advisory Fees 0.04%

Distribution and Service (12b-1) Fees 0.50%

Other Expenses 0.53%
----

Total Annual Fund Operating Expenses 1.07%
</TABLE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
CNI CLASS SHARES $ $ $ $
</TABLE>

- -------------------------------------------------------------------------------

5
<PAGE>

FUND INVESTMENTS
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND
- -------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET SECURITIES X
- -------------------------------------------------------------------------------

The investments listed above and the investments and strategies described
throughout this prospectus are those that we use under normal conditions.
During unusual economic or market conditions or for temporary defensive or
liquidity purposes, the Fund may invest up to 100% of its assets in cash, money
market instruments, repurchase agreements and short-term obligations that would
not ordinarily be consistent with the Fund's objective. The Fund will do so
only if the Adviser believes that the risk of loss outweighs the opportunity for
taxable gains. When the Fund is investing for temporary defensive purposes, it
is not pursuing its investment goal.

INVESTMENT ADVISER
- -------------------------------------------------------------------------------
The Investment Adviser makes investment decisions for the Fund and continuously
reviews, supervises and administers the Fund's investment program. The Board of
Trustees supervises the Adviser and establishes policies that the Adviser must
follow in its management activities.

Weiss, Peck & Greer, L.L.C., serves as the Adviser to the California Tax Exempt
Fund. As of September 30, 1998, Weiss, Peck & Greer, L.L.C. had approximately
___ billion in assets under management. For the fiscal year ended August 31,
1998, Weiss Peck received advisory fees of:

CALIFORNIA TAX EXEMPT FUND __%

PORTFOLIO MANAGER(s)

CALIFORNIA TAX EXEMPT FUND

WEISS, PECK & GREER, L.L.C.: Janet Fiorenza is a portfolio manager at Weiss,
Peck & Greer, L.L.C. Ms. Fiorenza has been with Weiss, Peck & Greer, L.L.C.
since 1988, and with its predecessor since 1980. She manages the California Tax
Exempt Fund. She has more than 18 years of investment experience.

6
<PAGE>

PURCHASING FUND SHARES
- -------------------------------------------------------------------------------

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).

You may purchase CNI Class Shares directly from us by:

- - mail
- - telephone
- - wire, or
- - Automated Clearing House (ACH).

Certain investors who deal directly with a financial intermediary will have to
follow the intermediary's procedures for transacting with the Fund. If you
purchase, sell or exchange Fund shares through a financial institution (rather
than directly from us), you may have to transmit your purchase, sale and
exchange requests to your financial institution at an earlier time for your
transaction to become effective that day. This allows the financial institution
time to process your request and transmit it to us. For more information about
how to purchase or sell Fund shares through your financial institution, you
should contact your financial institution directly.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order. NAV for one Fund
share is the value of that share's portion of all of the assets in the Fund. We
calculate the Fund's NAV at 2:00 p.m., Eastern time. If you want to receive the
current Business Day's NAV, generally we must receive your purchase order before
the Fund calculates its NAV, usually 2:00 p.m. Eastern time.

HOW WE CALCULATE NAV

We value the Fund's securities by utilizing the amortized cost valuation method
(as described in the SAI). If we think amortized cost is unreliable, fair value
prices may be determined in good faith using methods approved by the Board of
Trustees. We expect the Fund's NAV to remain constant at $1.00 per share,
although we cannot guarantee this.

SELLING FUND SHARES
- -------------------------------------------------------------------------------

HOW TO SELL YOUR FUND SHARES

7
<PAGE>

TELEPHONE TRANSACTIONS

Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. Although we have certain safeguards and procedures to
confirm the identity of callers and the authenticity of instructions, we are not
responsible for any losses or costs incurred by following telephone instructions
we reasonably believe to be genuine. If you or your financial institution
transact with us over the telephone, you will generally bear the risk of any
loss.

RECEIVING YOUR MONEY

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

OTHER INFORMATION
- -------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS

The Fund distributes its income monthly. The Fund makes distributions of
capital gains, if any, at least annually.

TAXES

PLEASE CONSULT YOUR TAX ADVISER REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Fund and its shareholders. This summary is based on current tax
laws, which may change.

8
<PAGE>

The Fund is not liable for any income or franchise taxes in the Commonwealth of
Massachusetts as long as it qualifies as a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN OUR STATEMENT OF ADDITIONAL INFORMATION.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. The Fund has adopted a distribution plan that allows CNI Class Shares
of the Fund to pay distribution fees for the sale and distribution of its
shares. Because these fees are paid out of the Fund's assets continuously, over
time these fees will increase the cost of your investment and may cost you more
than paying other types of sales charges.

For CNI Class Shares of the Fund, the distribution fee is .50% of the average
daily net assets of the Fund.

The Fund has adopted a shareholder service plan that allows the Fund to pay
service fees for services provided to shareholders. Because these fees are paid
out of the Fund's assets continuously, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges. For CNI Class Shares, shareholder service fees, as a percentage of
average daily net assets, are .25%.

9
<PAGE>

FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------

The tables that follow present performance information about CNI Class Shares of
the California Tax Exempt Fund. This information is intended to help you
understand the Fund's financial performance for the past five years, or, if
shorter, the period of the Fund's operations. Some of this information reflects
financial information for a single Fund share. The total returns in the tables
represent the rate that you would have earned [or lost] on an investment in the
Fund, assuming you reinvested all of your dividends and distributions.

CALIFORNIA TAX EXEMPT FUND
- -------------------------------------------------------------------------------

Net Asset Value, Beginning of Period
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income
Net Gains or Losses on Securities (both realized and unrealized)
Total From Investment Operations
LESS DISTRIBUTIONS
Dividends (from net investment income)
Distributions (from capital gains)
Returns of Capital
Total Distributions
Net Asset Value, End of Period
TOTAL RETURN
...............................................................................
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period
Ratio of Expenses to Average Net Assets
Ratio of Net Income to Average Net Assets
Portfolio Turnover Rate
_____________________
(1) Commencement of operations.
(2) Total return excludes the effect of sales charge.
(3) Annualized.

10
<PAGE>

SEI Tax Exempt Trust

ADVISER

WEISS, PECK & GREER, L.L.C.

DISTRIBUTOR

SEI INVESTMENTS DISTRIBUTION CO.

LEGAL COUNSEL

MORGAN, LEWIS & BOCKIUS LLP
More information about the Fund is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)
- -------------------------------------------------------------------------------

ANNUAL AND SEMIANNUAL REPORTS
- -------------------------------------------------------------------------------

TO OBTAIN MORE INFORMATION:
- -------------------------------------------------------------------------------

BY TELEPHONE: Call 1-800-DIAL-SEI
BY MAIL: Write to us at:
SEI Investments Distribution Co.
Oaks, Pennsylvania 19456.
BY INTERNET: http://www.seic.com

11
<PAGE>
SEI TAX EXEMPT TRUST

Manager:

SEI Investments Management Corporation

Distributor:

SEI Investments Distribution Co.

Investment Advisers and Sub-Advisers:

Morgan Grenfell Capital Management Incorporated

SEI Investments Management Corporation

Standish, Ayer & Wood, Inc.

Van Kampen Management, Inc.

Weiss, Peck & Greer L.L.C.

This STATEMENT OF ADDITIONAL INFORMATION is not a Prospectus. It is intended
to provide additional information regarding the activities and operations of SEI
Tax Exempt Trust (the "Trust") and should be read in conjunction with the
Trust's Prospectuses dated December 31, 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
Risk Factors.......................................................................... S-2
Investment Objective and Policies..................................................... S-2
Description of Permitted Investments.................................................. S-8
Description of Ratings................................................................ S-13
Investment Limitations................................................................ S-14
State Specific Disclosure............................................................. S-17
The Manager........................................................................... S-19
The Advisers and Sub-Advisers......................................................... S-20
Distribution and Shareholder Servicing................................................ S-21
Trustees and Officers of the Trust.................................................... S-23
Performance........................................................................... S-26
Determination of Net Asset Value...................................................... S-28
Purchase and Redemption of Shares..................................................... S-29
Shareholder Services.................................................................. S-30
Taxes................................................................................. S-30
Portfolio Transactions................................................................ S-35
Description of Shares................................................................. S-37
Limitation of Trustees' Liability..................................................... S-37
Shareholder Liability................................................................. S-37
5% Shareholders....................................................................... S-37
Experts............................................................................... S-37
Legal Counsel......................................................................... S-37
Financial Statements.................................................................. S-38
</TABLE>

December 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 ("funds") of units of beneficial interest ("shares") and
separate classes of funds. This Statement of Additional Information relates to
the following funds: Tax Free, Institutional Tax Free, California Tax Exempt,
Intermediate-Term Municipal, Pennsylvania Municipal Bond, Pennsylvania Tax Free,
Ohio Tax Free, California Municipal Bond, Massachusetts Municipal Bond, New
Jersey Municipal Bond and New York Municipal Bond Funds (each a "Fund," and
collectively, the "Funds"), and any different classes of the Funds. Except for
differences between the Class A, Class B, Class C, Class D and CNI Class shares
of any Fund pertaining to sales loads, shareholder servicing and administrative
services plans, distribution plans, transfer agency costs, voting rights and/or
dividends, each share of each Fund represents an equal proportionate interest in
that Fund with each other share of that Fund.

RISK FACTORS

YEAR 2000

The Trust depends on the smooth functioning of computer systems in almost
every aspect of its business. Like other mutual funds, business and individuals
around the world, the Trust could be adversely affected if the computer systems
used by its service providers do not properly process dates on and after January
1, 2000 and distinguish between the year 2000 and the year 1900. The Trust has
asked its service providers whether they expect to have their computer systems
adjusted for the year 2000 transition, and received assurances from each that
its system is expected to accommodate the year 2000 without material adverse
consequences to the Trust. The Trust and its shareholders may experience losses
if these assurances prove to be incorrect or as a result of year 2000 computer
difficulties experienced by issuers of portfolio securities or third parties,
such as custodians, banks, broker-dealers or others with which the Trust does
business.

INVESTMENT OBJECTIVE AND POLICIES

INTERMEDIATE-TERM MUNICIPAL FUND--The Fund's investment objective is to seek
the highest level of income exempt from federal income taxes that can be
obtained, consistent with the preservation of capital, from a diversified
portfolio of investment grade municipal securities. There can be no assurance
that the Fund will achieve its investment objective.

The Fund invests at least 80% of its net assets in municipal securities the
interest of which is exempt from federal income taxes based on opinions from
bond counsel for the issuers. This investment policy is a fundamental policy of
the Fund. The issuers of these securities can be located in all fifty states,
the District of Columbia, Puerto Rico, and other U.S. territories and
possessions. Under normal conditions, the Fund will invest at least 80% of its
net assets in securities the interest on which is not a preference item for
purposes of the federal alternative minimum tax. Although the advisers have no
present intention of doing so, up to 20% of all assets in the Fund can be
invested in taxable debt securities for defensive purposes or when sufficient
tax exempt securities considered appropriate by the advisers are not available
for purchase.

The Fund may purchase the following types of municipal obligations, but only
if such securities, at the time of purchase, either have the requisite rating,
or if not rated are of comparable quality as determined by the advisers: (i)
municipal bonds rated A or better by Standard and Poor's Corporation ("S&P") or
by Moody's Investors Service, Inc. ("Moody's"), and the Fund may invest up to
10% of its total assets in municipal bonds rated BBB or S&P or Baa by Moody's:
(ii) municipal notes rated at least SP-1 by S&P or MIG-1 or VMIG-1 by Moody's:
and (iii) tax-exempt commercial paper rated at least A-1 by S&P or Prime-1 by
Moody's. Bonds rate BBB by S&P or Baa by Moody's have speculative
characteristics. Municipal obligations owned by the Fund which become less than
the prescribed investment quality shall

S-2
<PAGE>

be sold at a time when, in the judgment of the advisers, it does not
substantially impact the market value of the Fund.

Not more than 25% of Fund assets will be invested in (a) municipal
securities whose issuers are located in the same state and, (b) municipal
securities the interest on which is derived from revenues of similar type
projects. This restriction does not apply to 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 Fund's assets are invested in municipal securities
payable from revenues on similar projects, the Fund will be subject to the
peculiar risks presented by such projects to a greater extent than it would be
if the Fund's assets where not so invested.

The Fund 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 Fund can maintain an average weighted maturity of
less than three years.

CALIFORNIA MUNICIPAL BOND FUND--The Fund'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 Fund will achieve its investment objective.

The Fund 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. Under normal circumstances, the Fund will
invest at least 80% of its net assets in securities the interest on which is not
a preference item for purposes of the federal alternative minimum tax. The Fund
will invest at least 65% of its total assets in municipal obligations the
interest on which is exempt from California personal income tax ("California
Securities"). California Securities constitute municipal obligations of the
State of California and its political subdivisions or municipal authorities, as
well as municipal obligations issued by territories or possessions of the United
States, such as Puerto Rico. 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 Fund 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 Fund 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
Management Inc., the Fund's investment sub-adviser ("Van Kampen"): (i) municipal
bonds rated BBB or better by S&P or Baa or better by Moody's: (ii) municipal
notes rated at least SP-1 by S&P or MIG-1 or VMIG-1 by Moody's: and (iii)
tax-exempt commercial paper rated at least A-1 by S&P or Prime-1 by Moody's.
Bonds rated BBB by S&P or Baa by Moody's have speculative characteristics.
Municipal obligations owned by the Fund 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 Fund.

The Fund will typically maintain a dollar-weighted average portfolio
maturity of three to ten years. However, when the advisers determine that market
conditions so warrants, the Fund can maintain an average weighted maturity of
less than three years.

MASSACHUSETTS MUNICIPAL BOND FUND--The Fund'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 Fund will achieve its investment objective.

S-3
<PAGE>

The Fund 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. Under normal circumstances, the Fund will
invest at least 80% of its net assets in securities the interest on which is not
a preference item for purposes of the federal alternative minimum tax. The Fund
will invest at least 65% of its total assets in municipal obligations the
interest on which is exempt from Massachusetts personal income tax
("Massachusetts Securities"). Massachusetts Securities constitute municipal
obligations of the Commonwealth of Massachusetts 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. 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 Fund 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 Fund 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 Fund's investment sub-adviser ("SAW"): (i) municipal bonds rated
BBB or better by S&P or Baa or better by Moody's: (ii) municipal notes rated at
least SP-1 by S&P or MIG-1 or VMIG-1 by Moody's: and (iii) tax-exempt commercial
paper rated at least A-1 by S&P or Prime-1 by Moody's. Bonds rated BBB by S&P or
Baa by Moody's have speculative characteristics. Municipal obligations owned by
the Fund 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 Fund.

NEW JERSEY MUNICIPAL BOND FUND--The Fund'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 Fund will achieve its investment objective.

The Fund 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. Under normal circumstances, the Fund will
invest at least 80% of its net assets in securities the interest on which is not
a preference item or purposes of the federal alternative minimum tax. The Fund
will invest at least 65% of its total assets in municipal obligations the
interest on which is exempt form New Jersey personal income tax ("New Jersey
Securities"). New Jersey Securities constitute municipal obligations of the
State of New Jersey 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. In addition, for temporary defensive purposes when,
in the opinion of its advisers, such securities are not readily available or of
sufficient quality, the Fund 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 Fund 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, the
Fund's investment sub-adviser ("Van Kampen"): (i) municipal bonds rated BBB or
better by S&P or Baa or better by Moody's: (ii) municipal notes rated at least
SP-1 by S&P or MIG-1 or VMIG-1 by Moody's: and (iii) tax-exempt commercial paper
rated at least A-1 by S&P or Prime-1 by Moody's. Bonds rated BBB by S&P or Baa
by Moody's have speculative characteristics. Municipal obligations owned by the
Fund 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 Fund.

S-4
<PAGE>

NEW YORK MUNICIPAL BOND FUND--The investment objective of the Fund 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 Fund will achieve its investment objective.

The Fund 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. Under normal circumstances, the Fund
will invest at least 80% of its net assets in securities the interest on which
is not a preference item for purposes of the federal alternative minimum tax.
The Fund will invest at least 65% of its total assets in municipal obligations
the interest on which is exempt from New York and New York City personal income
tax ("New York Securities"). New York Securities constitute municipal
obligations of the State of New York 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. 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 Fund 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 Fund 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 SAW, the Fund's
investment sub-adviser: (i) municipal bonds rated BBB or better by S&P or Baa or
better by Moody's: (ii) municipal notes rated at least SP-1 by S&P or MIG-1 or
VMIG-1 by Moody's: and (iii) tax-exempt commercial paper rated at least A-1 by
S&P or Prime-1 by Moody's. Bonds rated BBB by S&P or Baa by Moody's have
speculative characteristics. Municipal obligations owned by the Fund 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
Fund.

PENNSYLVANIA MUNICIPAL BOND FUND--The Fund's investment objective is to
provide current income exempt from both federal and Pennsylvania state income
taxes while preserving capital by investing primarily in municipal securities
within the guidelines presented below.

The Fund has a fundamental policy, under normal conditions, to be fully
invested in obligations which produce interest that is exempt from both federal
and Pennsylvania state income tax (state tax-free obligations). Under normal
circumstances, the Fund will invest at least 90% (and intends to invest 100%) of
its net assets in securities the interest on which is not a preference item for
purposes of the federal alternative minimum tax. In addition, for temporary
defensive purposes when, in the opinion of its investment adviser, such
securities are not readily available or of sufficient quality, the Fund 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 Fund may purchase the following types of municipal obligations, but only
if such securities, at the time of purchase, either have the requisite rating
or, if not rated, are of comparable quality as determined by Morgan Grenfell
Capital Management Incorporated, the Fund's investment adviser ("Morgan
Grenfell"): (i) municipal bonds rated BBB or better by S&P or Baa or better by
Moody's: (ii) municipal notes rated at least SP-1 by S&P or MIG-1 or VMIG-1 by
Moody's: and (iii) tax-exempt commercial paper rated at least A-1 by S&P or
Prime-1 by Moody's. Bonds rated BBB by S&P or Baa by Moody's have

S-5
<PAGE>

speculative characteristics. Municipal obligations owned by the Fund which
become less than the prescribed investment quality will be sold at a time when,
in the judgment of Morgan Grenfell, it does not substantially impact the market
value of the Fund.

The Fund will typically maintain a dollar-weighted average portfolio
maturity of seven years or less. Each security purchased will typically have an
average maturity of no longer than fifteen years.

INSTITUTIONAL TAX FREE FUND--The Fund's investment objective is to preserve
principal value and maintain a high degree of liquidity while providing current
income exempt from federal income taxes. There can be no assurance that the Fund
will meet its investment objective.

The Fund invests in U.S. dollar denominated municipal securities of issuers
located in all fifty states, the District of Columbia, Puerto Rico and other
U.S. territories and possessions. It is a fundamental policy of the Fund to
invest at least 80% of its net assets in securities the interest on which is
exempt for federal income taxes, based on opinions from bond counsel for the
issuers, and the Fund will invest, under normal conditions, at least 80% of its
net assets in securities the interest on which is not a preference item for
purposes of the federal alternative minimum tax.

The Fund 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.

The Adviser will not invest more than 25% of Fund assets in municipal
securities (a) whose issuers are located in the same state or (b) the interest
on which is derived from revenues of similar type projects. This restriction
does not apply to municipal securities in any of the following categories:
public housing authorities; general obligations of states and localities; state
and local housing finance authorities or municipal utilities systems.

There could be economic, business, or political developments which might
affect all municipal securities of a similar type. To the extent that a
significant portion of the Fund's assets are invested in municipal securities
payable from a revenues on similar projects, the Fund will be subject to the
peculiar risks presented by such projects to a greater extent than it would be
if the Fund's assets were not so invested. Moreover, in seeking to attain its
investment objective, the Fund may invest all of any part of its assets in
municipal securities that are industrial development bonds.

TAX FREE FUND--The Fund's investment objective is to preserve principal
value and maintain a high degree of liquidity while providing current income
exempt from federal income taxes. There can be no assurance that the Fund will
meet its investment objective.

The Fund invests in U.S. dollar denominated municipal securities of issuers
located in all fifty states, the District of Columbia, Puerto Rico and other
U.S. territories and possessions. At least 80% of the Fund's net assets will be
in securities the interest on which is exempt from federal income taxes, based
on opinions from bond counsel for the issuers. The investment policy is a
fundamental policy of the Fund. Under normal conditions, the Fund will invest at
least 80% of its net assets in securities the interest on which is not a
preference item for purposes of the federal alternative minimum tax.

The Adviser will not invest more than 25% of the Fund's assets in municipal
securities (a) whose issuers are located in the same state or (b) the interest
on which is derived from revenues of similar type projects. This restriction
does not apply to municipal securities in any of the following categories:
public housing authorities; general obligations of states and localities; state
and local housing finance authorities or municipal utilities systems.

S-6
<PAGE>

There could be economic, business, or political developments which might
affect all municipal securities of a similar type. To the extent that a
significant portion of the Fund's assets are invested in municipal securities
payable from a revenues on similar projects, the Fund will be subject to the
peculiar risks presented by such projects to a greater extent than it would be
if the Fund's assets were not so invested. Moreover, in seeking to attain its
investment objective, the Fund may invest all of any part of its assets in
municipal securities that are industrial development bonds.

CALIFORNIA TAX EXEMPT FUND--The Fund's investment objective is to preserve
principal value and maintain a high degree of liquidity while providing current
income exempt from federal and, to the extent possible, California state
personal income taxes. There can be no assurance that the Fund will achieve its
investment objective.

It is a fundamental policy of the Fund to invest, under normal conditions,
at least 80% of its net assets in municipal securities that produce interest
that, in the opinion of bond counsel, is exempt from federal income tax, and the
Fund will invest, under normal conditions, at least 80% of its net assets in
securities the interest on which is not a preference item for purposes of the
federal alternative minimum tax. Under normal conditions, at least 65% of the
Fund's assets will be invested in municipal obligations the interest on which is
exempt from California state personal income tax. These constitute municipal
obligations of the state of California and its political subdivisions of
municipal authorities and municipal obligations issued by territories or
possessions of the United States. The Fund 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 Fund has no present intention of investing in such securities) and (2)
taxable investments. In addition, for temporary defensive purposes when Weiss,
Peck & Greer, L.L.C., the Fund's investment adviser (the "Adviser" or "WPG"),
determines that market conditions warrant, the Fund may invest up to 100% of its
assets in municipal obligations of states other than California or taxable money
market securities.

The Adviser will not invest more than 25% of the Fund's assets in municipal
securities the interest on which is derived from revenues of similar type
projects. This restriction does not apply to municipal securities in any of the
following categories: public housing authorities; general obligations of states
and localities; state and local housing finance authorities or municipal
utilities systems.

OHIO TAX FREE FUND--The Fund'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 Fund will also
attempt to maintain a constant net asset value of $1.00 per share.

It is a fundamental policy of the Fund 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 Fund 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 Fund 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 Fund 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 Fund may invest up to 100% of its assets in municipal
obligations of states other than Ohio or taxable money market instruments.

S-7
<PAGE>

There can be no assurance that the Fund will be able to achieve its
investment objective, or that the Fund will be able to maintain a constant $1.00
net asset value per share.

PENNSYLVANIA TAX FREE FUND--The Fund's investment objective is a high level
of current income, free from federal income tax and, to the extent possible,
Pennsylvania personal income taxes, consistent with preservation of capital. The
Fund will also attempt to maintain a constant net asset value of $1.00 per
share.

It is a fundamental policy of the Fund 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.
This Fund will under normal conditions, invest at least 80% of its net assets in
securities the interest on which is not a preference item for purposes of the
federal alternative minimum tax and invest at least 65% of its total assets in
municipal obligations the interest on which is exempt from Pennsylvania personal
income tax ("Pennsylvania Securities"). Pennsylvania Securities constitute
municipal obligations of the Commonwealth of Pennsylvania and its political
subdivisions or municipal authorities, as will as municipal obligations issued
by territories or possessions of the United States, such as Puerto Rico. This
Fund 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 Fund 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 Fund may invest up to 100% of its
assets in municipal obligations of states other than Pennsylvania or taxable
money market instruments.

There can be no assurance that the Fund will be able to maintain a constant
$1.00 net asset value per share.

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
Fund'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

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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 Fund's net asset value.

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 give 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 Fund 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 Fund
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 Fund 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 Fund 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 Fund'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 Fund 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.

A Fund may buy and sell futures contracts and related options to manage its
exposure to changing interest rates and securities prices. Some strategies
reduce a Fund's exposure to price fluctuations, while others tend to increase
its market exposure. Futures and options on futures can be volatile instruments
and involve certain risks that could negatively impact a Fund's return. No price
is paid upon entering into futures contracts. Instead, a Fund would be required
to deposit an amount of cash or U.S. Treasury securities known as "initial
margin." Subsequent payments, called "variation margin," to and from the broker,
would be made on a daily basis as the value of the future position varies (a
process known as "market to market"). The margin is in the nature of performance
bond or good-faith deposit on a futures contract.

INVESTMENT COMPANY SHARES--Each Fund 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 Fund. A Fund'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

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expenses of such investment companies, including advisory fees, in addition to
paying Fund expenses. Under applicable regulations, a Fund is prohibited from
acquiring the securities of another investment company if, as a result of such
acquisition: (1) the Fund 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 Fund'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 Fund.

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 there venues 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.

MUNICIPAL LEASES--Each Fund may invest in instruments, or participations in
instruments, issued in connection with lease obligations or installment purchase
contract obligations of municipalities ("municipal lease obligations"). Although
municipal lease obligations do not constitute general obligations of the issuing
municipality, a lease obligation is ordinarily backed by the municipality's
covenant to budget for, appropriate funds for, and make the payments due under
the lease obligation. However, certain lease obligations contain
"non-appropriation" clauses, which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose in the relevant years. Municipal lease
obligations are a relatively new form of financing, and the market for such
obligations is still developing. Municipal leases will be treated as liquid only
if they satisfy criteria set forth in guidelines established by the Board of
Trustees, and there can be no assurance that a market will exist or continue to
exist for any municipal lease obligation.

MUNICIPAL NOTES--Municipal notes consist of general obligation notes, tax
anticipation notes (notes sold to finance working capital needs of the issuer in
anticipation of receiving taxes on a future date), revenue anticipation notes
(notes sold to provide needed cash prior receipt of expected non-tax revenues
from a specific source), bond anticipation notes, tax and revenue anticipation
notes, certificates of indebtedness, demand notes, and construction loan notes.
The maturities of the instruments at the time of issue will generally range from
three months to one year.

MUNICIPAL BONDS--Municipal bonds are debt obligations issued to obtain funds
for various public purposes. A Fund 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

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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 Fund or its agent will have actual or constructive possession of
the securities held as collateral for the repurchase agreement. Each Fund bears
a risk of loss in the event the other party defaults on its obligations and the
Fund is delayed or prevented from exercising its right to dispose of the
collateral securities, or if the Fund realizes a loss on the sale of the
collateral securities. The Advisers or Sub-Advisers will enter into repurchase
agreements on behalf of a Fund 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 Funds 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 Funds 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 Funds, the Custodian or its agent must
take possession of the underlying collateral. However, if the seller defaults,
the Funds 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 Funds may incur delays and costs in selling the security and
may suffer a loss of principal and interest if the Funds are treated as
unsecured creditors.

STANDBY COMMITMENTS AND PUT TRANSACTIONS--The Funds reserve the right to
engage in put transactions. The Advisers and Sub-Advisers have the authority to
purchase securities at a price which would result in a yield to maturity lower
than that generally offered by the seller at the time of purchase when the Funds
can simultaneously acquire the right to sell the securities back to the seller,
the issuer, or a third party (the "writer") at an agreed-upon price at any time
during a stated period or on a certain date. Such a right is generally denoted
as a "standby commitment" or a "put." The purpose of engaging in transactions
involving puts is to maintain flexibility and liquidity to permit the Funds 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 Funds 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 Fund 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 Fund 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 Fund 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

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be marketable or otherwise assignable. Therefore, the put would have value only
to the Fund. 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 Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could, of course, sell the security. The
maturity of the underlying security will generally be different from that of the
put. The Intermediate-Term Municipal and Pennsylvania Municipal Bond Funds 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.

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 Fund 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 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. Delivery of and payment for these securities may occur a
month or more after the date of the purchase commitment. The Fund 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 Fund
before settlement. Although a Fund generally purchases securities on a
when-issued or forward commitment basis with the intention of actually acquiring
securities for its portfolio, a Fund may dispose of a when-issued security or
forward commitment prior to settlement if the Adviser deems it appropriate to do
so.

The Funds 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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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 Funds will establish segregated accounts with the Custodian and will
maintain liquid assets in an amount at least equal in value to the Funds'
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

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Aaa-rated securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa-rated securities.

Bonds which are rated A by Moody's possess many favorable investment
attributes and are to be considered as upper-medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

Bonds which are rated Baa by Moody's are considered as medium-grade
obligations (I.E., they are neither highly protected nor poorly secured).
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

COMMERCIAL PAPER RATINGS. Commercial paper rated A by S&P is regarded by
S&P as having the greatest capacity for timely payment. Issues rated A are
further refined by use of the numbers 1+, 1, 2 and 3 to indicate the relative
degree of safety, issues rated A-1+ are those with an "overwhelming degree" of
credit protection. Those rated A-1 reflect a "very strong" degree of safety
regarding timely payment. Those rated A-2 reflect a "satisfactory" degree of
safety regarding timely payment.

Commercial paper issuers rated Prime-1 or Prime-2 by Moody's are judged by
Moody's to be of "superior" quality and "strong" quality, respectively, on the
basis of relative repayment capacity.

INVESTMENT LIMITATIONS

The following investment limitations apply to the Tax Free, Institutional Tax
Free, California Tax Exempt, Intermediate-Term Municipal, Pennsylvania Municipal
Bond, and Pennsylvania Tax Free Funds.

No Fund may:

1. Purchase securities of any issuer (except securities issued or guaranteed by
the United States Government, its agencies or instrumentalities) if, as a
result, more than 5% of the total assets of the Fund (based on current
market value at the time of investment) would be invested in the securities
of such issuer: provided, however, that the Fund may invest up to 25% of its
total assets without regard to this restriction of, and as permitted by,
Rule 2a-7.

2. Purchase any securities which would cause more than 25% of the total assets
of the Fund, based on current value at the time of such purchase, to be
invested in the securities of one or more issuers conducting their principal
business activities in the same industry, provided that this limitation does
not apply to investments in obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities.

3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding 10% of the value of total assets. The California Tax
Exempt Fund has a fundamental policy that to the extent such borrowing
exceeds 5% of the value of the Fund's total assets, borrowing will be done
from a bank and in accordance with the requirements of the 1940 Act. This
borrowing provision is included solely to facilitate the orderly sale of
portfolio securities to accommodate heavy redemption requests if they should
occur and is not for investment purposes. All borrowings of the Funds, in
excess of 5% of its total assets, will be repaid before making additional
investments and any interest paid on such borrowings will reduce income.

4. Purchase securities of other investment companies, except that the
Intermediate-Term Municipal, Pennsylvania Municipal Bond and Pennsylvania
Tax Free Funds may only purchase securities of money market funds and the
New York Municipal Bond Fund may purchase securities of other

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investment companies, in either case, as permitted by the 1940 Act and the
rules and regulations thereunder.

5. Make loans, except that each Fund may purchase or hold debt instruments in
accordance with its investment objective and policies and may enter into
repurchase agreements, provided that repurchase agreements maturing in more
than seven days, restricted securities and other illiquid securities
are not to exceed, in the aggregate, 10% of the Fund's net assets, except
for the Intermediate-Term Municipal and New York Municipal Bond Funds, for
which it cannot exceed 15% of the Fund's net assets.

6. Pledge, mortgage or hypothecate assets except to secure temporary borrowings
permitted by (1) above in aggregate amounts not to exceed 10% of the net
assets of such Fund taken at current value at the time of the incurrence of
such loan.

7. Invest in companies for the purpose of exercising control.

8. Acquire more than 10% of the voting securities of any one issuer.

9. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts including futures contracts. However,
subject to its permitted investments, any Fund may invest in municipal
securities or other obligations secured by real estate or other interests
therein.

10. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Fund may obtain short-term credits as
necessary for the clearance of security transactions.

11. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

12. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described in the Prospectuses and this
Statement of Additional Information or as permitted by rule, regulation or
order of the SEC.

13. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or any
investment adviser of the Trust owns beneficially more than 1/2 of 1% of the
shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 1/2 of 1% of such shares or
securities together own more than 5% of such shares or securities.

14. Purchase securities of any company which has (with predecessors) a record of
less than three years continuing operations (except (i) obligations issued
or guaranteed by the United States Government, its agencies or
instrumentalities, or (ii) municipal securities which are rated by at least
two nationally recognized municipal bond rating services or determined by
the Adviser or Sub-Adviser to be of "high quality") if, as a result, more
than 5% of the total assets (taken at current value) would be invested in
such securities.

15. Purchase warrants, calls, straddles, spreads or combinations thereof, except
as permitted by its Prospectus and this Statement of Additional Information.

16. Invest in interests in oil, gas or other mineral exploration or development
programs. The Institutional Tax Free Fund and the California Tax Exempt Fund
may not invest in oil, gas or mineral leases.

17. Invest more than 25% of total assets in issues within the same state or
similar type projects (except in specified categories). This investment
limitation applies to the Intermediate-Term Municipal Fund, Tax Free Fund,
Institutional Tax Free Fund, and Pennsylvania Municipal Bond Fund. For the
Pennsylvania Municipal Bond Fund, this limitation does not apply to the
extent stated in its investment objective and policies.

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The foregoing percentages (except the limitation on borrowing) will apply at
the time of the purchase of a security. These investment limitations and the
investment limitations in each Prospectus are fundamental policies of the Trust
and may not be changed without shareholder approval. It is a fundamental policy
of the Intermediate-Term Municipal and Pennsylvania Municipal Bond Funds to
abide by the maturity restrictions and to invest solely in the permitted
investments described in this Statement of Additional Information and in their
respective Prospectuses.

The following investment limitations and non-fundamental policies apply to
the California Municipal Bond, Massachusetts Municipal Bond, New Jersey
Municipal Bond, Ohio Tax Free and New York Municipal Bond Funds.

No Fund may:

1. Purchase any securities which would cause more than 25% of the total assets
of the Fund, 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 Fund to purchase securities or require the Fund 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.

3. 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.

4. 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.

5. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

6. 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.

7. 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 Fund
may (i) obtain short-term credits as necessary for the clearance of security
transactions, (ii) provide initial and variation margin

S-16
<PAGE>

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% (10% for the Ohio Tax Free Fund) 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.

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 Fund's assets are invested in Municipal Securities
payable from revenues on similar projects, the Fund will be subject to the risks
presented by such projects to a greater extent than it would be if the Fund's
assets were not so invested. Moreover, in seeking to attain its investment
objective the Fund may invest all or any part of its assets in Municipal
Securities that are industrial development bonds.

CALIFORNIA RISK FACTORS. Under normal conditions, the Fund will be fully
invested in obligations which produce income exempt from federal income tax and
California state income tax. Accordingly, the Fund will have considerable
investments in California municipal obligations. As a result, the Fund will be
more susceptible to factors which adversely affect issuers of California
obligations than a mutual fund which does not have as great a concentration in
California municipal obligations.

An investment in the Fund 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 Fund.

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.

S-17
<PAGE>

SPECIAL CONSIDERATIONS RELATING TO MASSACHUSETTS MUNICIPAL SECURITIES

MASSACHUSETTS RISK FACTORS. Under normal conditions, the Fund will be fully
invested in obligations which produce income exempt from federal income tax and
Massachusetts state tax. Accordingly, the Fund will have considerable
investments in Massachusetts municipal obligations. As a result, the Fund will
be more susceptible to factors which adversely affect issuers of Massachusetts
obligations than a mutual fund which does not have as great a concentration in
Massachusetts municipal obligations.

An investment in the Fund 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 Fund.

SPECIAL CONSIDERATIONS RELATING TO NEW JERSEY MUNICIPAL SECURITIES

NEW JERSEY RISK FACTORS. Under normal conditions, the Fund will be fully
invested in obligations which produce income exempt from federal income tax and
New Jersey state tax. Accordingly, the Fund will have considerable investments
in New Jersey municipal obligations. As a result, the Fund will be more
susceptible to factors which adversely affect issuers of New Jersey obligations
than a mutual fund which does not have a great concentration in New Jersey
municipal obligations.

An investment in the Fund 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 Fund.

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 RISK FACTORS. The Fund's concentration in investments in New York
Municipal Securities involves greater risk than if their investments were more
diversified. These risks result from (1) amendments to the New York Constitution
and other statutes that limit the taxing and spending authority of New York
government entities; (2) the general financial condition of the State of New
York, and (3) a variety of New York laws and regulations that may affect,
directly or indirectly, New York municipal securities. The ability of issuers of
Municipal Securities to pay interest on, or repay principal of, Municipal
Securities may be impaired as a result. The Fund'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 the
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.

NEW YORK CITY. The fiscal health of the State is closely related to the
fiscal health of its localities, particularly the City, which has required
significant financial assistance from the State in recent years.

SPECIAL CONSIDERATIONS RELATING TO PENNSYLVANIA MUNICIPAL SECURITIES

REVENUES AND EXPENDITURES. The Constitution of Pennsylvania provides that
operating budget appropriations may not exceed the estimated revenues and
available surplus in the fiscal year for which funds are appropriated. Annual
budgets are enacted for the General Fund and for certain special revenue funds

S-18
<PAGE>
which represent the majority of expenditures of the Commonwealth. Pennsylvania's
Governmental Funds receive a majority of their revenues from taxes levied by the
Commonwealth. Interest earnings, licenses and fees, lottery ticket sales, liquor
store profits, miscellaneous revenues, augmentations and federal government
grants supply the balance of the receipts of these funds.

PENNSYLVANIA RISK FACTORS. Under normal conditions the Fund will be fully
invested in obligations which produce interest income from federal income tax
and Pennsylvania state income tax. Accordingly, the Fund will have considerable
investments in Pennsylvania municipal obligations. As a result, the Fund will be
more susceptible to factors which adversely affect issuers of Pennsylvania
obligations than a mutual fund which does not have as great a concentration in
Pennsylvania municipal obligations.

An investment in the Fund will be affected by the many factors that affect
the financial condition of the Commonwealth of Pennsylvania. For example,
financial difficulties of the Commonwealth, its counties, municipalities and
school districts that hinder efforts to borrow and lower credit ratings are
factors which may affect the Fund.

LOCAL GOVERNMENT DEBT. Local government in Pennsylvania consists of
numerous individual units. Each unit is distinct and independent of other local
units, although they may overlap geographically. There is extensive general
legislation applying to local government. Municipalities may also issue revenue
obligations without limit and without affecting their general obligation
borrowing capacity if the obligations are projected to be paid solely from
project revenues. Municipal authorities and industrial development authorities
are also widespread in Pennsylvania.

THE MANAGER

The Trust and SEI Investments Management Corporation ("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 Fund, 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
Fund without penalty by the Trustees of the Trust, by a vote of a majority of
the outstanding shares of the Fund or by the Manager on not less than 30 days'
nor more than 60 days' written notice.

SEI Management, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in SEI Management. SEI
Investments and its subsidiaries and affiliates, including SEI Management, are
leading providers of funds evaluation services, trust accounting systems, and
brokerage and information services to financial institutions, institutional
investors, and money managers. SEI Management and its affiliates also serve as
administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK
Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CoreFunds, Inc., CrestFunds, Inc., CUFUND, The
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, Marquis
Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell Investment Trust,
The Nevis Funds, 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

S-19
<PAGE>

Institutional Investments Trust, SEI Institutional International Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust, STI Classic Funds, STI
Classic Variable Trust, TIP Funds, and TIP Institutional Funds.

For the fiscal years ended August 31, 1996, 1997, and 1998, the Funds paid
management fees, after waivers and/or reimbursements as follows:

<TABLE>
<CAPTION>
FEES WAIVED OR
FEES PAID (000) REIMBURSED (000)
---------------------- ----------------------
PORTFOLIO 1996 1997 1998 1996 1997 1998
- -------------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Tax Free Fund..................................... $1,099 $1,420 $ $ 158 $ 0 $
Institutional Tax Free Fund....................... $1,697 $2,472 $1,283 $1,080
California Tax Exempt Fund........................ $ 581 $ 848 $ 305 $ 158
Intermediate-Term Municipal Fund.................. $ 279 $ 412 $ 74 $ 40
Pennsylvania Municipal Bond Fund.................. $ 183 $ 200 $ 174 $ 140
Pennsylvania Tax Free Fund........................ $ 66 $ 93 $ 43 $ 43
Ohio Tax Free Bond Fund........................... * * * *
California Municipal Bond Fund.................... * * * *
Massachusetts Municipal Bond Fund................. * * * *
New Jersey Municipal Bond Fund.................... * * * *
New York Municipal Bond Fund...................... * * * *
</TABLE>

- ------------------------

* Not in operation during the period.

THE ADVISERS AND SUB-ADVISERS

SEI Investments Management Corporation ("SIMC") serves as investment adviser
to the Fund. 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 provide consulting advice to institutional investors for more than
20 years, including advice regarding the selection and evaluation of investment
advisers.

SIMC acts as the investment adviser to the Massachusetts Municipal Bond, New
York Municipal Bond, California Municipal Bond, New Jersey Municipal Bond and
Intermediate-Term Municipal Funds and operates as a "manager of managers." As
Adviser, SIMC oversees the investment advisory services provided to the Fund and
manages the cash portion of the Fund'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 Fund. 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 Fund's assets to the sub-advisers, monitors and
evaluates the sub-advisers' performance, and oversees sub-adviser compliance
with the Fund'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 the fiscal year ended August 31, 1998, the Fund paid advisory fees,
after waivers, of .33% of its average daily net assets. SIMC pays the
sub-advisers out its investment advisory fees.

SIMC and the Trust have obtained an exemptive order from the Securities and
Exchange Commission ("SEC") that permits SIMC, with the approval of the Trust's
Board of Trustees, to retain sub-advisers

S-20
<PAGE>

unaffiliated with SIMC for the Fund without submitting the sub-advisory
agreements to a vote of the Fund's shareholders. The exemptive relief permits
the disclosure of only the aggregate amount payable by SIMC under all such
sub-advisory agreements. The Fund will notify shareholders in the event of any
additional or change in the identity of its sub-advisers.

Morgan Grenfell Capital Management Incorporated ("Morgan Grenfell"), acts as
investment adviser to the Pennsylvania Municipal Bond Fund. Morgan Grenfell is a
wholly-owned, U.S. based subsidiary of Morgan Grenfell Asset Management and was
organized in 1985. As of September 30, 1998, total assets under management by
Morgan Grenfell were approximately billion. The principal place of business
address of Morgan Grenfell is 885 Third Avenue, 32nd Floor, New York, New York
10022.

Weiss, Peck & Greer, L.L.C., ("Weiss Peck"), serves as investment adviser to
the California Tax Exempt, Pennsylvania Tax Free, Institutional Tax Free and Tax
Free Funds. The Weiss Peck invests the assets of the Fund, and continuously
reviews, supervises and administers the investment program of the Fund. Weiss
Peck is a limited liability company founded as a limited partnership in 1970,
and engages in investment management, venture capital management and management
buyouts. Weiss Peck has been active since its founding in managing portfolios of
tax exempt securities. As of September 30, 1998, total assets under management
were approximately billion. The principal business address of Weiss Peck is
One New York Plaza, New York, New York 10004.

Standish, Ayer & Wood, Inc. ("SAW"), serves as investment sub-adviser to the
Massachusetts Municipal Bond, New York Municipal Bond and Intermediate-Term
Municipal Funds. 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. As of September 30,
1998, total assets under management were billion. The principal offices are
located at One Financial Center, Boston, Massachusetts 02111.

Van Kampen Management, Inc. ("Van Kampen"), serves as investment sub-adviser
to the New Jersey Municipal Bond and California Municipal Bond Funds. Van Kampen
is an indirect, wholly-owned subsidiary of Morgan Stanley Dean Witter & Co., and
was founded in 1974. As of September 30, 1998, assets under management were
approximately billion. The principal Business address is One Parkview Plaza,
Oakbrook Terrace, Illinois 60181.

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 Fund 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 Fund, by a majority of the outstanding shares of
that Fund, 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.

S-21
<PAGE>

For the fiscal years ended August 31, 1996, 1997 and 1998, the Portfolios
paid advisory fees, after waivers and/or reimbursements as follows:

<TABLE>
<CAPTION>
FEES WAIVED OR
FEES PAID (000) REIMBURSED (000)
---------------- ----------------
PORTFOLIO 1996 1997 1998 1996 1997 1998
- -------------------------------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Tax Free Fund..................................... $137 $153 $ 0 $ 0
Institutional Tax Free Fund....................... $325 $384 $ 0 $ 0
California Tax Exempt Fund........................ $151 $170 $ 0 $ 0
Intermediate-Term Municipal Fund+................. $254 $622 $ 0 $ 0
Pennsylvania Municipal Bond Fund.................. $202 $195 $ 0 $ 0
Pennsylvania Tax Free Fund........................ $ 12 $ 15 $ 0 $ 0
Ohio Tax Free Bond Fund........................... * * * *
California Municipal Bond Fund.................... * * * *
Massachusetts Municipal Bond Fund................. * * * *
New Jersey Municipal Bond Fund.................... * * * *
New York Municipal Bond Fund...................... * * * *
</TABLE>

- ------------------------

* Not in operation during the period.

+ Amounts paid for the Fund since April 16, 1996, were paid to SIMC, who paid
Standish, Ayer & Wood out this advisory fee.

DISTRIBUTION AND SHAREHOLDER SERVICING

The Trust has adopted Distribution Plans for Class D and CNI Class shares of
the Funds (the "Plans") in accordance with the provisions of Rule 12b-1 under
the 1940 Act, which regulates circumstances under which an investment company
may directly or indirectly bear expenses relating to the distribution of its
shares. In this regard, the Board of Trustees has determined that the Plans and
the Distribution Agreement are in the best interests of the shareholders.
Continuance of the Plans must be approved annually by a majority of the Trustees
of the Trust and by a majority of the trustees who are not "interested persons"
of the Trust as that term is defined in the 1940 Act and who have no direct or
indirect financial interest in the operation of a Distribution Plan or in any
agreements related thereto ("Qualified Trustees"). The Plans require that
quarterly written reports of amounts spent under the Plans and the purposes of
such expenditures be furnished to and reviewed by the Trustees. The Plans may
not be amended to increase materially the amount which may be spent thereunder
without approval by a majority of the outstanding shares of the Portfolio or
class affected. All material amendments of the Plans will require approval by a
majority of the Trustees of the Trust and of the Qualified Trustees.

The Plans provide that the Trust will pay the Distributor a fee on the Class
D and CNI Class shares of the Fund. The Distributor may use this fee for: (i)
compensation for its services in connection with distribution assistance or
provision of shareholder services or (ii) payments to financial institutions and
intermediaries such as banks, savings and loan associations, insurance companies
and investment counselors, broker-dealers and the Distributor's affiliates and
subsidiaries as compensation for services or reimbursement of expenses incurred
in connection with distribution assistance or provision of shareholder services.

The Funds have also adopted shareholder servicing plans for its Class A,
Class B, Class C and CNI Class shares (the "Service Plans"), and Administrative
Services Plans for its Class B and Class C shares. Under these Service and
Administrative Services Plans, the Distributor may perform, or may compensate
other service providers for performing, the following shareholder and
administrative services: maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services provided on investments;
assisting clients in changing dividend options, account designations and
addresses; sub-

S-22
<PAGE>
accounting; providing information on share positions to clients; forwarding
shareholder communications to clients; processing purchase, exchange and
redemption orders; and processing dividend payments. Under the Service and
Administrative Services Plans, the Distributor may retain as a profit any
difference between the fee it receives and the amount it pays to third parties.

For the fiscal year ended August 31, 1998, the Funds paid the following
amounts pursuant to the Distribution Plans:

<TABLE>
<CAPTION>
AMOUNT PAID TO
THIRD PARTIES
BY DISTRIBUTOR
OF PROSPECTUS
DISTRIBUTION- PRINTING & COSTS
TOTAL BASIS RELATED SALES MAILING ASSOCIATED WITH
PORTFOLIO/CLASS AMOUNT POINTS SERVICES EXPENSES COSTS REGISTRATION
- ------------------------------------ ---------- ------ -------------- -------- ---------- -----------------
<S> <C> <C> <C> <C> <C> <C>
California Tax Exempt Fund -- CNI
Class+............................ $ -- --% $ -- $ 0 $ 0 $ 0
Tax Free Fund -- Class D............ $ -- --% $ -- $ 0 $ 0 $ 0
</TABLE>

- ------------------------

+ Formerly the Class C shares; converted to Class G shares on March 18, 1996,
and were renamed CNI Class shares effective on December 31, 1997.

Except to the extent that the Manager or Advisers benefitted through
increased fees from an increase in the net assets of the Trust which may have
resulted in part from the expenditures, no interested person of the Trust nor
any Trustee of the Trust who is not an interested person of the Trust had a
direct or indirect financial interest in the operation of the Distribution Plans
or related agreements.

For the fiscal years ended August 31, 1996, 1997 and 1998, the aggregate
sales charges payable to the Distributor with respect to the Class D shares for
the Tax Free Fund were as follows:

<TABLE>
<CAPTION>
AGGREGATE SALES CHARGE AMOUNT RETAINED
YEAR PAYABLE TO DISTRIBUTOR BY DISTRIBUTOR
---- ---------------------- ---------------
<S> <C> <C>
1996 $17,368 $1,614
1997 $ 0 $ 0
1998 $ $
</TABLE>

TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and
executive officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some of the following: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK
Funds, Bishop Street Funds, Boston 1784 Funds, CoreFunds, Inc., CrestFunds,
Inc., CUFUND, The Expedition Funds, 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 Managed Trust, SEI Institutional
International Trust, SEI Liquid Asset Trust, STI Classic Funds, STI Classic
Variable Trust, TIP Funds and TIP Institutional Funds, open-end management
investment companies which are managed by SEI Fund Management or its affiliates
and, except for and with the exception of Profit Funds Investment Trust, and
Santa Barbara Group of Mutual Funds, Inc., are distributed by SEI Investments
Distribution Co. (the "Distributor").

S-23
<PAGE>

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 Manager and the
Distributor, 1981-1994. Trustee of the Arbor Fund, Marquis
Funds-Registered Trademark-, The Advisors' Inner Circle Fund, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Liquid Asset Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional Investments Trust, SEI
Institutional International Trust, Insurance Investment Products Trust, Boston
1784 Funds-Registered Trademark-, Pillar Funds, and Rembrandt
Funds-Registered Trademark-.

WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Manager and Distributor, Director and Secretary of SEI Investments
and Secretary of the Manager and Distributor. Trustee of the Arbor Fund, Marquis
Funds-Registered Trademark-, The Advisors' Inner Circle Fund, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Liquid Asset Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional Investments Trust, and
SEI Institutional International Trust.

F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--P.O. Box 190, Paoli, IN 47454.
President, Orange County Publishing Co., Inc. from October 1981 to January 1,
1997. Publisher of the Paoli News and the Paoli Republican and Editor of the
Paoli Republican since January 1981. President, H & W Distribution, Inc. since
July 1984. Executive Vice President, Trust Department, Harris Trust and Savings
Bank and Chairman of the Board of Directors of The Harris Trust Company of
Arizona before January 1981. Trustee of STI Classic Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Liquid Asset Trust, SEI Index Funds, SEI
Institutional Managed Trust, SEI Institutional Investments Trust and SEI
Institutional International Trust.

FRANK E. MORRIS (DOB 12/30/23)--Trustee**--105 Walpole Street, Dover, MA
02030. Retired since 1990. Peter Drucker Professor of Management, Boston
College, 1989-1990. President, Federal Reserve Bank of Boston, 1968-1988.
Trustee of The Arbor Fund, Marquis Funds-Registered Trademark-, The Advisors'
Inner Circle Fund, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Liquid Asset Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional Investments Trust, and SEI Institutional International Trust.

JAMES M. STOREY (DOB 04/12/31)--Trustee**--89A Mt. Vernon Street, Boston, MA
02108.-- Partner, Dechert Price & Rhoads, from September 1987 - December 1993.
Trustee of the Arbor Fund, Marquis Funds-Registered Trademark-, The Advisors'
Inner Circle Fund, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Liquid Asset Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional Investments Trust, and SEI Institutional International Trust.

GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--48 Catherine Drive,
Peabody, MA 01960. General Partner, Teton Partners, L.P., since 1991; Chief
Financial Officer, Noble Partners, L.P., since 1991; Treasurer and Clerk, Peak
Asset Management, Inc., since 1991; Trustee, Navigator Securities Lending Trust,
since 1995. Trustee of SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Liquid Asset Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional Investments Trust, and SEI Institutional International Trust.

EDWARD D. LOUGHLIN (DOB 03/07/51)--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments, the Adviser and the Manager since 1994. Senior Vice President,
SEI Investments, 1986-1991; Vice President, SEI Investments, 1981-1986.

SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Manager and Distributor since 1988.

KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President, General Counsel of SEI, the Manager and
Distributor since 1994. Vice President and Assistant Secretary

S-24
<PAGE>
of SEI Investments, the Manager and Distributor, 1992-1994. Associate, Morgan,
Lewis & Bockius LLP (law firm), 1988-1992.

RICHARD W. GRANT (DOB 10/25/45)--Secretary--2000 One Logan Square,
Philadelphia, PA 19103, Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Manager and Distributor.

KATHRYN L. STANTON (DOB 11/19/58)--Vice President and Assistant
Secretary--Deputy General Counsel, Vice President and Assistant Secretary of SEI
Investments, the Manager and Distributor since 1994, General Counsel, Investment
Systems & Services since 1997. Associate, Morgan, Lewis & Bockius LLP (law
firm), 1989-1994.

MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Fund Resources and the
Manager since 1996. Vice President of Fund Accounting, BISYS Fund Services
(1995-1996). Fidelity Investments (1981-1995).

TODD CIPPERMAN (DOB 02/14/66)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI Investments, 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 Manager 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 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 Manager
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.

CYNTHIA M. PARRISH (DOB 10/23/59)--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, September 1990 - August
1992.

LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Manager 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.

- ------------------------

* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.

** Messrs. Gooch, Storey, Sullivan and Morris serve as members of the Audit
Committee of the Trust.

The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
Compensation of officers and affiliated Trustees of the Trust is paid by the
Manager.

S-25
<PAGE>

The following table sets forth information about the compensation paid to
the Trustees for the fiscal year ended August 31, 1998:

<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 8/31/98 FUND EXPENSES RETIREMENT FOR FYE 8/31/98
- ---------------------------------------- --------------- ------------------- --------------- ----------------------
<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............... $ -- N/A N/A $ -- on services on 8
boards
Frank E. Morris, Trustee................ $ -- N/A N/A $ -- on service on 8
boards
James M. Storey, Trustee................ $ -- N/A N/A $ -- on service on 8
boards
George J. Sullivan, Trustee............. $ -- N/A N/A $ -- 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 Funds may advertise yield and/or total return. These
figures will be based on historical earnings and are not intended to indicate
future performance.

The current yield of the Funds that are money market funds is calculated
daily based upon the 7 days ending on the date of calculation ("base period").
The yield is computed by determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing shareholder account having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts and dividing
such net change by the value of the account at the beginning of the same period
to obtain the base period return and multiplying the result by (365/7). Realized
and unrealized gains and losses are not included in the calculation of the
yield.

The Funds compute their effective compound yield by determining the net
changes, exclusive of capital changes, in the value of a hypothetical
pre-existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula: Effective Yield = {(Base Period Return + 1)(365/7)} - 1. The
current and the effective yields reflect the reinvestment of net income earned
daily on portfolio assets.

From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal
Bond, California Municipal Bond, Massachusetts Municipal Bond, New Jersey
Municipal Bond, and New York Municipal Bond Funds may advertise yield. These
figures will be based on historical earnings and are not intended to indicate
future performance. The yield of these Funds refers to the annualized income
generated by an investment in the Funds over a specified 30-day period. The
yield is calculated by assuming that the income generated by the investment
during that period generated each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:

Yield = 2([(a-b)/(cd) + 1)](6) - 1) where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of reimbursement); c
= the current daily number of shares outstanding during the period that were
entitled to receive dividends; and d = the maximum offering price per share on
the last day of the period.

S-26
<PAGE>

Actual yields will depend on such variables as asset quality, average asset
maturity, the type of instruments a Fund invests in, changes in interest rates
on money market instruments, changes in the expenses of the Funds and other
factors.

Yields are one basis upon which investors may compare the Funds with other
money market funds; however, yields of other money market mutual funds and other
investment vehicles may not be comparable because of the factors set forth above
and differences in the methods used in valuing portfolio instruments.

For the 7-day period ended August 31, 1998, the end of the Trust's most
recent fiscal year, the money market Funds' current effective and tax-equivalent
yields were as follows:

<TABLE>
<CAPTION>
7-DAY 7-DAY
7-DAY TAX-EQUIVALENT TAX-EQUIVALENT
PORTFOLIO CLASS 7-DAY YIELD EFFECTIVE YIELD YIELD EFFECTIVE YIELD
- ---------------------------------------- ----------- ----------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Tax Free Fund........................... Class A --% --% --% --%
Class D --% --% --% --%
Institutional Tax Free Fund............. Class A --% --% --% --%
Class B --% --% --% --%
Class C --% --% --% --%
California Tax Exempt Fund.............. Class A --% --% --% --%
Class B * * * *
Class C * * * *
CNI Class+ --% --% --% --%
Pennsylvania Tax Free Fund.............. Class A --% --% --% --%
Ohio Tax Free Fund...................... Class A * * * *
</TABLE>

- ------------------------

* Not in operation during the period

+ Formerly the Class C shares; converted to Class G shares on March 18, 1996,
and renamed CNI Class shares effective on December 31, 1997.

For the 30-day period ended August 31, 1998, yields on the Funds other than
the money market Funds were as follows:

<TABLE>
<CAPTION>
YIELD
--------------------------
30-DAY
PORTFOLIO CLASS 30-DAY TAX EQUIVALENT
- ------------------------------------------------------------------- --------- --------- ---------------
<S> <C> <C> <C>
New York Municipal Bond Fund....................................... Class A * *
New Jersey Municipal Bond Fund..................................... Class A * *
Massachusetts Municipal Bond Fund.................................. Class A * *
California Municipal Bond Fund..................................... Class A * *
Pennsylvania Municipal Bond Fund................................... Class A --% -- %
Intermediate-Term Municipal Fund................................... Class A --% -- %
</TABLE>

- ------------------------

* Not in operation during the period.

From time to time, the Intermediate-Term Municipal, Pennsylvania Municipal
Bond, California Municipal Bond, Massachusetts Municipal Bond, New Jersey
Municipal Bond, and New York Municipal Bond Fund may advertise total return. The
total return of a Fund 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 Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula: P(1 + T)n = ERV, where P = a hypothetical initial payment of
$1,000; T = average annual total return; n = number of years; and ERV = ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
designated time period as of the end of such period.

S-27
<PAGE>

Based on the foregoing, the average annual total returns for the Funds from
inception through August 31, 1998, and for the one-, five- and ten-year periods
ended August 31, 1998 were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------------
TEN SINCE
FUND CLASS ONE YEAR FIVE YEAR YEAR INCEPTION
- ----------------------------------- ----------------------------- -------- --------- --- ---------
<S> <C> <C> <C> <C> <C>
Tax Free Fund...................... Class A(1) --% --% --% --%
Class D -- Offering Price(9) --% * * --%
Institutional Tax Free Fund........ Class A(3) --% --% --% --%
Class B(4) --% --% * --%
Class C(5) --% * * --%
California Tax Exempt Fund......... Class A --% --% * --%
CNI Class+ --% * * --%
Pennsylvania Municipal Bond Fund... Class A(6) --% --% * --%
Pennsylvania Tax Free Fund......... Class A(7) --% * * --%
Intermediate-Term Municipal Fund... Class A(8) --% --% * --%
Ohio Tax Free Fund................. Class A * * * *
California Municipal Bond Fund..... Class A * * * *
Massachusetts Municipal Bond
Fund............................. Class A * * * *
New Jersey Municipal Bond Fund..... Class A * * * *
New York Municipal Bond Fund....... Class A * * * *
</TABLE>

- --------------------------

* Not in operation during the period.

+ Formerly the Class C shares; converted to Class G shares on March 18, 1996,
and were renamed CNI Class shares effective on December 31, 1997.

(1) Commenced operations 2/1/84

(2) Commenced operations 10/15/90

(3) Commenced operations 5/14/90

(4) Commenced operations 1/5/94

(5) Commenced operations 5/11/94

(6) Commenced operations 8/14/89

(7) Commenced operations 1/21/94

(8) Commenced operations 9/5/89

(9) Commenced operations 11/1/94

Each Fund may, from time to time, compare its performance to other mutual
funds tracked by mutual fund rating services, to broad groups of comparable
mutual funds or to unmanaged indices which may assume investment of dividends
but generally do not reflect deductions for sales charges, administrative and
management costs.

DETERMINATION OF NET ASSET VALUE

Securities of the Tax Free, Institutional Tax Free, California Tax Exempt,
Pennsylvania Tax Free and Ohio Tax Free Funds 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 Fund 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 Fund resulted
in a lower aggregate portfolio value on a particular day, a prospective investor
in a Fund 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 Fund would experience a lower yield. The converse would
apply in a period of rising interest rates.

S-28
<PAGE>

A Fund's use of amortized cost valuation and the maintenance of the Fund's
net asset value at $1.00 are permitted by Rule 2a-7 under the 1940 Act, provided
that certain conditions are met. Under Rule 2a-7 a money market portfolio must
maintain a dollar-weighted average maturity of 90 days or less, and not purchase
any instrument having a remaining maturity of more than 397 days. In addition,
money market funds may acquire only U.S. dollar denominated obligations that
present minimal credit risks and that are "eligible securities," which means
they are: (i) rated, at the time of investment, by at least two nationally
recognized statistical rating organizations (one if it is the only organization
rating such obligation) in the highest short-term rating category or, if
unrated, determined to be of comparable quality (a "first tier security"), or
(ii) rated according to the foregoing criteria in the second highest short-term
rating category or, if unrated, determined to be of comparable quality ("second
tier security"). The Advisers will determine that an obligation presents minimal
credit risk or that unrated instruments are of comparable quality in accordance
with guidelines established by the Trustees. In the event a first tier security
of the Tax Free Fund, Institutional Tax Free Fund, California Tax Exempt Fund,
Pennsylvania Tax Free Fund or the Ohio Tax Free Fund is downgraded below first
tier security status after purchase, or the Adviser of the of any such Fund
becomes aware that an unrated or second tier security has received any rating
below the second highest rating category after purchase, the Fund'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 Fund's Adviser
with respect to the downgrade of a first tier security. The regulations also
require the Trustees to establish procedures which are reasonably designed to
stabilize the net asset value per unit at $1.00 for each Fund. However, there is
no assurance that the Trust will be able to meet this objective. The Trust's
procedures include the determination of the extent of deviation, if any, of each
Fund's current net asset value per unit calculated using available market
quotations from each Fund's amortized cost price per unit at such intervals as
the Trustees deem appropriate and reasonable in light of market conditions and
periodic reviews of the amount of the deviation and the methods used to
calculate such deviation. In the event that such deviation exceeds 1/2 of 1%,
the Trustees are required to consider promptly what action, if any, should be
initiated; and, if the Trustees believe that the extent of any deviation may
result in material dilution or other unfair results to shareholders, the
Trustees are required to take such corrective action as they deem appropriate to
eliminate or reduce such dilution or unfair results to the extent reasonably
practicable. In addition, if any Fund incurs a significant loss or liability,
the Trustees have the authority to reduce pro rata the number of shares of that
Fund in each shareholder's account and to offset each shareholder's pro rata
portion of such loss or liability from the shareholder's accrued but unpaid
dividends or from future dividends.

Securities of the Intermediate-Term Municipal, Pennsylvania Municipal Bond,
California Municipal Bond, Massachusetts Municipal Bond, New Jersey Municipal
Bond, and New York Municipal Bond 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
quotations. However, the service may also use a matrix system to determine
valuations, which system considers such factors as security prices, yields,
maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.

PURCHASE AND REDEMPTION OF SHARES

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or evaluation of the portfolio securities is not reasonably
practicable, or for such other periods as the SEC may be order permit. The Trust
also reserves the right to suspend sales of shares of a Fund for any period
during which the New York Stock Exchange, the Manager, a Fund's Adviser, the
Distributor and/or the Custodian are not open for business. Currently, the
following holidays are observed

S-29
<PAGE>

by the Trust: New Year's Day, Martin Luther King, Jr. Day, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.

In calculating the sales charge rates applicable to current purchases of
Class D shares, members of the following affinity groups and clients of the
following broker-dealers, each of which has entered into an agreement with the
Distributor, are entitled to the following percentage-based discounts from the
otherwise applicable sales charge:

<TABLE>
<CAPTION>
PERCENTAGE DATE OFFER
NAME OF GROUP DISCOUNT STARTS
- -------------------------------------------------------------------- ----------- ----------------------
<S> <C> <C>
Countrywide Funding Corp............................................ 100% July 27, 1994
50% September 23, 1994
</TABLE>

Those members or clients who take advantage of a percentage-based reduction
in the sales charge during the offering period noted above may continue to
purchase shares at the reduced sales charge rate after the offering period
relating to each such purchaser's affinity group or broker-dealer relationship
has terminated.

Please contact the Distributor at 1-800-437-6016.

SHAREHOLDER SERVICES--CLASS D SHARES

STOP-PAYMENT REQUESTS (MONEY MARKET FUNDS ONLY): Investors may request a
stop payment on checks by providing the Trust with a written authorization to do
so. Oral requests will be accepted provided that the Trust promptly receives a
written authorization. Such requests will remain in effect for six months unless
renewed or canceled. The Trust will use its best efforts to effect stop-payment
instructions, but does not promise or guarantee that such instructions will be
effective. Shareholders requesting stop payment will be charged a $20 service
fee per check which will be deducted from their accounts.

EXCHANGE PRIVILEGE: A shareholder may exchange the shares of the Tax Free
Fund for which good payment has been received, in his account at any time,
regardless of how long he has held his shares.

Each Exchange Request must be in proper form (I.E., if in writing, signed by
the record owner(s) exactly as the shares are registered; if by telephone,
proper account identification is given by the dealer or shareholder of record),
and each exchange must involve either shares having an aggregate value of at
least $1,000 or all the shares in the account. Each exchange involves the
redemption of the shares of a Fund (the "Old Fund") to be exchanged and the
purchase at net asset value of the shares of the other portfolios (the "New
Funds") plus in certain cases, as disclosed in each Prospectus, any applicable
sales charge. Any gain or loss on the redemption of the shares exchanged is
reportable on the shareholder's federal income tax return, unless such shares
were held in a tax-deferred retirement plan or other tax-exempt account. If the
Exchange Request is received by the Distributor in writing or by telephone on
any business day prior to the redemption cut-off time specified in each
Prospectus, the exchange usually will occur on that day if all the restrictions
set forth above have been complied with at that time. However, payment of the
redemption proceeds by the Old Fund, and thus the purchase of shares of the New
Funds, may be delayed for up to seven days if the Funds determine that such
delay would be in the best interest of all of its shareholders. Investment
dealers which have satisfied criteria established by the Funds may also
communicate a shareholder's Exchange Request to the Funds subject to the
restrictions set forth above. No more than five exchange requests may be made in
any one telephone Exchange Request.

TAXES

FEDERAL INCOME TAX

The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder as in effect on the date of this

S-30
<PAGE>
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 Fund 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 Fund will pay federal income tax thereon, and, if the Fund 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 Fund 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 Fund 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 Fund will generally be subject to a nondeductible 4% federal excise tax
to the extent it fails to distribute by the end of any calendar year at least
98% of its ordinary income and 98% of its capital gain net income (the excess of
short- and long-term capital gains over short- and long-term capital losses) for
the one-year period ending on October 31 of that year, plus certain other
amounts.

Each Fund 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 Fund, 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 Fund 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 Fund 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 Fund.

If a Fund 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
Fund are expected to qualify for that deduction.

As noted in the Prospectuses for the Funds, 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 Funds intend, when possible,
to avoid investing in private activity bonds. Second, in the case of
exempt-interest dividends received by corporate shareholders, all
exempt-interest dividends, regardless of when the bonds from which they are
derived were issued or whether they are derived from private activity bonds,
will be included in the corporation's "adjusted current earnings," as

S-31
<PAGE>
defined in Section 56(g) of the Code, in calculating the corporation's
alternative minimum taxable income for purposes of determining the Alternative
Minimum Tax and the Environmental Tax.

The percentage of income that constitutes "exempt-interest dividends" will
be determined for each year for the Funds and will be applied uniformly to all
dividends declared with respect to the Funds 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 Funds will not be deductible for federal income tax purposes to
the extent that the Funds distribute exempt-interest dividends during the
taxable year. The deduction otherwise allowable to property and casualty
insurance companies for "losses incurred" will be reduced by an amount equal to
a portion of exempt-interest dividends received or accrued during any taxable
year. Certain foreign corporations engaged in a trade or business in the United
States will be subject to a "branch profits tax" on their "dividend equivalent
amount" for the taxable year, which will include exempt-interest dividends.
Certain Subchapter S corporations may also be subject to taxes on their "passive
investment income," which could include exempt-interest dividends. Up to 85% of
the Social Security benefits or railroad retirement benefits received by an
individual during any taxable year will be included in the gross income of such
individual if the individual's "modified adjusted gross income" (which includes
exempt-interest dividends) plus one-half of the Social Security benefits or
railroad retirement benefits received by such individual during that taxable
year exceeds the base amount described in Section 86 of the Code.

Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by industrial development bonds or
private activity bonds should consult their tax advisors before purchasing
shares of the Funds. "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 Funds (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 Fund 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 Fund 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
Fund will make periodic reports to shareholders of the source of distributions
on a state-by-state basis.

MASSACHUSETTS INCOME TAXES. Under current law, as long as the Fund
qualifies as a regulated investment company under the Code, distributions from
the Fund 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 certain Massachusetts
obligations and are properly designated as such in a written notice mailed to
the Fund's shareholders not later than sixty days after the close of the Fund's
tax year. In addition, as long as the Fund 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 personal income taxation, and

S-32
<PAGE>

are properly designated as such in a written notice mailed to the Fund's
shareholders not later than sixty days after the close of the Fund's tax year.

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 Fund.

CALIFORNIA INCOME TAXES. The Fund intends to qualify to pay dividends to
shareholders that are exempt from California personal income tax ("California
exempt-interest dividends"). The Fund will qualify to pay California
exempt-interest dividends if (1) at the close of each quarter of the Fund's
taxable year, at least 50 percent of the value of the Fund's total assets
consists of obligations the interest on which would be exempt from California
personal income tax if the obligations were held by an individual ("California
Tax Exempt Obligations") and (2) the Fund continues to qualify as a regulated
investment company.

If the Fund qualifies to pay California exempt-interest dividends, dividends
distributed to shareholders will be considered California exempt-interest
dividends if they meet certain requirements. The Fund will notify its
shareholders of the amount of exempt-interest dividends each year.

Corporations subject to California franchise tax that invest in the Fund 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 Fund's earnings and profits.

Interest on indebtedness incurred or continued by a shareholder in
connection with the purchase of shares of the Fund will not be deductible for
California personal income tax purposes if the Fund 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 Fund transactions.
Shareholders are advised to consult with their own tax advisers for more
detailed information concerning California tax matters.

If a Fund 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 Fund in a written notice to shareholders mailed within 60 days
of the close of the Fund's taxable year and (2) to the extent the interest
received by the Fund during the year on California Tax Exempt Obligations
exceeds expenses of the Fund that would be disallowed under California personal
income tax law as allocable to tax exempt interest if the Fund 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 Fund, or treat dividends paid by the Fund to its
shareholders as California

S-33
<PAGE>

exempt-interest dividends, if the Fund fails to meet the 30-percent test. It is
the intention of the management of the Fund to continue to meet the 30-percent
test for all years for which California does not conform to the federal
legislation.

PENNSYLVANIA TAXES. The following is a general, abbreviated summary of
certain of the provisions of the Pennsylvania tax code presently in effect as
they directly govern the taxation of shareholders subject to Pennsylvania
personal income tax. These provisions are subject to change by legislative or
administration action, and any such change may be retroactive.

Distributions paid by the Fund to shareholders will not be subject to the
Pennsylvania personal income tax or the Philadelphia School District investment
net income tax to the extent that the distributions are attributable to interest
received by the Fund from its investments in (i) obligations issued by the
Commonwealth of Pennsylvania, any public authority, commission, board of agency
created by the Commonwealth of Pennsylvania or any public authority created by
such political subdivision; and (ii) obligations of the United States, the
interest and gains from which are statutorily free from state taxation in the
Commonwealth. Distributions by the Fund to a Pennsylvania resident that are
attributable to most other sources will not be exempt from the Pennsylvania
personal income tax or (for residents of Philadelphia) the Philadelphia School
District investment net income tax. Distributions paid by the Fund which are
excludable as exempt income for federal tax purposes are not subject to the
Pennsylvania corporate net income tax.

The Fund intends to invest primarily in obligations that produce interest
exempt from federal and Pennsylvania taxes. If the Fund invests in obligations
that pay interest that is not exempt for Pennsylvania purposes but is exempt for
federal purposes, a portion of the Fund's distributions will be subject to
Pennsylvania personal income tax.

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 Fund that are derived from interest on Municipal
Securities issued by New York State and 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 Fund 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.

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.

For purposes of this discussion of New Jersey taxation, it is assumed that
the Fund will continue to qualify as a regulated investment company for federal
tax purposes. Distributions paid by the Fund will not be subject to the New
Jersey Gross Income Tax to the extent they are derived from interest income (and
net gain, if any, from the disposition of New Jersey Securities) attributable to
New Jersey Securities or direct obligations of the United States, its
territories and certain of its agencies and instrumentalities ("Federal
Securities") held by the Fund, either when received by the Fund or when credited
or distributed to the investors, provided that the Fund meets the New Jersey
requirements for a qualified investment fund by: 1) maintaining its registration
as a registered investment company; 2) investing at least 80% of the

S-34
<PAGE>

aggregate principal amount of the Fund's investments, excluding cash and certain
specified items, in New Jersey Securities or Federal Securities; and 3)
investing 100% of its assets in interest bearing obligations, discount
obligations, financial options, futures, forward contracts or similar financial
instruments, and cash, including receivables. Gain on the disposition of Shares
of the Fund is not subject to New Jersey Gross Income Tax, provided that the
Fund meets the requirements for a qualified investment fund set forth above.

For New Jersey Gross Investment Tax purposes, net income or gains and
distributions derived from investments in other than New Jersey Securities and
Federal Securities, and distributions from net realized capital gains in respect
of such investments, would be taxable. Thus, while the Fund intends to invest
primarily in obligations that produce interest exempt from the Fund intends to
invest primarily in obligations that produce interest exempt from federal and
New Jersey taxes, if the Fund invests in obligations that pay interest that is
not exempt for New Jersey purposes but is exempt for federal purposes, a portion
of the Fund's distributions would be subject to New Jersey tax.

Shareholders should consult their tax advisors concerning the state and
local tax consequences of investments in the Trust, which may differ from the
federal income tax consequences described above.

PORTFOLIO TRANSACTIONS

The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the Advisers and Sub-Adviser are responsible for
placing orders to execute Fund 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 Funds 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
Fund'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 Fund will
primarily consist of dealer spreads and underwriting commissions.

It is expected that certain of the Funds 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 Fund on an exchange if a written contract is in effect
between the Distributor and the Trust expressly permitting

S-35
<PAGE>

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 Funds
may direct commission business to one or more designated broker-dealers,
including the Distributor, in connection with payment of certain of the Funds'
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
Funds, select brokers on the basis of the research services they provide to the
Adviser or Sub-Adviser. Such services may include analysis of the business or
prospects of a company, industry or economic sector or statistical and pricing
services. Information so received by the Advisers or Sub-Adviser will be in
addition to and not in lieu of the services required to be performed by an
Adviser or Sub-Adviser under the Advisory or Sub-Advisory Agreements. If in the
judgement of an Adviser or Sub-Adviser the Funds, or other accounts managed by
the Adviser or Sub-Adviser, will be benefitted by supplemental research
services, the Adviser or Sub-Adviser is authorized to pay brokerage commissions
to a broker furnishing such services which are in excess of commissions which
another broker may have charged for effecting the same transaction. The expenses
of an Adviser or Sub-Adviser will not necessarily be reduced as a result of the
receipt of such supplemental information.

For the fiscal years ended August 31, 1996, 1997, and 1998, the Funds paid
no brokerage commissions.

It is expected that the portfolio turnover rate will normally not exceed
100% for any Fund. A portfolio turnover rate would exceed 100% if all of its
securities, exclusive of U.S. Government securities and other securities whose
maturities at the time of acquisition are one year or less, are replaced in the
period of one year. Turnover rates may vary from year to year and may be
affected by cash requirements for redemptions and by requirements which enable a
Portfolio to receive favorable tax treatment.

For each of the fiscal years ending August 31, 1997 and 1998, the portfolio
turnover rate for each of the following Funds was:

<TABLE>
<CAPTION>
TURNOVER RATE
------------------------
FUND 1997 1998
- ----------------------------------------------------------------------------------------- ----- -----
<S> <C> <C>
Pennsylvania Municipal Bond Fund......................................................... 34% --%
Intermediate-Term Municipal Fund......................................................... 16% --%
New York Municipal Bond Fund............................................................. * *
California Municipal Bond Fund........................................................... * *
Massachusetts Municipal Bond Fund........................................................ * *
New Jersey Municipal Bond Fund........................................................... * *
</TABLE>

- ------------------------

* Not in operation during the period.

S-36
<PAGE>
DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Fund, each of which represents an equal proportionate interest in
that Fund. Each share upon liquidation entitles a shareholder to a pro rata
share in the net assets of that Fund, after taking into account the Class D and
CNI Class distribution expenses. Shareholders have no preemptive rights. The
Declaration of Trust provides that the Trustees of the Trust may create
additional portfolios of shares or classes of portfolios. Share certificates
representing the shares will not be issued.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for
his own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or administrators, shall not be liable
for any neglect or wrongdoing of any such person. The Declaration of Trust also
provides that the Trust will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with actual or threatened
litigation in which they may be involved because of their offices with the Trust
unless it is determined in the manner provided in the Declaration of Trust that
they have not acted in good faith in the reasonable belief that their actions
were in the best interests of the Trust. However, nothing in the Declaration of
Trust shall protect or indemnify a Trustee against any liability for his wilful
misfeasance, bad faith, gross negligence or reckless disregard of his duties.

SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of such a Trust could,
under certain circumstances, be held personally liable as partners for the
obligations of the Trust. Even if, however, the Trust were held to be a
partnership, the possibility of the shareholders' incurring financial loss for
that reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because, the Declaration of Trust provides for indemnification out
of the Trust property for any shareholders held personally liable for the
obligations of the Trust.

5% SHAREHOLDERS

As of December 1, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Funds. The Trust believes that most of the shares
referred to below were held by the persons indicated in accounts for their
fiduciary, agency, or custodial customers.

<TABLE>
<CAPTION>
PERCENT OF
NAME AND ADDRESS NUMBER OF SHARES FUNDS
- ------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
</TABLE>

EXPERTS

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as counsel to the Trust.

FINANCIAL STATEMENTS

S-37
<PAGE>
PART C. OTHER INFORMATION

ITEM 23. EXHIBITS:

<TABLE>
<S> <C>
(a)(1) Registrant's Declaration of Trust is incorporated herein by reference to
Exhibit 1(a) of 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.
(a)(2) Amendment to the Registrant's Declaration of Trust, dated July 30, 1982, is
incorporated herein by reference to Exhibit 1(b) of 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.
(a)(3) Amendment to the Registrant's Declaration of Trust, dated May 23, 1986, is
incorporated herein by reference to Exhibit 1(c) of 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.
(a)(4) Amendment to the Registrant's Declaration of Trust, dated April 8, 1987, is
incorporated herein by reference to Exhibit 1(d) of 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.
(a)(5) Amendment to the Registrant's Declaration of Trust, dated December 23, 1988,
is incorporated herein by reference to Exhibit 1(e) of 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.
(a)(6) Amendment to the Registrant's Declaration of Trust, dated June 16, 1989, is
incorporated herein by reference to Exhibit 1(f) of 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.
(a)(7) Amendment to the Registrant's Declaration of Trust, dated July 5, 1989, is
incorporated herein by reference to Exhibit 1(g) of 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.
(a)(8) Amendment to the Registrant's Declaration of Trust, dated November 15, 1989,
is incorporated herein by reference to Exhibit 1(h) of 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.
(b)(1) Registrant's By-Laws are incorporated herein by reference to Exhibit 2(a) of
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.
(b)(2) Amended By-Laws are incorporated herein by reference to Exhibit 2(b) of 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.
(c) Not Applicable.
(d)(1) Investment Advisory Agreement with Weiss, Peck and Greer Advisers, Inc. is
incorporated herein by reference to Exhibit 5(a) of 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>

C-1
<PAGE>

<TABLE>
<S> <C>
(d)(2) Investment Advisory Agreement with Bessemer Trust Company is incorporated by
reference to Exhibit 5(b) 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.
(d)(3) Investment Advisory Agreement with First National Bank in Wichita (now
INTRUST Bank, NA in Wichita) is incorporated by reference to Exhibit 5(c)
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.
(d)(4) Investment Advisory Agreement with Woodbridge Capital Management, Inc. is
incorporated by reference to Exhibit 5(d) 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.
(d)(5) Investment Advisory Agreement with State Street Bank and Trust Company is
incorporated by reference to Exhibit 5(e) 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.
(d)(6) Schedule E dated August 5, 1992 to Investment Advisory Agreement with Weiss,
Peck & Greer Advisers, Inc. is incorporated by reference to Exhibit 5(f)
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).
(d)(7) 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 Exhibit 5(g)
of 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.
(d)(8) 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 Exhibit 5(h) of 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.
(d)(9) Investment Advisory Agreement with Morgan Grenfell Capital Management, Inc.,
is incorporated herein by reference to Exhibit 5(i) of 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.
(d)(10) Investment Advisory Agreement with SEI Financial Management Corporation, is
incorporated herein by reference to Exhibit 5(j) of 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.
(d)(11) Investment Sub-Advisory Agreement with Standish, Ayer & Wood, Inc., is
incorporated herein by reference to Exhibit 5(k) of 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.
(e) Distribution Agreement is incorporated herein by reference to Exhibit 6 of
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>

C-2
<PAGE>

<TABLE>
<S> <C>
(f) Not Applicable.
(g) Custodian Agreement is incorporated herein by reference to Exhibit 8 of 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.
(h)(1) Management Agreement is incorporated herein by reference to Exhibit 9(a) of
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.
(h)(2) Schedule E dated August 5, 1992 to Management Agreement is incorporated by
reference to Exhibit 9(b) 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).
(h)(3) Schedule F dated August 5, 1992 to Management Agreement is incorporated by
reference to Exhibit 9(c) 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).
(h)(4) Schedule G, dated October 29, 1993, to Management Agreement (adding
Pennsylvania Tax Free Portfolio) is incorporated herein by reference to
Exhibit 9(d) of 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.
(h)(5) Schedule H, dated October 29, 1993, to Management Agreement (adding New York
Intermediate-Term Municipal Portfolio) is incorporated herein by reference
to Exhibit 9(e) of 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.
(h)(6) Schedule I, dated October 29, 1993, to Management Agreement (adding
California Intermediate-Term Municipal Portfolio) is incorporated herein
by reference to Exhibit 9(f) of 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.
(h)(7) 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 Exhibit 9(g) of 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.
(i) Opinion and Consent of Counsel is incorporated herein by reference to
Exhibit 10 of 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.
(j) Consent of Independent Public Accountants, filed herewith.
(k) Not Applicable.
(l) Not Applicable.
(m)(1) Distribution Plan is incorporated herein by reference to Exhibit 15(a) of
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>

C-3
<PAGE>

<TABLE>
<S> <C>
(m)(2) Distribution Plan for Kansas Tax Free Income Portfolio Class B is
incorporated by reference to Exhibit 15(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.
(m)(3) Distribution Plan for Class D shares (formerly, ProVantage Funds) is
incorporated herein by reference to Exhibit 15(c) of 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.
(m)(4) Distribution Plan for Class C shares of California Tax Exempt Portfolio and
Institutional Tax Free Portfolio is incorporated herein by reference to
Exhibit 15(d) of 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.
(m)(5) Amended and Restated Class D Distribution Plan is incorporated herein by
reference to Exhibit 15(e) of 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.
(m)(6) Class G Distribution Plan incorporated herein by reference to Exhibit 15(f)
of 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.
(n) Not Applicable
(o)(1) Rule 18f-3 Plan is incorporated herein by reference to Exhibit 18(a) of 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.
(o)(2) Amendment No. 1 to Rule 18f-3 Plan relating to Class A, B, C, D and G shares
is incorporated herein by reference to Exhibit 18(b) of 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.
(p) 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 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:

None.

ITEM 25. 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

C-4
<PAGE>
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 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISERS:

WEISS, PECK & GREER L.L.C.

The principal address of Weiss, Peck & Greer L.L.C. is One New York Plaza,
New York, NY 10004. Weiss, Peck & Greer L.L.C. is an investment adviser
registered under the Advisers Act.

The list required by this item 28 of officers and directors of Weiss, Peck &
Greer L.L.C., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Weiss, Peck & Greer L.L.C. to the Advisers Act (SEC
File No. 801-6604).

SEI INVESTMENTS MANAGEMENT CORPORATION

The principal address of SEI Investment Management Corporation ("SIMC") is
Oaks, PA 19456. SIMC is an investment adviser registered under the Advisers Act.

The list required by this item 28 of officers and directors of SIMC,
together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by SIMC to the Advisers Act (SEC File No. 801-24593).

MORGAN GRENFELL CAPITAL MANAGEMENT INC.

The principal address of Morgan Grenfell Capital Management Inc. ("Morgan
Grenfell") is 885 Third Avenue, 32nd Floor, New York, NY 10022. Morgan Grenfell
is an investment adviser registered under the Advisers Act.

The list required by this item 28 of officers and directors of Morgan
Grenfell, together with information as to any other business profession,
vocation, or employment of a substantial nature engaged 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).

VAN KAMPEN AMERICAN CAPITAL MANAGEMENT, INC.

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.

C-5
<PAGE>
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 27. PRINCIPAL UNDERWRITERS:

(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or investment
adviser.

Registrant's distributor, SEI Investments Distribution Co., acts as
distributor for:

<TABLE>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI Institutional 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
First American Funds, Inc. November 1, 1992
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
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
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
The Nevis Fund, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 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").

C-6
<PAGE>
(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 --

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

S. Courtney E. Collier Vice President & Assistant Secretary --

Robert Crudup Vice President & Managing Director --

Barbara Doyne Vice President --

Jeff Drennen Vice President --

Vic Galef Vice President & Managing Director --

Lydia A. Gavelis Vice President & Assistant Secretary --

Greg Gettinger Vice President & Assistant Secretary --

Kathy Heilig Vice President --

Jeff Jacobs 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 --
</TABLE>

C-7
<PAGE>

<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------- ------------------------------------------------------ ------------------------
<S> <C> <C>
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

Kim Rainey Vice President --

Rob Redican Vice President --

Maria Rinehart Vice President --

Mark Samuels Vice President & Managing Director --

Kathryn L. Stanton Vice President & Assistant Secretary --

Lynda J. Striegel Vice President & Assistant Secretary --

Lori L. White Vice President & Assistant Secretary --

Wayne M. Withrow Vice President & Managing Director --
</TABLE>

ITEM 28. 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

C-8
<PAGE>
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 29. MANAGEMENT SERVICES:

None

ITEM 30. UNDERTAKINGS:

None

C-9
<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 30th day of October, 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.

*
- ------------------------------ Truste e October 30, 1998
George J. Sullivan, Jr.

*
- ------------------------------ Trustee October 30, 1998
William M. Doran

*
- ------------------------------ Trustee October 30, 1998
F. Wendell Gooch

*
- ------------------------------ Trustee October 30, 1998
Frank E. Morris

*
- ------------------------------ Trustee October 30, 1998
Robert A. Nesher

*
- ------------------------------ Trustee October 30, 1998
James M. Storey

/s/ EDWARD D. LAUGHLIN
- ------------------------------ President & Chief October 30, 1998
Edward D. Laughlin Executive Officer

/s/ MARK NAGLE
- ------------------------------ Controller, Chief October 30, 1998
Mark Nagle Financial Officer

*By: /s/ EDWARD D. LOUGHLIN
-------------------------
Edward D. Loughlin,
ATTORNEY-IN-FACT
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
- -----------------
<S> <C>
EX-99.Ba1 Registrant's Declaration of Trust is incorporated herein by reference to Exhibit 1(a)
of 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.Ba2 Amendment to the Registrant's Declaration of Trust, dated July 30, 1982, is
incorporated herein by reference to Exhibit 1(b) of 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.Ba3 Amendment to the Registrant's Declaration of Trust, dated May 23, 1986, is incorporated
herein by reference to Exhibit 1(c) of 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.Ba4 Amendment to the Registrant's Declaration of Trust, dated April 8, 1987, is
incorporated herein by reference to Exhibit 1(d) of 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.Ba5 Amendment to the Registrant's Declaration of Trust, dated December 23, 1988, is
incorporated herein by reference to Exhibit 1(e) of 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.Ba6 Amendment to the Registrant's Declaration of Trust, dated June 16, 1989, is
incorporated herein by reference to Exhibit 1(f) of 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.Ba7 Amendment to the Registrant's Declaration of Trust, dated July 5, 1989, is incorporated
herein by reference to Exhibit 1(g) of 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.Ba8 Amendment to the Registrant's Declaration of Trust, dated November 15, 1989, is
incorporated herein by reference to Exhibit 1(h) of 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.Bb1 Registrant's By-Laws are incorporated herein by reference to Exhibit 2(a) of 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.Bb2 Amended By-Laws are incorporated herein by reference to Exhibit 2(b) of 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.Bc Not Applicable.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
- -----------------
<S> <C>
EX-99.Bd1 Investment Advisory Agreement with Weiss, Peck and Greer Advisers, Inc. is incorporated
herein by reference to Exhibit 5(a) of 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.Bd2 Investment Advisory Agreement with Bessemer Trust Company is incorporated by reference
to Exhibit 5(b) 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.Bd3 Investment Advisory Agreement with First National Bank in Wichita (now INTRUST Bank, NA
in Wichita) is incorporated by reference to Exhibit 5(c) 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.Bd4 Investment Advisory Agreement with Woodbridge Capital Management, Inc. is incorporated
by reference to Exhibit 5(d) 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.Bd5 Investment Advisory Agreement with State Street Bank and Trust Company is incorporated
by reference to Exhibit 5(e) 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.Bd6 Schedule E dated August 5, 1992 to Investment Advisory Agreement with Weiss, Peck &
Greer Advisers, Inc. is incorporated by reference to Exhibit 5(f) 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.Bd7 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 Exhibit 5(g) of 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.Bd8 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 Exhibit 5(h) of 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.Bd9 Investment Advisory Agreement with Morgan Grenfell Capital Management, Inc., is
incorporated herein by reference to Exhibit 5(i) of 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.Bd10 Investment Advisory Agreement with SEI Financial Management Corporation, is
incorporated herein by reference to Exhibit 5(j) of 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.Bd11 Investment Sub-Advisory Agreement with Standish, Ayer & Wood, Inc, is incorporated
herein by reference to Exhibit 5(k) of 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.Be Distribution Agreement is incorporated herein by reference to Exhibit 6 of 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.Bf Not Applicable.

EX-99.Bg Custodian Agreement is incorporated herein by reference to Exhibit 8 of 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.Bh1 Management Agreement is incorporated herein by reference to Exhibit 9(a) of 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.Bh2 Schedule E dated August 5, 1992 to Management Agreement is incorporated by reference to
Exhibit 9(b) 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.Bh3 Schedule F dated August 5, 1992 to Management Agreement is incorporated by reference to
Exhibit 9(c) 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.Bh4 Schedule G, dated October 29, 1993, to Management Agreement (adding Pennsylvania Tax
Free Portfolio) is incorporated herein by reference to Exhibit 9(d) of 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.Bh5 Schedule H, dated October 29, 1993, to Management Agreement (adding New York
Intermediate-Term Municipal Portfolio) is incorporated herein by reference to Exhibit
9(e) of 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.Bh6 Schedule I, dated October 29, 1993, to Management Agreement (adding California
Intermediate-Term Municipal Portfolio) is incorporated herein by reference to Exhibit
9(f) of 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.Bh7 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 Exhibit 9(g) of 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.Bi Opinion and Consent of Counsel is incorporated herein by reference to Exhibit 10 of
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.Bj Consent of Independent Public Accountants, filed herewith.

EX-99.Bk Not Applicable.

EX-99.Bl Not Applicable.

EX-99.Bm1 Distribution Plan is incorporated herein by reference to Exhibit 15(a) of 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.Bm2 Distribution Plan for Kansas Tax Free Income Portfolio Class B is incorporated by
reference to Exhibit 15(b) of 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.Bm3 Distribution Plan for Class D shares (formerly ProVantage Funds), is incorporated
herein by reference to Exhibit 15(c) of 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.Bm4 Distribution Plan for Class C shares of California Tax Exempt Portfolio and
Institutional Tax Free Portfolio is incorporated herein by reference to Exhibit 15(d)
of 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.Bm5 Amended and Restated Class D Distribution Plan is incorporated herein by reference to
Exhibit 15(e) of 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.Bm6 Class G Distribution Plan is incorporated herein by reference to Exhibit 15(f) of
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.Bo1 Rule 18f-3 Plan is incorporated herein by reference to Exhibit 18(a) of 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.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
- -----------------
<S> <C>
EX-99.Bo2 Amendment No. 1 to Rule 18f-3 Plan relating to Class A, B, C, D and G shares is
incorporated herein by reference to Exhibit 18(b) of 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.Bp 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>

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to all references to our
firm included in Post-Effective Amendment No. 43 to the Registration
Statement on Form N-1A of SEI Tax-Exempt Trust (File No. 2-76990).

/s/ ARTHUR ANDERSEN LLP
- -----------------------

Philadelphia, Pennsylvania
October 28, 1998

<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>

POWER OF ATTORNEY

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>

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.

/s/ Frank E. Morris Date:
- --------------------------------- ----------------
Frank E. Morris, Trustee

<PAGE>

POWER OF ATTORNEY

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>

POWER OF ATTORNEY

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>

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>

POWER OF ATTORNEY

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>

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:
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Mark E. Nagle, Controller and
Chief Financial Officer