SEI TAX EXEMPT TRUST, 485BPOS, 2000-12-29

SEI TAX EXEMPT TRUST
485BPOS, 2000-12-29

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 29, 2000

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. 47 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 49 /X/

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

SEI TAX EXEMPT TRUST
(Exact Name of Registrant as Specified in Charter)

C/O CT CORPORATION
101 Federal Street
Boston, Massachusetts 02110
(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
1701 Market Street 1701 Market Street
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>
/X/ Immediately upon filing pursuant to paragraph (b), or
/ / On December 31 2000, pursuant to paragraph (b), or
/ / 75 days after filing pursuant to paragraph (a)(2), or
/ / On [date] pursuant to paragraph (a) of Rule 485
</TABLE>

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

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

MONEY MARKET

------------------------
INSTITUTIONAL
TAX FREE FUND
------------------------
CALIFORNIA
TAX EXEMPT FUND

CLASS B & C

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust

ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

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

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN. FOR MORE DETAILED INFORMATION
ABOUT THE FUNDS, PLEASE SEE:

CALIFORNIA TAX EXEMPT FUND...........................................2
INSTITUTIONAL TAX FREE FUND..........................................4
MORE INFORMATION ABOUT FUND INVESTMENTS..............................6
THE INVESTMENT ADVISER...............................................6
PURCHASING AND SELLING FUND SHARES...................................7
DIVIDENDS AND DISTRIBUTIONS..........................................9
TAXES...............................................................10
FINANCIAL HIGHLIGHTS................................................11
HOW TO OBTAIN MORE INFORMATION ABOUT
SEI TAX EXEMPT TRUST........................................Back Cover

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

The Funds invest primarily 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 issuer's current or future ability to make
principal or interest payments. A strategy to invest in investment grade
securities reduces but does not eliminate this risk.

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

<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION COMMON TO THE FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of its Adviser. The Adviser
invests Fund assets in a way that it believes will help the Fund achieve its
goal. 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 OTHER GOVERNMENT AGENCY ALTHOUGH THE FUNDS ARE MANAGED TO MAINTAIN A
CONSTANT PRICE PER SHARE OF $1.00, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUNDS.

<PAGE>
2 PROSPECTUS

CALIFORNIA TAX EXEMPT FUND

INVESTMENT SUMMARY

<TABLE>
<S> <C>
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
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The California Tax Exempt Fund invests substantially all (at least 80%) 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 Puerto Rico and other U.S. territories and possessions.

The Adviser purchases liquid securities with appropriate maturities that offer
competitive yields, and that are issued by financially sound issuers. The
Adviser also considers sector allocation and relative valuations in selecting
securities for the Fund.

The Fund invests in high quality, short-term debt securities, commonly known as
money market instruments. These include municipal bonds, notes and tax-exempt
commercial paper. The Fund may, to a limited extent, invest in certain taxable
securities and repurchase agreements, as well as, securities subject to the
alternative minimum tax or in taxable municipal securities. The Fund follows
strict SEC rules about the credit risk, maturity and diversification of its
investments.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

State and local governments rely on taxes, and to some extent, revenues from
private projects financed by municipal securities to pay interest and principal
on municipal debt. 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
lower credit ratings are factors which may affect the Fund. In addition, actual
or perceived credit-worthiness of California municipal issuers may reduce the
value of the Fund's holdings. 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.

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.

A FUND SHARE IS NOT A BANK DEPOSIT AND IT IS NOT INSURED OR GUARANTEED BY THE
FDIC OR ANY OTHER GOVERNMENT AGENCY. IN ADDITION, ALTHOUGH THE FUND SEEKS TO
MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, YOU MAY LOSE MONEY BY INVESTING IN
THE FUND.

<PAGE>
PROSPECTUS 3

CALIFORNIA TAX EXEMPT FUND

PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the risks and
volatility of an investment in the 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 performance of the Fund's Class A Shares
from year to year for nine years. Since Class A Shares are invested in the same
portfolio of securities, returns for Class B and Class C shares will be
substantially similar to those of the Class A Shares, shown here, and will
differ only to the extent that each class has different expenses. The
performance information shown is based on full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.15% 0.50%
(03/31/91) (03/31/94)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
2.46%.

This table shows the Fund's average annual total returns for the periods ended
December 31, 1999.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
---------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND --
CLASS A SHARES 2.81% 3.21% 3.33%*
---------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND --
CLASS B SHARES N/A N/A 2.32%**
---------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND --
CLASS C SHARES N/A N/A N/A%***
---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS MAY 14, 1990.

** THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS JANUARY 27, 1999.

** THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS JUNE 26, 2000.

Please dial 1-800-DIAL-SEI to obtain the Fund's current yield.

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

FUND FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES CLASS C SHARES
<S> <C> <C>
Investment Advisory Fees 0.04% 0.04%
Distribution (12b-1) Fees None None
Other Expenses 0.59% 0.79%
------ ------
Total Annual Fund Operating Expenses 0.63%* 0.83%*
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADMINISTRATOR AND
DISTRIBUTOR ARE EACH VOLUNTARILY WAIVING A PORTION OF THEIR FEES IN ORDER TO
KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADMINISTRATOR AND/OR
DISTRIBUTOR MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY TIME. WITH THESE
FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
CALIFORNIA TAX EXEMPT FUND -- CLASS B SHARES 0.58%
CALIFORNIA TAX EXEMPT FUND -- CLASS C SHARES 0.78%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

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 and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same and you
reinvest all dividends and distributions. 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>
California Tax Exempt Fund --
Class B Shares $64 $202 $351 $ 786
California Tax Exempt Fund --
Class C Shares $85 $265 $460 $1,025
</TABLE>

<PAGE>
4 PROSPECTUS

INSTITUTIONAL TAX FREE FUND

INVESTMENT SUMMARY

<TABLE>
<S> <C>
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.
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Institutional Tax Free Fund invests substantially all (at least 80%) 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, Puerto Rico, and other U.S.
territories and possessions.

The Fund invests in high quality, short-term debt securities, commonly known as
money market instruments. These include municipal bonds, notes and tax-exempt
commercial paper. The Fund may, to a limited extent, invest in certain taxable
securities and repurchase agreements, as well as,securities subject to the
alternative minimum tax or in taxable municipal securities. The Fund follows
strict SEC rules about the credit risk, maturity and diversification of its
investments.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

State and local governments rely on taxes, and to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. 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 may change in value in response to changes in
interest rates and other factors. In addition, actual or perceived erosion of
the credit-worthiness of municipal issuers may reduce the value of the Fund's
holdings.

<PAGE>
PROSPECTUS 5

INSTITUTIONAL TAX FREE FUND

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the risks and
volatility of an investment in the 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 performance of the Fund's Class B Shares
from year to year for nine years. The performance information shown is based on
full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.16% 0.49%
(03/31/91) (03/31/94)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
2.69%.

This table shows the Fund's average annual total returns for the periods ended
December 31, 1999.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
---------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND --
CLASS B SHARES 2.82% 3.13% 3.11%*
---------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND --
CLASS C SHARES 2.61% N/A 2.87%**
---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS OCTOBER 15, 1990.
** THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS SEPTEMBER 11, 1995.

Please dial 1-800-DIAL-SEI to obtain the Fund's current yield.

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

FUND FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES CLASS C SHARES
<S> <C> <C>
Investment Advisory Fees 0.04% 0.04%
Distribution (12b-1) Fees None None
Other Expenses 0.70% 0.90%
------ ------
Total Annual Fund Operating Expenses 0.74%* 0.94%*
</TABLE>

<TABLE>
<S> <C>
INSTITUTIONAL TAX FREE FUND -- CLASS B SHARES 0.63%
INSTITUTIONAL TAX FREE FUND -- CLASS C SHARES 0.83%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Institutional Tax Free Fund --
Class B Shares $76 $237 $411 $ 918
Institutional Tax Free Fund --
Class C Shares $96 $300 $520 $1,155
</TABLE>

<PAGE>
6 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Funds' primary investment strategies. The Funds
may invest in other securities, use other strategies and engage in other
investment practices, which are described in detail in the Funds' Statement of
Additional Information (SAI).

The investments and strategies described in this prospectus are those that the
Funds 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 or cash equivalents that would not ordinarily be
consistent with the Funds' objectives. Of course, there is no guarantee that any
Fund will achieve its investment goal.

INVESTMENT ADVISER

The Investment Adviser makes investment decisions for the Fund and continuously
reviews, supervises and administers the Funds' 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. ("WPG"), located at One New York Plaza, New York, NY
10004, serves as the Adviser to the Funds. As of September 30, 2000, WPG had
approximately $19.5 billion in assets under management. For the fiscal year
ended August 31, 2000, WPG received advisory fees of:

<TABLE>
<S> <C>
California Tax Exempt Fund 0.04%
Institutional Tax Free Fund 0.04%
</TABLE>

Janet Fiorenza, a portfolio manager at WPG, has managed the Funds since 1990.
Ms. Fiorenza has been with WPG since 1988, and with its predecessor since 1980.
She has more than 20 years of investment experience.

<PAGE>
PROSPECTUS 7

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Funds. The Funds offer Class B and Class C Shares only to
financial institutions or intermediaries for their own or their customers'
accounts. For information on how to open an account and set up procedures for
placing transactions, please call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day). However, Fund shares cannot be purchased by
Federal Reserve wire on Federal holidays on which wire transfers are restricted.

Financial institutions and intermediaries may purchase Class B and Class C
Shares by placing orders with the Funds' Transfer Agent (or its authorized
agent). Institutions and intermediaries that use certain SEI proprietary systems
may place orders electronically through those systems. Cash investments must be
transmitted or delivered in federal funds to the Funds' wire agent by the close
of business on the same day the order is placed. Each Fund reserves the right to
refuse any purchase requests, particularly those that would not be in the best
interests of the Fund or its shareholders and could adversely affect the Funds
or their operations. This includes those from any individual or group who, in a
Fund's view, are likely to engage in excessive trading (usually defined as more
than four transactions out of a Fund within a calendar year).

When you purchase or sell Fund shares through certain financial institutions
(rather than directly from the Funds), you may have to transmit your purchase
and sale requests to these financial institutions at an earlier time for your
transaction to become effective that day. This allows these financial
institutions time to process your requests and transmit them to the Funds.

Certain other intermediaries, including certain broker-dealers and shareholder
organizations, are authorized to accept purchase, redemption and exchange
requests for Fund shares. These requests are normally executed at the net asset
value per share (NAV) next determined after the intermediary receives the
request. These authorized intermediaries are responsible for transmitting
requests and delivering funds on a timely basis.

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with the Funds. For more information about how to purchase or sell
Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain of these
broker-dealers or other financial intermediaries.

The California Tax Exempt and Institutional Tax-Free Funds' NAV is calculated
once each Business Day at 2:00 p.m. and 3:00 p.m., Eastern Time, respectively.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, generally the Funds (or their authorized intermediaries)
must receive your purchase order and federal funds (readily available funds)
before the Funds calculate their NAV.

HOW THE FUNDS CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

In calculating NAV for the California Tax Exempt and Institutional Tax Free
Funds, each Fund generally values the Fund's investment portfolio using the
amortized cost valuation method, which is described in detail in the SAI. If
this method is determined to be unreliable during certain market conditions or
for other reasons, a Fund may value its portfolio at market price or fair value
prices may be determined in good faith using methods approved by the Board of
Trustees.

<PAGE>
8 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

HOW TO SELL YOUR FUND SHARES

If you hold Class B or Class C Shares, you may sell your shares on any Business
Day by following the procedures established when you opened your account or
accounts. If you have questions, call 1-800-DIAL-SEI. If you own shares through
an account with a broker or other institution, contact that broker or
institution to sell your shares. Your financial institution or intermediary may
charge you a fee for its services. Generally, the California Tax Exempt Fund and
Institutional Tax Free Fund must receive your redemption request before 2:00
p.m. and 1:30 p.m., Eastern time, respectively. The sale price of each share
will be the next NAV determined after the Funds (or their authorized
intermediaries) receive your request.

RECEIVING YOUR MONEY

Normally, the Funds will make payment on your sale on the same Business Day on
which they receive your request, but it may take up to seven days. Your proceeds
will be wired to your bank account.

REDEMPTIONS IN KIND

The Funds generally pay sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Funds 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 brokerage
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 the
Class B and Class C 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

The Funds 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 the SAI.

TELEPHONE TRANSACTIONS

Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. The Funds have certain safeguards and procedures to
confirm the identity of callers and the authenticity of instructions. If the
Funds follow these procedures, the Funds will not be responsible for any losses
or costs incurred by following telephone instructions the Funds reasonably
believe to be genuine.

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' Class B
and Class C Shares.

For Class B and Class C Shares, shareholder servicing fees, as a percentage of
average daily net assets, may be up to 0.25%.

For Class B and Class C Shares, administrative service fees, as a percentage of
average daily net assets, may be up to 0.05% or 0.25%, respectively.

<PAGE>
PROSPECTUS 9

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The Funds declare dividends daily and distributes its income monthly. The Funds
make distributions of capital gains, if any, at least annually.

You will receive dividends and distributions in the form of cash unless
otherwise stated.

TAXES

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

The Funds will distribute substantially all of their 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. If so, they are
taxable whether or not you reinvest them. Income distributions are generally
taxable at ordinary income rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. Each sale of Fund
shares is a taxable event.

The Funds intend to distribute federally tax-exempt income. The California Tax
Exempt Fund also intend to distribute income that is exempt from California
state and local income taxes. The Institutional Tax Free Fund intends to
distribute income that is exempt from Federal income taxes. A portion of the
income distributed by the Institutional Tax Free Fund may be exempt from your
state and local taxes depending on the investments of the Fund. The Funds may
invest a portion of their assets in securities that generate income that is
subject to 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 a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
10 PROSPECTUS

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about Class B and 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 table 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 the Fund's annual report that accompanies the SAI. You can obtain the annual
report, which contains more performance information, at no charge by calling
1-800-DIAL-SEI.

SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR

<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED
GAIN (LOSS)
INVESTMENT DISTRIBUTIONS ON NET
NET ASSET ACTIVITIES ------------------------------------- INVESTMENTS ASSET
VALUE, NET NET NET AND VALUE,
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL CAPITAL END
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS OF PERIOD
---------- ---------- ---------- ---------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND
---------------------------------------------------------------------------------------------------------------------------------
CLAS S B
2000................................ $ 1.00 $0.028 $(0.028) -- $(0.028) -- $ 1.00
1999(1)............................. 1.00 0.014 (0.014) -- (0.014) -- 1.00
CLASS C
2000(2)............................. 1.00 0.005 (0.005) -- (0.005) -- 1.00
---------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND
---------------------------------------------------------------------------------------------------------------------------------
CLASS B
2000................................ $ 1.00 $0.034 $(0.034) -- $(0.034) -- $ 1.00
1999................................ 1.00 0.027 (0.027) -- (0.027) -- 1.00
1998................................ 1.00 0.031 (0.031) -- (0.031) -- 1.00
1997................................ 1.00 0.031 (0.031) -- (0.031) -- 1.00
1996................................ 1.00 0.032 (0.032) -- (0.032) -- 1.00
CLASS C
2000................................ 1.00 0.032 (0.032) -- (0.032) -- 1.00
1999................................ 1.00 0.025 (0.025) -- (0.025) -- 1.00
1998................................ 1.00 0.029 (0.029) -- (0.029) -- 1.00
1997................................ 1.00 0.029 (0.029) -- (0.029) -- 1.00
1996(3)............................. 1.00 0.029 (0.029) -- (0.029) -- 1.00

RATIO RATIO OF
OF NET
EXPENSES INVESTMENT
TO RATIO OF INCOME TO
NET AVERAGE NET AVERAGE
ASSETS, RATIO OF NET ASSETS INVESTMENT NET ASSETS
END EXPENSES EXCLUDING INCOME TO EXCLUDING
TOTAL OF PERIOD TO AVERAGE FEE AVERAGE FEE
RETURN+ (000) NET ASSETS WAIVERS NET ASSETS WAIVERS
------- ------------ ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>

CALIFORNIA TAX EXEMPT FUND
------------------------------------------------------------------------------------------------------------------------
CLAS S B
2000................................ 2.88% $596 0.58% 0.63% 2.84% 2.79%
1999(1)............................. 1.43 508 0.58* 0.60* 2.42* 2.40*
CLASS C
2000(2)............................. 0.55 1,938 0.78* 0.83* 2.93* 2.88*
---------------------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND
---------------------------------------------------------------------------------------------------------------------------------
CLASS B
2000................................ 3.42% $114,633 0.63% 0.74% 3.45% 3.34%
1999................................ 2.78 57,310 0.63 0.73 2.74 2.64
1998................................ 3.15 95,004 0.63 0.73 3.06 2.96
1997................................ 3.13 34,783 0.63 0.73 3.10 3.00
1996................................ 3.21 14,156 0.63 0.80 3.16 2.99
CLASS C
2000................................ 3.21 54,064 0.83 0.94 3.16 3.05
1999................................ 2.57 38,022 0.83 0.93 2.52 2.42
1998................................ 2.94 22,676 0.83 0.93 2.89 2.79
1997................................ 2.93 9,382 0.83 0.95 2.85 2.73
1996(3)............................. 2.92 19,208 0.83* 0.96* 2.89* 2.76*
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized.

+ Total return is for the period indicated and has not been annualized.

(1) The California Tax Exempt Fund -- Class B commenced operations on January
27, 1999.
(2) The California Tax Exempt Fund -- Class C commenced operations on June 26,
2000.
(3) The Institutional Tax Free Fund -- Class C commenced operations on September
11, 1995.
<PAGE>

SEI
INVESTMENTS
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated December 31, 2000, includes more detailed information about SEI
Tax Exempt Trust. The SAI is on file 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 SEMI-ANNUAL REPORTS

These reports list the Funds' holdings and contain information from the
Funds' managers about fund strategies, market conditions and trends and their
impact on performance. 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 the Fund at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

From the SEC: You can also obtain the SAI or the Annual and Semi-Annual
Reports, as well as other information about the SEI Tax Exempt Trust, from
the EDGAR Database on 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 on the operation of the Public Reference Room, call
1-202-942-8090). 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 20549-0102. You may also obtain this
information, upon payment of a duplicating fee, by e-mailing the SEC at the
following address: [email protected].

The Trust's Investment Company Act registration number is 811-3447.

INV-375

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

FIXED INCOME

------------------------
INTERMEDIATE-TERM
MUNICIPAL FUND
------------------------
CALIFORNIA MUNICIPAL
BOND FUND
------------------------
MASSACHUSETTS
MUNICIPAL BOND FUND
------------------------
NEW JERSEY MUNICIPAL
BOND FUND
------------------------
NEW YORK MUNICIPAL
BOND FUND
------------------------
PENNSYLVANIA MUNICIPAL
BOND FUND

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust
ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

SEI Tax Exempt Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). 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.

INTERMEDIATE-TERM MUNICIPAL FUND.....................................2
CALIFORNIA MUNICIPAL BOND FUND.......................................4
MASSACHUSETTS MUNICIPAL BOND FUND....................................6
NEW JERSEY MUNICIPAL BOND FUND.......................................8
NEW YORK MUNICIPAL BOND FUND........................................10
PENNSYLVANIA MUNICIPAL BOND FUND....................................12
MORE INFORMATION ABOUT FUND INVESTMENTS.............................14
THE INVESTMENT ADVISER AND SUB-ADVISERS.............................14
PURCHASING AND SELLING FUND SHARES..................................16
DIVIDENDS AND DISTRIBUTIONS.........................................18
TAXES...............................................................18
FINANCIAL HIGHLIGHTS................................................19

HOW TO OBTAIN MORE INFORMATION ABOUT SEI TAX EXEMPT TRUST...Back Cover

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

Each of the Funds invests primarily 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.

Generally, the income from municipal securities is exempt from Federal income
tax, 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 tax.

<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION COMMON TO THE FUNDS

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of SEI Investments Management
Corporation (SIMC) and one or more Sub-Advisers who manage portions of each
Fund's assets in a way that they believe will help each Fund achieve its goal.
SIMC acts as "manager of managers" for the Funds, and attempts to ensure that
the Sub-Advisers comply with the Funds' investment policies and guidelines. SIMC
also recommends the appointment of additional or replacement Sub-Advisers to the
Funds' Board. Still, investing in the Funds involves risks, and there is no
guarantee that a Fund will achieve its goal. SIMC and the Sub-Advisers make
judgments about the securities markets, the economy, and companies, but these
judgments may not anticipate actual market movements or the impact of economic
conditions on company performance. In fact, no matter how good a job SIMC and
the Sub-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 other government agency.

The value of your investment in the Funds is based on the market prices of the
securities the Funds hold. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
estimated level of volatility for a Fund is set forth in the Fund Summaries that
follows. The effect on a Fund of a change in the value of a single security will
depend on how widely the Fund diversifies its holdings.

<PAGE>
2 PROSPECTUS

INTERMEDIATE-TERM MUNICIPAL FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL The highest level of income exempt from Federal
income tax 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 securities
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Intermediate-Term Municipal Fund invests substantially all (at least 80%) of
its assets in investment grade municipal securities that generate income exempt
from Federal income tax. The issuers of these securities are state and local
governments and agencies located in all fifty states, 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 selects securities based on its
views on the future direction of interest rates and the shape of the yield
curve, as well as its views on credit quality and sector allocation issues.
Where possible, the Sub-Adviser will attempt to acquire securities that are
underpriced relative to other eligible securities. 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 FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
credit-worthiness of individual issuers, including governments. Generally, fixed
income securities will decrease in value if interest rates rise and vice versa,
and the volatility of lower-rated securities is even greater than that of higher
rated securities. Also, longer-term securities are generally more volatile, so
the average maturity or duration of these securities affects risk. In addition,
the Fund is subject to the risk that its market segment, tax-exempt fixed income
securities, may underperform other fixed income market segments or the fixed
income markets as a whole.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. Poor statewide or local economic results or changing
political sentiments may reduce tax revenues and increase the expenses of
municipal issuers, making it more difficult for them to meet their obligations.
Actual or perceived erosion of the credit-worthiness of municipal issuers may
reduce the value of the Fund's holdings. As a result, the Fund will be more
susceptible to factors which adversely affect issuers of municipal obligations
than a mutual fund which does not have as great a concentration in municipal
obligations.

Also, 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. Any changes in the financial condition of
municipal issuers also may adversely affect the value of the Fund's securities.
<PAGE>
PROSPECTUS 3

INTERMEDIATE-TERM MUNICIPAL FUND

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for ten years. The performance information shown is based on
full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
4.81% -4.18%
(03/31/95) (03/31/94)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
5.23%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999 to those of the Lehman Brothers 5-Year G.O. Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS 10 YEAR (9/5/89)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------
INTERMEDIATE-TERM MUNICIPAL
FUND -0.83% 5.74% 5.68% 5.68%
-------------------------------------------------------------------
LEHMAN BROTHERS 5-YEAR G.O.
INDEX* 0.72% 5.80% 6.16% 6.31%**
-------------------------------------------------------------------
</TABLE>

* 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 ADVISER
AND DOES NOT PAY ANY COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS
PERFORMANCE WOULD BE LOWER. THE LEHMAN BROTHERS 5-YEAR G.O. INDEX IS A WIDELY
RECOGNIZED INDEX CONSISTING OF GENERAL OBLIGATION BONDS WITH MATURITIES BETWEEN
4 AND 6 YEARS.
** THE INCEPTION DATE FOR THE INDEX IS SEPTEMBER 30, 1989.

--------------------------------------------------------------------------------
FUND FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.33%
Distribution (12b-1) Fees None
Other Expenses 0.55%
------
Total Annual Fund Operating Expenses 0.88%*
</TABLE>

<TABLE>
<S> <C>
INTERMEDIATE-TERM MUNICIPAL FUND - CLASS A
SHARES 0.60%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS AND
SUB-ADVISERS" AND "DISTRIBUTION OF FUND SHARES."
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 and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same and you
reinvest all dividends and distributions. 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>
Intermediate-Term Municipal
Fund - Class A Shares $90 $281 $488 $1,084
</TABLE>

<PAGE>
4 PROSPECTUS

CALIFORNIA MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
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
municipal securities, the Fund invests in
investment grade municipal securities
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The California Municipal Bond Fund invests substantially all (at least 80%) of
its assets in investment grade municipal 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 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 selects securities based on its
view on the future direction of interest rates and the shape of the yield curve,
as well as its views on credit quality and sector allocation issues. Where
possible, the Sub-Adviser will attempt to acquire securities that are
underpriced relative to other eligible securities. 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 FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
credit-worthiness of individual issuers, including governments. Generally, fixed
income securities will decrease in value if interest rates rise and vice versa,
and the volatility of lower-rated securities is even greater than that of higher
rated securities. Also, longer-term securities are generally more volatile, so
the average maturity or duration of these securities affects risk. In addition,
the Fund is also subject to the risk that its market segment, California
tax-exempt fixed income securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. Poor statewide or local economic results or changing
political sentiments may reduce tax revenues and increase the expenses of
California municipal issuers, making it more difficult for them to meet their
obligations. Actual or perceived erosion of the credit-worthiness of California
municipal issuers may reduce the value of the Fund's holdings. 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.

The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or regulatory occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities.
<PAGE>
PROSPECTUS 5

CALIFORNIA MUNICIPAL BOND FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares for
one year. The performance information shown is based on a full calendar year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.24% -1.80%
(09/30/99) (06/30/99)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
7.04%.

This table compares Fund's average annual total returns for the periods ended
December 31, 1999 to those of the Lehman Brothers 5-Year G.O. Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR (8/19/98)
<S> <C> <C>
-----------------------------------------------------------
CALIFORNIA MUNICIPAL FUND -0.37% 2.10%
-----------------------------------------------------------
LEHMAN BROTHERS 5-YEAR G.O. INDEX* 0.72% 1.91%**
-----------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS AUGUST 31, 1998.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.33%
Distribution (12b-1) Fees None
Other Expenses 0.54%
------
Total Annual Fund Operating Expenses 0.87%*
</TABLE>

<TABLE>
<S> <C>
CALIFORNIA MUNICIPAL BOND FUND - CLASS A
SHARES 0.60%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
California Municipal Bond Fund
- Class A Shares $89 $278 $482 $1,073
</TABLE>

<PAGE>
6 PROSPECTUS

MASSACHUSETTS MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
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 securities
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Massachusetts Municipal Bond Fund invests substantially all (at least 80%)
of its assets in investment grade municipal 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 Puerto Rico and other U.S. territories and
possessions.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
credit-worthiness of individual issuers, including governments. Generally, fixed
income securities will decrease in value if interest rates rise and vice versa,
and the volatility of lower-rated securities is even greater than that of higher
rated securities. Also, longer-term securities are generally more volatile, so
the average maturity or duration of these securities affects risk. In addition,
the Fund is also subject to the risk that its market segment, Massachusetts
tax-exempt fixed income securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. Poor statewide or local economic results or changing
political sentiments may reduce tax revenues and increase the expenses of
Massachusetts municipal issuers, making it more difficult for them to meet their
obligations. Actual or perceived erosion of the credit-worthiness of
Massachusetts municipal issuers may reduce the value of the Fund's holdings. 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.

MASSACHUSETTS MUNICIPAL BOND FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares for
one year. The performance information shown is based on a full calendar year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
0.56% -2.00%
(03/31/99) (06/30/99)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
5.26%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999 to those of the Lehman Brothers 5-Year G.O. Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR (8/19/98)
<S> <C> <C>
-----------------------------------------------------------
MASSACHUSETTS MUNICIPAL BOND FUND -1.35% 0.42%
-----------------------------------------------------------
LEHMAN BROTHERS 5-YEAR G.O. INDEX* 0.72% 1.91%**
-----------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS AUGUST 31, 1998.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<S> <C>
MASSACHUSETTS MUNICIPAL BOND FUND - CLASS A
SHARES 0.60%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Massachusetts Municipal Bond
Fund - Class A Shares $90 $281 $488 $1,084
</TABLE>

<PAGE>
8 PROSPECTUS

NEW JERSEY MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
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 selecting
New Jersey municipal securities, the Fund invests
in investment grade municipal securities
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The New Jersey Municipal Bond Fund invests substantially all (at least 80%) of
its assets in investment grade municipal 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 Puerto Rico and other U.S. territories and possessions.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
credit-worthiness of individual issuers, including governments. Generally, fixed
income securities will decrease in value if interest rates rise and vice versa,
and the volatility of lower-rated securities is even greater than that of higher
rated securities. Also, longer-term securities are generally more volatile, so
the average maturity or duration of these securities affects risk. In addition,
the Fund is also subject to the risk that its market segment, New Jersey
tax-exempt fixed income securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. Poor statewide or local economic results or changing
political sentiments may reduce tax revenues and increase the expenses of New
Jersey municipal issuers, making it more difficult for them to meet their
obligations. Actual or perceived erosion of the credit-worthiness of New Jersey
municipal issuers may reduce the value of the Fund's holdings. 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 as great a
concentration in New Jersey municipal obligations.

NEW JERSEY MUNICIPAL BOND FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares for
one year. The performance information shown is based on a full calendar year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
0.87% -1.68%
(09/30/99) (06/30/99)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
4.70%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999 to those of the Lehman Brothers 5-Year G.O. Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR (8/18/98)
<S> <C> <C>
-----------------------------------------------------------
NEW JERSEY MUNICIPAL BOND FUND -0.36% 1.33%
-----------------------------------------------------------
LEHMAN BROTHERS 5-YEAR G.O. INDEX* 0.72% 1.91%**
-----------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS AUGUST 31, 1998.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<S> <C>
NEW JERSEY MUNICIPAL BOND FUND - CLASS A
SHARES 0.60%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
New Jersey Municipal Bond Fund
- Class A Shares $90 $281 $488 $1,084
</TABLE>

<PAGE>
10 PROSPECTUS

NEW YORK MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
THE HIGHEST LEVEL OF CURRENT INCOME EXEMPT FROM
FEDERAL AND NEW YORK STATE AND CITY INCOME TAXES
WHILE PRESERVING 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 securities
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The New York Municipal Bond Fund invests substantially all (at least 80%) of its
assets in investment grade municipal 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 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 selects securities based on its
view on the future direction of interest rates and the shape of the yield curve,
as well as its views on credit quality and sector allocation issues. Where
possible, the Sub-Adviser will attempt to acquire securities that are
underpriced relative to other eligible securities. 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 FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
credit-worthiness of individual issuers, including governments. Generally, fixed
income securities will decrease in value if interest rates rise and vice versa,
and the volatility of lower-rated securities is even greater than that of higher
rated securities. Also, longer-term securities are generally more volatile, so
the average maturity or duration of these securities affects risk. In addition,
the Fund is also subject to the risk that its market segment, New York
tax-exempt fixed income securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. Poor statewide or local economic results or changing
political sentiments may reduce tax revenues and increase the expenses of New
York municipal issuers, making it more difficult for them to meet their
obligations. Actual or perceived erosion of the credit-worthiness of New York
municipal issuers may reduce the value of the Fund's holdings. 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.

NEW YORK MUNICIPAL BOND FUND

PERFORMANCE INFORMATION

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

This bar chart shows changes in the performance of the Fund's Class A Shares for
one year. The performance information shown is based on a full calendar year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
0.65% -2.19%
(03/31/99) (06/30/99)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
5.71%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999 to those of the Lehman Brothers 5-Year G.O. Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR (8/18/98)
<S> <C> <C>
-----------------------------------------------------------
NEW YORK MUNICIPAL BOND FUND -1.18% 0.91%
-----------------------------------------------------------
LEHMAN BROTHERS 5-YEAR G.O. INDEX* 0.72% 1.91%**
-----------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS AUGUST 31, 1998.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<S> <C>
NEW YORK MUNICIPAL BOND FUND - CLASS A
SHARES 0.60%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
New York Municipal Bond Fund -
Class A Shares $90 $281 $488 $1,084
</TABLE>

<PAGE>
12 PROSPECTUS

PENNSYLVANIA MUNICIPAL BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
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 a sub-adviser experienced in selecting
Pennsylvania municipal securities, the Fund
invests in investment grade municipal securities
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Pennsylvania Municipal Bond Fund invests substantially all (at least 80%) of
its assets in investment grade municipal 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 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 selects securities based on its
view on the future direction of interest rates and the shape of the yield curve,
as well as its views on credit quality and sector allocation issues. Where
possible, the Sub-Adviser will attempt to acquire securities that are
underpriced relative to other eligible securities. The Sub-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 FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
credit-worthiness of individual issuers, including governments. Generally, fixed
income securities will decrease in value if interest rates rise and vice versa,
and the volatility of lower-rated securities is even greater than that of higher
rated securities. Also, longer-term securities are generally more volatile, so
the average maturity or duration of these securities affects risk. In addition,
the Fund is also subject to the risk that its market segment, Pennsylvania
tax-exempt fixed income securities, may underperform other fixed income market
segments or the fixed income markets as a whole.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. Poor statewide or local economic results or changing
political sentiments may reduce tax revenues and increase the expenses of
Pennsylvania municipal issuers, making it more difficult for them to meet their
obligations. Actual or perceived erosion of the credit-worthiness of
Pennsylvania municipal issuers may reduce the value of the Fund's holdings. 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.

PENNSYLVANIA MUNICIPAL BOND FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares for
one years.

The performance information shown is based on a full calendar year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
0.83% -1.71%
(03/31/99) (06/30/99)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
5.36%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Lehman Brothers 5-Year G.O. Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR (8/25/98)
<S> <C> <C>
-----------------------------------------------------------
PENNSYLVANIA MUNICIPAL BOND FUND -0.91% 0.82%*
-----------------------------------------------------------
LEHMAN BROTHERS 5-YEAR G.O. INDEX* 0.72% 1.91%**
-----------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS AUGUST 31, 1998.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.35%
Distribution (12b-1) Fees None
Other Expenses 0.51%
------
Total Annual Fund Operating Expenses 0.86%*
</TABLE>

<TABLE>
<S> <C>
PENNSYLVANIA MUNICIPAL BOND FUND - CLASS A
SHARES 0.60%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Pennsylvania Municipal Bond
Fund - Class A Shares $88 $274 $477 $1,061
</TABLE>

<PAGE>
14 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Funds' primary investment strategies. The Funds
also may invest in other securities, use other strategies, and engage in other
investment practices, which are described in detail in the Funds' Statement of
Additional Information (SAI).

The investments and strategies described in this prospectus are those that the
Funds 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 investments that would not ordinarily be consistent with
the Funds' objectives. Of course, there is no guarantee that any Fund will
achieve its investment goal.

INVESTMENT ADVISER AND SUB-ADVISER

SEI INVESTMENTS MANAGEMENT CORPORATION (SIMC) ACTS AS THE MANAGER OF MANAGERS OF
THE FUNDS, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE FUNDS SINCE
IT ALLOCATES THE FUNDS' ASSETS TO ONE OR MORE SUB-ADVISERS AND RECOMMENDS HIRING
OR CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES.

The Sub-Advisers make investment decisions for the assets they manage and
continuously review, supervise and administer their investment program. SIMC
oversees the Sub-Advisers to ensure compliance with the Funds' investment
policies and guidelines, and monitors each Sub-Adviser's adherence to its
investment style. The Board of Trustees supervises SIMC and the Sub-Advisers;
establishes policies that they must follow in their management activities; and
oversees the hiring and termination of the Sub-Advisers recommended by SIMC.
SIMC pays the Sub-Advisers out of the investment advisory fees it receives.

SIMC an SEC-registered adviser, located at One Freedom Valley Drive, Oaks, PA
19456, serves as the adviser to the Funds. As of October 31, 2000, SIMC had
approximately $52 billion in assets under management. For the fiscal year ended
August 31, 2000, SIMC received investment advisory fees as follows.

<TABLE>
<S> <C>
INTERMEDIATE-TERM MUNICIPAL FUND 0.33%
CALIFORNIA MUNICIPAL BOND FUND 0.33%
MASSACHUSETTS MUNICIPAL BOND FUND 0.33%
NEW JERSEY MUNICIPAL BOND FUND 0.33%
NEW YORK MUNICIPAL BOND FUND 0.33%
</TABLE>

Prior to August 29, 2000, Deutsche Asset Management, Inc. ("DeAM") served as the
investment adviser to the Pennsylvania Municipal Bond Fund. For its services,
DeAM received advisory fees of 0.20% of the average daily net assets of the
Fund. As of August 29, 2000, SIMC serves as the investment adviser to the
Pennsylvania Municipal Bond Fund under a "manager of managers" structure and
DeAM serves as Sub-Adviser. For its services, SIMC receives advisory fees of
0.35% of the average daily net assets of the Pennsylvania Municipal Bond Fund.

SUB-ADVISERS AND PORTFOLIO MANAGER(S)

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

STANDISH, AYER & WOOD, INC.: Standish, Ayer & Wood, Inc. (SAW), located at One
Financial Center, Suite 27, Boston, MA 02111, serves as the Sub-Adviser to the
Intermediate-Term Municipal, Massachusetts Municipal Bond, and New York
Municipal Bond Funds. As of September 30, 2000, SAW had approximately
$45.3 billion in assets under management.

<PAGE>
PROSPECTUS 15

MORE INFORMATION ABOUT FUND INVESTMENTS

Raymond J. Kubiak, CFA, a portfolio manager at SAW, manages the
Intermediate-Term Municipal, Massachusetts Municipal Bond and New York Municipal
Bond Funds. Mr. Kubiak has been with SAW since 1988. He has more than 17 years
of investment experience.

CALIFORNIA MUNICIPAL BOND FUND
NEW JERSEY MUNICIPAL BOND FUND

VAN KAMPEN MANAGEMENT INC.: Van Kampen Management Inc. ("Van Kampen"), located
at One Parkview Plaza, Oakbrook Terrace, IL 60181, serves as the Sub-Adviser to
the California Municipal Bond and New Jersey Municipal Bond Funds. As of
September 30, 2000, Van Kampen had approximately $86.9 billion in assets under
management.

Joseph A. Piraro, a Vice President of Van Kampen, manages the California
Municipal Bond Fund. Mr. Piraro has been with Van Kampen since 1992. He has more
than 27 years of investment experience.

Timothy D. Haney, a Vice President of Van Kampen, manages the New Jersey
Municipal Bond Fund. Mr. Haney has been with Van Kampen since 1988. He has more
than 27 years of investment experience.

PENNSYLVANIA MUNICIPAL BOND FUND

DEUTSCHE ASSET MANAGEMENT, INC.: Deutsche Asset Management, Inc. ("DeAM"),
located at 885 Third Avenue, New York, NY 10022, serves as the Sub-Adviser to
the Pennsylvania Municipal Bond Fund. As of September 30, 2000, DeAM had
approximately $254 billion in assets under management.

David Baldt has served as Director and Executive President of Deutsche Asset
Management, Inc. DeAM since 1989. He has managed the Pennsylvania Municipal Bond
Fund since July of 1995. He has more than 29 years of investment experience.

<PAGE>
16 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Funds. The Funds offer Class A Shares only to financial
institutions or intermediaries for their own or their customers' accounts. For
information on how to open an account and set up procedures for placing
transactions, please call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

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

Financial institutions and intermediaries may purchase Class A Shares by placing
orders with the Funds' Transfer Agent (or their authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Fund's wire agent by the close of business on
the day after the order is placed. The Funds reserve the right to refuse any
purchase requests, particularly those that would not be in the best interests of
the Funds or their shareholders and could adversely affect the Funds or their
operations. This includes those from any individual or group who, in a Fund's
view, are likely to engage in excessive trading (usually defined as more than
four transactions out of a Fund within a calendar year).

When you purchase or sell Fund shares through certain financial institutions
(rather than directly from the Funds), you may have to transmit your purchase
and sale requests to these financial institution's at an earlier time for your
transaction to become effective that day. This allows these financial
institutions time to process your requests and transmit them to the Funds.

Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the NYSE (normally, 4:00 p.m., Eastern time). So, for
you to receive the current Business Day's NAV, generally a Fund must receive
your purchase order in proper form before 4:00 p.m., Eastern time. A Fund will
not accept orders that request a particular day or price for the transaction or
any other special conditions.

HOW THE FUNDS CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

In calculating NAV, the Funds generally value their investment portfolio at
their market price. If market prices are unavailable or the Funds think that
they are unreliable, fair value prices may be determined in good faith using
methods approved by the Board of Trustees.

MINIMUM PURCHASES

To purchase Class A Shares of the Funds for the first time, you must invest at
least $100,000 in any such Fund. To purchase additional shares of the Funds, you
must invest at least $1,000. The Funds may accept investments of smaller amounts
at their discretion.
<PAGE>
PROSPECTUS 17

PURCHASING AND SELLING FUND SHARES

HOW TO SELL YOUR FUND SHARES

If you hold Class A Shares, you may sell your shares on any Business Day by
following the procedures established when you opened your account or accounts.
If you have questions, call 1-800-DIAL-SEI. If you own shares through an account
with a broker or other institution, contact that broker or institution to sell
your shares. You may also sell your shares by contacting your financial
institution or financial intermediary by telephone. Your financial institution
or intermediary may charge you a fee for its services. The sale price of each
share will be the next NAV determined after the Funds (or their authorized
intermediaries) receive your request.

RECEIVING YOUR MONEY

Normally, the Fund will make payment on your sale on the Business Day following
the day on which they receive your request, but it may take up to seven days.
Your proceeds will be wired to your bank account.

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Funds 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 the SAI.

TELEPHONE TRANSACTIONS

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' Class A
Shares.

For Class A Shares, shareholder servicing fees, as a percentage of average daily
net assets, may be up to 0.25%.
<PAGE>
18 PROSPECTUS

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in the form of cash unless
otherwise stated.

TAXES

The Funds intend to distribute federally tax-exempt income. The California,
Massachusetts, New Jersey, New York, and Pennsylvania Municipal Bond Funds also
intend to distribute income that is exempt from state (and in some cases, local)
income taxes. The Intermediate-Term Municipal Fund intends to distribute income
that is exempt from Federal income taxes. A portion of the income distributed by
the Intermediate-Term Municipal Fund may be exempt from your state and local
income taxes depending on the investments of the Fund. Each Fund may invest a
portion of its assets in securities that generate income that is subject to
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 THE FUNDS' SAI.
<PAGE>
PROSPECTUS 19

FINANCIAL HIGHLIGHTS

The table that follows presents 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
each Fund's operation. 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.

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

SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR

<TABLE>
<CAPTION>
NET REALIZED
AND
UNREALIZED
GAIN
NET INVESTMENT (LOSS) ON
ASSET ACTIVITIES DISTRIBUTIONS INVESTMENTS
VALUE, NET NET NET AND
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL CAPITAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
---------- ---------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE-TERM MUNICIPAL FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $10.70 $0.45 $(0.45) $(0.01) $(0.46) $ 0.14
1999................................ 11.08 0.44 (0.44) (0.01) (0.45) (0.37)
1998................................ 10.77 0.46 (0.46) -- (0.46) 0.31
1997................................ 10.45 0.48 (0.48) -- (0.48) 0.32
1996................................ 10.59 0.49 (0.53) -- (0.53) (0.10)
------------------------------------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $ 9.96 $0.40 $(0.40) $ -- $(0.40) $ 0.31
1999................................ 10.07 0.33 (0.33) (0.02) (0.35) (0.09)
1998(1)............................. 10.00 0.01 (0.01) -- (0.01) 0.07
------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $ 9.72 $0.40 $(0.40) $ -- $(0.40) $ 0.14
1999................................ 10.05 0.34 (0.34) -- (0.34) (0.33)
1998(2)............................. 10.00 -- -- -- -- 0.05
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
2000................................ $ 9.86 $0.39 $(0.39) $(0.39) $ 0.09
1999................................ 10.05 0.32 (0.32) -- (0.32) (0.19)
1998(3)............................. 10.00 0.01 (0.01) -- (0.01) 0.05
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $ 9.77 $0.39 $(0.39) $ -- $(0.39) $ 0.19
1999................................ 10.05 0.35 (0.35) -- (0.35) (0.28)
1998(4)............................. 10.00 -- -- -- -- 0.05
------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A...............................
2000................................ $10.29 $0.48 $(0.48) $(0.01) $(0.49) $ 0.09
1999................................ 10.75 0.48 (0.48) (0.05) (0.53) (0.41)
1998(5)............................. 10.72 0.01 (0.01) -- (0.01) 0.03

<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES RATIO OF INCOME
NET NET TO AVERAGE NET TO AVERAGE
ASSET ASSETS, RATIO OF NET ASSETS INVESTMENT NET ASSETS
VALUE, END OF EXPENSES EXCLUDING INCOME EXCLUDING
END OF TOTAL PERIOD TO AVERAGE FEE TO AVERAGE FEE
PERIOD RETURN+ (000) NET ASSETS WAIVERS NET ASSETS WAIVERS
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

INTERMEDIATE-TERM MUNICIPAL FUND
-------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $10.83 5.72% $843,397 0.60% 0.88% 4.27% 3.99%
1999................................ 10.70 0.67 647,240 0.60 0.87 4.03 3.76
1998................................ 11.08 7.20 516,324 0.60 0.88 4.23 3.95
1997................................ 10.77 7.93 259,238 0.60 0.88 4.53 4.25
1996................................ 10.45 3.76 134,563 0.59 0.66 4.66 4.59
------------------------------------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $10.27 7.39% $172,328 0.60% 0.87% 4.12% 3.85%
1999................................ 9.96 2.40 64,469 0.60 0.90 3.43 3.13
1998(1)............................. 10.07 0.78 2,158 0.60 0.87 2.73 2.46
------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $ 9.86 5.74% $ 31,964 0.60% 0.88% 4.19% 3.91%
1999................................ 9.72 0.07 17,840 0.60 0.93 3.57 3.24
1998(2)............................. 10.05 0.53 1,040 0.60 0.87 1.13 0.86
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
2000................................ $ 9.95 4.99% $ 57,272 0.60% 0.88% 4.02% 3.74%
1999................................ 9.86 1.29 24,513 0.60 0.91 3.26 2.95
1998(3)............................. 10.05 0.58 1,105 0.60 0.87 2.93 2.66
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $ 9.96 6.15% $ 49,299 0.60% 0.88% 4.10% 3.82%
1999................................ 9.77 0.68 21,562 0.60 0.92 3.60 3.28
1998(4)............................. 10.05 0.55 1,375 0.60 0.87 2.27 2.00
------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A...............................
2000................................ $10.37 5.76% $ 44,170 0.60% 0.86% 4.75% 4.49%
1999................................ 10.29 0.65 18,785 0.60 0.83 4.53 4.30
1998(5)............................. 10.75 0.26 333 0.60 0.79 4.56 4.25

PORTFOLIO
TURNOVER
RATE
----------
<S> <C>

INTERMEDIATE-TERM MUNICIPAL FUND
-------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ 17.99%
1999................................ 30.25
1998................................ 8.98
1997................................ 16.02
1996................................ 40.66
------------------------------------------------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ 37.16%
1999................................ 105.21
1998(1)............................. --
------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ 24.62%
1999................................ 13.76
1998(2)............................. 11.35
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
2000................................ 83.16%
1999................................ 25.41
1998(3)............................. --
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ 2.97%
1999................................ 17.85
1998(4)............................. 0.92
------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A...............................
2000................................ 30.91%
1999................................ 16.64
1998(5)............................. 26.85
</TABLE>

Amounts designated as "-" are either $0 or have been rounded to $0.

+ Total return is for the period indicated and has not been annualized.

(1) The California Municipal Bond Fund-Class A commenced operations on August
19, 1998. All ratios for the period have been annualized.

(2) The Massachusetts Municipal Bond Fund-Class A commenced operations on August
19, 1998. All ratios for the period have been annualized.

(3) The New Jersey Municipal Bond Fund-Class A commenced operations on August
18, 1998. All ratios for the period have been annualized.

(4) The New York Municipal Bond Fund-Class A commenced operations on August 18,
1998. All ratios for the period have been annualized.

(5) The Pennsylvania Municipal Bond Fund-Class A commenced operations on August
25, 1998. All ratios for the period have been annualized.

<PAGE>

SEI
INVESTMENTS
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

These reports list the Fund's holdings and contain information from the
Fund's managers about fund strategies, market conditions and trends and their
impact on performance. 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 the Funds at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

From the SEC: You can also obtain the SAI or the Annual and Semi-Annual
Reports, as well as other information about SEI Tax Exempt Trust, from
the EDGAR Database on 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 on the operation of the Public Reference Room, call
1-202-942-8090). 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 20549-0102. You may also obtain this
information, upon payment of a duplicating fee, by e-mailing the SEC at the
following address: [email protected].

The Trust's Investment Company Act registration number is 811-3447.

SEI-F-008-(12/00)

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

FIXED INCOME

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

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust
ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES...............................2

MORE INFORMATION ABOUT FUND INVESTMENTS..............................4

THE INVESTMENT ADVISER AND SUB-ADVISER...............................4

PURCHASING AND SELLING FUND SHARES...................................5

DIVIDENDS AND DISTRIBUTIONS..........................................7

TAXES................................................................7

FINANCIAL HIGHLIGHTS.................................................8

HOW TO OBTAIN MORE INFORMATION ABOUT
SEI TAX EXEMPT TRUST......................................Back Cover

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

The Fund invests primarily 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.

<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION

The Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities.

The Fund has its own investment goal and strategies for reaching that goal. The
Fund's assets are managed under the direction of SEI Investments Management
Corporation (SIMC) and one or more Sub-Advisers who manage portions of the
Fund's assets in a way that they believe will help the Fund achieve its goal. No
matter how good a job SIMC and the Sub-Advisers do, 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
other government agency.

The value of your investment in the Fund is based on the market prices of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities the Fund owns and the markets in which they trade. The
estimated level of volatility for the Fund is set forth in the Fund Summary that
follows. The effect on the Fund of a change in the value of a single security
will depend on how widely the Fund diversifies its holdings.

<PAGE>
2 PROSPECTUS

PENNSYLVANIA MUNICIPAL BOND FUND

INVESTMENT SUMMARY

INVESTMENT STRATEGY

The Fund utilizes a specialist Sub-Adviser to manage the Fund's portfolio under
the general supervision of SIMC. The Sub-Adviser selects securities based on its
view on the future direction of interest rates and the shape of the yield curve,
as well as its views on credit quality and sector allocation issues. Where
possible, the Sub-Adviser will attempt to acquire securities that are
underpriced relative to other eligible securities. The Sub-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 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 will decrease in value if interest rates rise and vice versa,
and the volatility of lower-rated securities is even greater than that of
higher-rated securities. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.
In addition, the Fund is also subject to the risk that its market segment,
Pennsylvania tax-exempt fixed income securities, may underperform other fixed
income market segments or the fixed income markets as a whole.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. Poor statewide or local economic results or changing
political sentiments may reduce tax revenues and increase the expenses of
Pennsylvania municipal issuers, making it more difficult for them to meet their
obligations. Actual or perceived erosion of the credit-worthiness of
Pennsylvania municipal issuers may reduce the value of the Fund's holdings. 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.

PENNSYLVANIA MUNICIPAL BOND FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for ten years. The performance information show is based on
full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
3.82% -3.23%
(3/31/95) (3/31/94)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
5.35%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Lehman Brothers 5-Year G.O. Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (8/14/89)
<S> <C> <C> <C> <C>
--------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL BOND
FUND -- CLASS B SHARES -0.79% 5.60% 5.76% 5.83%
--------------------------------------------------------------------
LEHMAN BROTHERS 5-YEAR G.O.
INDEX* 0.72% 5.80% 6.16% 6.27%**
--------------------------------------------------------------------
</TABLE>

** SINCE AUGUST 31, 1989.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.35%
Distribution (12b-1) Fees None
Other Expenses 0.56%
------
Total Annual Fund Operating Expenses 0.91%*
</TABLE>

<TABLE>
<S> <C>
PENNSYLVANIA MUNICIPAL BOND FUND -- CLASS B
SHARES 0.48%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Pennsylvania Municipal Bond
Fund -- Class B Shares $93 $290 $504 $1,120
</TABLE>

<PAGE>
4 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund
also may invest in other securities, use other strategies and engage in other
investment practices, also which are described in detail in the Fund's Statement
of Additional Information (SAI).

The investments and strategies described in this prospectus are those that the
Fund uses 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 investments that would not ordinarily be consistent with the
Fund's objective. Of course, there is no guarantee that the Fund will achieve
its investment goal.

INVESTMENT ADVISER AND SUB-ADVISER

SEI INVESTMENTS MANAGEMENT CORPORATION (SIMC) ACTS AS THE MANAGER OF MANAGERS OF
THE FUND, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE FUND SINCE IT
ALLOCATES THE FUND'S ASSETS TO ONE OR MORE SUB-ADVISERS AND RECOMMENDS HIRING OR
CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES.

The Sub-Adviser makes investment decisions for the assets it manages and
continuously reviews, supervises and administers its investment program. SIMC
oversees the Sub-Adviser to ensure compliance with the Fund's investment
policies and guidelines, and monitors the Sub-Adviser's adherence to its
investment style. The Board of Trustees supervises SIMC and the Sub-Adviser;
establishes policies that they must follow in their management activities; and
oversees the hiring and termination of the Sub-Advisers recommended by SIMC.
SIMC pays the Sub-Adviser out of the investment advisory fees it receives.

SIMC, an SEC-registered adviser, located at One Freedom Valley Drive, Oaks, PA
19456, serves as the Adviser to the Fund. As of October 31, 2000, SIMC had
approximately $52 billion in assets under management. Prior to August 29, 2000,
Deutsche Asset Management, Inc. ("DeAM") served as the investment adviser to the
Fund. For its services, DeAM received advisory fees of 0.20% of the average
daily net assets of the Fund. As of August 29, 2000, SIMC serves as the
investment adviser to the Fund under a "manager of managers" structure and DeAM
serves as Sub-Adviser. For its services, SIMC receives advisory fees of 0.35% of
the average daily net assets of the Fund.

SUB-ADVISER AND PORTFOLIO MANAGER

DEUTSCHE ASSET MANAGEMENT, INC.: David Baldt has served as Director and
Executive President of Deutsche Asset Management, Inc. ("DeAM"), located at 885
Third Avenue, New York, NY 10022, since 1989. He has managed the Pennsylvania
Municipal Bond Fund since July of 1995. He has more than 29 years of investment
experience.

<PAGE>
PROSPECTUS 5

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Fund. The Fund offers Class B Shares only to financial
institutions or intermediaries for its own or its customers' accounts. For
information on how to open an account and set up procedures for placing
transactions, please call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

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

Financial institutions and intermediaries may purchase Class B Shares by placing
orders with the Fund's Transfer Agent (or its authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Fund's wire agent by the close of business on
the day after the order is placed. The Fund reserves the right to refuse any
purchase requests, particularly those that would not be in the best interests of
the Fund or its shareholders and could adversely affect the Fund or its
operations. This includes those from any individual or group who, in the Fund's
view, are likely to engage in excessive trading (usually defined as more than
four transactions out of the Fund within a calendar year).

When you purchase or sell Fund shares through certain financial institutions
(rather than directly from the Fund), you may have to transmit your purchase and
sale requests to these financial institutions at an earlier time for your
transaction to become effective that day. This allows these financial
institutions time to process your requests and transmit them to the Fund.

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with the Fund. For more information about how to purchase or sell
Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain broker-dealers or
other financial intermediaries.

The Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the NYSE (normally, 4:00 p.m., Eastern time). So, for
you to receive the current Business Day's NAV, generally the Fund must receive
your purchase order in proper form before 4:00 p.m., Eastern time. The Fund will
not accept orders that request a particular day or price for the transaction or
any other special conditions.

HOW THE FUND CALCULATES NAV

NAV for one Fund share is the value of that share's portion of all of the assets
in the Fund.

In calculating NAV, the Fund generally values its investment Fund at market
price. If market prices are unavailable or the Fund thinks that they are
unreliable, fair value prices may be determined in good faith using methods
approved by the Board of Trustees.

HOW TO SELL YOUR FUND SHARES

If you hold Class B Shares, you may sell your shares on any Business Day by
following the procedures established when you opened your account or accounts.
You may also sell your shares by contacting your financial institution or
financial intermediary by telephone. Your financial institution or intermediary
may charge you a fee for its services. The sale price of each share will be the
next NAV determined after the Fund (or its authorized intermediary) receives
your request.

<PAGE>
6 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

RECEIVING YOUR MONEY

Normally, the Fund will make payment on your sale on the Business Day following
the day on which it receives your request, but it may take up to seven days.
Your proceeds will be wired to your bank account.

REDEMPTIONS IN KIND

The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Fund 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 brokerage
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund 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 the SAI.

TELEPHONE TRANSACTIONS

Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. The Fund has certain safeguards and procedures to confirm
the identity of callers and the authenticity of instructions. If the Fund
follows these procedures, the Fund will not be responsible for any losses or
costs incurred by following telephone instructions the Fund reasonably believes
to be genuine.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives no compensation for distributing the Fund's Class B
Shares.

For Class B Shares, shareholder servicing fees and administrative service fees,
as a percentage of average daily net assets, may be up to 0.25% and 0.05%,
respectively.
<PAGE>
PROSPECTUS 7

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in the form of cash unless
otherwise stated.

TAXES

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

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. If so, they are
taxable whether or not you reinvest them. Income distributions are generally
taxable at ordinary income rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. EACH SALE OF FUND
SHARES IS A TAXABLE EVENT.

The Fund intends to distribute federally tax-exempt income. The Fund also
intends to distribute income that is exempt from Pennsylvania (and in some
cases, local) income taxes. The Fund may invest a portion of its assets in
securities that generate income that is subject to 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 a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN THE FUND'S SAI.
<PAGE>
8 PROSPECTUS

FINANCIAL HIGHLIGHTS

The table that follow present performance information about Class B Shares of
the 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 the annual report that accompanies the Fund's SAI. You can obtain the annual
report, which contains more performance information, at no charge by calling
1-800-DIAL-SEI.

SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR

<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED
INVESTMENT GAIN (LOSS)
NET ASSET ACTIVITIES DISTRIBUTIONS ON NET ASSET
VALUE, NET NET NET INVESTMENTS VALUE,
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL END
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS OF PERIOD
---------- ---------- ---------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA MUNICIPAL BOND FUND
--------------------------------------------------------------------------------------------------------------------------------
CLASS B
2000........................... $10.29 $0.49 $(0.49) $(0.01) $(0.50) $ 0.08 $10.36
1999........................... 10.76 0.49 (0.49) (0.05) (0.54) (0.42) 10.29
1998........................... 10.58 0.52 (0.52) (0.04) (0.56) 0.22 10.76
1997........................... 10.48 0.53 (0.53) (0.19) (0.72) 0.29 10.58
1996........................... 10.66 0.55 (0.59) -- (0.59) (0.14) 10.48

<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
RATIO OF NET ASSETS INVESTMENT NET ASSETS
NET ASSETS, EXPENSES EXCLUDING INCOME TO EXCLUDING PORTFOLIO
TOTAL END OF TO AVERAGE FEE AVERAGE FEE TURNOVER
RETURN+ PERIOD (000) NET ASSETS WAIVERS NET ASSETS WAIVERS RATE
------- ------------ ---------- ---------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>

PENNSYLVANIA MUNICIPAL BOND FUND
------------------------------------------------------------------------------------------------------------------------------
CLASS B
2000........................... 5.78% $ 77,743 0.48% 0.91% 4.83% 4.40% 30.91%
1999........................... 0.68 104,869 0.48 0.87 4.61 4.22 16.64
1998........................... 7.24 101,029 0.48 0.86 4.87 4.49 26.85
1997........................... 8.08 98,079 0.48 0.86 5.08 4.70 34.48
1996........................... 3.96 97,228 0.48 0.65 5.15 4.98 65.75
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.

+ Total return is for the period indicated and has not been annualized.

<PAGE>

SEI
INVESTMENTS
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-800-DIAL-SEI

By Mail: Write to the Funds at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

The Trust's Investment Company Act registration number is 811-3447.

SEI-F-131-(12/00)

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

CALIFORNIA

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

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust
ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES...............................2

MORE INFORMATION ABOUT FUND INVESTMENTS..............................4
THE INVESTMENT ADVISER...............................................4
PURCHASING AND SELLING FUND SHARES...................................5
DIVIDENDS AND DISTRIBUTIONS..........................................7
TAXES................................................................7
FINANCIAL HIGHLIGHTS.................................................8

HOW TO OBTAIN MORE INFORMATION ABOUT
SEI TAX EXEMPT TRUST......................................Back Cover

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

<PAGE>
Prospectus 1

RISK/RETURN INFORMATION

The California Tax Exempt Fund is a mutual fund. A mutual fund pools
shareholders' money and, using professional investment managers, invests it in
securities.

The Fund has its own investment goal and strategies for reaching that goal. The
Fund's assets are managed under the direction of its Adviser. The Adviser
invests Fund assets in a way that it believes will help the Fund achieve its
goal. 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 OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND IS MANAGED TO MAINTAIN A
CONSTANT PRICE PER SHARE OF $1.00, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN
THE FUND.

<PAGE>
2 Prospectus

CALIFORNIA TAX EXEMPT FUND

INVESTMENT SUMMARY

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities to pay interest and principal
on municipal debt. 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
lower credit ratings are factors which may affect the Fund. In addition, actual
or perceived erosion of the credit-worthiness of California municipal issuers
may reduce the value of the Fund's holdings. 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.

<PAGE>
Prospectus 3

CALIFORNIA TAX EXEMPT FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for nine years. The performance information shown is based on
full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.15% 0.50%
(3/31/91) (3/31/94)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
2.46%.

This table shows the Fund's average annual total returns for the periods ended
December 31, 1999.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
---------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND - CLASS
A SHARES 2.81% 3.21% 3.33%*
---------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND - CLASS
B SHARES N/A N/A 2.32%**
---------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND - CLASS
C SHARES N/A N/A N/A***
---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS MAY 14, 1990.

** THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS JANUARY 27, 1999.

*** THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS JUNE 26, 2000.

Please dial 1-800-DIAL-SEI to obtain the Fund's current yield.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.04% 0.04% 0.04%
Distribution (12b-1) Fees None None None
Other Expenses 0.54% 0.59% 0.79%
---------- ---------- ----------
Total Annual Fund Operating Expenses 0.58%* 0.63%* 0.83%*
</TABLE>

<TABLE>
<S> <C>
CALIFORNIA TAX EXEMPT FUND -- CLASS A SHARES 0.28%
CALIFORNIA TAX EXEMPT FUND -- CLASS B SHARES 0.58%
CALIFORNIA TAX EXEMPT FUND -- CLASS C SHARES 0.78%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
California Tax Exempt Fund --
Class A Shares $59 $186 $324 $ 726
California Tax Exempt Fund --
Class B Shares $64 $202 $351 $ 786
California Tax Exempt Fund --
Class C Shares $85 $265 $460 $1,025
</TABLE>

<PAGE>
4 Prospectus

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund
also may invest in other securities, use other strategies and engage in other
investment practices, which are described in detail in the Fund's Statement of
Additional Information (SAI).

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. ("WPG") located at One New York Plaza, New York, NY
10004, serves as the Adviser to the California Tax Exempt Fund. As of September
30, 2000, WPG had approximately $19.5 billion in assets under management. For
the fiscal year ended August 31, 2000, WPG received advisory fees from the
California Tax Exempt Fund of 0.04%.

Janet Fiorenza, a portfolio manager at WPG, has managed the Fund since 1990. Ms.
Fiorenza has been with WPG since 1988, and with its predecessor since 1980. She
has more than 20 years of investment experience.

<PAGE>
Prospectus 5

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Fund. The Fund offers Class A, Class B, and Class C Shares only to
financial institutions or intermediaries for its own or its customers' accounts.
For information on how to open an account and set up procedures for placing
transactions, please call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

Financial institutions and intermediaries may purchase Class A, Class B and
Class C Shares by placing orders with the Fund's Transfer Agent (or its
authorized agent). Institutions and intermediaries that use certain SEI
proprietary systems may place orders electronically through those systems. Cash
investments must be transmitted or delivered in federal funds to the Fund's wire
agent by the close of business on the same day the order is placed. The Fund
reserves the right to refuse any purchase requests, particularly those that
would not be in the best interests of the Fund or its shareholders and could
adversely affect the Fund or its operations. This includes those from any
individual or group who, in the Fund's view, are likely to engage in excessive
trading (usually defined as more than four transactions out of the Fund within a
calendar year).

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with the Fund. For more information about how to purchase or sell
Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain broker-dealers or
other financial intermediaries.

The Fund calculates its NAV once each Business Day at 2:00 p.m., Eastern Time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, the Fund generally must receive your order before 2:00
p.m., Eastern Time and federal funds (readily available funds) before 2:00 p.m.,
Eastern Time.

HOW THE FUND CALCULATES NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

In calculating NAV for the California Tax Exempt Fund, the Fund generally values
the Fund's investment portfolio using the amortized cost valuation method, which
is described in detail in the SAI. If this method is determined to be unreliable
during certain market conditions or for other reasons, the Fund may value its
portfolio at market price or fair value prices may be determined in good faith
using methods approved by the Board of Trustees.

HOW TO SELL YOUR FUND SHARES

If you hold Class A, Class B, or Class C Shares, you may sell your shares on any
Business Day by following the procedures established when you opened your
account or accounts. If you have questions, call 1-800-DIAL-SEI. If you own
shares

<PAGE>
6 Prospectus

PURCHASING AND SELLING FUND SHARES

through an account with a broker or other institution, contact that broker or
institution to sell your shares. Your financial institution or intermediary may
charge you a fee for its services. Generally, the Fund must receive your
redemption request before the time that NAV is determined (usually 2:00 p.m.
Eastern time). The sale price of each share will be the next NAV determined
after the Fund (or its authorized intermediary) receives your request.

RECEIVING YOUR MONEY

Normally, the Fund will make payment on your sale on the same Business Day on
which it receives your request, but it may take up to seven days. Your proceeds
will be wired to your bank account.

REDEMPTIONS IN KIND

The Fund generally pays sale (redemption) proceeds in cash. However, under
unusual conditions that make the payment of cash unwise (and for the protection
of the Fund's remaining shareholders) the Fund 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 probably would have to pay brokerage
costs to sell the securities distributed to you, as well as taxes on any capital
gains from the sale as with any redemption.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund 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 the SAI.

TELEPHONE TRANSACTIONS

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives no compensation for distributing the Fund's Class A
Shares.

For Class B and Class C Shares, administrative service fees, as a percentage of
average daily net assets, may be up to 0.05% and 0.25%, respectively.

<PAGE>
Prospectus 7

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in the form of cash unless
otherwise stated.

TAXES

The Fund intends to distribute federally tax-exempt income. The Fund also
intends to distribute income that is exempt from California state income taxes.
The Fund may invest a portion of its assets in securities that generate income
that is subject to 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 a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN THE FUND'S SAI.

<PAGE>
8 Prospectus

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class A, Class B
and Class C Shares of the 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.

SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR

<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED
NET INVESTMENT DISTRIBUTIONS GAIN (LOSS) NET
ASSET ACTIVITIES ----------------------------------- ON ASSET
VALUE, NET NET NET INVESTMENTS VALUE,
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL END OF TOTAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS PERIOD RETURN+
--------- ---------- ---------- -------- ------------- ------------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA TAX EXEMPT FUND
-----------------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $1.00 $0.031 $(0.031) -- $(0.031) -- $1.00 3.19%
1999................................ 1.00 0.027 (0.027) -- (0.027) -- 1.00 2.78
1998................................ 1.00 0.032 (0.032) -- (0.032) -- 1.00 3.20
1997................................ 1.00 0.033 (0.033) -- (0.033) -- 1.00 3.30
1996................................ 1.00 0.034 (0.034) -- (0.034) -- 1.00 3.41
CLASS B
2000................................ $1.00 $0.028 $(0.028) -- $(0.028) -- $1.00 2.88%
1999(1)............................. 1.00 0.014 (0.014) -- (0.014) -- 1.00 1.43
CLASS C
2000(2)............................. $1.00 $0.005 $(0.005) -- $(0.005) -- $1.00 0.55%

<CAPTION>
RATIO OF
NET
RATIO INVESTMENT
OF EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
NET ASSETS, RATIO OF NET ASSETS INVESTMENT NET ASSETS
END OF EXPENSES EXCLUDING INCOME TO EXCLUDING
PERIOD TO AVERAGE FEE AVERAGE FEE
(000) NET ASSETS WAIVERS NET ASSETS WAIVERS
----------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>

CALIFORNIA TAX EXEMPT FUND
-------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $22,350 0.28% 0.58% 3.13% 2.83%
1999................................ 22,356 0.28 0.56 2.70 2.42
1998................................ 39,508 0.28 0.55 3.17 2.90
1997................................ 51,314 0.28 0.57 3.26 2.97
1996................................ 44,729 0.28 0.36 3.33 3.25
CLASS B
2000................................ $ 596 0.58% 0.63% 2.84% 2.79%
1999(1)............................. 508 0.58* 0.60* 2.42* 2.40*
CLASS C
2000(2)............................. $ 1,938 0.78%* 0.83%* 2.93%* 2.88%*
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized.

+ Total return is for the period indicated and has not been annualized.

(1) The California Tax Exempt Fund -- Class B commenced operations on January
27, 1999.

(2) The California Tax Exempt Fund -- Class C commenced operations on June 26,
2000.

<PAGE>

SEI
INVESTMENTS
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-800-DIAL-SEI

By Mail: Write to the Fund at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

The Trust's Investment Company Act registration number is 811-3447.

CMS-F-005-(12/00)

<PAGE>

SEI TAX EXEMPT TRUST

CLASS A SHARES
CLASS B SHARES
CLASS C SHARES

PROSPECTUS

DECEMBER 31, 2000

OHIO TAX FREE FUND

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

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

Page 1 of 12
<PAGE>

ABOUT THIS PROSPECTUS

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

PAGE
PRINCIPAL INVESTMENT STRATEGIES AND RISKS..........................XXX
PERFORMANCE INFORMATION AND EXPENSES...............................XXX
THE FUND'S OTHER INVESTMENTS.......................................XXX
THE INVESTMENT ADVISER.............................................XXX
PURCHASING AND SELLING FUND SHARES.................................XXX
DIVIDENDS AND DISTRIBUTIONS........................................XXX
TAXES..............................................................XXX
HOW TO OBTAIN MORE INFORMATION ABOUT
...............................................................SEI TAX
EXEMPT TRUST ..................................................Back Cover

MUNICIPAL SECURITIES

Page 2 of 12
<PAGE>

RISK/RETURN INFORMATION

The Ohio Tax Free Fund is a mutual fund. A mutual fund pools shareholders' money
and, using professional investment managers, invests it in securities.

The Fund has its own investment goal and strategies for reaching that goal. The
Fund's assets are managed under the direction of its Adviser. The Adviser
invests the Fund's assets in a way that it believes will help the Fund achieve
its goal. Still, investing in the Fund involves risk, and there is no guarantee
that the Fund will achieve its goal. 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.

Page 3 of 12
<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 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 Ohio municipal money
market securities

INVESTMENT STRATEGY

The Ohio Tax Free Fund 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 Puerto Rico and other U.S.
territories and possessions.

The Fund invests in high quality, short-term debt securities, commonly known as
money market instruments. These include municipal bonds, notes and tax-exempt
commercial paper. The Fund may, to a limited extent, invest in certain taxable
securities and repurchase agreements, as well as, securities subject to the
alternative minimum tax or in taxable municipal securities. The Fund follows
strict Securities and Exchange Commission (SEC) rules about the credit risk,
maturity and diversification of its investments.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. 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. In addition, actual
or perceived erosion of the creditworthiness of Ohio municipal issuers

Page 4 of 12
<PAGE>

may reduce the value of the Fund's holdings. 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.

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT. ALTHOUGH THE FUND SEEKS TO
MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00, YOU MAY LOSE MONEY BY INVESTING IN
THE FUND.

PERFORMANCE INFORMATION

As of December 31, 2000, the Ohio Tax Free Fund had not commenced operations and
did not have a performance history.

FUND FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

ANNUAL FUND OPERATING EXPENSES (EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Advisory Fees 0.04% 0.04% 0.04%
Distribution (12b-1) Fees None None None
Other Expenses 0.67%* 0.72%* 0.92%*
------ ------ ------
Total Annual Fund Operating Expenses 0.71%** 0.76%** 0.96%**
----------------------------------------------------------------------------------------------------------
</TABLE>

* Other Expenses are based on estimated amounts for the current fiscal year.

** The Fund's total actual annual fund operating expenses for the current
fiscal year are expected to be less than the amount shown above because the
Administrator and Distributor will each voluntarily waive a portion of
their fees in order to keep total operating expenses at a specified level.
The Administrator and/or Distributor may discontinue all or part of these
waivers at any time. With these fee waivers, the Fund's actual total
operating expenses are expected to be as follows:

<TABLE>
<S> <C>
Ohio Tax Free Fund - Class A Shares 0.35%
Ohio Tax Free Fund - Class B Shares 0.65%
Ohio Tax Free Fund - Class C Shares 0.85%
</TABLE>

For more information about these fees, see "Investment Adviser" and
"Distribution of Fund Shares."

Page 5 of 12
<PAGE>

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
OHIO TAX FREE FUND - CLASS A SHARES $73 $227
OHIO TAX FREE FUND - CLASS B SHARES $78 $243
OHIO TAX FREE FUND - CLASS C SHARES $98 $306
</TABLE>

Page 6 of 12
<PAGE>

MORE INFORMATION ABOUT THE FUND'S INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund may
invest in other securities, use other strategies and engage in other investment
practices, which are described in detail in the Fund's Statement of Additional
Information (SAI).

The investments and strategies described in this prospectus are those that the
Fund uses 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 or cash equivalents that would not ordinarily be
consistent with the Fund's objective. Of course, there is no guarantee that the
Fund will achieve its investment goal.

INVESTMENT ADVISER

Weiss, Peck & Greer, L.L.C. ("WPG"), located at One New York Plaza, New York, NY
10004, serves as the Adviser to the Ohio Tax Free Fund. As of September 30,
2000, WPG had approximately $19.5 billion in assets under management. For the
fiscal year ended August 31, 2000, WPG receives advisory fee from the Ohio Tax
Free Fund of 0.04%.

Janet Fiorenza, a portfolio manager at WPG, has managed the Fund since 1990. Ms.
Fiorenza has been with WPG since 1988, and with its predecessor since 1980. She
has more than 19 years of investment experience.

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Fund. The Fund offers Class A, Class B, and Class C Shares only to
financial institutions or intermediaries for their own or their customers'
accounts. For information on how to open an account and set up procedures for
placing transactions, please call 1-800-DIAL-SEI.

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). However, Fund shares cannot be purchased by Federal
Reserve wire on Federal holidays on which wire transfers are restricted.

Financial institutions and intermediaries may purchase shares by placing orders
with the Fund's Transfer Agent (or its authorized agent). Institutions and
intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Fund's wire agent by the close of business on
the same day the order is placed. The Fund may reject any purchase order if it
determines that accepting the order would not be in the best interests of the
Fund or its shareholders.

Page 7 of 12
<PAGE>

When you purchase or sell Fund shares through certain financial institutions
(rather than directly from the Fund), you may have to transmit your purchase and
sale requests to your financial institution at an earlier time for your
transaction to become effective that day. This allows your financial institution
time to process your requests and transmit them to the Fund.

Investors who deal directly with a financial institution or financial
intermediary will have to follow the institution's or intermediary's procedures
for transacting with the Fund. For more information about how to purchase or
sell Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain of these
broker-dealers or other financial intermediaries.

The Fund's NAV is calculated once each Business Day at 4:00 p.m., Eastern time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, generally the Fund (or its authorized intermediary) must
receive your purchase order and federal funds (readily available funds) before
the Fund calculates its NAV.

HOW THE FUND CALCULATES NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

The Fund values its securities by utilizing the amortized cost valuation method
(as described in the SAI). If the Fund thinks amortized cost is unreliable, fair
value prices may be determined in good faith using methods approved by the Board
of Trustees. The Fund expects its NAV to remain constant at $1.00 per share,
although there is no guarantee that the Fund can accomplish this.

HOW TO SELL YOUR FUND SHARES

If you hold Fund Shares, you may sell your shares on any Business Day by
following the procedures established when you opened your account or accounts
with your financial institution or intermediary. You may also sell your shares
by contacting your financial institution or financial intermediary by telephone.
Your financial institution or intermediary may charge you a fee for its
services. Generally, the Fund must receive your redemption request before the
time that NAV is determined (usually 4:00 p.m. Eastern time). The sale price of
each share will be the next NAV determined after the Fund (or its authorized
intermediary) receives your request.

RECEIVING YOUR MONEY

Normally, the Fund will make payment on your sale the same Business Day on which
it receives your request, but it may take up to seven days. Your proceeds will
be wired to your bank account.

Page 8 of 12
<PAGE>

REDEMPTIONS IN KIND

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

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund 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 the SAI.

TELEPHONE TRANSACTIONS

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives no compensation for distributing the Fund's Class A
Shares.

For Class A, Class B, and Class C Shares, shareholder servicing fees, as a
percentage of average daily net assets, may be up to 0.25%. The Distributor has
voluntarily agreed to waive the shareholder servicing fees applicable to Class A
Shares of the Fund. The Distributor has no current intention to discontinue this
voluntary waiver. For Class B and C Shares, administrative service fees, as a
percentage of average daily net assets, may be up to 0.05% and 0.25%,
respectively.

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in the form cash unless otherwise
stated.

Page 9 of 12
<PAGE>

TAXES

The Fund intends to distribute federally tax-exempt income. The Fund also
intends to distribute income that is exempt from Ohio state and local income
taxes. The Fund may also invest a portion of its assets in securities that
generate income that is subject to 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 a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN THE FUND'S SAI.

Page 10 of 12
<PAGE>

SEI TAX EXEMPT TRUST

INVESTMENT ADVISER

Weiss, Peck & Greer, L.L.C.
One New York Plaza
New York, NY 10004

DISTRIBUTOR

SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456

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 SEMI-ANNUAL REPORTS

These reports will list the Fund's holdings and contain information from the
Fund's managers about strategies and recent market conditions and trends and
their impact on performance. The reports will also contain detailed financial
information about the Fund.

TO OBTAIN MORE INFORMATION:

BY TELEPHONE: Call 1-800-DIAL-SEI

BY MAIL: Write to the Fund at:

One Freedom Valley Drive
Oaks, PA 19456

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

Page 11 of 12
<PAGE>

FROM THE SEC: You can also obtain the SAI or the Annual and Semi-Annual Reports,
as well as other information about SEI Tax Exempt Trust, from the EDGAR Database
on 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 on the
operation of the Public Reference Room, call 1-202-942-8090). 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 20549-0102. You may also obtain this information, upon payment of a
duplicating fee, by e-mailing the SEC at the following address:
[email protected].

The Trust's Investment Company Act registration number is 811-3447.

Page 12 of 12

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

PENNSYLVANIA

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

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust
ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES...............................2

HOW TO OBTAIN MORE INFORMATION ABOUT
SEI TAX EXEMPT TRUST......................................Back Cover

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

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 tax.

<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION

The Pennsylvania Tax Free Fund is a mutual fund. A mutual fund pools
shareholders' money and, using professional investment managers, invests it in
securities.

<PAGE>
2 PROSPECTUS

PENNSYLVANIA TAX FREE FUND

INVESTMENT SUMMARY

<TABLE>
<S> <C>
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
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Pennsylvania Tax Free Fund invests substantially all (at least 80%) 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 Puerto Rico and other U.S. territories and possessions.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

State and local governments rely on taxes and, to some extent, revenues from
private projects financed by municipal securities, to pay interest and principal
on municipal debt. 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. In addition, actual or perceived erosion of the credit-worthiness of
Pennsylvania municipal issuers may reduce the value of the Fund's holdings. 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.

<PAGE>
PROSPECTUS 3

PENNSYLVANIA TAX FREE FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for five years. The performance information shown is based on
full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
0.98% 0.72%
(06/30/95) (03/31/99)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
2.87%.

This table shows the Fund's average annual total returns for the periods ended
December 31, 1999.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
-----------------------------------------------------------------
PENNSYLVANIA TAX FREE FUND - CLASS
A SHARES 3.15% 3.38% 3.27%*
-----------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS JANUARY 21, 1994. AS OF
DECEMBER 31, 1999, CLASS B AND CLASS C SHARES OF THE FUND WERE NOT OPEN TO
INVESTORS.

Please dial 1-800-DIAL-SEI to obtain the Fund's current yield.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.
ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES CLASS B SHARES CLASS C SHARES
<S> <C> <C> <C>
Investment Advisory Fees 0.04% 0.04% 0.04%
Distribution (12b-1) Fees None None None
Other Expenses 0.65% 0.70% 0.90%
------ ------ ------
Total Annual Fund Operating Expenses 0.69%* 0.74%* 0.94%*
</TABLE>

<TABLE>
<S> <C>
PENNSYLVANIA TAX FREE FUND -- CLASS A SHARES 0.35%
PENNSYLVANIA TAX FREE FUND -- CLASS B SHARES 0.65%
PENNSYLVANIA TAX FREE FUND -- CLASS C SHARES 0.85%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Pennsylvania Tax Free Fund --
Class A Shares $70 $221 $384 $ 859
Pennsylvania Tax Free Fund --
Class B Shares $76 $237 $411 $ 918
Pennsylvania Tax Free Fund --
Class C Shares $96 $300 $520 $1,155
</TABLE>

<PAGE>
4 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund
also may invest in other securities, use other strategies and engage in other
investment practices, which are described in detail in the Fund's Statement of
Additional Information (SAI).

INVESTMENT ADVISER

Weiss, Peck & Greer, L.L.C. ("WPG"), located at One New York Plaza, New York, NY
10004, serves as the Adviser to the Pennsylvania Tax Free Fund. As of September
30, 2000, WPG had approximately $19.5 billion in assets under management. For
the fiscal year ended August 31, 2000, WPG received advisory fees from the
Pennsylvania Tax Free Fund of 0.04%.

<PAGE>
PROSPECTUS 5

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Fund. The Fund offers Class A, Class B, or Class C Shares only to
financial institutions or intermediaries for its own or its customers' accounts.
For information on how to open an account and set up procedures for placing
transactions, please call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with the Fund. For more information about how to purchase or sell
Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain broker-dealers or
other financial intermediaries.

The Fund calculates its NAV once each Business Day at 2:00 p.m., Eastern time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, the Fund generally must receive your order before 2:00
p.m., Eastern time and federal funds (readily available funds) before 2:00 p.m.,
Eastern time.

HOW THE FUND CALCULATES NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

In calculating NAV for the Pennsylvania Tax Free Fund, the Fund generally values
the Fund's investment portfolio using the amortized cost valuation method, which
is described in detail in the SAI. If this method is determined to be unreliable
during certain market conditions or for other reasons, the Fund may value its
portfolio at market price or fair value prices may be determined in good faith
using methods approved by the Board of Trustees.

<PAGE>
6 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

HOW TO SELL YOUR FUND SHARES

If you hold Class A, Class B or Class C Shares, you may sell your shares on any
Business Day by following the procedures established when you opened your
account or accounts. If you have questions, call 1-800-DIAL-SEI. If you own
shares through an account with a broker or other institution, contact that
broker or institution to sell your shares. Your financial institution or
intermediary may charge you a fee for its services. Generally, the Fund must
receive your redemption request before 1:30 p.m., Eastern time. The sale price
of each share will be the next NAV determined after the Fund (or its authorized
intermediary) receives your request.

RECEIVING YOUR MONEY

Normally, the Fund will make payment on your sale on the same Business Day on
which it receives your request, but it may take up to seven days. Your proceeds
will be wired to your bank account.

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund 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 the SAI.

TELEPHONE TRANSACTIONS

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives no compensation for distributing the Fund's Class A,
Class B, or Class C Shares.

For Class B and Class C Shares, administrative service fees, as a percentage of
average daily net assets, may be up to 0.05% and 0.25%, respectively.

<PAGE>
PROSPECTUS 7

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in the form of cash unless
otherwise stated.

TAXES

The Fund intends to distribute federally tax-exempt income. The Fund also
intends to distribute income that is exempt from Pennsylvania state and local
income taxes. The Fund may invest a portion of its assets in securities that
generate income that is subject to 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 a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN THE FUND'S SAI.
<PAGE>
8 PROSPECTUS

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class A Shares of
the 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.

SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR

NET REALIZED
AND
UNREALIZED NET
NET INVESTMENT DISTRIBUTIONS GAIN (LOSS) ASSET
ASSET ACTIVITIES ------------------------------------- ON VALUE,
VALUE, NET NET NET INVESTMENTS END
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL OF
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS PERIOD
---------- ---------- ---------- ---------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA TAX FREE FUND
--------------------------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ $1.00 $0.036 $(0.036) -- $(0.036) -- $1.00
1999................................ 1.00 0.030 (0.030) -- (0.030) -- 1.00
1998................................ 1.00 0.034 (0.034) -- (0.034) -- 1.00
1997................................ 1.00 0.033 (0.033) -- (0.033) -- 1.00
1996................................ 1.00 0.034 (0.034) -- (0.034) -- 1.00

<CAPTION>
RATIO OF
RATIO NET
OF INVESTMENT
EXPENSES RATIO OF INCOME TO
TO AVERAGE NET AVERAGE
NET RATIO OF NET ASSETS INVESTMENT NET ASSETS
ASSETS, END EXPENSES EXCLUDING INCOME TO EXCLUDING
TOTAL OF PERIOD TO AVERAGE FEE AVERAGE FEE
RETURN+ (000) NET ASSETS WAIVERS NET ASSETS WAIVERS
------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>

PENNSYLVANIA TAX FREE FUND
----------------------------------------------------------------------------------------------------------------
CLASS A
2000................................ 3.66% $69,575 0.35% 0.69% 3.68% 3.34%
1999................................ 3.10 34,098 0.35 0.69 3.04 2.70
1998................................ 3.41 50,068 0.35 0.68 3.36 3.03
1997................................ 3.39 49,563 0.35 0.71 3.33 2.97
1996................................ 3.40 42,971 0.35 0.49 3.33 3.19
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.

+ Total return is for the period indicated and has not been annualized.

<PAGE>

SEI
INVESTMENTS
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-800-DIAL-SEI

By Mail: Write to the Fund at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

The Trust's Investment Company Act registration number is 811-3447.

CMS-F-009-(12/00)

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

MONEY MARKET

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

CLASS C

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust

ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
PERFORMANCE INFORMATION AND EXPENSES...............................2

MORE INFORMATION ABOUT FUND INVESTMENTS..............................4

THE INVESTMENT ADVISER...............................................4

PURCHASING AND SELLING FUND SHARES...................................5

DIVIDENDS AND DISTRIBUTIONS..........................................7

TAXES................................................................7

FINANCIAL HIGHLIGHTS.................................................8

HOW TO OBTAIN MORE INFORMATION ABOUT
SEI TAX EXEMPT TRUST......................................Back Cover

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

<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION

The Institutional Tax Free Fund is a mutual fund. A mutual fund pools
shareholders' money and, using professional investment managers, invests it in
securities.

<PAGE>
2 PROSPECTUS

INSTITUTIONAL TAX FREE FUND

INVESTMENT SUMMARY

<TABLE>
<S> <C>
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
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

A FUND SHARE IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY. IN ADDITION, ALTHOUGH THE FUND SEEKS TO MAINTAIN
A CONSTANT PRICE PER SHARE OF $1.00, YOU MAY LOSE MONEY BY INVESTING IN THE
FUND.

<PAGE>
PROSPECTUS 3

INSTITUTIONAL TAX FREE FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for four years. The performance information shown is based on
full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
0.78% 0.57%
(12/31/97) (03/31/99)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
2.54%.

This table shows the Fund's average annual total returns for the periods ended
December 31, 1999.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (9/11/95)
<S> <C> <C>
-----------------------------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND -
CLASS C SHARES 2.61% 2.87%
-----------------------------------------------------------------------------------------
</TABLE>

Please dial 1-800-DIAL-SEI to obtain the Fund's current yield.

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

FUND FEES AND EXPENSES

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
CLASS C SHARES
<S> <C>
Investment Advisory Fees 0.04%
Distribution (12b-1) Fees None
Other Expenses 0.90%
----------
Total Annual Fund Operating Expenses 0.94%*
</TABLE>

<TABLE>
<S> <C>
INSTITUTIONAL TAX FREE FUND -- CLASS C
SHARES 0.83%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER" AND
"DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Institutional Tax Free Fund --
Class C Shares $96 $300 $520 $1,155
</TABLE>

<PAGE>
4 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund
also may invest in other securities, use other strategies and engage in other
investment practices, which are described in detail in the Fund's Statement of
Additional Information (SAI).

INVESTMENT ADVISER

Weiss, Peck & Greer, L.L.C. ("WPG"), located at One New York Plaza, New York, NY
10004, serves as the Adviser to the Institutional Tax Free Fund. As of September
30, 2000, WPG had approximately $19.5 billion in assets under management. For
the fiscal year ended August 31, 2000, WPG received advisory fees from the
Institutional Tax Free Fund of 0.04%.

<PAGE>
PROSPECTUS 5

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Fund. The Fund offers Class C Shares only to financial
institutions or intermediaries for their own or their customers' accounts. For
information on how to open an account and set up procedures for placing
transactions, please call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

Financial institutions and intermediaries may purchase Class C Shares by placing
orders with the Fund's Transfer Agent (or its authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Fund's wire agent by the close of business on
the same day the order is placed. The Fund reserves the right to refuse any
purchase requests, particularly those that would not be in the best interests of
the Fund or its shareholders and could adversely affect the Fund or its
operations. This includes those from any individual or group who, in the Fund's
view, are likely to engage in excessive trading (usually defined as more than
four transactions out of the Fund within a calendar year).

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with the Fund. For more information about how to purchase or sell
Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain broker-dealers or
other financial intermediaries.

The Fund calculates its NAV once each Business Day at 3:00 p.m., Eastern time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, the Fund generally must receive your order before 3:00
p.m., Eastern time and federal funds (readily available funds) before 3:00 p.m.,
Eastern time.

HOW THE FUND CALCULATES NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

In calculating NAV for the Institutional Tax Free Fund, the Fund generally
values the Fund's investment portfolio using the amortized cost valuation
method, which is described in detail in the SAI. If this method is determined to
be unreliable during certain market conditions or for other reasons, the Fund
may value its portfolio at market price or fair value prices may be determined
in good faith using methods approved by the Board of Trustees.

HOW TO SELL YOUR FUND SHARES

If you hold Class C Shares, you may sell your shares on any Business Day by
following the procedures established when they opened their account or accounts.
If you have questions, call 1-800-DIAL-SEI. If you own shares through an account
with a

<PAGE>
6 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

broker or other institution, contact that broker or institution to sell your
shares. Your financial institution or intermediary may charge you a fee for its
services. Generally, the Fund must receive your redemption request before 1:30
p.m., Eastern time. The sale price of each share will be the next NAV determined
after the Fund (or its authorized intermediary) receives your request.

RECEIVING YOUR MONEY

Normally, the Fund will make payment on your sale on the same Business Day on
which it receives your request, but it may take up to seven days. Your proceeds
will be wired to your bank account.

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund 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 the SAI.

TELEPHONE TRANSACTIONS

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives no compensation for distributing the Fund's Class C
Shares.

For Class C Shares, shareholder servicing fees and administrative service fees,
as a percentage of average daily net assets, may each be up to 0.25%.
<PAGE>
PROSPECTUS 7

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in the form of cash unless
otherwise stated.

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. If so, they are
taxable whether or not you reinvest them. Income distributions are generally
taxable at ordinary income rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. EACH SALE OF FUND
SHARES IS A TAXABLE EVENT.

The Fund intends to distribute federally tax-exempt income. The Fund may also
invest a portion of its assets in securities that generate income that is
subject to 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 a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN THE FUND'S SAI.
<PAGE>
8 PROSPECTUS

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about Class C Shares of
the 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 table 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.

SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR

NET REALIZED
AND
UNREALIZED
NET INVESTMENT DISTRIBUTIONS GAIN (LOSS)
ASSET ACTIVITIES ---------------------------------------- ON
VALUE, NET NET NET INVESTMENTS
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS
---------- ---------- ---------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------------
INSTITUTIONAL TAX FREE FUND
-------------------------------------------------------------------------------------------------------------------
CLASS C
2000........................... $1.00 $0.032 $(0.032) -- $(0.032) --
1999........................... 1.00 0.025 (0.025) -- (0.025) --
1998........................... 1.00 0.029 (0.029) -- (0.029) --
1997........................... 1.00 0.029 (0.029) -- (0.029) --
1996 (1)....................... 1.00 0.029 (0.029) -- (0.029) --

<CAPTION>
RATIO OF
NET
RATIO INVESTMENT
OF EXPENSES RATIO OF INCOME TO
NET NET TO AVERAGE NET AVERAGE
ASSET ASSETS, RATIO OF NET ASSETS INVESTMENT NET ASSETS
VALUE, END EXPENSES EXCLUDING INCOME TO EXCLUDING
END TOTAL OF PERIOD TO AVERAGE FEE AVERAGE FEE
OF PERIOD RETURN+ (000) NET ASSETS WAIVERS NET ASSETS WAIVERS
--------- ------------ ---------- ---------- -------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>

INSTITUTIONAL TAX FREE FUND
-------------------------------------------------------------------------------------------------------------------
CLASS C
2000........................... $1.00 3.21% $54,064 0.83% 0.94% 3.16% 3.05%
1999........................... 1.00 2.57 38,022 0.83 0.93 2.52 2.42
1998........................... 1.00 2.94 22,676 0.83 0.93 2.89 2.79
1997........................... 1.00 2.93 9,382 0.83 0.95 2.85 2.73
1996 (1)....................... 1.00 2.92 19,208 0.83* 0.96* 2.89* 2.76*
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.
* Annualized.
(1) The Institutional Tax Free Fund -- Class C commenced operations on September
11, 1995.

+ Total return is for the period indicated and has not been annualized.

<PAGE>

SEI
INVESTMENTS
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-800-DIAL-SEI

By Mail: Write to the Fund at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

The Trust's Investment Company Act registration number is 811-3447.

CMS-F-025-(12/00)

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

MONEY MARKET

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

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust
ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

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

PRINCIPAL INVESTMENT STRATEGIES AND RISKS
PERFORMANCE INFORMATION AND EXPENSES...............................2

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

MUNICIPAL SECURITIES

<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION

The Tax Free Fund is a mutual fund. A mutual fund pools shareholders' money and,
using professional investment managers, invests it in securities.

<PAGE>
2 PROSPECTUS

TAX FREE FUND

INVESTMENT SUMMARY

INVESTMENT STRATEGY

The Tax Free Fund invests substantially all (at least 80%) 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, Puerto Rico, and other U.S.
territories and possessions.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

An investment in the Fund is subject to income risk, which is the possibility
that the Fund's yield will decline due to falling interest rates.

<PAGE>
PROSPECTUS 3

TAX FREE FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for ten years. The performance information shown is based on
full calendar years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.42% 0.49%
(12/31/90) (03/31/94)
</TABLE>

* THE FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO SEPTEMBER 30, 2000, WAS
2.82%.

This table shows the Fund's average annual total returns for the periods ended
December 31, 1999.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS (11/11/82)
<S> <C> <C> <C> <C>
---------------------------------------------------------------------
TAX FREE FUND 2.98% 3.28% 3.38% 4.04%
---------------------------------------------------------------------
</TABLE>

Please dial 1-800-DIAL-SEI to obtain the Fund's current yield.

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.04%
Distribution (12b-1) Fees None
Other Expenses 0.65%
------
Total Annual Fund Operating Expenses 0.69%*
</TABLE>

<TABLE>
<S> <C>
TAX FREE FUND - CLASS A SHARES 0.45%
</TABLE>

For more information about these fees, see "Investment Adviser" and
"Distribution of Fund Shares."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Tax Free Fund - Class A Shares $70 $221 $384 $859
</TABLE>

<PAGE>
4 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund
also may invest in other securities, use other strategies and engage in other
investment practices, which are described in detail in the Fund's Statement of
Additional Information (SAI).

INVESTMENT ADVISER

Weiss, Peck & Greer, L.L.C. ("WPG"), located at One New York Plaza, New York, NY
10004, serves as the Adviser to the Tax Free Fund. As of September 30, 2000, WPG
had approximately $19.5 billion in assets under management. For the fiscal year
ended August 31, 2000, WPG received advisory fees from the Tax Free Fund of
0.04%.

<PAGE>
PROSPECTUS 5

PURCHASING AND SELLING FUND SHARES

This section tells you how to purchase or sell (sometimes called "redeem")
shares of the Fund. The Fund offers Class A Shares only to financial
institutions or intermediaries for their own or their customers' accounts. For
information on how to open an account and set up procedures for placing
transactions, please call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

Financial institutions and intermediaries may purchase Class A Shares by placing
orders with the Fund's Transfer Agent (or its authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Fund's wire agent by the close of business on
the same day the order is placed. The Fund reserves the right to refuse any
purchase requests, particularly those that would not be in the best interests of
the Fund or its shareholders and could adversely affect the Fund or its
operations. This includes those from any individual or group who, in the Fund's
view, are likely to engage in excessive trading (usually defined as more than
four transactions out of the Fund within a calendar year).

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with the Fund. For more information about how to purchase or sell
Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain broker-dealers or
other financial intermediaries.

The Fund calculates its NAV once each Business Day at 4:00 p.m., Eastern time.
So, for you to be eligible to receive dividends declared on the day you submit
your purchase order, the Fund generally must receive your order before 4:00
p.m., Eastern time and federal funds (readily available funds) before 4:00 p.m.,
Eastern time.

HOW THE FUND CALCULATES NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund.

In calculating NAV for the Tax Free Fund, the Fund generally values the Fund's
investment portfolio using the amortized cost valuation method, which is
described in detail in the SAI. If this method is determined to be unreliable
during certain market conditions or for other reasons, the Fund may value its
portfolio at market price or fair value prices may be determined in good faith
using methods approved by the Board of Trustees.

<PAGE>
6 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

HOW TO SELL YOUR FUND SHARES

If you hold Class A Shares, you may sell your shares on any Business Day by
following the procedures established when you opened your account or accounts.
If you have questions, call 1-800-DIAL-SEI. If you own shares through an account
with a broker or other institution, contact that broker or institution to sell
your shares. Your financial institution or intermediary may charge you a fee for
its services. Generally, the Fund must receive your redemption request before
2:00 p.m., Eastern time. The sale price of each share will be the next NAV
determined after the Fund (or its authorized intermediary) receives your
request.

RECEIVING YOUR MONEY

Normally, the Fund will make payment on your sale on the same Business Day on
which it receives your request, but it may take up to seven days. Your proceeds
will be wired to your bank account.

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Fund 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 the SAI.

TELEPHONE TRANSACTIONS

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives no compensation for distributing the Fund's Class A
Shares.

For Class A Shares, shareholder servicing fees, as a percentage of average daily
net assets, may be up to 0.25%. The Distributor has voluntarily agreed to waive
a portion of the shareholder servicing fees applicable to Class A Shares of the
Fund. The Distributor has no current intention to discontinue this voluntary
waiver.

<PAGE>
PROSPECTUS 7

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in the form of cash unless
otherwise stated.

TAXES

The Fund intends to distribute federally tax-exempt income. The Fund may invest
a portion of its assets in securities that generate income that is subject to
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 a regulated investment company under
Federal tax law.

MORE INFORMATION ABOUT TAXES IS IN THE FUND'S SAI.

<PAGE>
8 PROSPECTUS

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about Class A Shares of
the 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.

SEI TAX EXEMPT TRUST
FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR

NET REALIZED
INVESTMENT DISTRIBUTIONS AND UNREALIZED NET
NET ASSET ACTIVITIES ------------------------------------- GAIN (LOSS) ON ASSET
VALUE, NET NET NET INVESTMENTS VALUE,
BEGINNING INVESTMENT INVESTMENT REALIZED TOTAL AND CAPITAL END OF
OF PERIOD INCOME INCOME GAIN DISTRIBUTIONS TRANSACTIONS PERIOD
---------- ---------- ---------- ---------- ------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------------------------
TAX FREE FUND
---------------------------------------------------------------------------------------------------------------------------------
CLASS A
2000.................................. $1.00 $0.035 $(0.035) -- $(0.035) -- $1.00
1999.................................. 1.00 0.029 (0.029) -- (0.029) -- 1.00
1998.................................. 1.00 0.033 (0.033) -- (0.033) -- 1.00
1997.................................. 1.00 0.033 (0.033) -- (0.033) -- 1.00
1996.................................. 1.00 0.033 (0.033) -- (0.033) -- 1.00

<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
EXPENSES RATIO OF INCOME TO
NET TO AVERAGE NET AVERAGE
ASSETS, RATIO OF NET ASSETS INVESTMENT NET ASSETS
END OF EXPENSES EXCLUDING INCOME TO EXCLUDING
TOTAL PERIOD TO AVERAGE FEE AVERAGE FEE
RETURN+ (000) NET ASSETS WAIVERS NET ASSETS WAIVERS
------- ------------ ---------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>

TAX FREE FUND
------------------------------------------------------------------------------------------------------------------------
CLASS A
2000.................................. 3.58% $894,090 0.45% 0.69% 3.56% 3.32%
1999.................................. 2.94 652,210 0.45 0.67 2.89 2.67
1998.................................. 3.30 543,276 0.45 0.68 3.25 3.02
1997.................................. 3.31 431,016 0.45 0.69 3.26 3.02
1996.................................. 3.35 339,906 0.45 0.50 3.30 3.25
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.

+ Total return is for the period indicated and has not been annualized.

<PAGE>

SEI
INVESTMENTS
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

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

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-800-DIAL-SEI

By Mail: Write to the Fund at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

The Trust's Investment Company Act registration number is 811-3447.

CMS-F-003-(12/00)

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF DECEMBER 31, 2000

MONEY MARKET

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

CLASS A

The Securities and Exchange
Commission has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI Tax
Exempt Trust
ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

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