<PAGE>
SEI DAILY INCOME TRUST
MAY 31, 1997
- --------------------------------------------------------------------------------
PRIME OBLIGATION PORTFOLIO
TREASURY PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus concisely sets forth information about the above-referenced
Portfolios that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated May 31, 1997, has been filed with
the Securities and Exchange Commission and is available upon request and without
charge by writing the Distributor, SEI Investments Distribution Co., Oaks,
Pennsylvania 19456, or by calling 1-800-342-5734. The Statement of Additional
Information is incorporated into this Prospectus by reference.
SEI Daily Income Trust (the "Trust") is an open-end management investment
company, certain classes of which offer financial institutions a convenient
means of investing their own funds, or funds for which they act in a fiduciary,
agency or custodial capacity, in professionally managed diversified portfolios
of securities. Some portfolios offer separate classes of units of beneficial
interest that differ from each other primarily in the allocation of certain
distribution and/or shareholder servicing expenses. This Prospectus offers Class
C shares of the two money market fund portfolios (each a "Portfolio" and,
together, the "Portfolios") listed above.
AN INVESTMENT IN A PORTFOLIO IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT ANY PORTFOLIO WILL BE ABLE TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) CLASS C
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRIME
OBLIGATION TREASURY
PORTFOLIO PORTFOLIO
---------- ---------
<S> <C> <C>
Management/Advisory Fees (AFTER FEE WAIVER) (1) .16% .08%
12b-1 Fees none none
Total Other Expenses .54% .62%
Shareholder Servicing Fees .25% .25%
- ------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (AFTER FEE WAIVER) (2) .70% .70%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) THE MANAGER AND ADVISER HAVE WAIVED A PORTION OF THEIR FEES, AND THE
MANAGEMENT/ADVISORY FEES SHOWN REFLECT THESE WAIVERS. ABSENT SUCH WAIVERS,
MANAGEMENT/ADVISORY FEES WOULD BE .25% FOR THE PRIME OBLIGATION PORTFOLIO
AND .30% FOR THE TREASURY PORTFOLIO.
(2) ABSENT THE FEE WAIVER, TOTAL OPERATING EXPENSES FOR THE CLASS C SHARES OF
THE PORTFOLIOS WOULD BE .79% FOR THE PRIME OBLIGATION PORTFOLIO AND .92% FOR
THE TREASURY PORTFOLIO.
EXAMPLE CLASS C
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at the end of each time period:
Prime Obligation Portfolio $ 7 $ 22 $ 39 $ 87
Treasury Portfolio $ 7 $ 22 $ 39 $ 87
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
THE PURPOSE OF THIS TABLE IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE VARIOUS
COSTS AND EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY BORNE BY INVESTORS IN
CLASS C SHARES OF THE PORTFOLIOS. A PERSON WHO PURCHASES SHARES THROUGH A
FINANCIAL INSTITUTION MAY BE CHARGED SEPARATE FEES BY THAT INSTITUTION. EACH OF
THE PORTFOLIOS ALSO OFFERS CLASS A SHARES, CLASS B SHARES AND SWEEP CLASS
SHARES, WHICH ARE SUBJECT TO THE SAME EXPENSES, EXCEPT THAT CLASS A, CLASS B,
CLASS G AND SWEEP CLASS SHARES EACH HAVE DIFFERENT DISTRIBUTION AND/OR
SHAREHOLDER SERVICING COSTS. ADDITIONAL INFORMATION MAY BE FOUND UNDER "THE
MANAGER," "THE ADVISER" AND "DISTRIBUTION AND SHAREHOLDER SERVICING."
2
<PAGE>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following financial highlights for a share outstanding throughout each
period have been audited by Arthur Andersen LLP, independent public accountants,
whose report thereon, dated March 7, 1997, was unqualified. This information
should be read in conjunction with the Trust's financial statements as of and
for the fiscal year ended January 31, 1997, and notes thereto, which are
incorporated by reference to the Trust's Statement of Additional Information
under the heading "Financial Information." Additional performance information is
set forth in the Trust's 1997 Annual Report to shareholders, which is available
upon request and without charge by calling 1-800-342-5734.
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD
NET ASSET NET REALIZED AND DISTRIBUTIONS
VALUE NET UNREALIZED GAINS FROM NET DISTRIBUTIONS NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT FROM REALIZED VALUE END
OF PERIOD INCOME SECURITIES INCOME CAPITAL GAINS OF PERIOD
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------
PRIME OBLIGATION PORTFOLIO
- --------------------------
CLASS C
1997(1) $ 1.00 $0.04 $ -- $(0.04) $ -- $ 1.00
1995(2) 1.00 0.03 -- (0.03) -- 1.00
1994 1.00 0.03 -- (0.03) -- 1.00
1993(3) 1.00 0.03 -- (0.03) -- 1.00
- ------------------
TREASURY PORTFOLIO
- ------------------
CLASS C
1997 $ 1.00 $0.05 $ -- $(0.05) $ -- $ 1.00
1996(4) 1.00 0.03 -- (0.03) -- 1.00
<CAPTION>
FOR A SHARE OUTSTANDING
THROUGHOUT EACH PERIOD
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME TO
RATIO OF INVESTMENT TO AVERAGE AVERAGE
NET ASSETS EXPENSES INCOME TO NET ASSETS NET ASSETS
TOTAL END OF TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING
RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS)
- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------
PRIME OBLIGATION PORTFOLIO
- --------------------------
CLASS C
1997(1) 4.85% $ 4,332 0.70% 4.79% 0.74% 4.75%
1995(2) 2.55+ 0 0.70 2.79 0.77 2.72
1994 2.59 20,602 0.70 2.57 0.78 2.48
1993(3) 3.13 33,325 0.70 3.05 0.83 2.92
- ------------------
TREASURY PORTFOLIO
- ------------------
CLASS C
1997 4.80% $ 24,904 0.70% 4.70% 0.90% 4.50%
1996(4) 2.68+ 14,691 0.70 5.12 0.87 4.95
</TABLE>
+ RETURNS ARE FOR THE PERIOD INDICATED AND HAVE NOT BEEN ANNUALIZED.
(1) PRIME OBLIGATION CLASS C SHARES WERE RE-OFFERED BEGINNING APRIL 30, 1996.
ALL RATIOS INCLUDING TOTAL RETURN FOR THE PERIOD HAVE BEEN ANNUALIZED.
(2) PRIME OBLIGATION CLASS C SHARES WERE FULLY LIQUIDATED OCTOBER 27, 1994. ALL
RATIOS FOR THE PERIOD INDICATED HAVE BEEN ANNUALIZED.
(3) PRIME OBLIGATION CLASS C SHARES WERE OFFERED BEGINNING MARCH 25, 1992. ALL
RATIOS INCLUDING TOTAL RETURN FOR THE PERIOD INDICATED HAVE BEEN ANNUALIZED.
(4) TREASURY CLASS C SHARES WERE OFFERED BEGINNING JULY 27, 1995. ALL RATIOS
INCLUDING TOTAL RETURN FOR THE PERIOD INDICATED HAVE BEEN ANNUALIZED.
3
<PAGE>
THE TRUST
__________________________________________________________________________
SEI DAILY INCOME TRUST (the "Trust") is an open-end management investment
company that offers units of beneficial interest ("shares") in separate
diversified investment portfolios. This Prospectus offers shares of the Trust's
Prime Obligation, and Treasury Portfolios (each a "Portfolio," and, together,
the "Portfolios"). Each Portfolio has separate classes of shares which provide
for variations in distribution, shareholder servicing and transfer agency costs,
voting rights and dividends. Each of the Portfolios offers Class A, Class B,
Class C and Sweep Class shares. Additional information pertaining to the Trust
may be obtained by writing SEI Investments Distribution Co., Oaks, Pennsylvania
19456, or by calling 1-800-342-5734.
INVESTMENT OBJECTIVES
AND POLICIES
___________________________________________________________________________
PRIME OBLIGATION PORTFOLIO
The Prime Obligation Portfolio seeks to preserve principal
value and maintain a high degree of liquidity while
providing current income. Under normal market conditions,
the Portfolio invests exclusively in obligations of U.S.
issuers (excluding foreign branches of U.S. banks or U.S.
branches of foreign banks) consisting of: (i) commercial
paper rated, at the time of investment, in the highest
short-term rating category by two or more NRSROs, or one
NRSRO if only one NRSRO has rated the security or, if not
rated, determined by the Adviser to be of comparable
quality; (ii) obligations (including certificates of
deposit, time deposits, bankers' acceptances and bank
notes) of U.S. commercial banks or savings and loan
institutions having total assets of $500 million or more as
shown on their last published financial statements at the
time of investment and that are insured by the Federal
Deposit Insurance Corporation; (iii) corporate obligations
with a remaining term of not more than 397 days of issuers
that issue commercial paper of comparable priority and
security meeting the above ratings or, if not rated,
determined by the Adviser to be of comparable quality; (iv)
short-term obligations issued by state and local
governmental issuers which are rated, at the time of
investment, in the highest municipal bond rating categories
by at least two NRSROs, or, if not rated, determined by the
Adviser to be of comparable quality, and which carry yields
that are competitive with those of other types of money
market instruments of comparable quality; (v) U.S. Treasury
obligations; (vi) obligations issued or guaranteed as to
principal and interest by the agencies or instrumentalities
of the U.S. Government; and (vii) repurchase agreements
involving any of the foregoing obligations.
TREASURY PORTFOLIO
The Treasury Portfolio seeks to preserve principal value
and maintain a high degree of liquidity while providing
current income. Under normal market conditions, the
Portfolio invests exclusively in U.S. Treasury obligations
and repurchase agreements involving such obligations.
There can be no assurance that the Portfolios will
achieve their respective investment objectives.
4
<PAGE>
GENERAL INVESTMENT
POLICIES
___________________________________________________________________________
In purchasing obligations, the Portfolios comply with the
requirements of Rule 2a-7 under the Investment Company Act
of 1940 (the "1940 Act"), as that Rule may be amended from
time to time. These requirements currently provide that the
Portfolios must limit their investments to securities with
remaining maturities of 397 days or less, and must maintain
a dollar-weighted average maturity of 90 days or less. In
addition, under Rule 2a-7, the Portfolios may only invest
in securities (other than U.S. Government Securities) rated
in one of the two highest categories for short-term
securities by at least two nationally recognized
statistical rating organizations ("NRSROs") (or by one
NRSRO if only one NRSRO has rated the security), or, if
unrated, determined by the Adviser (in accordance with
procedures adopted by the Trust's Board of Trustees) to be
of equivalent quality to rated securities in which the
Portfolio may invest.
Securities rated in the highest rating category by at
least two NRSROs (or, if unrated, determined by the Adviser
to be of comparable quality) are "first tier" securities.
Non-first tier securities rated in the second highest
rating category by at least one NRSRO (or, if unrated,
determined by the Adviser to be of comparable quality) are
considered to be "second tier" securities.
Although the Portfolios are governed by Rule 2a-7,
their investment policies are, in certain respects, more
restrictive than those imposed by that Rule.
Each Portfolio may invest up to 10% of its net assets
in illiquid securities. However, restricted securities,
including Rule 144A securities and Section 4(2) commercial
paper, that meet the criteria established by the Board of
Trustees of the Trust will be considered liquid. In
addition, each Portfolio may invest in U.S. Treasury STRIPS
(as defined in the "Description of Permitted Investments
and Risk Factors").
Each Portfolio may purchase securities on a
when-issued basis.
For temporary defensive purposes, the Portfolios may
maintain 100% of their assets in cash.
For a description of the permitted investments and
the above ratings see "Description of Permitted Investments
and Risk Factors" and the Statement of Additional
Information.
INVESTMENT LIMITATIONS
________________________________________________________________________
The investment objectives and certain of the investment
limitations are fundamental policies of the Portfolios. It
is a fundamental policy of each Portfolio to use its best
efforts to maintain a constant net asset value of $1.00 per
share. There can be no assurance that any Portfolio will
achieve its investment objective, or that any Portfolio
will be able to maintain a net asset value of $1.00 per
share on a continuing basis.
5
<PAGE>
Fundamental policies cannot be changed with respect
to the Trust or a Portfolio without the consent of the
holders of a majority of the Trust or that Portfolio's
outstanding shares.
EACH PORTFOLIO MAY NOT:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the U.S. Government, its agencies
or instrumentalities), if as a result, more than 5% of
the total assets of the Portfolio would be invested in
the securities of such issuer; provided, however, that
any Portfolio except the Prime Obligation Portfolio may
invest up to 25% of its total assets without regard to
this restriction as permitted by Rule 2a-7 under the 1940
Act.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in (a) domestic banks and (b) obligations
issued or guaranteed by the U.S. Government or its
agencies and instrumentalities.
3. Borrow money except for temporary or emergency purposes
and then only in an amount not exceeding 10% of the value
of the total assets of that Portfolio. This borrowing
provision is included solely to facilitate the orderly
sale of portfolio securities to accommodate substantial
redemption requests if they should occur and is not for
investment purposes. All borrowings will be repaid before
the Portfolio makes additional investments and any
interest paid on such borrowings will reduce the income
of that Portfolio.
The foregoing percentage limitations (except the limitation
on borrowing) will apply at the time of the purchase of a
security. Additional fundamental and non-fundamental
investment limitations are set forth in the Statement of
Additional Information.
THE MANAGER
______________________________________________________________________
SEI Fund Management (the "Manager" or the "Transfer
Agent"), a wholly-owned subsidiary of SEI Investments
Company ("SEI"), is responsible for (i) providing the Trust
with overall management services, regulatory reporting, all
necessary office space, equipment, personnel and facilities
and (ii) acting as transfer agent, dividend disbursing
agent, and shareholder servicing agent for Class A, Class
B, Class C, Class G and Sweep Class shares of each
Portfolio.
For these services, the Manager is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of each Portfolio's average daily net assets as
follows: Prime Obligation Portfolio--.19%; and Treasury
Portfolio--.24%. The Manager has contractually agreed to
waive up to all of its fee and, if necessary, pay other
operating expenses in order to limit the total operating
expenses to not more than: .70% of the Class C shares of
the Prime Obligation and Treasury Portfolios, each on an
annualized basis. The Manager reserves the right, in its
sole discretion, to terminate these voluntary
6
<PAGE>
waivers at any time. For the fiscal year ended January 31,
1997, the Prime Obligation and Treasury Portfolios paid
management fees, after waivers, of .15% and .07%
respectively, of their average daily net assets.
THE ADVISER
_______________________________________________________________________
Wellington Management Company, LLP (the "Adviser" or "WMC")
serves as the investment adviser for each Portfolio under
advisory agreements with the Trust. The Adviser is a
professional investment counseling firm which provides
investment services to investment companies, employee
benefit plans, endowments, foundations, and other
institutions and individuals. Under the advisory
agreements, the Adviser invests the assets of the
Portfolios and continuously reviews, supervises and
administers each Portfolio's investment program. The
Adviser is independent of the Manager and SEI and
discharges its responsibilities subject to the supervision
of, and policies set by, the Trustees of the Trust.
The Adviser's predecessor organizations have provided
investment advisory services to investment companies since
1933 and to investment counseling clients since 1960. As of
March 31, 1997, the Adviser had discretionary management
authority with respect to approximately $136.3 billion of
assets, including the assets of the Trust and SEI Liquid
Asset Trust, each an open-end management investment company
administered by the Manager. The principal address of the
Adviser is 75 State Street, Boston, Massachusetts 02109.
WMC is a Massachusetts limited liability partnership, of
which the following persons are managing partners: Robert
W. Doran, Duncan M. McFarland and John R. Ryan.
The Adviser is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .075% of the
combined average daily net assets of the Portfolios of the
Trust up to $500 million and .02% of such combined average
daily net assets in excess of $500 million. Such fees are
allocated daily among the Portfolios on the basis of their
relative net assets. For the fiscal year ended January 31,
1997, the Prime Obligation and Treasury Portfolios paid the
Adviser advisory fees, after fee waivers, of .01% and .01%,
respectively, of their relative net assets.
DISTRIBUTION AND
SHAREHOLDER
SERVICING
__________________________________________________________________________
SEI Investments Distribution Co. (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust.
The Portfolios have adopted plans under which firms,
including the Distributor, that provide shareholder and
administrative services may receive compensation therefor.
The Class A, B, C, G and Sweep Class plans differ in a
number of ways, including the amounts
7
<PAGE>
that may be paid. Under each plan, the Distributor may
provide those services itself or may enter into
arrangements under which third parties provide such
services and are compensated by the Distributor. Under such
arrangements the Distributor may retain as a profit any
difference between the fee it receives and the amount it
pays such third party. In addition, the Portfolios may
enter into such arrangements directly.
Under the Class C shareholder service plan, the
Distributor is entitled to receive shareholder service fees
at an annual rate of up to .25% of its average daily net
assets in return for the Distributor's (or its agent's)
efforts in maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services
provided or investments; and assisting clients in changing
dividend options, account designations and addresses. In
addition, the Class C shares may pay administrative
services fees at a specified percentage of the average
daily net assets of the shares of the Class (up to .25%).
Administrative services include providing sub-accounting;
providing information on share positions to clients;
forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and
processing dividend payments.
It is possible that an institution may offer
different classes of shares to its customers and thus
receive compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Portfolios'
shares.
PURCHASE AND
REDEMPTION OF SHARES
____________________________________________________________________________
Financial institutions may acquire shares of the Portfolios
for their own accounts, or as a record owner on behalf of
fiduciary, agency or custody accounts, by placing orders
with the Transfer Agent. Institutions that use certain SEI
proprietary systems may place orders electronically through
those systems. Financial institutions may impose an earlier
cut-off time for receipt of purchase orders directed
through them to allow for processing and transmittal of
these orders to the Transfer Agent for effectiveness on the
same day. Financial institutions that purchase shares for
the accounts of their customers may impose separate charges
on these customers for account services.
Shares of each Portfolio may be purchased or redeemed
on days on which the New York Stock Exchange is open for
business ("Business Days"). However, money market fund
shares cannot be purchased by Federal Reserve wire on
Federal holidays restricting wire transfers.
Shareholders who desire to purchase shares with cash
must place their orders with the Transfer Agent (or its
authorized agent) prior to the determination of net asset
value
8
<PAGE>
and in accordance with the procedures described below for
the order to be accepted on that Business Day. Cash
investments must be transmitted or delivered in federal
funds to the wire agent by the close of business on the
same day the order is placed. The Trust reserves the right
to reject a purchase order when the Distributor determines
that it is not in the best interest of the Trust or
shareholders to accept such purchase order.
The Trust will send shareholders a statement of
shares owned after each transaction. The purchase price of
shares is the net asset value next determined after a
purchase order is received and accepted by the Trust, which
is expected to remain constant at $1.00. The net asset
value per share of a Portfolio is determined by dividing
the total value of its investments and other assets, less
any liabilities, by the total number of outstanding shares
of the Portfolio. A Portfolio's investments will be valued
by the amortized cost method described in the Statement of
Additional Information. Net asset value per share is
determined daily as of 4:30 p.m. Eastern time on each
Business Day. Financial institutions which purchase and
redeem shares for the accounts of their customers may
impose their own cut-off times for receipt of purchase and
redemption requests directed through them.
Shareholders who desire to redeem shares of a
Portfolio must place their redemption orders with the
Transfer Agent (or its authorized agent) prior to the
determination of net asset value and in accordance with the
procedures described below on any Business Day. The
redemption price is the net asset value per share of the
Portfolio next determined after receipt by the Transfer
Agent of the redemption order. Payment on redemptions will
be made as promptly as possible and, in any event, within
seven days after the redemption order is received.
Shareholders who desire to purchase or redeem shares
of the Prime Obligation or Treasury Portfolios after 2:00
p.m. Eastern time must contact the Transfer Agent one week
in advance to establish the requisite operational
requirements for late day trading. Even after these
procedures are in place, investors are encouraged to
execute as many trades as possible prior to 2:00 p.m.
Eastern time.
Shareholders who wish to receive same-day acceptance
of investment in the Prime Obligation and Treasury
Portfolios after 2:00 p.m. Eastern time must contact the
Transfer Agent (or its authorized agent) before 4:30 p.m.
Eastern time to place the trade and must obtain a security
code number for each trade. It is necessary to obtain a new
security code number for each purchase placed in the
Portfolios after 2:00 p.m. Eastern time. Security code
numbers are assigned exclusively by means of telephone
communications and are effective for one transaction only
and may not be used more than once.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Trust's Transfer Agent
will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The
Trust and the Trust's Transfer Agent will each employ
reasonable procedures to confirm that instructions
communicated by telephone are genuine, including
9
<PAGE>
requiring a form of personal identification prior to acting
upon instructions received by telephone and recording
telephone instructions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by other
means.
PERFORMANCE
______________________________________________________________________
For any Portfolio, the performance of Class A shares will
normally be higher than that of Class B shares because of
the additional administrative services expenses charged
Class B shares. Likewise, the performance of Class B shares
will normally be higher than that of Class C, Class G and
Sweep Class shares because of the additional administrative
services expenses charged to Class C shares and the
additional distribution and shareholder servicing expenses
charged to Class G and Sweep Class shares.
From time to time, each Portfolio may advertise the
"current yield" and "effective yield" (also called
"effective compound yield"). These figures are based on
historical earnings and are not intended to indicate future
performance. No representation can be made concerning
actual future yields or returns. The "current yield" of a
Portfolio refers to the income generated by a hypothetical
investment in such Portfolio over a seven-day period (which
period will be stated in the advertisement). This income is
then "annualized," i.e., the income generated during that
week is assumed to be generated each week over a 52-week
period and is shown as a percentage of the investment. The
"effective yield" (also called "effective compound yield")
is calculated similarly but, when annualized, the income
earned by an investment in a Portfolio is assumed to be
reinvested. The "effective yield" will be slightly higher
than the "current yield" because of the compounding effect
of this assumed reinvestment.
Each Portfolio may periodically compare its
performance to that of: (i) other mutual funds tracked by
mutual fund rating services (such as Lipper Analytical) or
financial and business publications and periodicals; (ii)
broad groups of comparable mutual funds; (iii) unmanaged
indices which may assume investment of dividends but
generally do not reflect deductions for administrative and
management costs; or (iv) to other investment alternatives.
Each Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy and investment
techniques.
TAXES
______________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state or local income tax treatment of the
Portfolios or their shareholders. In addition, state and
local tax consequences of an investment in the Portfolio
may differ from the federal income tax
10
<PAGE>
consequences described below. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state and local income taxes.
Additional information concerning taxes is set forth in the
Statement of Additional Information.
TAX STATUS
OF THE PORTFOLIOS
Each Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. Each Portfolio intends to qualify or to
continue to qualify for the special tax treatment afforded
regulated investment companies ("RICs") under Subchapter M
of the Internal Revenue Code of 1986, as amended (the
"Code"), so as to be relieved of federal income tax on net
investment company taxable income and net capital gains
(the excess of net long-term capital gains over net
short-term capital losses) distributed to shareholders.
TAX STATUS
OF DISTRIBUTIONS
Each Portfolio distributes substantially all of its net
investment income (including net short-term capital gains)
to shareholders. Dividends from a Fund's net investment
company taxable income are taxable to its shareholders as
ordinary income (whether received in cash or in additional
shares) and will not qualify for the corporate dividends
received deduction. Distributions of net capital gains are
taxable to shareholders as long-term capital gains,
regardless of how long shareholders have held their shares
and regardless of whether the distributions are received in
cash or in additional shares. The Portfolios provide annual
reports to shareholders of the federal income tax status of
all distributions.
Dividends declared by a Portfolio in October,
November or December of any year and payable to
shareholders of record on a date in such a month, will be
deemed to have been paid by the Portfolio and received by
the shareholders on December 31 of the year declared if
paid by the Portfolio at any time during the following
January.
Income received on direct U.S. Government obligations
is exempt from tax at the state level when received
directly by a Portfolio and may be exempt, depending on the
state, when received by a shareholder from a Portfolio
provided certain state-specific conditions are satisfied.
Interest received on repurchase agreements collateralized
by U.S. Government obligations normally is not exempt from
state taxation. Each Portfolio will inform shareholders
annually of the percentage of income and distributions
derived from direct U.S. Government obligations.
Shareholders should consult their tax advisers to determine
whether any portion of the income dividends received from a
Portfolio is considered tax exempt in their particular
states.
With respect to investments in U.S. Treasury STRIPS,
which are sold at original issue discount and thus do not
make periodic cash interest payments, each Portfolio will
be required to include as part of its current income the
accreted interest on any such obligations even though the
Portfolio has not received any interest payments on such
obligations during that period. Because the Portfolio
distributes all of its net investment income to its
shareholders, a Portfolio may have to sell portfolio
securities to distribute such imputed income, which may
occur at a time when the Adviser would not have chosen to
sell such securities, and which may result in a taxable
gain or loss.
11
<PAGE>
Each Portfolio intends to make sufficient
distributions prior to the end of each calendar year to
avoid liability for the federal excise tax applicable to
RICs.
Each sale, exchange, or redemption of Portfolio
shares is a taxable transaction to the shareholder.
GENERAL INFORMATION
______________________________________________________________
THE TRUST
The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated March 15, 1982. The
Declaration of Trust permits the Trust to offer separate
portfolios of shares and different classes of each
portfolio. In addition to the Portfolios, the Trust
consists of the following portfolios: Money Market
Portfolio, Government Portfolio, Government II Portfolio,
Treasury II Portfolio, Federal Securities Portfolio,
Short-Duration Government Portfolio, Intermediate-Duration
Government Portfolio, GNMA Portfolio, Corporate Daily
Income Portfolio and Treasury Securities Daily Income
Portfolio (formerly, Government Securities Daily Income
Portfolio). All consideration received by the Trust for
shares of any portfolio and all assets of such portfolio
belong to that portfolio and would be subject to
liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under state and federal securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
TRUSTEES OF THE TRUST
The management and affairs of the Trust are supervised by
the Trustees under the laws of The Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each Portfolio or class will vote
separately on matters relating solely to that Portfolio or
class. As a Massachusetts business trust, the Trust is not
required to hold annual meetings of shareholders, but
approval will be sought for certain changes in the
operation of the Trust and for the election of Trustees
under certain circumstances. In addition, a Trustee may be
removed by the remaining Trustees or by shareholders at a
special meeting called upon written request of shareholders
owning at least 10% of the outstanding shares of the Trust.
In the event that such a meeting is requested, the Trust
will provide appropriate assistance and information to the
shareholders requesting the meeting.
As of May 5, 1997, BMS & Company, c/o Central Trust
Bank (Jefferson City, MO) owned a controlling interest, as
defined by the 1940 Act, of the Treasury Portfolio.
REPORTING
The Trust issues an unaudited report semi-annually and
audited financial statements annually. The Trust furnishes
proxy statements and other reports to shareholders of
record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Manager,
SEI Fund Management, Oaks, Pennsylvania 19456.
12
<PAGE>
DIVIDENDS
Substantially all of the net investment income (exclusive
of capital gains) of each Portfolio is distributed in the
form of dividends that are declared on each Business Day as
a dividend for shareholders of record and are distributed
monthly in federal funds or in additional shares at the
discretion of the shareholder on the first Business Day of
each month. Dividends will be paid on the next Business Day
to shareholders who redeem all of their shares of a
Portfolio at any other time during the month. The dividends
on Class A shares are normally higher than those on Class B
shares of each Portfolio because of the additional
administrative services expenses charged to Class B shares.
Likewise, the dividends on Class B shares are normally
higher than those on Class C, Class G and Sweep Class
shares of each Portfolio because of the additional
administrative services expenses charged to Class C shares
and the additional distribution and shareholder servicing
expenses charged to Class G and Sweep Class shares.
COUNSEL AND INDEPENDENT PUBLIC ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Arthur Andersen LLP serves as the independent public
accountants of the Trust.
CUSTODIANS AND WIRE AGENT
The Bank of New York, 48 Wall Street, New York, New York
10286, (a "Custodian"), serves as custodian of the assets
of the Treasury Portfolio. CoreStates Bank, N.A., Broad and
Chestnut Streets, P.O. Box 7618, Philadelphia, Pennsylvania
19101 (a "Custodian," and together, the "Custodians"),
serves as custodian and wire agent of the assets of the
Prime Obligation Portfolio and wire agent for the Treasury
Portfolio. The Custodians hold cash, securities and other
assets of the Trust as required by the 1940 Act.
DESCRIPTION OF
PERMITTED INVESTMENTS
AND RISK FACTORS
____________________________________________________________________________
The following is a description of certain of the permitted
investment practices for the Portfolios and the associated
risk factors:
BANKERS' ACCEPTANCES
Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers'
acceptances are used by corporations to finance the
shipment and storage of goods. Maturities are generally six
months or less.
CERTIFICATES OF DEPOSIT
Certificates of deposit are interest-bearing instruments
with a specific maturity. They are issued by banks and
savings and loan institutions in exchange for the deposit
of funds, and normally can be traded in the secondary
market, prior to maturity. Certificates of deposit with
penalties for early withdrawal will be considered illiquid.
COMMERCIAL PAPER
Commercial paper is a term used to describe unsecured
short-term promissory notes issued by municipalities,
corporations and other entities. Maturities on these issues
vary from one to 270 days.
13
<PAGE>
DEMAND INSTRUMENTS
Certain instruments may entail a demand feature which
permits the holder to demand payment of the principal
amount of the instrument. Demand instruments may include
variable rate master demand notes.
ILLIQUID SECURITIES
Illiquid securities are securities which cannot be disposed
of within seven business days at approximately the price at
which they are being carried on a Portfolio's books.
Illiquid securities include demand instruments with a
demand notice periods exceeding seven days, securities for
which there is no active secondary market, and repurchase
agreements with maturities or durations of more than seven
days in length.
MUNICIPAL SECURITIES
Municipal Securities consist of: (i) debt obligations
issued by or on behalf of public authorities to obtain
funds to be used for various public facilities, for
refunding outstanding obligations, for general operating
expenses, and for lending such funds to other public
institutions and facilities, and (ii) certain private
activity and industrial development bonds issued by or on
behalf of public authorities to obtain funds to provide for
the construction, equipment, repair or improvement of
privately operated facilities.
Municipal Securities include both municipal notes and
municipal bonds. Municipal notes include general obligation
notes, tax anticipation notes, revenue anticipation notes,
bond anticipation notes, certificates of indebtedness,
demand notes and construction loan notes and participation
interests in municipal notes. Municipal bonds include
general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds
and participation interests in municipal bonds.
General obligation bonds are backed by the taxing
power of the issuing municipality. Revenue bonds are backed
by the revenues of a project or facility (tolls from a
bridge, for example). Certificates of participation
represent an interest in an underlying obligation or
commitment, such as an obligation issued in connection with
a leasing arrangement. The payment of principal and
interest on private activity and industrial development
bonds generally is dependent solely on the ability of a
facility's user to meet its financial obligations and the
pledge, if any, of real and personal property as security
for such payment.
TAXABLE MUNICIPAL SECURITIES: Taxable Municipal
Securities are Municipal Securities the interest on which
is not exempt from federal income tax. Taxable Municipal
Securities include "private activity bonds" that are issued
by or on behalf of states or political subdivisions thereof
to finance privately-owned or operated facilities for
business and manufacturing, housing, sports, and pollution
control and to finance activities of and facilities for
charitable institutions. Private activity bonds are also
used to finance public facilities such as airports, mass
transit systems, ports, parking lots, and low income
housing. The payment of the principal and interest on
private activity bonds is not backed by a pledge of tax
revenues, and is dependent solely on the ability of the
facility's user to meet its financial obligations, and may
be secured by a pledge of real and personal property so
financed. Interest on these bonds may not be exempt from
federal income tax.
14
<PAGE>
REPURCHASE AGREEMENTS
Repurchase agreements are agreements by which a Portfolio
obtains a security and simultaneously commits to return the
security to the seller at an agreed upon price on an agreed
upon date within a number of days from the date of
purchase. A Portfolio will have actual or constructive
possession of the security as collateral for the repurchase
agreement. A Portfolio bears a risk of loss in the event
the other party defaults on its obligations and the
Portfolio is delayed or prevented from exercising its right
to dispose of the collateral or if the Portfolio realizes a
loss on the sale of the collateral. A Portfolio will enter
into repurchase agreements only with financial institutions
deemed to present minimal risk of bankruptcy during the
term of the agreement based on established guidelines.
Repurchase agreements are considered loans under the 1940
Act.
TIME DEPOSITS
Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Like a certificate of
deposit, it earns a specified rate of interest over a
definite period of time; however, it cannot be traded in
the secondary market. Time deposits with maturities of more
than seven days are considered to be illiquid.
U.S. GOVERNMENT AGENCY SECURITIES
Obligations issued or guaranteed by agencies of the U.S.
Government, including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the
Small Business Administration, and obligations issued or
guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full
faith and credit of the U.S. Treasury (e.g., Government
National Mortgage Association securities), others are
supported by the right of the issuer to borrow from the
Treasury (e.g., Federal Farm Credit Bank securities), while
still others are supported only by the credit of the
instrumentality (e.g., Fannie Mae securities). Guarantees
of principal by agencies or instrumentalities of the U.S.
Government may be a guarantee of payment at the maturity of
the obligation so that in the event of a default prior to
maturity there might not be a market and thus no means of
realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not
extend to the value or yield of these securities nor to the
value of the Portfolio's shares.
U.S. TREASURY OBLIGATIONS
U.S. Treasury obligations consist of bills, notes and bonds
issued by the U.S. Treasury, as well as separately traded
interest and principal component parts of such obligations
known as Separately Traded Registered Interest and
Principal Securities ("STRIPS") that are transferable
through the federal book-entry system.
U.S. TREASURY STRIPS
STRIPS are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at
face value at their maturity date without interim cash
payments of interest or principal. This discount is
accreted over the life of the security, and such accretion
will constitute the income earned on the security for both
accounting and tax purposes. Because of these features,
such securities may be subject to greater interest rate
volatility than interest-paying investments. See also
"Taxes."
15
<PAGE>
VARIABLE AND FLOATING RATE INSTRUMENTS
Certain obligations may carry variable or floating rates of
interest, and may involve a conditional or unconditional
demand feature. Such instruments bear interest at rates
which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on
interest rate changes.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. A Portfolio will maintain with the
Custodian a separate account with liquid securities or cash
in an amount at least equal to these commitments. The
interest rate realized on these securities is fixed as of
the purchase date, and no interest accrues to a Portfolio
before settlement.
16
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses................................................. 2
Financial Highlights...................................................... 3
The Trust................................................................. 4
Investment Objectives and Policies........................................ 4
General Investment Policies............................................... 5
Investment Limitations.................................................... 5
The Manager............................................................... 6
The Adviser............................................................... 7
Distribution and Shareholder Servicing.................................... 7
Purchase and Redemption of Shares......................................... 8
Performance............................................................... 10
Taxes..................................................................... 10
General Information....................................................... 12
Description of Permitted Investments and Risk Factors..................... 13
</TABLE>
17
