SEI DAILY INCOME TRUST /MA/, 497, 1999-06-08

SEI DAILY INCOME TRUST /MA/
497, 1999-06-08

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<PAGE>
SEI Daily
Income Trust
HOW TO READ THIS PROSPECTUS
- ------------------------------------------------------------------------

SEI Daily Income Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies, and are designed primarily for institutional
investors. 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.

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 the Funds. For more detailed information about
the Funds, please see:

MONEY MARKET FUND..............................................................2
PRIME OBLIGATION FUND..........................................................4
GOVERNMENT FUND................................................................6
GOVERNMENT II FUND.............................................................8
TREASURY FUND.................................................................10
TREASURY II FUND..............................................................12
THE FUNDS' OTHER INVESTMENTS..................................................14
THE INVESTMENT ADVISER........................................................14
PURCHASING AND SELLING FUND SHARES............................................15
DIVIDENDS, DISTRIBUTIONS AND TAXES............................................17
FINANCIAL HIGHLIGHTS..........................................................18
HOW TO OBTAIN MORE INFORMATION ABOUT SEI DAILY INCOME TRUST...........Back Cover
<PAGE>
PROSPECTUS 1

INTRODUCTION-INFORMATION COMMON TO ALL 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 each Fund's assets in a way it believes will help each Fund achieve its
goal. Still, investing in the Funds involves risk, and there is no guarantee
that a Fund will achieve its goal. In fact, no matter how good a job the Adviser
does, you could lose money on your investment in a Fund, just as you could with
other investments. A Fund share is not a bank deposit and it is not insured or
guaranteed by the FDIC or any other government agency.

ALTHOUGH EACH FUND IS MANAGED TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00,
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

Like other mutual funds (and most organizations around the world), the Funds
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Funds or
on the financial markets in general, the Funds are taking steps to protect Fund
investors. These include efforts to ensure that the Funds' own systems are
prepared to make the transition to the year 2000, and to determine that the
problem will not affect the systems used by the Funds' major service providers.
Whether these steps will be effective can only be known for certain in the year
2000. In addition, year 2000 problems may ultimately negatively affect the
companies and governments whose securities the Funds purchase, which may have an
impact on the value of the Funds' shares. There is additional information on
these risks in the Statement of Additional Information.
<PAGE>
2 PROSPECTUS

MONEY MARKET FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal and maintaining liquidity
while providing current income
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Very low
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY The Fund is professionally managed to provide
liquidity, diversification and a competitive yield
by investing in high quality, short-term money
market instruments
</TABLE>

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

INVESTMENT STRATEGY

The Money Market Fund is comprised of short-term U.S. dollar denominated debt
obligations that are rated in one of the two highest rating categories by
nationally recognized statistical rating organizations or that the Adviser
determines are of comparable quality. The Fund invests in: (i) commercial paper
and other short-term corporate obligations of U.S. and foreign issuers,
including asset-backed securities, rated in the highest rating category; (ii)
certificates of deposit, time deposits, bankers' acceptances, bank notes and
other obligations of U.S. savings and loan institutions, U.S. commercial banks
(including foreign branches of such banks), and U.S. and London branches of
foreign banks, that meet certain asset requirements; (iii) short-term
obligations issued by state and local governments; (iv) obligations of foreign
governments (including Canadian and Provincial Government and Crown Agency
obligations); and (v) U.S. Treasury obligations and obligations issued or
guaranteed as to principal and interest by agencies or instrumentalities of the
U.S. government. The Fund may also enter into fully-collateralized repurchase
agreements.

Using a top-down strategy and bottom-up security selection, the Adviser seeks
securities with an acceptable maturity, that are marketable and liquid, offer
competitive yields, and are issued by issuers that are on a sound financial
footing. The Adviser also considers factors such as the anticipated level of
interest rates and the maturity of individual securities relative to the
maturity of the Fund as a whole. The Fund follows strict Investment Company Act
rules about the credit quality, maturity and diversification of its investments.

WHAT ARE THE RISKS OF INVESTING IN THE MONEY MARKET 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.

Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies are
backed by the U.S. Treasury, while others are backed solely by the ability of
the agency to borrow from the U.S. Treasury or by the agency's own resources.

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.
<PAGE>
PROSPECTUS 3

MONEY MARKET 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 ten years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.03% 0.72%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.21%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
MONEY MARKET FUND -- CLASS A
SHARES 5.55% 5.39% 5.71% 6.52%*
- ---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS NOVEMBER 15, 1983.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.62%
------
Total Annual Fund Operating Expenses 0.64%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
MONEY MARKET FUND -- CLASS A
SHARES 0.18%
</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 and Fund expenses remain the same. Although your
actual costs and returns might be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Money Market Fund -- Class A
Shares $65 $205 $357 $798
</TABLE>

<PAGE>
4 PROSPECTUS

PRIME OBLIGATION FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Prime Obligation Fund is comprised of short-term debt obligations of U.S.
issuers that are rated in one of the two highest rating categories by nationally
recognized statistical rating organizations or that the Adviser determines are
of comparable quality. The Fund invests in: (i) commercial paper and other
short-term corporate obligations (including asset-backed securities) rated in
the highest rating category; (ii) certificates of deposit, time deposits,
bankers' acceptances, bank notes and other obligations of U.S. commercial banks
or savings and loan institutions that meet certain asset requirements; (iii)
short-term obligations issued by state and local governments; and (iv) U.S.
Treasury obligations and obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. government. The Fund may
also enter into fully-collateralized repurchase agreements.

WHAT ARE THE RISKS OF INVESTING IN THE PRIME OBLIGATION 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.

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.
<PAGE>
PROSPECTUS 5

PRIME OBLIGATION 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.06% 0.75%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.22%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
PRIME OBLIGATION FUND -- CLASS
A SHARES 5.53% 5.34% 5.76 5.95%*
- ---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS DECEMBER 22, 1987.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.48%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.50%
Fee Waivers and Expense Reimbursements 0.30%
------
NET EXPENSES 0.20%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.20%.

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>
Prime Obligation Fund -- Class
A Shares $20 $64 $113 $255
</TABLE>

<PAGE>
6 PROSPECTUS

GOVERNMENT FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations, obligations issued or
guaranteed as to principal and interest by agencies or instrumentalities of the
U.S. government, and repurchase agreements fully-collateralized by such
obligations.

Using a top-down strategy and bottom-up security selection, the Adviser seeks
securities with an acceptable maturity that are marketable and liquid and offer
competitive yields. The Adviser also considers factors such as the anticipated
level of interest rates and the maturity of individual securities relative to
the maturity of the Fund as a whole. The Fund follows strict Investment Company
Act rules about the credit quality, maturity and diversification of its
investments.

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT 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.

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.
<PAGE>
PROSPECTUS 7

GOVERNMENT FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for three years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.38% 1.26%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.19%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
GOVERNMENT FUND -- CLASS A SHARES 5.45% 5.46%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS OCTOBER 27, 1995.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.53%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.55%
Fee Waivers and Expense Reimbursements 0.30%
------
NET EXPENSES 0.25%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.25%.

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

<TABLE>
<S> <C>
GOVERNMENT FUND -- CLASS A SHARES 0.20%
</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>
Government Fund -- Class A
Shares $26 $80 $141 $318
</TABLE>

<PAGE>
8 PROSPECTUS

GOVERNMENT II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and obligations issued
or guaranteed as to principal and interest by agencies or instrumentalities of
the U.S. government.

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT II 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.

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.
<PAGE>
PROSPECTUS 9

GOVERNMENT II 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.01% 0.73%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.19%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
10 SINCE
1 YEAR 5 YEARS YEARS INCEPTION
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------
GOVERNMENT II FUND -- CLASS A
SHARES 5.38% 5.23% 5.57% 5.88%*
- -------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS DECEMBER 9, 1985.
PLEASE CALL 1-800 DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.20%.

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>
Government II Fund -- Class A
Shares $20 $64 $113 $255
</TABLE>

<PAGE>
10 PROSPECTUS

TREASURY FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and repurchase
agreements fully-collateralized by U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 11

TREASURY FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for six years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.48% 0.73%
(6/30/95) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.15%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
TREASURY FUND -- CLASS A SHARES 5.35% 5.22% 4.77%*
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS SEPTEMBER 30, 1992.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.55%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.57%
Fee Waivers and Expense Reimbursements 0.37%
------
NET EXPENSES 0.20%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.20%.

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>
Treasury Fund -- Class A
Shares $20 $64 $113 $255
</TABLE>

<PAGE>
12 PROSPECTUS

TREASURY II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY II 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 13

TREASURY II 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.96% 0.70%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.07%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
TREASURY II FUND -- CLASS A SHARES 4.93% 4.95% 5.09%*
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS JULY 28, 1989.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.25%.

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>
Treasury II Fund -- Class A
Shares $26 $80 $141 $318
</TABLE>
<PAGE>
14 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

This prospectus describes the Funds' primary investment strategies. The Funds
are required to invest at least 80% of their assets, but normally will invest
100% of their assets, in the types of securities described in this prospectus.
However, 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). Of course, there is no
guarantee that any Fund will achieve its investment goal.

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 Fund's objectives.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

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

Wellington Management Company, LLP ("Wellington"), serves as the Adviser to the
Funds. As of March 31, 1999, Wellington had approximately $215 billion in assets
under management. For the fiscal year ended January 31, 1999, each Fund paid
Wellington advisory fees of 0.01% of its average daily net assets.

Timothy E. Smith is the portfolio manager of each Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 15

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy or sell (sometimes called "redeem") shares of
the Funds. The Funds offer Class A Shares only to financial institutions 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 Class A 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. The Funds may reject any purchase order if
they determine that accepting the order would not be in the best interests of
the Funds or their shareholders.

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 NAV next
determined after the intermediary receives the request. These authorized
intermediaries are responsible for transmitting requests and delivering funds on
a timely basis.

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 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.

Each Fund's net asset value (NAV) is calculated once each Business Day at 4:30
p.m., Eastern time, except for the Government II Fund, which calculates its NAV
at 2:00 p.m., Eastern time, the Treasury II Fund, which calculates its NAV at
2:30 p.m., Eastern time, and the Prime Obligation Fund, which calculates its NAV
at 5:00 p.m., Eastern time. So, for you to be eligible to receive dividends
declared on the day you submit your purchase order, generally the Funds must
receive your purchase order and federal funds (readily available funds) before
each Fund calculates its 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.

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

HOW TO SELL YOUR FUND SHARES

Holders of Class A Shares may sell shares by following procedures established
when they opened their account or accounts with their financial institution or
intermediary. You may also sell your shares by contacting your financial
institution or financial intermediary by telephone. The sale price of each share
will be the next NAV determined after the Funds (or their authorized
intermediaries) receive your request.
<PAGE>
16 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

RECEIVING YOUR MONEY
Normally, the Funds will make payment on your sale as promptly as possible after
they receive your request, but it may take up to three Business 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 Funds' 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). 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 as with any redemption.

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.

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%. The Distributor has voluntarily agreed to waive
the shareholder servicing fees applicable to Class A Shares of the Funds. The
Distributor has no current intention to discontinue this voluntary waiver.
<PAGE>
PROSPECTUS 17

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

You will receive dividends and distributions in 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.

Each Fund will distribute substantially all of its income and capital gains, if
any. The dividends and distributions you receive may be subject to federal,
state and local taxation, depending upon your tax situation. If so, they are
taxable whether or not you reinvest them. Income distributions are generally
taxable at ordinary income tax rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. EACH SALE OF SHARES
IS A TAXABLE EVENT.

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
18 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 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 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 statements, appears
in the annual report that accompanies the Funds' Statement of Additional
Information. You can obtain the annual report, which contains more performance
information, at no charge by calling 1-800-DIAL-SEI.

SEI DAILY INCOME TRUST -- FOR THE YEARS ENDED JANUARY 31
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- ------------------
MONEY MARKET FUND
- ------------------
CLASS A
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.06 -- (0.06) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.06 -- (0.06) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00
- --------------------
PRIME OBLIGATION FUND
- --------------------
CLASS A
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.06 -- (0.06) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00
- ---------------
GOVERNMENT FUND
- ---------------
CLASS A
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996(1)................... 1.00 0.01 -- (0.01) -- 1.00
1994(2)................... 1.00 0.01 -- (0.01) -- 1.00
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS A
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.06 -- (0.06) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00

<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME
RATIO OF INVESTMENT TO AVERAGE TO 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>
- ------------------
MONEY MARKET FUND
- ------------------
CLASS A
1999...................... 5.50% $ 1,212,244 0.18% 5.32% 0.64% 4.86%
1998...................... 5.65 721,035 0.18 5.51 0.66 5.03
1997...................... 5.44 369,052 0.16 5.33 0.63 4.86
1996...................... 5.98 95,891 0.20 5.88 0.45 5.63
1995...................... 4.55 213,988 0.21 4.49 0.45 4.25
- --------------------
PRIME OBLIGATION FUND
- --------------------
CLASS A
1999...................... 5.48% $ 4,482,676 0.20% 5.32% 0.50% 5.02%
1998...................... 5.59 3,247,562 0.20 5.46 0.51 5.15
1997...................... 5.38 2,626,360 0.20 5.26 0.45 5.01
1996...................... 5.96 2,441,662 0.20 5.82 0.29 5.73
1995...................... 4.46 2,778,326 0.20 4.41 0.30 4.31
- ---------------
GOVERNMENT FUND
- ---------------
CLASS A
1999...................... 5.39% $ 204,988 0.20% 5.22% 0.55% 4.87%
1998...................... 5.52 142,929 0.20 5.40 0.56 5.04
1997...................... 5.33 116,373 0.20 5.22 0.55 4.87
1996(1)................... 1.48+ 48,762 0.20 5.55 0.33 5.42
1994(2)................... 3.22 -- 0.20 3.04 0.37 2.87
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS A
1999...................... 5.33% $ 943,396 0.20% 5.20% 0.50% 4.90%
1998...................... 5.45 863,427 0.20 5.32 0.51 5.01
1997...................... 5.29 762,015 0.20 5.17 0.45 4.92
1996...................... 5.83 810,365 0.20 5.69 0.29 5.60
1995...................... 4.39 786,405 0.20 4.33 0.30 4.23
</TABLE>

+ Returns are for the period indicated and have not been annualized.
(1) Government Class A shares were re-offered beginning October 27, 1995. All
ratios for that period have been annualized.
(2) Government Class A shares were fully liquidated June 2, 1993. All ratios
and total return for that period have been annualized.
<PAGE>
PROSPECTUS 19

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- ------------
TREASURY FUND
- ------------
CLASS A
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.06 -- (0.06) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00
- --------------
TREASURY II FUND
- --------------
CLASS A
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.05 -- (0.05) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00

[LOGO]
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated May 31, 1999, includes more detailed information about SEI
Daily Income 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 part of this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

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

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-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 obtain the SAI or the Annual and Semi-Annual Reports,
as well as other information about the SEI Daily Income Trust, from the SEC's
website (http://www.sec.gov). You may review and copy documents at the SEC
Public Reference Room in Washington, DC (for information call
1-800-SEC-0330). You may request documents by mail from the SEC, upon payment
of a duplicating fee, by writing to: Securities and Exchange Commission,
Public Reference Section, Washington, DC 20549-6009.

The Trust's Investment Company Act registration number is 811-3451.

CMS-F-038-03

[LOGO]

PROSPECTUS AS OF MAY 31, 1999

MONEY
MARKET

[GRAPHIC]

------------------------
Money Market Fund
------------------------
Prime Obligation Fund
------------------------
Government Fund
------------------------
Government II Fund
------------------------
Treasury Fund
------------------------
Treasury II Fund

CLASS A

The Securities and Exchange Commission has not approved any Fund shares or
determined whether this prospectus is accurate or complete. It is a crime for
anyone to tell you otherwise.
<PAGE>
SEI Daily
Income Trust
HOW TO READ THIS PROSPECTUS
- ------------------------------------------------------------------------

SEI Daily Income Trust is a mutual fund family that offers separate investment
portfolios (Funds). The Funds have individual investment goals and strategies.
This prospectus gives you important information about the Class C Shares of the
Funds 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 discuss
general information you should know about the Funds. For more detailed
information about the Funds, please see:

MONEY MARKET FUND..............................................................2
PRIME OBLIGATION FUND..........................................................4
GOVERNMENT FUND................................................................6
GOVERNMENT II FUND.............................................................8
TREASURY FUND.................................................................10
TREASURY II FUND..............................................................12
THE FUNDS' OTHER INVESTMENTS..................................................14
THE INVESTMENT ADVISER........................................................14
PURCHASING AND SELLING FUND SHARES............................................15
DIVIDENDS, DISTRIBUTIONS AND TAXES............................................17
FINANCIAL HIGHLIGHTS..........................................................18
HOW TO OBTAIN MORE INFORMATION ABOUT THE SEI DAILY INCOME TRUST.......Back Cover
<PAGE>
PROSPECTUS 1

INTRODUCTION-INFORMATION COMMON TO ALL 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 each Fund's assets in a way it believes will help the Fund achieve its
goals. Still, investing in the Funds involves risks, and there is no guarantee
that a Fund will achieve its goal. In fact, no matter how good a job the Adviser
does, you could lose money on your investment in a Fund, just as you could with
other investments. A Fund share is not a bank deposit, and it is not insured or
guaranteed by the FDIC or any other government agency.

ALTHOUGH EACH FUND IS MANAGED TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00,
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

MONEY MARKET FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE MONEY MARKET 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.

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.
<PAGE>
PROSPECTUS 3

MONEY MARKET FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for three years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.28% 1.18%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.09%.

This table shows the Fund's average annual total returns for Class C Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
MONEY MARKET FUND -- CLASS C SHARES 5.03% 5.09%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS MAY 17, 1995.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS C SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.87%
------
Total Annual Fund Operating Expenses 0.89%*
</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 ADVISER,
ADMINISTRATOR, AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEE IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR, AND/OR DISTRIBUTOR MAY DISCONTINUE ALL OR PART OF THEIR WAIVER AT
ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE
AS FOLLOWS:

<TABLE>
<S> <C>
MONEY MARKET FUND -- CLASS C
SHARES 0.68%
</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>
Money Market Fund -- Class C
Shares $91 $284 $493 $1,096
</TABLE>

<PAGE>
4 PROSPECTUS

PRIME OBLIGATION FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE PRIME OBLIGATION 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.

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.
<PAGE>
PROSPECTUS 5

PRIME OBLIGATION FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for two years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.27% 1.17%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.09%.

This table shows the Fund's average annual total returns for Class C Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
PRIME OBLIGATION FUND -- CLASS C SHARES 5.00% 4.98%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS APRIL 30, 1996.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS C SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.73%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.75%
Fee Waivers and Expense Reimbursements 0.05%
------
NET EXPENSES 0.70%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.70%.

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>
Prime Obligation Fund -- Class
C Shares $72 $224 $390 $871
</TABLE>

<PAGE>
6 PROSPECTUS

GOVERNMENT FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT 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.

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.
<PAGE>
PROSPECTUS 7

GOVERNMENT FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares for
one year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.25% 1.13%
(9/30/98) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.07%.

This table shows the Fund's average annual total returns for Class C Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
GOVERNMENT FUND -- CLASS C SHARES 4.92% 4.96%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS JULY 1, 1997.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS C SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.78%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.80%
Fee Waivers and Expense Reimbursements 0.05%
------
NET EXPENSES 0.75%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.75%.

The Fund's total actual annual fund operating expenses for the most recent
fiscal year were less than the amount shown above because the Adviser,
Administrator and/or Distributor are each waiving a portion of their fees in
order to keep total operating expenses at a specified level. The Adviser,
Administrator and/or Distributor may discontinue all or part of their waiver at
any time. With this fee waiver, the Fund's actual total operating expenses are
as follows:

<TABLE>
<S> <C>
GOVERNMENT FUND -- CLASS C SHARES 0.70%
</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>
Government Fund -- Class C
Shares $77 $240 $417 $930
</TABLE>

<PAGE>
8 PROSPECTUS

GOVERNMENT II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and obligations issued
or guaranteed as to principal and interest by agencies or instrumentalities of
the U.S. government.

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT II 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.

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.
<PAGE>
PROSPECTUS 9

GOVERNMENT II FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for two years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.23% 1.12%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.06%.

This table shows the Fund's average annual total returns for Class C Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
GOVERNMENT II FUND -- CLASS C SHARES 4.85% 4.88%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS NOVEMBER 27, 1996.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.70%.

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>
Government II Fund -- Class C
Shares $72 $224 $390 $871
</TABLE>

<PAGE>
10 PROSPECTUS

TREASURY FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and repurchase
agreements fully-collateralized by U.S. Treasury obligations.

Using a top-down strategy and bottom-up security selection, the Adviser seeks
securities with an acceptable maturity, that are marketable and liquid and offer
competitive yields. The Adviser also considers factors such as the anticipated
level of interest rates and the maturity of individual securities relative to
the maturity of the Fund as a whole. The Fund follows strict Investment Company
Act rules about the credit quality, maturity and diversification of its
investments.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 11

TREASURY FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for three years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.25% 1.09%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.02%.

This table shows the Fund's average annual total returns for Class C for the
periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
TREASURY FUND -- CLASS C SHARES 4.83% 4.92%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS JULY 27, 1995.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS C SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.80%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.82%
Fee Waivers and Expense Reimbursements 0.12%
------
NET EXPENSES 0.70%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.70%.

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>
Treasury Fund -- Class C
Shares $72 $224 $390 $871
</TABLE>

<PAGE>
12 PROSPECTUS

TREASURY II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY II 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 13

TREASURY II FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for three years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.16% 0.97%
(9/30/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 0.95%.

This table shows the Fund's average annual total returns for Class C Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
TREASURY II FUND -- CLASS C SHARES 4.41% 4.64%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS MAY 8, 1995.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.75%.

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>
Treasury II Fund -- Class C
Shares $77 $240 $417 $930
</TABLE>
<PAGE>
14 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

This prospectus describes the Funds' primary investment strategies. The Funds
are required to invest at least 80% of their assets, but normally will invest
100% of their assets, in the types of securities described in this prospectus.
However, 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. Of course, there is no guarantee
that any Fund will achieve its investment goal.

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 hold up to 100%
of its assets in cash or cash equivalents that would not ordinarily be
consistent with the Fund's objective.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

Wellington Management Company, LLP ("Wellington"), serves as the Adviser to the
Funds. As of March 31, 1999, Wellington had approximately $215 billion in assets
under management. For the fiscal period ended January 31, 1999, each Fund paid
Wellington advisory fees of 0.01% of its average daily net assets.

Timothy E. Smith is the portfolio manager of each Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 15

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy or sell (sometimes called "redeem") shares of
the Funds. The Funds offer Class C Shares only to financial institutions 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 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. The Funds may reject any purchase order if
they determine that accepting the order would not be in the best interests of
the Funds or their shareholders.

Each Fund's net asset value (NAV) is calculated once each Business Day at 4:30
p.m. Eastern time, except for the Government II Fund, which calculates its NAV
at 2:00 p.m. Eastern time, the Treasury II Fund, which calculates its NAV at
2:30 p.m. Eastern time, and the Prime Obligation Fund, which calculates its NAV
at 5:00 p.m. Eastern time. So, for you to be eligible to receive dividends
declared on the day you submit your purchase order, generally the Funds must
receive your purchase order and federal funds (readily available funds) before
each Fund calculates its 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.

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

HOW TO SELL YOUR FUND SHARES

Holders of Class C Shares may sell shares by following procedures established
when they opened their account or accounts with their financial institution or
intermediary. You may also sell your shares by contacting your financial
institution or financial intermediary by telephone. The sale price of each share
will be the next NAV determined after the Funds (or their authorized
intermediaries) receive your request.
<PAGE>
16 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

RECEIVING YOUR MONEY
Normally, the Funds will make payment on your sale proceeds as promptly as
possible after they receive your request, but it will take up to three Business
Days. Your proceeds will be wired to your bank account.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A 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.

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 C
Shares.

For Class C Shares, shareholder servicing fees, as a percentage of average daily
net assets, may be up to 0.25%, and administrative service fees, as a percentage
of average daily net assets, may be up to 0.25%.
<PAGE>
PROSPECTUS 17

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTION

Each Fund declares 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 cash unless otherwise stated.

TAXES

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

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class C Shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table 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 Funds' financial statements, appears
in the annual report that accompanies the Fund's Statement of Additional
Information. You can obtain the annual report, which contains more performance
information, at no charge by calling 1-800-DIAL-SEI.

SEI DAILY INCOME TRUST -- FOR THE YEARS ENDED JANUARY 31
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- ------------------
MONEY MARKET FUND
- ------------------
CLASS C
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996(1)................... 1.00 0.04 -- (0.04) -- 1.00
- --------------------
PRIME OBLIGATION FUND
- --------------------
CLASS C
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997(2)................... 1.00 0.04 -- (0.04) -- 1.00
1995(3)................... 1.00 0.03 -- (0.03) -- 1.00
1994...................... 1.00 0.03 -- (0.03) -- 1.00
- ---------------
GOVERNMENT FUND
- ---------------
CLASS C
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998(4)................... 1.00 0.03 -- (0.03) -- 1.00
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS C
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997(5)................... 1.00 0.01 -- (0.01) -- 1.00

<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME
RATIO OF INVESTMENT TO AVERAGE TO 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>
- ------------------
MONEY MARKET FUND
- ------------------
CLASS C
1999...................... 4.97% $ 132,831 0.68% 4.84% 0.89% 4.63%
1998...................... 5.12 86,922 0.68 5.02 0.92 4.78
1997...................... 4.92 30,528 0.66 4.84 0.92 4.58
1996(1)................... 3.79+ 2,460 0.70 5.17 0.96 4.91
- --------------------
PRIME OBLIGATION FUND
- --------------------
CLASS C
1999...................... 4.96% $ 351,881 0.70% 4.82% 0.75% 4.77%
1998...................... 5.06 207,908 0.70 5.02 0.76 4.96
1997(2)................... 4.85 4,332 0.70 4.79 0.74 4.75
1995(3)................... 2.55+ -- 0.70 2.79 0.77 2.72
1994...................... 2.59 20,602 0.70 2.57 0.78 2.48
- ---------------
GOVERNMENT FUND
- ---------------
CLASS C
1999...................... 4.87% $ 39,881 0.70% 4.70% 0.80% 4.60%
1998(4)................... 5.01 25,341 0.70 4.94 0.81 4.83
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS C
1999...................... 4.81% $ 50,712 0.70% 4.70% 0.75% 4.65%
1998...................... 4.93 35,272 0.70 4.82 0.76 4.76
1997(5)................... 4.71 6,359 0.70 4.69 0.75 4.64
</TABLE>

+ Returns are for the period indicated and that you sell your shares at the
end of the period and that you sell your shares at the end of the period and
have not been annualized.
(1) Money Market Class C shares were offered beginning May 17, 1995. All ratios
for that period have been annualized.
(2) Prime Obligation Class C shares were re-offered beginning April 30, 1996.
All ratios and total return for the period have been annualized.
(3) Prime Obligation Class C shares were fully liquidated October 27, 1994. All
ratios for that period have been annualized.
(4) Government Class C shares were offered beginning July 1, 1997. All ratios
and total return for that period have been annualized.
(5) Government II Class C shares were offered beginning November 27, 1996. All
ratios and total return for that period have been annualized.
<PAGE>
PROSPECTUS 19

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- ------------
TREASURY FUND
- ------------
CLASS C
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996(6)................... 1.00 0.03 -- (0.03) -- 1.00
- --------------
TREASURY II FUND
- --------------
CLASS C
1999...................... $1.00 $0.04 $ -- $(0.04) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.04 -- (0.04) -- 1.00
1996(7)................... 1.00 0.04 -- (0.04) -- 1.00

(6) Treasury Class C shares were offered beginning July 27, 1995. All ratios
for that period have been annualized.
(7) Treasury II Class C shares were offered beginning May 8, 1995. All ratios
and total return for that period have been annualized.
<PAGE>

[LOGO]
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-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 811-3451.

CMS-F-038-03

[LOGO]

PROSPECTUS AS OF MAY 31, 1999

MONEY
MARKET

[PHOTO]

-------------------
Money Market Fund
-------------------
Prime Obligation Fund
-------------------
Government Fund
-------------------
Government II Fund
-------------------
Treasury Fund
-------------------
Treasury II Fund

CLASS C

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

INTRODUCTION-INFORMATION COMMON TO ALL FUNDS

The 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 each Fund's assets in a way it believes will help each Fund achieve its
goals. Still, investing in the Funds involves risks, and there is no guarantee
that a Fund will achieve its goal. In fact, no matter how good a job the Adviser
does, you could lose money on your investment in a Fund, just as you could with
other investments. A Fund share is not a bank deposit, and it is not insured or
guaranteed by the FDIC or any government agency.

ALTHOUGH EACH FUND IS MANAGED TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00,
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

Like other mutual funds (and most organizations around the world), the Funds
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Funds or
on the financial markets in general, the Funds are taking steps to protect Fund
investors. These include efforts to ensure that the Funds' systems are prepared
to make the transition to the year 2000, and to determine that the problem will
not affect the systems used by the Funds' major service providers. Whether these
steps will be effective can only be known for certain in the year 2000. In
addition, year 2000 problems may ultimately negatively affect the companies and
governments whose securities the Funds purchase, which may have an impact on the
value of the Funds' shares. There is additional information on these risks in
the Statement of Additional Information.
<PAGE>
2 PROSPECTUS

MONEY MARKET FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Money Market Fund is comprised of short-term U.S. dollar denominated debt
obligations that are rated in one of the two highest rating categories by
nationally recognized statistical rating organizations or that the Adviser
determines are of comparable quality. The Fund invests in: (i) commercial paper
and other short-term corporate obligations of U.S. and foreign issuers,
including asset-backed securities, rated in the highest rating category; (ii)
certificates of deposit, time deposits, bankers' acceptances, bank notes and
other obligations of U.S. savings and loan institutions, U.S. commercial banks
(including foreign branches of such banks), and U.S. and London branches of
foreign banks, that meet certain asset requirements; (iii) short-term
obligations issued by state and local governments; (iv) obligations of foreign
governments (including Canadian and Provincial Government and Crown Agency
obligations); and (v) U.S. Treasury obligations and obligations issued or
guaranteed as to principal and interest by agencies or intrumentalities of the
U.S. government. The Fund may also enter into fully-collateralized repurchase
agreements.

WHAT ARE THE RISKS OF INVESTING IN THE MONEY MARKET 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.

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.
<PAGE>
PROSPECTUS 3

MONEY MARKET 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. Since Class A Shares are invested in the same
portfolio of securities, returns for Sweep Class 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.03% 0.72%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.21%.

This table shows the Fund's average annual total returns for Class A Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
MONEY MARKET FUND 5.55% 5.39% 5.71% 6.52%*
- ---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS NOVEMBER 15, 1983. THE
INCEPTION DATE FOR SWEEP CLASS SHARES OF THE FUND IS JULY 15, 1998.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) SWEEP CLASS SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees 0.50%
Other Expenses 0.62%
------
Total Annual Fund Operating Expenses 1.14%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE WAIVING A PORTION OF THEIR FEES IN ORDER TO
KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER, ADMINISTRATOR
AND OR DISTRIBUTOR MAY DISCONTINUE ALL OR PART OF THEIR WAIVERS AT ANY TIME.
WITH THESE FEE WAIVERS THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS
FOLLOWS:

<TABLE>
<S> <C>
MONEY MARKET FUND -- SWEEP CLASS
SHARES 0.93%
</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>
Money Market Fund -- Sweep
Class Shares $116 $362 $628 $1,386
</TABLE>

<PAGE>
4 PROSPECTUS

PRIME OBLIGATION FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE PRIME OBLIGATION 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.

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.
<PAGE>
PROSPECTUS 5

PRIME OBLIGATION 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.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.06% 0.75%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.22%.
This table shows the Fund's average annual total returns for Class A Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
PRIME OBLIGATION FUND 5.53% 5.34% 5.76% 5.95%*
- ---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS DECEMBER 22, 1987. THE
INCEPTION DATE FOR SWEEP CLASS SHARES OF THE FUND IS MAY 18, 1998.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) SWEEP CLASS SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees 0.50%
Other Expenses 0.48%
------
Total Annual Fund Operating Expenses 1.00%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE WAIVING A PORTION OF THEIR FEES IN ORDER TO
KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER, ADMINISTRATOR
AND OR DISTRIBUTOR MAY DISCONTINUE ALL OR PART OF THEIR WAIVERS AT ANY TIME.
WITH THESE FEE WAIVERS THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS
FOLLOWS:

<TABLE>
<S> <C>
PRIME OBLIGATION FUND -- SWEEP CLASS SHARES 0.95%
</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 and Fund expenses remain the same. Although your
actual costs and returns might be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Prime Obligation Fund -- Sweep
Class Shares $102 $318 $552 $1,225
</TABLE>

<PAGE>
6 PROSPECTUS

GOVERNMENT FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT 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.

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.
<PAGE>
PROSPECTUS 7

GOVERNMENT FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for three years. Since Class A Shares are invested in the same
portfolio of securities, returns for Sweep Class 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.38% 1.26%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.19%.

This table shows the Fund's average annual total returns for Class A Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
GOVERNMENT FUND 5.45% 5.46%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS OCTOBER 27, 1995. THE
INCEPTION DATE FOR SWEEP CLASS SHARES OF THE FUND IS JUNE 4, 1998.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) SWEEP CLASS SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees 0.50%
Other Expenses 0.53%
------
Total Annual Fund Operating Expenses 1.05%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE WAIVING A PORTION OF THEIR FEES IN ORDER TO
KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER, ADMINISTRATOR
AND OR DISTRIBUTOR MAY DISCONTINUE ALL OR PART OF THEIR WAIVERS AT ANY TIME.
WITH THESE FEE WAIVERS THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS
FOLLOWS:

<TABLE>
<S> <C>
GOVERNMENT FUND -- SWEEP CLASS
SHARES 0.95%
</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>
Government Fund -- Sweep Class
Shares $107 $334 $579 $1,283
</TABLE>

<PAGE>
8 PROSPECTUS

GOVERNMENT II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Government II Fund invests exclusively in U.S. Treasury obligations and
obligations issued or guaranteed as to principal and interest by agencies or
instrumentalities of the U.S. government.

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT II 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.

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.
<PAGE>
PROSPECTUS 9

GOVERNMENT II FUND

PERFORMANCE INFORMATION

As of January 31, 1999, there were no Sweep Class Shares of the Government II
Fund outstanding.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.01% 0.73%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.19%.

This table shows the Fund's average annual total returns for Class A Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
GOVERNMENT II FUND 5.38% 5.23% 5.57% 5.88%*
- ---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS DECEMBER 9, 1985. AS OF
JANUARY 31, 1999, THERE WERE NO SWEEP CLASS SHARES OF THE FUND OUTSTANDING.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) SWEEP CLASS SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees 0.50%
Other Expenses 0.48%*
------
Total Annual Fund Operating Expenses 1.00%**
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY WAIVE A PORTION OF THEIR FEES IN ORDER TO
KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER, ADMINISTRATOR
AND OR DISTRIBUTOR MAY DISCONTINUE ALL OR PART OF THEIR WAIVERS AT ANY TIME.
WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE EXPECTED TO
BE AS FOLLOWS:

<TABLE>
<S> <C>
GOVERNMENT II FUND -- SWEEP CLASS
SHARES 0.95%
</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>
Government II Fund -- Sweep
Class Shares $102 $318 $552 $1,225
</TABLE>

<PAGE>
10 PROSPECTUS

TREASURY FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and repurchase
agreements fully-collateralized by U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 11

TREASURY FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Sweep Class Shares
for one year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.17% 1.03%
(9/30/98) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S SWEEP CLASS TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS
0.96%.

This table shows the Fund's average annual total returns for Sweep Class Shares
for the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
TREASURY FUND 4.57% 4.64%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR SWEEP CLASS SHARES OF THE FUND IS AUGUST 1, 1997.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) SWEEP CLASS SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees 0.50%
Other Expenses 0.55%
------
Total Annual Fund Operating Expenses 1.07%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE WAIVING A PORTION OF THEIR FEES IN ORDER TO
KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER, ADMINISTRATOR
AND OR DISTRIBUTOR MAY DISCONTINUE ALL OR PART OF THEIR WAIVERS AT ANY TIME.
WITH THESE FEE WAIVERS THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE AS
FOLLOWS:

<TABLE>
<S> <C>
TREASURY FUND -- SWEEP CLASS
SHARES 0.95%
</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>
Treasury Fund -- Sweep Class
Shares $109 $340 $590 $1,306
</TABLE>

<PAGE>
12 PROSPECTUS

TREASURY II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY II 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 13

TREASURY II FUND

PERFORMANCE INFORMATION

As of January 31, 1999, there were no Sweep Class Shares of the Treasury II Fund
outstanding.

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 Sweep Class 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.96% 0.70%
(6/30/90) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.07%.

This table shows the Fund's average annual total returns for Class A Shares for
the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
TREASURY II FUND 4.93% 4.95% 5.09%*
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS JULY 28, 1989. AS OF
JANUARY 31, 1999, THERE WERE NO SWEEP CLASS SHARES OF THE FUND OUTSTANDING.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) SWEEP CLASS SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees 0.50%
Other Expenses 0.53%*
------
Total Annual Fund Operating Expenses 1.05%**
</TABLE>

<TABLE>
<S> <C>
TREASURY II FUND -- SWEEP CLASS
SHARES 1.00%
</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>
Treasury II Fund -- Sweep
Class Shares $107 $334 $579 $1,283
</TABLE>
<PAGE>
14 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

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 hold up to 100%
of its assets in cash or cash equivalents that would not ordinarily be
consistent with the Fund's objective.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

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

Wellington Management Company, LLP ("Wellington"), serves as the Adviser for the
Funds. As of March 31, 1999, Wellington had approximately $215 billion in assets
under management. For the fiscal year ended January 31, 1999, each Fund paid
Wellington advisory fees of 0.01% of its average daily net assets.

Timothy E. Smith is the portfolio manager of each Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 15

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy or sell (sometimes called "redeem") shares of
the Funds. The Funds offer Sweep Class Shares only to financial institutions 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 Sweep Class 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. The Funds may reject any
purchase order if they determine that accepting the order would not be in the
best interests of the Funds or their shareholders.

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.

HOW TO SELL YOUR FUND SHARES

Holders of Sweep Class Shares may sell shares by following procedures
established when they opened their account or accounts with financial
institution or intermediary. You may also sell your shares by contacting your
financial institution or financial intermediary by telephone. The sale price of
each share will be the next NAV determined after the Funds (or their authorized
intermediaries) receive your request.
<PAGE>
16 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

RECEIVING YOUR MONEY
Normally, the Funds will make payment on your sale as promptly as possible after
they receive your request, but it will take up to three Business Days. Your
proceeds will be wired to your bank account.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. SIDCo. receives compensation, pursuant to a Rule 12b-1 Plan, for
distributing the Funds' Sweep Class Shares. The distribution fee for Sweep Class
Shares, as a percentage of daily net assets, may be up to 0.50%.

For Sweep Class Shares, shareholder servicing fees, as a percentage of average
daily net assets, may be up to 0.25%.
<PAGE>
PROSPECTUS 17

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

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

TAXES

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

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the Sweep Class
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 a Fund,
assuming you reinvested all of your dividends and distributions.

(1) Money Market Sweep Class shares were offered beginning July 15, 1998. All
ratios and total return for that period have been annualized.
(2) Prime Obligation Sweep Class shares were offered beginning May 18, 1998.
All ratios and total return for that period have been annualized.
(3) Government Sweep Class shares were offered beginning June 4, 1998. All
ratios and total return for that period have been annualized.
(4) Treasury Sweep Class shares were offered beginning August 1, 1997. All
ratios and total return for that period have been annualized.
<PAGE>

[LOGO]
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-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 811-3451.

CMS-F-039-03

[LOGO]

PROSPECTUS AS OF MAY 31, 1999

MONEY
MARKET

[PHOTO]
---------------------
Money Market Fund
---------------------
Prime Obligation Fund
---------------------
Government Fund
---------------------
Government II Fund
---------------------
Treasury Fund
---------------------
Treasury II Fund

SWEEP CLASS

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

CORPORATE DAILY INCOME FUND....................................................2
TREASURY SECURITIES DAILY INCOME FUND..........................................4
SHORT-DURATION GOVERNMENT FUND.................................................6
INTERMEDIATE-DURATION GOVERNMENT FUND..........................................8
GNMA FUND.....................................................................10
THE FUNDS' OTHER INVESTMENTS..................................................12
MORE INFORMATION ABOUT RISK...................................................12
THE INVESTMENT ADVISER AND PORTFOLIO MANAGERS.................................13
PURCHASING AND SELLING FUND SHARES............................................14
DIVIDENDS, DISTRIBUTIONS AND TAXES............................................16
FINANCIAL HIGHLIGHTS..........................................................17
HOW TO OBTAIN MORE INFORMATION ABOUT SEI DAILY INCOME TRUST...........Back Cover
<PAGE>
PROSPECTUS 1

INTRODUCTION -- INFORMATION COMMON TO ALL 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 each Fund's assets in a way it believes will help each Fund achieve its
goals. Still, investing in a Fund involves risks, and there is no guarantee that
a Fund will achieve its goal. The Adviser makes judgments about the economy, but
these judgments may not anticipate actual market movements or the impact of
economic conditions on issuers. In fact, no matter how good a job the Adviser
does, you could lose money on your investment in a Fund, just as you could with
other investments. A Fund share is not a bank deposit, and it is not insured or
guaranteed by the FDIC or any other government agency.

The value of your investment in a 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 each Fund is set forth in the Fund Summaries
that follow. 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.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

CORPORATE DAILY INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Providing a higher current income than that
typically offered by a money market fund while
maintaining liquidity
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Low to medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
fixed income obligations, the Fund invests in
investment grade fixed income securities of U.S.
issuers
</TABLE>

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

INVESTMENT STRATEGY

The Corporate Daily Income Fund invests substantially all (at least 80%) of its
assets in investment grade obligations of U.S. issuers, including: (i)
commercial paper and other corporate obligations; (ii) certificates of deposit,
time deposits, bankers' acceptances and bank notes of U.S. commercial banks or
savings and loans institutions that meet certain asset requirements; (iii) U.S.
Treasury obligations and obligations issued or guaranteed as to principal and
interest by agencies or instrumentalities of the U.S. government; (iv)
mortgage-backed securities; and (v) asset-backed securities. The Fund may also
enter into repurchase agreements.

Using a top-down strategy and bottom-up security selection, the Adviser seeks
attractively-valued securities with an acceptable maturity, that offer
competitive yields, and that are issued by issuers that are on a sound financial
footing. The Adviser also considers factors such as the anticipated level of
interests rates, relative valuations and yield spreads among various sectors,
and the maturity of individual securities relative to the maturity of the Fund
as a whole. The Adviser will strive to maintain a portfolio duration between one
half and one and a half years. The maximum remaining maturity of any single
security, other than securities whose rate of payment resets at least once a
year, will be five years.

WHAT ARE THE RISKS OF INVESTING IN THE CORPORATE DAILY INCOME 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. Generally, fixed income securities
decrease in value if interest rates rise and vice versa. Also, longer-term
securities are generally more volatile, so the average maturity or duration of
these securities affects risk.

Mortgage-backed securities are fixed income securities representing an interest
in a pool of underlying mortgage loans. They are sensitive to changes in
interest rates, but may respond to these changes differently from other fixed
income securities due to the possibility of prepayment of the underlying
mortgage loans. As a result, it may not be possible to determine in advance the
actual maturity date or average life of a mortgage-backed security. Rising
interest rates tend to discourage refinancings, with the result that the average
life and volatility of the security will increase, exacerbating its decrease in
market price. When interest rates fall, however, mortgage-backed securities may
not gain as much in market value because of the expectation of additional
mortgage prepayments, which must be reinvested at lower interest rates.
Prepayment risk may make it difficult to calculate the average maturity of a
portfolio of mortgage-backed securities and, therefore, to assess the volatility
risk of that portfolio.

The Fund is also subject to the risk that its market segment, short duration
fixed income securities, may underperform other fixed income market segments or
the fixed income markets as a whole.
<PAGE>
PROSPECTUS 3

CORPORATE DAILY INCOME 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
2.56% 0.38%
(6/30/95) (3/31/94)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.28%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ending December 31, 1998 to those of the Merrill Lynch 1-Year
U.S. Treasury Bill Index.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
CORPORATE DAILY INCOME FUND --
CLASS A SHARES 6.18% 5.73% 5.51%*
- ---------------------------------------------------------------
MERRILL LYNCH 1-YEAR U.S. TREASURY
BILL INDEX+ 5.89% 5.53% 5.40%++
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS SEPTEMBER 28, 1993.
+ AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. 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 MERRILL LYNCH 1-YEAR U.S. TREASURY BILL INDEX IS A WIDELY-RECOGNIZED,
MARKET WEIGHTED INDEX OF U.S. TREASURY BILLS WITH A MATURITY OF ONE YEAR.
++ THE INCEPTION DATE FOR THE INDEX IS SEPTEMBER 30, 1993.

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

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

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 0.10% 0.10% 0.10%
Distribution (12b-1) Fees None None None
Other Expenses 0.66% 0.71% 0.91%
------ ------ ------
Total Annual Fund Operating
Expenses 0.76%* 0.81%* 1.01%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
CORPORATE DAILY INCOME FUND -- CLASS A
SHARES 0.35%
CORPORATE DAILY INCOME FUND -- CLASS B
SHARES 0.65%
CORPORATE DAILY INCOME 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>
Corporate Daily Income Fund --
Class A Shares $78 $243 $422 $942
Corporate Daily Income Fund --
Class B Shares $83 $259 $450 $1,002
Corporate Daily Income Fund --
Class C Shares $103 $322 $558 $1,236
</TABLE>

<PAGE>
4 PROSPECTUS

TREASURY SECURITIES DAILY INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Providing a higher current income than that
typically offered by a money market fund while
maintaining liquidity
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Low to medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
fixed income securities, the Fund invests in U.S.
Treasury obligations
</TABLE>

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

INVESTMENT STRATEGY

The Treasury Securities Daily Income Fund invests substantially all (at least
80%) of its assets in U.S. Treasury obligations. The Fund may also enter into
repurchase agreements.

Using a top-down strategy and bottom-up security selection, the Adviser seeks
attractively-valued securities with an acceptable maturity that offer
competitive yields. The Adviser also considers factors such as the anticipated
level of interest rates, relative valuations and yield spreads, and the maturity
of individual securities relative to the maturity of the Fund as a whole. The
Adviser will strive to maintain a portfolio duration between one half and one
and a half years. The maximum remaining maturity of any single security will be
five years.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY SECURITIES DAILY INCOME FUND?

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

The Fund is also subject to the risk that its market segment, U.S. Treasury
securities, may underperform other fixed income market segments or the fixed
income markets as a whole.
<PAGE>
PROSPECTUS 5

TREASURY SECURITIES DAILY INCOME FUND

PERFORMANCE INFORMATION

As of January 31, 1999, the Treasury Securities Daily Income Fund had not
commenced operations, and did not have a performance history.

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

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

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 0.10% 0.10% 0.10%
Distribution (12b-1) Fees None None None
Other Expenses 0.64%* 0.69%* 0.89%*
------ ------ ------
Total Annual Fund Operating
Expenses 0.74%** 0.79%** 0.99%**
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE EXPECTED TO BE FOLLOWS:

<TABLE>
<S> <C>
TREASURY SECURITIES DAILY INCOME FUND -- CLASS
A SHARES 0.35%
TREASURY SECURITIES DAILY INCOME FUND -- CLASS
B SHARES 0.65%
TREASURY SECURITIES DAILY INCOME 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>
Treasury Securities Daily
Income Fund -- Class A
Shares $76 $237 $411 $918
Treasury Securities Daily
Income Fund -- Class B
Shares $81 $252 $439 $978
Treasury Securities Daily
Income Fund -- Class C
Shares $101 $315 $547 $1,213
</TABLE>

<PAGE>
6 PROSPECTUS

SHORT-DURATION GOVERNMENT FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal value and maintaining
liquidity while providing current income
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Low to medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
fixed income securities, the Fund invests in U.S.
Government securities
</TABLE>

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

INVESTMENT STRATEGY

The Short-Duration Government Fund invests substantially all (at least 80%) of
its assets in U.S. Treasury obligations and obligations issued or guaranteed as
to principal and interest by agencies or instrumentalities of the U.S.
Government, including mortgage-backed securities. The Fund may also enter into
repurchase agreements.

WHAT ARE THE RISKS OF INVESTING IN THE SHORT-DURATION GOVERNMENT FUND?

Although the Fund's U.S. government securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates. Obligations issued by some U.S. government agencies or
instrumentalities are backed by the U.S. Treasury, while others are backed
solely by the ability of the agency to borrow from the U.S. Treasury or by the
agency's own resources.

The Fund is also subject to the risk that its market segment, short-duration
U.S. Government securities, may underperform other fixed income market segments
or the fixed income markets as a whole.
<PAGE>
PROSPECTUS 7

SHORT-DURATION GOVERNMENT 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 of Class A, and Class B Shares
will differ due to differences in expenses.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
3.65% -0.65%
(12/31/91) (3/31/94)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 0.69%.
This table compares the Fund's average annual total returns for Class A and
Class B Shares for the periods ending December 31, 1998 to those of the Merrill
Lynch 1-3 Year U.S. Treasury Bond Index.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
SHORT-DURATION GOVERNMENT FUND --
CLASS A SHARES 7.08% 5.90% 6.72%*
- ---------------------------------------------------------------
SHORT-DURATION GOVERNMENT FUND --
CLASS B SHARES 6.87% 5.58% 6.12%**
- ---------------------------------------------------------------
MERRILL LYNCH 1-3 YEAR U.S.
TREASURY BOND INDEX+ 7.00% 5.98% 7.12%++
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS FEBRUARY 17, 1987.
** THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS NOVEMBER 5, 1990.
+ AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. 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 MERRILL LYNCH 1-3 YEAR U.S. TREASURY BOND INDEX IS A WIDELY-
RECOGNIZED, MARKET WEIGHTED INDEX OF U.S. TREASURY BONDS WITH MATURITIES BETWEEN
ONE AND THREE YEARS.
++ THE INCEPTION DATE FOR THE INDEX IS FEBRUARY 28, 1987.

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 0.10% 0.10% 0.10%
Distribution (12b-1) Fees None None None
Other Expenses 0.62% 0.67% 0.87%
------ ------ ------
Total Annual Fund Operating
Expenses 0.72%* 0.77%* 0.97%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
SHORT-DURATION GOVERNMENT FUND -- CLASS A
SHARES 0.45%
SHORT-DURATION GOVERNMENT FUND -- CLASS B
SHARES 0.75%
SHORT-DURATION GOVERNMENT FUND -- CLASS C
SHARES 0.95%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Short-Duration Government Fund
-- Class A Shares $74 $230 $401 $894
Short-Duration Government Fund
-- Class B Shares $79 $246 $428 $954
Short-Duration Government Fund
-- Class C Shares $99 $309 $536 $1,190
</TABLE>

<PAGE>
8 PROSPECTUS

INTERMEDIATE-DURATION GOVERNMENT FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal value and maintaining
liquidity while providing current income
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
fixed income securities, the Fund invests in U.S.
Government securities
</TABLE>

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

INVESTMENT STRATEGY

The Intermediate-Duration Government Fund invests substantially all (at least
80%) of its assets in U.S. Treasury obligations and obligations issued or
guaranteed as to principal and interest by agencies or instrumentalities of the
U.S. Government, including mortgage-backed securities. The Fund may also enter
into repurchase agreements. In addition, the Fund may invest in futures
contracts and other similar instruments for risk management purposes.

WHAT ARE THE RISKS OF INVESTING IN THE INTERMEDIATE-DURATION GOVERNMENT FUND?

The Fund is also subject to the risk that its market segment,
intermediate-duration U.S. Government securities, may underperform other fixed
income market segments or the fixed income markets as a whole.
<PAGE>
PROSPECTUS 9

INTERMEDIATE-DURATION GOVERNMENT FUND

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for ten years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.08% -2.00%
(6/30/95) (3/31/94)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS -0.44%.
This table compares the Fund's average annual total returns for Class A Shares
for the periods ending December 31, 1998, to those of the Merrill Lynch 3-5 Year
U.S. Treasury Bond Index.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
INTERMEDIATE-DURATION
GOVERNMENT FUND -- CLASS A
SHARES 8.47% 6.35% 7.98% 7.41%*
- ---------------------------------------------------------------------
MERRILL LYNCH 3-5 YEAR U.S.
TREASURY BOND INDEX+ 9.08% 6.62% 8.71% 8.05%++
- ---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS FEBRUARY 17, 1987.
+ AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. 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 MERRILL LYNCH 3-5 YEAR U.S. TREASURY BOND INDEX IS A WIDELY-
RECOGNIZED, MARKET WEIGHTED INDEX OF U.S TREASURY BONDS WITH MATURITIES BETWEEN
THREE AND FIVE YEARS.
++ THE INCEPTION DATE FOR THE INDEX IS FEBRUARY 28, 1987.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.66%
------
Total Annual Fund Operating Expenses 0.76%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
INTERMEDIATE-DURATION GOVERNMENT FUND -- CLASS A
SHARES 0.50%
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Intermediate-Duration
Government Fund -- Class A
Shares $78 $243 $422 $942
</TABLE>

<PAGE>
10 PROSPECTUS

GNMA FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Preserving principal value and maintaining
liquidity while providing current income
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing an adviser experienced in selecting
mortgage-backed securities, the Fund invests
principally in fixed income obligations issued by
the Government National Mortgage Association
("GNMA")
</TABLE>

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

INVESTMENT STRATEGY

The GNMA Fund invests primarily (at least 65% of its assets) in mortgage-backed
securities issued by GNMA. The Fund may also invest in U.S. Treasury securities
and U.S. Government securities. In addition the Fund may enter into repurchase
agreements and may invest in futures contracts and other similar instruments for
risk management purposes.

Using a top-down strategy and bottom-up security selection, the Adviser seeks
attractively-valued securities with an acceptable maturity and that offer
competitive yields. The Adviser also considers factors such as the anticipated
level of interests rates, relative valuations and yield spreads, and the
maturity of individual securities relative to the maturity of the Fund as a
whole. There is no restriction on the Fund's portfolio duration.

WHAT ARE THE RISKS OF INVESTING IN THE GNMA FUND?

The Fund is also subject to the risk that its market segment, GNMA securities,
may underperform other fixed income market segments or the fixed income markets
as a whole.
<PAGE>
PROSPECTUS 11

GNMA FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class A Shares
from year to year for 10 years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.70% -3.73%
(9/30/91) (3/31/94)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS A TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 0.34%.

This table compares the Fund's average annual total returns for Class A Shares
for the periods ending December 31, 1998, to those of the Salomon Smith Barney
30 Year GNMA Index.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
GNMA FUND 7.26% 6.69% 8.72% 8.01%*
- ---------------------------------------------------------------------
SALOMON SMITH BARNEY 30 YEAR
GNMA INDEX+ 6.82% 7.34% 9.29% 8.75%++
- ---------------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS A SHARES OF THE FUND IS MARCH 20, 1987.
+ AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. 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 SALOMON SMITH BARNEY 30-YEAR GNMA INDEX IS A WIDELY-RECOGNIZED
COMPONENT OF THE SALOMON SMITH BARNEY MORTGAGE INDEX CONSISTING OF THE POOL OF
30-YEAR MORTGAGES BACKED BY GNMA.
++ THE INCEPTION DATE FOR THE INDEX IS MARCH 31, 1987.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.10%
Distribution (12b-1) Fees None
Other Expenses 0.62%
------
Total Annual Fund Operating Expenses 0.72%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
GNMA FUND -- CLASS A SHARES 0.60%
</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>
GNMA Fund -- Class A Shares $74 $230 $401 $894
</TABLE>
<PAGE>
12 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

This prospectus describes the Funds' primary investment strategies. The Funds
will normally invest at least 65% of their assets in the types of securities
described in this prospectus. However, 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).
Of course, there is no guarantee that the Fund will achieve its investment goal.

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, the Funds may invest up to
100% of its assets in short-term obligations, cash or equivalents that would not
ordinarily be consistent with each Fund's objective. The Funds will do so only
if the Adviser believes that the risk of loss outweighs the opportunity for
higher taxable income.

MORE INFORMATION ABOUT RISK
- --------------------------------------------------------------------------------

The Funds are also subject to the following additional risks:

CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will default or otherwise become unable to honor a financial
obligation.

EXTENSION RISK. The risk that an unexpected rise in interest rates will extend
the life of a mortgage-backed security beyond the expected prepayment time,
typically reducing the security's value.

INTEREST RATE RISK. The risk of market losses attributable to changes in
interest rates. With fixed-rate securities, a rise in interest rates typically
causes a fall in values, while a fall in interest rates typically causes a rise
in values.

LIQUIDITY RISK. The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like. The seller may
have to lower the price, sell other securities instead, or forego an investment
opportunity, any of which could have a negative effect on fund management or
performance.

MARKET RISK. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. Market risk may affect a single issuer, an
industry, a sector, or the bond market as a whole.

OPPORTUNITY RISK. The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in other investments.

PREPAYMENT RISK. The risk to a GNMA or other mortgage-backed security of
unanticipated prepayments of principal with respect to mortgages in the
security's underlying pool of assets. While principal pre-payments are passed
through to the holders of GNMA securities, pre-payments also reduce the future
payments on such securities and may reduce their value.
<PAGE>
PROSPECTUS 13

INVESTMENT ADVISER AND PORTFOLIO MANAGERS

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

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

Wellington Management Company, LLP ("Wellington"), serves as the Adviser to the
Funds. As of March 31, 1999, Wellington had approximately $215 billion in assets
under management. For the fiscal year ended January 31, 1998 the Funds paid
Wellington the following advisory fees as a percentage of average daily net
assets:

<TABLE>
<S> <C>
CORPORATE DAILY INCOME FUND....................... 0.06%
SHORT-DURATION GOVERNMENT FUND.................... 0.08%
INTERMEDIATE-DURATION GOVERNMENT FUND............. 0.09%
GNMA FUND......................................... 0.10%
</TABLE>

PORTFOLIO MANAGERS

CORPORATE DAILY INCOME FUND
Timothy E. Smith became the portfolio manager of the Corporate Daily Income Fund
in 1999. Mr. Smith has been an investment professional with Wellington since
1992.

SHORT-DURATION GOVERNMENT FUND
TREASURY SECURITIES DAILY INCOME FUND
INTERMEDIATE-DURATION GOVERNMENT FUND
John C. Keogh serves as portfolio manager of the Short-Duration Government Fund,
and became portfolio manager of the Intermediate-Duration Government Fund in
1999. Mr. Keogh will also serve as portfolio manager for the Treasury Securities
Daily Income Fund upon the commencement of its operations. Mr. Keogh has been an
investment professional with Wellington since 1983.

GNMA FUND
Paul D. Kaplan serves as portfolio manager of the GNMA Fund. Mr. Kaplan has been
an investment professional with Wellington since 1978.
<PAGE>
14 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or exchange
Class A, Class B and Class C Shares of the Funds

The classes have different expenses and other characteristics. The Funds offer
Class A, Class B and Class C Shares only to financial institutions for their own
or their customers' accounts. For more 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).

Financial institutions and intermediaries may purchase Class A, 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.

When you purchase, sell or exchange Fund shares through certain financial
institutions (rather than directly from the Funds), you may have to transmit
your purchase, sale and exchange 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.

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 Funds. For more information about how to purchase, sell
or exchange 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.

Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the New York Stock Exchange (normally, 4:00 p.m.
Eastern time). So, for you to be eligible to receive dividends declared on the
day you submit your purchase order, generally the Funds must receive your
purchase order before 4:00 p.m. Eastern time.

HOW THE FUNDS CALCULATE NAV
NAV for one Fund share is the value of that share's portion of the net assets in
the Fund.

In calculating NAV, the Funds generally values its investment portfolio at
market price. If market prices are unavailable or the Funds 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

Holders of Class A, Class B and Class C Shares may sell shares by following
procedures established when they opened their account or accounts with their
financial institution or intermediary. You may also sell your shares by
contacting your financial institution or financial intermediary by telephone.
The sale price of each share will be the next NAV determined after the Funds (or
their authorized intermediaries) receive your request.
<PAGE>
PROSPECTUS 15

PURCHASING AND SELLING FUND SHARES

RECEIVING YOUR MONEY
Normally, the Funds will make payment on your sale within three Business Days
after they receive your request, but it will take up to seven Business Days.
Your proceeds will be wired to your bank account.

HOW TO EXCHANGE YOUR SHARES

You may exchange your Class A, Class B and Class C Shares of any Fund for Class
A, Class B and Class C Shares, respectively, of any other SEI Fund on any
Business Day by contacting your financial institution by mail or telephone. This
exchange privilege may be changed or canceled at any time upon 60 days' notice.

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

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

DISTRIBUTION OF FUND SHARES

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

For Class A, B, and 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% and 0.25%, respectively.
<PAGE>
16 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 cash unless otherwise stated.

TAXES

The Funds use a tax management technique known as "highest in, first out." Using
this technique, the portfolio holdings that have experienced the smallest gain
or largest loss are sold first in an effort to minimize capital gains and
enhance after-tax returns.

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
PROSPECTUS 17

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class A Shares,
Class B Shares and Class C Shares of each Fund. This information is intended to
help you understand each Fund's financial performance for the past five years,
or, if shorter, the period of the Fund's operations. Some of this information
reflects financial information for a single Fund share. The total returns in the
table 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.

SEI DAILY INCOME TRUST -- FOR THE YEARS ENDED JANUARY 31
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
- --------------------------
CORPORATE DAILY INCOME FUND
- --------------------------
CLASS A
1999...................... $2.00 $0.11 $ -- $(0.11) $ -- $ 2.00
1998...................... 1.99 0.11 0.01 (0.11) -- 2.00
1997...................... 2.00 0.11 (0.01) (0.11) -- 1.99
1996...................... 1.96 0.12 0.05 (0.12) (0.01) 2.00
1995...................... 2.00 0.09 (0.04) (0.09) -- 1.96
- -----------------------------
SHORT-DURATION GOVERNMENT FUND
- -----------------------------
CLASS A
1999...................... $10.06 $0.54 $ 0.10 $(0.54) $ -- $10.16
1998...................... 9.95 0.59 0.11 (0.59) -- 10.06
1997...................... 10.09 0.57 (0.12) (0.59) -- 9.95
1996...................... 9.73 0.61 0.36 (0.61) -- 10.09
1995...................... 10.06 0.40 (0.32) (0.40) (0.01) 9.73
CLASS B
1999...................... $10.04 $0.51 $ 0.11 $(0.51) $ -- $10.15
1998...................... 9.94 0.56 0.10 (0.56) -- 10.04
1997...................... 10.07 0.55 (0.12) (0.56) -- 9.94
1996...................... 9.71 0.58 0.36 (0.58) -- 10.07
1995...................... 10.04 0.38 (0.32) (0.38) (0.01) 9.71
- ------------------------------------
INTERMEDIATE-DURATION GOVERNMENT FUND
- ------------------------------------
CLASS A
1999...................... $10.07 $0.56 $ 0.17 $(0.56) $ -- $10.24
1998...................... 9.78 0.58 0.29 (0.58) -- 10.07
1997...................... 10.06 0.55 (0.28) (0.55) -- 9.78
1996...................... 9.33 0.60 0.73 (0.60) -- 10.06
1995...................... 10.13 0.50 (0.73) (0.50) (0.07) 9.33
CLASS B
1996(1)................... $9.33 $0.50 $ 0.65 $(0.50) $ -- $ 9.98
1995(2)................... 9.64 0.31 (0.24) (0.31) (0.07) 9.33

<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME
RATIO OF INVESTMENT TO AVERAGE TO AVERAGE
NET ASSETS EXPENSES INCOME TO NET ASSETS NET ASSETS PORTFOLIO
TOTAL END OF TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING TURNOVER
RETURN PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
------ ------------ ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------
CORPORATE DAILY INCOME FUND
- --------------------------
CLASS A
1999...................... 5.61% $ 90,043 0.35% 5.38% 0.76% 4.97% 48%
1998...................... 6.29 69,571 0.35 5.61 0.76 5.20 108
1997...................... 5.21 55,783 0.36 5.49 0.73 5.12 141
1996...................... 8.65 48,539 0.35 5.97 0.55 5.77 295
1995...................... 2.59 50,495 0.35 4.60 0.55 4.40 147
- -----------------------------
SHORT-DURATION GOVERNMENT FUND
- -----------------------------
CLASS A
1999...................... 6.49% $ 99,047 0.45% 5.31% 0.72% 5.04% 90%
1998...................... 7.23 81,014 0.45 5.91 0.76 5.60 166
1997...................... 4.62 73,545 0.45 5.72 0.70 5.47 145
1996...................... 10.27 73,431 0.45 6.13 0.53 6.05 184
1995...................... 0.93 99,458 0.45 4.12 0.52 4.05 45
CLASS B
1999...................... 6.28% $ 14 0.75% 5.02% 0.77% 5.00% 90%
1998...................... 6.82 13 0.75 5.61 0.81 5.55 166
1997...................... 4.40 13 0.75 5.49 0.82 5.42 145
1996...................... 9.94 39 0.75 5.85 0.83 5.77 184
1995...................... 0.70 131 0.75 3.92 0.82 3.85 45
- ------------------------------
INTERMEDIATE-DURATION GOVERNME
- ------------------------------
CLASS A
1999...................... 7.46% $ 124,657 0.50% 5.54% 0.76% 5.28% 21%
1998...................... 9.15 117,107 0.50 5.85 0.76 5.59 57
1997...................... 2.81 133,675 0.49 5.59 0.69 5.39 94
1996...................... 14.60 164,978 0.45 6.12 0.53 6.04 115
1995...................... (2.19) 243,671 0.45 5.20 0.52 5.13 61
CLASS B
1996(1)................... 12.26%+ $ -- 0.75% 5.82% 0.83% 5.74% 115%
1995(2)................... 0.61+ 93 0.75 5.07 0.83 4.99 61
</TABLE>

+ Returns are for the period indicated and have not been annualized.
(1) Intermediate-Duration Government Class B shares were fully liquidated
December 22, 1995. All ratios for that period have been annualized.
(2) Intermediate-Duration Government Class B shares were offered beginning June
8, 1994. All ratios for that period have been annualized.
<PAGE>
18 PROSPECTUS

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
- ----------
GNMA FUND
- ----------
CLASS A
1999...................... $9.87 $0.61 $ 0.04 $(0.61) $ -- $ 9.91
1998...................... 9.63 0.64 0.24 (0.64) -- 9.87
1997...................... 9.84 0.65 (0.21) (0.65) -- 9.63
1996...................... 9.17 0.67 0.67 (0.67) -- 9.84
1995...................... 10.07 0.64 (0.90) (0.64) -- 9.17
CLASS B
1997(3)................... $9.84 $0.28 $(0.46) $(0.28) $ -- $ 9.38
1996...................... 9.17 0.64 0.67 (0.64) -- 9.84
1995(4)................... 9.16 0.35 0.01 (0.35) -- 9.17

+ Returns are for the period indicated and have not been annualized.
(3) GNMA Class B shares were fully liquidated July 10, 1996. All ratios for
that period have been annualized.
(4) GNMA Class B shares were offered beginning July 12, 1994. All ratios and
total return for that period have been annualized.
<PAGE>

[LOGO]
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

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-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 811-3451.

CMS-F-094-06

[LOGO]
PROSPECTUS AS OF MAY 31, 1999

FIXED
INCOME
[PHOTO]
---------------------
Intermediate-Duration
Government Fund
---------------------
GNMA Fund
---------------------
Corporate Daily
Income Fund
---------------------
Treasury Securities
Daily Income Fund
---------------------
Short-Duration
Government Fund

SEI Daily Income Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the CNI Class Shares of the Government 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 the Fund. For more detailed information about
the Fund, please see:

PRINCIPAL INVESTMENT STRATEGIES AND RISKS, PERFORMANCE INFORMATION AND
EXPENSES.......................................................................2
THE FUND'S OTHER INVESTMENTS...................................................4
THE INVESTMENT ADVISER.........................................................4
PURCHASING AND SELLING FUND SHARES.............................................5
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................7
FINANCIAL HIGHLIGHTS...........................................................8
HOW TO OBTAIN MORE INFORMATION ABOUT SEI DAILY INCOME TRUST...........Back Cover
<PAGE>
PROSPECTUS 1

INTRODUCTION

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 its Adviser. The Adviser
invests the Fund's assets in a way it believes will help the Fund achieve its
goal. Still, investing in the Fund involves risks, 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 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.

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.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

Like other mutual funds (and most organizations around the world), the Fund
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Fund or
on the financial markets in general, the Fund is taking steps to protect Fund
investors. These include efforts to ensure that the Fund's own systems are
prepared to make the transition to the year 2000, and to determine that the
problem will not affect the systems used by the Fund's major service providers.
Whether these steps will be effective can only be known for certain in the year
2000. In addition, year 2000 problems may ultimately negatively affect the
companies and governments whose securities the Fund purchases, which may have an
impact on the value of the Fund's shares. There is additional information on
these risks in the Statement of Additional Information.
<PAGE>
2 PROSPECTUS

GOVERNMENT FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT 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.

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.
<PAGE>
PROSPECTUS 3

GOVERNMENT FUND

This bar chart shows changes in the performance of the Fund's CNI Class Shares
from year to year for four years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
1995 5.41%
1996 4.72%
1997 4.81%
1998 4.76%
</TABLE>
<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.36% 1.09%

<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
(6/30/95) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CNI CLASS TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.03%.
This table shows the Fund's average annual total returns for CNI Class Shares
for the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
GOVERNMENT FUND 4.76% 4.79%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CNI CLASS SHARES OF THE FUND IS APRIL 7, 1994.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CNI CLASS SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees 0.50%
Other Expenses 0.53%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 1.05%
Fee Waivers and Expense Reimbursements 0.05%
------
NET EXPENSES 1.00%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
1.00%.
THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVERS AT ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
GOVERNMENT FUND -- CNI CLASS
SHARES 0.85%
</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 and Fund expenses remain the same. Although your
actual costs and returns might be different, your approximate costs of investing
$10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Government Fund -- CNI Class
Shares $102 $318 $552 $1,225
</TABLE>
<PAGE>
4 PROSPECTUS

THE FUND'S OTHER INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund is
required to invest at least 80% of its assets, but normally will invest 100% of
its assets, in the types of securities described in this prospectus. However,
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). Of course, there is no guarantee that
the Fund will achieve its investment goal.

The investments and strategies described in this prospectus are those that we
use under normal conditions. During unusual economic or market conditions, or
for temporary defensive or liquidity purposes, the Fund may invest up to 100% of
its assets in cash or cash equivalents that would not ordinarily be consistent
with the Fund's objectives.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

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

Wellington Management Company, LLP ("Wellington"), serves as the Adviser to the
Government Fund. As of March 31, 1999, Wellington had approximately $215 billion
in assets under management. For the fiscal year ended January 31, 1999, the Fund
paid Wellington advisory fees 0.01% of its average daily net assets.

Timothy E. Smith is the portfolio manager of the Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 5

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy or sell (sometimes called "redeem") CNI Class
Shares of the Fund. The Fund offers CNI Class Shares only to financial
institutions 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

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 request 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 net asset value (NAV) is calculated once each Business Day at 4:30
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 must receive your
purchase order and federal funds (readily available funds) before the Fund
calculates the NAV.

HOW THE FUND CALCULATES NAV
NAV for one Fund share is the value of that share's portion of all 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

Holders of CNI Shares may sell shares by following procedures established when
they opened their account or accounts with their financial institution or
intermediary. You may sell your shares by contacting your financial institution
or financial intermediary by telephone. The sale price of each share will be the
NAV determined after the Fund (or its authorized intermediary) receives your
request.

RECEIVING YOUR MONEY
Normally, the Fund will make payment on your sale as promptly as possible after
it receives your request, but it may take up to three Business Days. Your
proceeds will be wired to your bank account.

PURCHASING AND SELLING FUND SHARES

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 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.

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund. SIDCo. receives compensation, pursuant to a Rule 12b-1 Plan, for
distributing the Fund's CNI Class Shares. The distribution fee for CNI Class
Shares, as a percentage of daily net assets, may be up to 0.50%.

For CNI Class Shares, shareholder servicing fees, as a percentage of average
daily net assets, may 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 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 tax rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. EACH SALE OF SHARES
IS A TAXABLE EVENT.

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

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the CNI Class
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.

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.

+ Returns are for the period indicated and have not been annualized.
(1) Government CNI Class (formerly Class G & C) shares were offered beginning
April 7, 1994. All ratios for that period have been annualized.
<PAGE>
[LOGO]

Oaks, PA 19456
800-DIAL-SEI/800-342-5734
More information about the Fund is available without charge through the
following:

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated May 31, 1999, includes more detailed information about SEI Daily
Income 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 part of
this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

These reports typically list the Fund's holdings and contain information from
the Fund's managers about fund strategies and market conditions and trends. 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

From the SEC: You can obtain the SAI or the Annual and Semi-Annual Reports, as
well as other information about the SEI Daily Income Trust, from the SEC's
website (http://www.sec.gov). You may review and copy documents at the SEC
Public Reference Room in Washington, DC (for information call 1-800-SEC-0330).
You may request documents by mail from the SEC, upon payment of a duplicating
fee, by writing to: Securities and Exchange Commission, Public Reference
Section, Washington, DC 20549-6009.

The Trust's Investment Company Act registration number is 811-3451.

CMS-F-040-04

CNI-TM-Shares

Government Fund

SEI Daily Income Trust

The Securities and Exchange
Commission has not approved
any Fund shares or determined
whether this prospectus is accurate
or complete. It is a Crime for
Anyone to Tell You Otherwise.

PROSPECTUS AS OF
MAY 31, 1999
<PAGE>
SEI Daily
Income Trust
HOW TO READ THIS PROSPECTUS
- ------------------------------------------------------------------------

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

PRIME OBLIGATION FUND..........................................................2
TREASURY FUND..................................................................4
THE FUNDS' OTHER INVESTMENTS...................................................6
THE INVESTMENT ADVISER.........................................................6
PURCHASING AND SELLING FUND SHARES.............................................7
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................9
FINANCIAL HIGHLIGHTS..........................................................10
HOW TO OBTAIN MORE INFORMATION ABOUT SEI DAILY INCOME TRUST...........Back Cover
<PAGE>
PROSPECTUS 1

INTRODUCTION -- INFORMATION COMMON TO ALL 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 the Funds' assets in a way it believes will help each Fund achieve its
goal. Still, investing in the Funds involves risks, and there is no guarantee
that a Fund will achieve its goal. In fact, no matter how good a job the Adviser
does, you could lose money on your investment in a Fund, just as you could with
other investments. A Fund share is not a bank deposit, and it is not insured or
guaranteed by the FDIC or any other government agency.

ALTHOUGH EACH FUND IS MANAGED TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00,
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

PRIME OBLIGATION FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE PRIME OBLIGATION 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.

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.
<PAGE>
PROSPECTUS 3

PRIME OBLIGATION FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for two years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.27% 1.17%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C SHARES TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS
1.09%.

This table shows the Fund's average annual total returns for Class C Shares for
the periods ending December 31, 1998.

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS APRIL 30, 1996.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.70%.

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>
Prime Obligation Fund -- Class
C Shares $72 $224 $390 $871
</TABLE>

<PAGE>
4 PROSPECTUS

TREASURY FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and repurchase
agreements fully-collateralized by U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 5

TREASURY FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class C Shares
from year to year for three years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.25% 1.09%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS C SHARES TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS
1.02%.

This table shows the Fund's average annual total returns for Class C Shares for
the periods ending December 31, 1998.

* THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS JULY 27, 1995.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.70%.

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>
Treasury Fund -- Class C
Shares $72 $224 $390 $871
</TABLE>
<PAGE>
6 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

This prospectus describes the Funds' primary investment strategies. The Funds
are required to invest at least 80% of their assets, but normally will invest
100% of its assets, in the types of securities described in this prospectus.
However, 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). Of course, there is no
guarantee that any Fund will achieve its investment goal.

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 hold up to 100%
of its assets in cash or cash equivalents that would not ordinarily be
consistent with the Fund's objectives.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

Wellington Management Company, LLP ("Wellington"), serves as the Adviser for
both Funds. As of March 31, 1999, Wellington, had approximately $215 billion in
assets under management. For the fiscal year ended January 31, 1999, each Fund
paid Wellington, advisory fees of 0.01% of its average daily net assets.

Timothy E. Smith is the portfolio manager of each Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 7

PURCHASING AND SELLING FUND SHARES

HOW TO PURCHASE FUND SHARES

The Treasury Fund's net asset value (NAV) is calculated once each Business Day
at 4:30 p.m., Eastern time, and the Prime Obligation Fund calculates its NAV
once each Business Day at 5:00 p.m., Eastern time. So, for you to be eligible to
receive dividends declared on the day you submit your purchase order, generally
the Funds must receive your purchase order and federal funds (readily available
funds) before each Fund calculates its 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.

HOW TO SELL YOUR FUND SHARES

Holders of Class C Shares may sell shares by following procedures established
when they opened their account or accounts with their financial institution or
intermediary. You may sell your shares by contacting your financial institution
or financial intermediary by telephone. The sale price of each share will be the
next NAV determined after the Funds (or their authorized intermediaries) receive
your request.
<PAGE>
8 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

RECEIVING YOUR MONEY
Normally, the Funds will make payment on your sale as promptly as possible after
the Funds receive your request, but it may take up to three Business Days. Your
proceeds will be wired to your bank account.

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 C
Shares.

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

Each Fund declares 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 cash unless otherwise stated.

TAXES

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

FINANCIAL HIGHLIGHTS

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

+ 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 and total return for the period have been annualized.
(2) Prime Obligation Class C shares were fully liquidated October 27, 1994. All
ratios for that period have been annualized.
(3) Treasury Class C shares were offered beginning July 27, 1995. All ratios
for that period have been annualized.
<PAGE>

THE ACHIEVEMENT FUNDS

PROSPECTUS
May 31, 1999

- ----------------------
Treasury Fund
Prime Obligation Fund
- ----------------------

The Securities and Exchange Commission has not approved or disapproved any
Portfolio shares or determined whether this prospectus is accurate or
complete. It is a crime for anyone to tell you otherwise.

[GRAPHIC]

<PAGE>

THE ACHIEVEMENT FUNDS

These Funds are portfolios of the SEI Daily Income Trust and are offered in
conjunction with The Achievement Funds to afford a convenient range of
investment choices to investors.

The Statement of Additional Information includes additional information about
the Funds.

Additional information about the Funds' investments is available in the
Funds' annual and semi-annual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Funds' performance during the last
fiscal year.

You can obtain a free copy of the Funds' Statement of Additional Information
and/or free copies of the Funds' most recent annual or semi-annual report by
calling 800-472-0577. You may also call 800-472-0577 to request other
information about the Funds or to make shareholder inquiries.

The Statement of Additional Information has been filed with the Securities
and Exchange Commission and is incorporated into the prospectus by reference.
This means that the SAI, for legal purposes, is part of this prospectus.

Information about the Funds (including the Statement of Additional
Information) can be reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. Information on the
operation of the public reference room may be obtained by calling the
Commission at 1-800-SEC-0330. Copies of this information may be obtained upon
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009.

Reports and other information about the Funds are also available on the
Commission's Internet site at http://www.sec.gov.

The Trust's Investment Company Act registration number is 811-3451.

[LOGO]

- --------------------------------
DISTRIBUTED BY
SEI INVESTMENTS DISTRIBUTION CO.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
800-472-0577
- --------------------------------

NOT FDIC INSURED

NO BANK GUARANTEE

MAY LOSE VALUE

ACH-F-020-04
<PAGE>
SEI Daily
Income Trust
HOW TO READ THIS PROSPECTUS
- ------------------------------------------------------------------------

SEI Daily Income Trust is a mutual fund family that offers different classes of
shares in separate investment portfolios (Funds). The Funds have individual
investment goals and strategies. This prospectus gives you important information
about the Class B and Class C Shares of the Government 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 the Fund. For more detailed information about
the Fund, please see:

INTRODUCTION

The Government 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 it believes will help the Fund achieve its
goal. Still, investing in the Fund involves risks, 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. A Fund share is not a bank deposit, and it is not
insured or guaranteed by the FDIC or any 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.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

Like other mutual funds (and most organizations around the world), the Fund
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Fund or
on the financial markets in general, the Fund is taking steps to protect
investors. These include efforts to ensure that the Fund's own systems are
prepared to make the transition to the year 2000, and to determine that the
problem will not affect the systems used by the Fund's major service providers.
Whether these steps will be effective can only be known for certain in the year
2000. In addition, year 2000 problems may ultimately negatively affect the
companies and governments whose securities the Fund purchases, which may have an
impact on the value of the Fund's shares. There is additional information on
these risks in the Statement of Additional Information.
<PAGE>
2 PROSPECTUS

GOVERNMENT FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

Using a top-down strategy and bottom-up security selection, the Adviser seeks
securities with an acceptable maturity, that are marketable and liquid, and that
offer competitive yields. The Adviser also considers factors such as the
anticipated level of interest rates and the maturity of individual securities
relative to the maturity of the Fund as a whole. The Fund follows strict
Investment Company Act rules about the credit quality, maturity and
diversification of its investments.

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT 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.

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.
<PAGE>
PROSPECTUS 3

GOVERNMENT FUND

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for three years. The performance of Class B and Class C Shares
will differ due to differences in expenses.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.30% 1.18%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.12%.
This table shows the Fund's average annual total returns for Class B and Class C
Shares for the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
GOVERNMENT FUND -- CLASS B SHARES 5.13% 5.16%*
- -----------------------------------------------------------
GOVERNMENT FUND -- CLASS C SHARES 4.92% 4.96%**
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS AUGUST 22, 1995.
** THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS JULY 1, 1997.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES CLASS C SHARES
<S> <C> <C>
Investment Advisory Fees 0.02% 0.02%
Distribution (12b-1) Fees None None
Other Expenses 0.58% 0.78%
------ ------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.60% 0.80%
Fee Waivers and Expense Reimbursements 0.05% 0.05%
------ ------
NET EXPENSES 0.55%* 0.75%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.55% FOR CLASS B SHARES AND 0.75% FOR CLASS C SHARES.
THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVERS AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
GOVERNMENT FUND -- CLASS B SHARES 0.50%
GOVERNMENT FUND -- CLASS C SHARES 0.70%
</TABLE>

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Government Fund -- Class B
Shares $56 $176 $307 $689
Government Fund -- Class C
Shares $77 $240 $417 $930
</TABLE>
<PAGE>
4 PROSPECTUS

THE FUND'S OTHER INVESTMENTS

This prospectus describes the Fund's primary investment strategies. The Fund is
required to invest at least 80% of its assets, but normally will invest 100% of
its assets, in the types of securities described in this prospectus. However 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). Of course, there is no guarantee that
the Fund will achieve its investment goal.

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 objectives.

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.

Timothy E. Smith is the portfolio manager of the Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 5

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy or sell (sometimes called "redeem") shares of
the Fund. The classes have different expenses and other characteristics. The
Fund offers Class B and Class C Shares only to financial institutions 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 B Shares 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 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.

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 net asset value (NAV) is calculated once each Business Day at 4:30
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 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 shares' portion of all of the net
assets in the Fund.

HOW TO SELL YOUR FUND SHARES

Holders of Class B Shares and Class C Shares may sell shares by following
procedures established when they opened their account or accounts with their
financial institution or intermediary. You may sell your shares by contacting
your financial institution or financial intermediary by telephone. 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 as promptly as possible after
the Fund receives your request, but it may take up to three Business 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) we might pay all or part of your
redemption proceeds in liquid securities with a market value equal to the
redemption price (redemption in kind). 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 as with any redemption.

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
and Class C Shares.

For Class B and 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% 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 cash unless otherwise stated.

TAXES

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

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about Class B Shares 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 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.

+ Returns are for the period indicated and have not been annualized.
(1) Government Class B shares were offered beginning August 22, 1995. All
ratios for that period have been annualized.
(2) Government Class C shares were offered beginning July 1, 1997. All ratios
and total return for that period have been annualized.
<PAGE>

Government Money Market Fund

THIS FUND IS OFFERED IN CONJUNCTION WITH THE EXPEDITION FUNDS TO AFFORD A
CONVENIENT RANGE OF INVESTMENT CHOICES TO INVESTORS.

The Statement of Additional Information
includes additional information about the Fund.

Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the last
fiscal year.

You can obtain a free copy of the Fund's Statement of Additional Information
and/or free copies of the Fund's most recent annual or semi-annual report by
calling 800-472-0577. You may also call 800-472-0577 to request other
information about the Fund or to make shareholder inquiries.

The Statement of Additional Information has been filed with the Securities
and Exchange Commission and is incorporated into the Prospectus by reference.
This means that the SAI, for legal purposes, is part of this prospectus.

Information about the Fund (including the Statement of Additional
Information) can be reviewed and copied at the Securities and Exchange
Commission's Public Reference Room in Washington, D.C. Information on the
operation of the public reference room may be obtained by calling the
Commission at 1-800-SEC-0330. Copies of this information may be obtained upon
payment of a duplicating fee, by writing the Public Reference Section of the
Commission, Washington, D.C. 20549-6009.

Reports and other information about the Fund are also available on the
Commission's Internet site at http://www.sec.gov.

The Trust's Investment Company Act registration
number is 811-3451.

DISTRIBUTED BY
SEI Investments Distribution Co.
One Freedom Valley Road
Oaks, Pennsylvania 19456

EXP-F-002-05

PROSPECTUS

SEI DAILY INCOME TRUST
PROSPECTUS AS OF MAY 31, 1999

Government Money Market Fund

INVESTMENT SERVICE SHARES

The Securities and Exchange Commission has not approved any Fund shares or
determined whether this prospectus is accurate or complete. It is a Crime for
Anyone to Tell You Otherwise.

[LOGO]
<PAGE>
SEI Daily
Income Trust
HOW TO READ THIS PROSPECTUS
- ------------------------------------------------------------------------

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

GOVERNMENT II FUND.............................................................2
TREASURY II FUND...............................................................4
THE FUNDS' OTHER INVESTMENTS...................................................6
THE INVESTMENT ADVISER.........................................................6
PURCHASING AND SELLING FUND SHARES.............................................7
DIVIDENDS, DISTRIBUTIONS AND TAXES.............................................9
FINANCIAL HIGHLIGHTS..........................................................10
HOW TO OBTAIN MORE INFORMATION ABOUT SEI DAILY INCOME TRUST...........Back Cover
<PAGE>
PROSPECTUS 1

INTRODUCTION-INFORMATION COMMON TO ALL 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 each Fund's assets in a way it believes will help the Fund achieve its
goals. Still, investing in the Funds involves risks, and there is no guarantee
that a Fund will achieve its goal. In fact, no matter how good a job the Adviser
does, you could lose money on your investment in a Fund, just as you could with
other investments. A Fund share is not a bank deposit, and it is not insured or
guaranteed by the FDIC or any government agency.

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 FUNDS.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

Like other mutual funds (and most organizations around the world), the Funds
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Funds or
on the financial markets in general, the Funds are taking steps to protect
investors. These include efforts to ensure that the Funds' systems are prepared
to make the transition to the year 2000, and to determine that the problem will
not affect the systems used by the Funds' major service providers. Whether these
steps will be effective can only be known for certain in the year 2000. In
addition, year 2000 problems may ultimately negatively affect the companies and
governments whose securities the Funds purchase, which may have an impact on the
value of the Funds' shares. There is additional information on these risks in
the Statement of Additional Information.
<PAGE>
2 PROSPECTUS

GOVERNMENT II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and obligations issued
or guaranteed as to principal and interest by the agencies or instrumentalities
of the U.S. government.

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT II 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.

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.
<PAGE>
PROSPECTUS 3

GOVERNMENT II FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for seven years. The performance of Class B and Class C Shares
will differ due to differences in expenses.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.40% 0.65%
(6/30/95) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.11%.

This table shows the Fund's average annual total returns for Class B and Class C
Shares for the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
GOVERNMENT II FUND -- CLASS B
SHARES 5.06% 4.91% 4.51%*
- ---------------------------------------------------------------
GOVERNMENT II FUND -- CLASS C
SHARES 4.85% N/A 4.88%**
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS JANUARY 28, 1991.
** THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS NOVEMBER 27, 1996.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES CLASS C SHARES
<S> <C> <C>
Investment Advisory Fees 0.02% 0.02%
Distribution (12b-1) Fees None None
Other Expenses 0.53% 0.73%
------ ------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.55% 0.75%
Fee Waivers and Expense Reimbursements 0.05% 0.05%
------ ------
NET EXPENSES 0.50%* 0.70%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.50% FOR CLASS B SHARES AND 0.70% FOR CLASS C SHARES.

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>
Government II Fund -- Class B
Shares $51 $160 $280 $628
Government II Fund -- Class C
Shares $72 $224 $398 $871
</TABLE>

<PAGE>
4 PROSPECTUS

TREASURY II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Treasury Fund invests exclusively in U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 5

TREASURY II FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for eight years. The performance of Class B and Class C Shares
will differ due to differences in expenses.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.51% 0.62%
(3/31/91) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999, TO MARCH 31, 1999, WAS 1.00%.

This table shows the Fund's average annual total returns for Class B and Class C
Shares for the periods ending December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
TREASURY II FUND -- CLASS B SHARES 4.62% 4.64% 4.58%*
- ---------------------------------------------------------------
TREASURY II FUND -- CLASS C SHARES 4.41% N/A 4.64%**
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS FEBRUARY 15, 1990.
** THE INCEPTION DATE FOR CLASS C SHARES OF THE FUND IS MAY 8, 1995.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

FOR MORE INFORMATION ABOUT THE 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>
Treasury II Fund -- Class B
Shares $56 $176 $307 $689
Treasury II Fund -- Class C
Shares $77 $240 $417 $930
</TABLE>
<PAGE>
6 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

This prospectus describes the Funds' primary investment strategies. The Funds
are required to invest at least 80% of their assets, but normally will invest
100% of their assets, in the types of securities described in this prospectus.
However, each Fund 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). Of course, there is no
guarantee that any Fund will achieve its investment goal.

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 hold up to 100%
of its assets in cash or cash equivalents that would not ordinarily be
consistent with the Fund's objective.

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

Wellington Management Company, LLP ("Wellington"), serves as the Adviser to the
Government II Fund and Treasury II Fund. As of March 31 1999, Wellington had
approximately $215 billion in assets under management. For the fiscal year ended
January 31, 1999, each Fund paid Wellington advisory fees of 0.01% of its
average daily net assets.

Timothy E. Smith is the portfolio manager of each Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 7

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy or sell (sometimes called "redeem") shares of
the Funds. The classes have different expenses and other characteristics. The
Funds offer Class B and Class C Shares only to financial institutions 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 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. The Funds may reject any
purchase order if they determine that accepting the order would not be in the
best interests of the Funds or their shareholders.

The Government II Fund's net asset value (NAV) is calculated once each Business
Day at 2:00 p.m., Eastern time and the Treasury II Fund calculates its NAV once
each Business Day at 2:30 p.m., Eastern time. So, for you to be eligible to
receive dividends declared on the day you submit your purchase order, generally
the Funds must receive your purchase order and federal funds (readily available
funds) before each Fund calculates its 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.

HOW TO SELL YOUR FUND SHARES

Holders of Class B and Class C Shares may sell shares by following procedures
established when they opened their account or accounts with their financial
institution or intermediary. You may also sell your shares by contacting your
financial institution or financial intermediary by telephone. The sale price of
each share will be the next NAV determined after the Funds (or their authorized
intermediaries) receive your request.
<PAGE>
8 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

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). 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 as with any redemption.

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
or 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% and 0.25%, respectively.
<PAGE>
PROSPECTUS 9

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTION

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

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

TAXES

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

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class B Shares and
Class C Shares of each Fund. This information is intended to help you understand
each Fund's financial performance for the past five years, or, if shorter, the
period of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the table 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 statements, appears
in the annual report that accompanies the Funds' SAI. You can obtain the annual
report, which contains more performance information, at no charge by calling
1-800-DIAL-SEI.

SEI DAILY INCOME TRUST -- FOR THE YEARS ENDED JANUARY 31
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS B
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.05 -- (0.05) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00
CLASS C
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997(1)................... 1.00 0.01 -- (0.01) -- 1.00
- --------------
TREASURY II FUND
- --------------
CLASS B
1999...................... $1.00 $0.04 $ -- $(0.04) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.05 -- (0.05) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00
CLASS C
1999...................... $1.00 $0.04 $ -- $(0.04) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.04 -- (0.04) -- 1.00
1996(2)................... 1.00 0.04 -- (0.04) -- 1.00

<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME
RATIO OF INVESTMENT TO AVERAGE TO 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>
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS B
1999...................... 5.01% $ 64,838 0.50% 4.86% 0.55% 4.81%
1998...................... 5.14 31,851 0.50 5.02 0.56 4.96
1997...................... 4.98 16,323 0.50 4.87 0.56 4.81
1996...................... 5.52 19,678 0.50 5.41 0.59 5.32
1995...................... 4.08 15,201 0.50 4.33 0.60 4.23
CLASS C
1999...................... 4.81% $ 50,712 0.70% 4.70% 0.75% 4.65%
1998...................... 4.93 35,272 0.70 4.82 0.76 4.76
1997(1)................... 4.71 6,359 0.70 4.69 0.75 4.64
- --------------
TREASURY II FUND
- --------------
CLASS B
1999...................... 4.55% $ 137,577 0.55% 4.36% 0.60% 4.31%
1998...................... 4.88 69,572 0.55 4.78 0.61 4.72
1997...................... 4.76 54,148 0.55 4.65 0.63 4.57
1996...................... 5.27 26,447 0.55 5.18 0.64 5.09
1995...................... 3.86 44,680 0.55 3.71 0.65 3.61
CLASS C
1999...................... 4.34% $ 19,361 0.75% 4.21% 0.80% 4.16%
1998...................... 4.67 11,843 0.75 4.58 0.81 4.52
1997...................... 4.55 4,528 0.75 4.45 0.82 4.38
1996(2)................... 3.64+ 3,935 0.75 4.85 0.84 4.76
</TABLE>

+ Returns are for the period indicated and have not been annualized.
(1) Government II Class C shares were offered beginning November 27, 1996. All
ratios and total return for that period have been annualized.
(2) Treasury II Class C shares were offered beginning May 8, 1995. All ratios
for that period have been annualized.
<PAGE>

Government II Money Market Fund

Treasury II Money Market Fund

THIS FUND IS OFFERED IN CONJUNCTION WITH THE EXPEDITION FUNDS TO AFFORD A
CONVENIENT RANGE OF INVESTMENT CHOICES TO INVESTORS.

The Statement of Additional Information includes additional information about
the Funds.

Reports and other information about the Funds are also available on the
Commission's Internet site at http://www.sec.gov.

The Trust's Investment Company Act registration number is 811-3451.

DISTRIBUTED BY
SEI Investments Distribution Co.
One Freedom Valley Road
Oaks, Pennsylvania 19456

EXP-F-018-02

PROSPECTUS

SEI DAILY INCOME TRUST
PROSPECTUS AS OF MAY 31, 1999

Government II Money Market Fund

Treasury II Money Market Fund

INVESTMENT SERVICE SHARES

The Securities and Exchange Commission has not approved any Fund shares or
determined whether this prospectus is accurate or complete. It is a Crime for
Anyone to Tell You Otherwise.

[LOGO]
<PAGE>
SEI Daily
Income Trust
HOW TO READ THIS PROSPECTUS
- ------------------------------------------------------------------------

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

INTRODUCTION-INFORMATION COMMON TO ALL FUNDS

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

ALTHOUGH EACH FUND IS MANAGED TO MAINTAIN A CONSTANT PRICE PER SHARE OF $1.00,
IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUNDS.

- --------------------------------------------------------------------------------
YEAR 2000 RISKS

MONEY MARKET FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE MONEY MARKET 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.

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.
<PAGE>
PROSPECTUS 3

MONEY MARKET FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares for
one year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.31% 1.23%
(9/30/98) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.14%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
MONEY MARKET FUND -- CLASS B SHARES 5.24% 5.28%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS AUGUST 4, 1997.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.67%
------
Total Annual Fund Operating Expenses 0.69%*
</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 ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVER AT ANY TIME. WITH THIS FEE WAIVER, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
MONEY MARKET 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>
Money Market Fund -- Class B
Shares $70 $221 $384 $859
</TABLE>

<PAGE>
4 PROSPECTUS

PRIME OBLIGATION FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE PRIME OBLIGATION 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.

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.
<PAGE>
PROSPECTUS 5

PRIME OBLIGATION FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for seven years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.42% 0.67%
(6/30/95) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, L999 TO MARCH 31, L999 WAS 1.14%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS INCEPTION
<S> <C> <C> <C>
- ---------------------------------------------------------------
PRIME OBLIGATION FUND -- CLASS B
SHARES 5.21% 5.03% 4.60%*
- ---------------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS MARCH 26, 1991.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.53%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.55%
Fee Waivers and Expense Reimbursements 0.05%
------
NET EXPENSES 0.50%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.50%.

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>
Prime Obligation Fund -- Class
B Shares $51 $160 $280 $628
</TABLE>

<PAGE>
6 PROSPECTUS

GOVERNMENT FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT 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.

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.
<PAGE>
PROSPECTUS 7

GOVERNMENT FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for three years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.30% 1.18%
(12/31/97) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.12%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS AUGUST 22, 1995.
PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.58%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.60%
Fee Waivers and Expense Reimbursements 0.05%
------
NET EXPENSES 0.55%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.55%.
THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR ARE EACH WAIVING A PORTION OF THEIR FEES IN
ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADVISER,
ADMINISTRATOR AND/OR DISTRIBUTOR MAY EACH DISCONTINUE ALL OR PART OF THEIR
WAIVERS AT ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING
EXPENSES ARE AS FOLLOWS:

<TABLE>
<S> <C>
GOVERNMENT FUND -- CLASS B SHARES 0.50%
</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>
Government Fund -- Class B
Shares $56 $176 $307 $689
</TABLE>

<PAGE>
8 PROSPECTUS

GOVERNMENT II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and obligations issued
or guaranteed as to principal and interest by agencies or instrumentalities of
the U.S. government.

WHAT ARE THE RISKS OF INVESTING IN THE GOVERNMENT II 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.

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.
<PAGE>
PROSPECTUS 9

GOVERNMENT II FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for seven years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.40% 0.65%
(6/30/95) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.11%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS JANUARY 28, 1991.

PLEASE CALL 1-800 DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.50%.

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>
Government II Fund -- Class B
Shares $51 $160 $280 $628
</TABLE>

<PAGE>
10 PROSPECTUS

TREASURY FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations and repurchase
agreements fully-collateralized by U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 11

TREASURY FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares for
one year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.28% 1.14%
(9/30/98) (12/31/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.07%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
<S> <C> <C>
- -----------------------------------------------------------
TREASURY FUND -- CLASS B SHARES 5.04% 5.10%*
- -----------------------------------------------------------
</TABLE>

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS AUGUST 4, 1997.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS B SHARES
<S> <C>
Investment Advisory Fees 0.02%
Distribution (12b-1) Fees None
Other Expenses 0.60%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 0.62%
Fee Waivers and Expense Reimbursements 0.12%
------
NET EXPENSES 0.50%*
</TABLE>

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.50%.

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>
Treasury Fund -- Class B
Shares $51 $160 $280 $628
</TABLE>

<PAGE>
12 PROSPECTUS

TREASURY II FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Fund invests exclusively in U.S. Treasury obligations.

WHAT ARE THE RISKS OF INVESTING IN THE TREASURY II 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.

Although the Fund's U.S. Treasury securities are considered to be among the
safest investments, they are not guaranteed against price movements due to
changing interest rates.

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.
<PAGE>
PROSPECTUS 13

TREASURY II FUND

PERFORMANCE INFORMATION

This bar chart shows changes in the performance of the Fund's Class B Shares
from year to year for eight years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
1.51% 0.62%
(3/31/91) (6/30/93)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S CLASS B TOTAL RETURN FROM JANUARY 1, 1999 TO MARCH 31, 1999 WAS 1.00%.

This table shows the Fund's average annual total returns for the periods ending
December 31, 1998.

* THE INCEPTION DATE FOR CLASS B SHARES OF THE FUND IS FEBRUARY 15, 1990.

PLEASE CALL 1-800-DIAL-SEI TO OBTAIN THE FUND'S CURRENT YIELD.

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

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

ANNUAL FUND OPERATING EXPENSES

* SEI INVESTMENTS FUND MANAGEMENT HAS CONTRACTUALLY AGREED TO WAIVE FEES AND TO
REIMBURSE EXPENSES IN ORDER TO KEEP TOTAL OPERATING EXPENSES FROM EXCEEDING
0.55%.

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>
Treasury II Fund -- Class B
Shares $56 $176 $307 $689
</TABLE>
<PAGE>
14 PROSPECTUS

THE FUNDS' OTHER INVESTMENTS

INVESTMENT ADVISER
- --------------------------------------------------------------------------------

Timothy E. Smith is the portfolio manager of each Fund. Mr. Smith has been an
investment professional with Wellington since 1992.
<PAGE>
PROSPECTUS 15

PURCHASING AND SELLING FUND SHARES

This section tells you how to buy or sell (sometimes called "redeem") shares of
the Funds. The Funds offer Class B Shares only to financial institutions 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 B 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. The Funds may reject any purchase order if
they determine that accepting the order would not be in the best interests of
the Funds or their shareholders.

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.

HOW TO SELL YOUR FUND SHARES

Holders of Class B Shares may sell shares by following procedures established
when they opened their account or accounts with their financial institution or
intermediary. You may also sell your shares by contacting your financial
institution or financial intermediary by telephone. The sale price of each share
will be the next NAV determined after the Funds (or their authorized financial
intermediaries) receive your request.
<PAGE>
16 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

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
Shares.

For Class B Shares, shareholder servicing fees, as a percentage of average daily
net assets, may be up to 0.25%, and administrative service fees, as a percentage
of average daily net assets, may be up to 0.05%.
<PAGE>
PROSPECTUS 17

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

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

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

TAXES

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

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class B Shares of
the 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 a Fund, assuming you reinvested
all of your dividends and distributions.

SEI DAILY INCOME TRUST -- FOR THE YEARS ENDED JANUARY 31
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- ------------------
MONEY MARKET FUND
- ------------------
CLASS B
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998(1)................... 1.00 0.03 -- (0.03) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.06 -- (0.06) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00
- --------------------
PRIME OBLIGATION FUND
- --------------------
CLASS B
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.06 -- (0.06) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00
- ---------------
GOVERNMENT FUND
- ---------------
CLASS B
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996(2)................... 1.00 0.02 -- (0.02) -- 1.00
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS B
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.05 -- (0.05) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00

<CAPTION>
RATIO OF
NET
RATIO OF RATIO OF INVESTMENT
NET EXPENSES INCOME
RATIO OF INVESTMENT TO AVERAGE TO 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>
- ------------------
MONEY MARKET FUND
- ------------------
CLASS B
1999...................... 5.18% $ 7,875 0.48% 5.08% 0.69% 4.87%
1998(1)................... 5.29 7,383 0.48 5.26 0.72 5.02
1997...................... 5.13 770 0.50 4.96 0.76 4.70
1996...................... 5.67 6,616 0.50 5.53 0.75 5.28
1995...................... 4.24 6,314 0.51 4.49 0.75 4.25
- --------------------
PRIME OBLIGATION FUND
- --------------------
CLASS B
1999...................... 5.16% $ 229,361 0.50% 5.04% 0.55% 4.99%
1998...................... 5.27 186,572 0.50 5.16 0.56 5.10
1997...................... 5.07 146,267 0.50 4.95 0.56 4.89
1996...................... 5.65 174,779 0.50 5.38 0.58 5.30
1995...................... 4.15 21,852 0.50 4.55 0.60 4.45
- ---------------
GOVERNMENT FUND
- ---------------
CLASS B
1999...................... 5.08% $ 34,676 0.50% 4.92% 0.60% 4.82%
1998...................... 5.21 29,102 0.50 5.06 0.61 4.95
1997...................... 5.02 53,144 0.50 4.91 0.62 4.79
1996(2)................... 2.39+ 14,997 0.50 5.27 0.63 5.14
- -----------------
GOVERNMENT II FUND
- -----------------
CLASS B
1999...................... 5.01% $ 64,838 0.50% 4.86% 0.55% 4.81%
1998...................... 5.14 31,851 0.50 5.02 0.56 4.96
1997...................... 4.98 16,323 0.50 4.87 0.56 4.81
1996...................... 5.52 19,678 0.50 5.41 0.59 5.32
1995...................... 4.08 15,201 0.50 4.33 0.60 4.23
</TABLE>

+ Returns are for the period indicated and have not been annualized.
(1) Money Market Class B shares were fully liquidated March 12, 1997 and
re-offered beginning August 12, 1997. All ratios and total return for that
period have been annualized.
(2) Government Class B shares were re-offered beginning August 22, 1995. All
ratios for that period have been annualized.
<PAGE>
PROSPECTUS 19

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DISTRIBUTIONS FROM
VALUE NET GAINS FROM NET REALIZED NET ASSET
BEGINNING INVESTMENT (LOSSES) ON INVESTMENT CAPITAL VALUE END
OF PERIOD INCOME SECURITIES INCOME GAINS OF PERIOD
--------- ---------- ------------- ------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
- ------------
TREASURY FUND
- ------------
CLASS B
1999...................... $1.00 $0.05 $ -- $(0.05) $ -- $1.00
1998(3)................... 1.00 0.03 -- (0.03) -- 1.00
- --------------
TREASURY II FUND
- --------------
CLASS B
1999...................... $1.00 $0.04 $ -- $(0.04) $ -- $1.00
1998...................... 1.00 0.05 -- (0.05) -- 1.00
1997...................... 1.00 0.05 -- (0.05) -- 1.00
1996...................... 1.00 0.05 -- (0.05) -- 1.00
1995...................... 1.00 0.04 -- (0.04) -- 1.00

(3) Treasury Class B shares were offered beginning August 4, 1997. All ratios
and total return for that period have been annualized.
<PAGE>

[LOGO]
The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-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 811-3451.

CMS-F-050-01

[LOGO]

PROSPECTUS AS OF MAY 31, 1999

MONEY
MARKET

[PHOTO]

CLASS B

Administrator:

SEI Investments Fund Management

Distributor:

SEI Investments Distribution Co.

Investment Adviser:

Wellington Management Company, LLP

This STATEMENT OF ADDITIONAL INFORMATION is not a Prospectus. It is intended
to provide additional information regarding the activities and operations of SEI
Daily Income Trust (the "Trust") and should be read in conjunction with the
Trust's Prospectuses dated May 31, 1999. Prospectuses may be obtained without
charge by writing the Trust's distributor, SEI Investments Distribution Co.,
Oaks, Pennsylvania 19456, or by calling 1-800-342-5734.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Trust................................................................. S-2
Investment Objectives and Policies........................................ S-2
Description of Permitted Investments and Risk Factors..................... S-4
Investment Limitations.................................................... S-17
Description of Ratings.................................................... S-19
The Administrator......................................................... S-23
The Adviser............................................................... S-24
Distribution and Shareholder Servicing.................................... S-25
Trustees and Officers of the Trust........................................ S-27
Performance............................................................... S-29
Determination of Net Asset Value.......................................... S-33
Purchase and Redemption of Shares......................................... S-34
Taxes..................................................................... S-35
Portfolio Transactions.................................................... S-36
Description of Shares..................................................... S-37
Limitation of Trustees' Liability......................................... S-38
Voting.................................................................... S-38
Shareholder Liability..................................................... S-38
Control Persons and Principal Holders of Securities....................... S-38
Custodian................................................................. S-49
Experts................................................................... S-49
Legal Counsel............................................................. S-49
Financial Statements...................................................... S-49

May 31, 1999
</TABLE>

SEI-F-045-10
<PAGE>
THE TRUST

The Trust is a diversified, open-end management investment company
established as a Massachusetts business trust pursuant to a Declaration of Trust
dated March 15, 1982. The Declaration of Trust permits the Trust to offer
separate series ("portfolios") of units of beneficial interest ("shares") and
separate classes of portfolios. Except for differences between the Class A,
Class B, Class C, CNI Class and/or Sweep Class shares pertaining to distribution
and shareholder service plans, voting rights, dividends and transfer agency
expenses, each share of each portfolio represents an equal proportionate
interest in that portfolio with each other share of that portfolio. The Trust
changed its name from SEI Cash+Plus Trust to its current name in April, 1994.

This Statement of Additional Information relates to the following
portfolios: Money Market, Prime Obligation, Government, Government II, Treasury,
Treasury II, Federal Securities, Corporate Daily Income, Treasury Securities
Daily Income, Short-Duration Government, Intermediate-Duration Government and
GNMA Funds (each a "Fund," and, together, the "Funds") and any different classes
of the Funds. Currently, the Federal Securities and Treasury Securities Daily
Income Funds are not selling shares.

INVESTMENT OBJECTIVES AND POLICIES

MONEY MARKET FUND--The Money Market Fund seeks to preserve principal value
and maintain a high degree of liquidity while providing current income. Under
normal market conditions, the Fund invests in obligations denominated in U.S.
dollars consisting of: (i) commercial paper issued by U.S. and foreign issuers
rated, at the time of investment, in the highest short-term rating category by
two or more nationally recognized statistical rating organizations (each, an
"NRSRO"), 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. savings and loan and thrift institutions, U.S. commercial banks
(including foreign branches of such banks), and U.S. and London branches of
foreign banks, provided that such institutions (or, in the case of a branch, the
parent institution) have total assets of $1 billion or more as shown on their
last published financial statements at the time of investment; (iii) short-term
corporate obligations issued by U.S. and foreign issuers with a remaining term
of not more than 397 days that issue commercial paper of comparable priority and
security meeting the above ratings; (iv) short-term obligations issued by state
and local governmental issuers which are rated, at the time of investment, by at
least two NRSROs in one of the two highest municipal bond rating categories, 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. dollar denominated obligations of
foreign governments including Canadian and Provincial Government and Crown
Agency Obligations; (vi) investments permitted for the Government II Fund (see
below); and (vii) repurchase agreements involving any of the foregoing
obligations.

PRIME OBLIGATION FUND--The Prime Obligation Fund seeks to preserve principal
value and maintain a high degree of liquidity while providing current income.
Under normal market conditions, the Fund 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

S-2
<PAGE>
quality, and which carry yields that are competitive with those of other types
of money market instruments of comparable quality; (v) investments permitted for
the Government II Fund (see below); and (vi) repurchase agreements involving any
of the foregoing obligations.

GOVERNMENT FUND--The Government Fund seeks to preserve principal value and
maintain a high degree of liquidity while providing current income. Under normal
market conditions, the Fund invests exclusively in (i) U.S. Treasury
obligations; (ii) obligations issued or guaranteed as to principal and interest
by agencies or instrumentalities of the U.S. Government; and (iii) repurchase
agreements fully-collateralized by such obligations.

GOVERNMENT II FUND--The Government II Fund seeks to preserve principal value
and maintain a high degree of liquidity while providing current income. Under
normal market conditions, the Fund invests exclusively in U.S. Treasury
obligations and obligations issued or guaranteed as to principal and interest by
agencies or instrumentalities of the U.S. Government. Since the Government II
Fund invests exclusively in U.S. Treasury Obligations, its income is not subject
to state or local taxations.

TREASURY FUND--The Treasury Fund seeks to preserve principal value and
maintain a high degree of liquidity while providing current income. Under normal
market conditions, the Fund invests exclusively in U.S. Treasury obligations and
repurchase agreements fully-collateralized by such obligations.

TREASURY II FUND--The Treasury II Fund seeks to preserve principal value and
maintain a high degree of liquidity while providing current income. Under normal
market conditions, the Fund invests exclusively in U.S. Treasury obligations.

CORPORATE DAILY INCOME FUND--The Corporate Daily Income Fund seeks to
provide higher current income than that typically offered by a money market fund
while maintaining a high degree of liquidity and a correspondingly higher risk
of principal volatility. Under normal market conditions, the Fund invests
exclusively in obligations of U.S. domiciled issuers (not including foreign
branches of U.S. banks or U.S. branches of foreign banks) consisting of: (i)
commercial paper rated in one of the two highest rating categories by a
nationally recognized statistical rating organization (each an "NRSRO") or, if
unrated, determined by the Adviser to be of comparable quality at the time of
investment; (ii) obligations (certificates of deposit, time deposits, bankers'
acceptances and bank notes) of U.S. commercial banks or savings and loan
institutions, provided that such institutions have net assets of at least $500
million as of the end of their most recent fiscal year; (iii) U.S. Treasury
obligations and obligations issued or guaranteed as to principal and interest by
agencies or instrumentalities of the U.S. Government; (iv) corporate obligations
(notes, bonds and debentures) rated in one of the four highest rating categories
by an NRSRO or, if unrated, determined by the Adviser to be of comparable
quality at the time of investment; (v) mortgage-backed securities; (vi)
asset-backed securities rated in one of the four highest rating categories by an
NRSRO or, if unrated, determined by the Adviser to be of comparable quality at
the time of investment; and (vii) repurchase agreements involving the foregoing
securities.

The Adviser intends to limit the Fund's purchases of non-mortgage
asset-backed securities to securities that are readily marketable at the time of
purchase. Securities rated in the lowest category of investment grade may have
speculative characteristics. In the event a security owned by the Fund is
downgraded below these rating categories, the Adviser will take appropriate
action with regard to such security. Under normal conditions, the Fund's
duration will range from half a year to one and a half years. Maximum remaining
maturity on any single issue will be five years, with the exception of floating
or variable rate securities that reset at least annually.

TREASURY SECURITIES DAILY INCOME FUND--The Treasury Securities Daily Income
Fund seeks to provide higher current income than that typically offered by a
money market fund while maintaining a high degree of liquidity and a
correspondingly higher risk of principal volatility. Under normal market
conditions, the Fund invests exclusively in (i) U.S. Treasury obligations; and
(ii) repurchase

S-3
<PAGE>
agreements involving such obligations. Under normal conditions, the Fund's
duration will range from half a year to one and a half years. Maximum remaining
maturity on any single issue will be five years.

SHORT-DURATION GOVERNMENT FUND--The Short-Duration Government Fund seeks to
preserve principal value and maintain a high degree of liquidity while providing
current income. Under normal market conditions, the Fund invests exclusively in
(i) U.S. Treasury obligations; (ii) obligations issued or guaranteed as to
principal and interest by agencies and instrumentalities of the U.S. Government,
including Government National Mortgage Association ("GNMA"), and other
mortgage-backed securities of governmental issuers; and (iii) repurchase
agreements fully-collateralized by such obligations. Under normal market
conditions, the Fund will have a duration of up to three years.

INTERMEDIATE-DURATION GOVERNMENT FUND--The Intermediate-Duration Government
Fund seeks to preserve principal value and maintain a high degree of liquidity
while providing current income. Under normal market conditions, the Fund invests
in the investments permitted for the Short-Duration Government Fund and may also
invest in futures contracts (including futures on U.S. Treasury obligations and
Eurodollar instruments) and related options, swaps, caps and floors, as
described in this Statement of Additional Information, as a hedging strategy.
Under normal market conditions, this Fund will have a duration of two and
one-half to five years.

GNMA FUND--The GNMA Fund seeks to preserve principal value and maintain a
high degree of liquidity while providing current income. Under normal market
conditions, the Fund invests in the investments permitted for the Short-Duration
Government Fund, but without restrictions on portfolio duration. At least 65% of
the total assets of the Fund will, under normal circumstances, be invested in
instruments issued by GNMA. In addition, the GNMA Fund may invest in futures
contracts (including futures on U.S. Treasury obligations) and related options,
swaps, caps and floors, as described in this Statement of Additional
Information, as a hedging strategy, and enter into dollar roll transactions with
selected banks and broker-dealers.

FEDERAL SECURITIES FUND--The Federal Securities Fund seeks to preserve
principal value and maintain a high degree of liquidity while providing current
income. Under normal market conditions, the Fund invests exclusively in general
obligations issued by the U.S. Treasury and repurchase agreements involving such
obligations.

There can be no assurance that the Funds will achieve their respective
investment objectives.

DESCRIPTION OF PERMITTED INVESTMENTS

ASSET-BACKED SECURITIES--The Money Market, Prime Obligation, and Corporate
Daily Income Funds may invest in asset-backed securities. Asset-backed
securities are securities secured by non-mortgage assets such as company
receivables, truck and auto loans, leases and credit card receivables. Such
securities are generally issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying pools of assets. Such
securities also may be debt instruments, which are also known as collateralized
obligations and are generally issued as the debt of a special purpose entity,
such as a trust, organized solely for the purpose of owning such assets and
issuing such debt.

Asset-backed securities are not issued or guaranteed by the United States
Government or its agencies or instrumentalities; however, the payment of
principal and interest on such obligations may be guaranteed up to certain
amounts and for a certain period by a letter of credit issued by a financial
institution (such as a bank or insurance company) unaffiliated with the issuers
of such securities. The purchase of asset-backed securities raises risk
considerations peculiar to the financing of the instruments underlying such
securities. For example, there is a risk that another party could acquire an
interest in the obligations superior to that of the holders of the asset-backed
securities. There also is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on those
securities. Asset-backed securities entail prepayment risk, which may vary
depending on the type of asset, but is generally less than

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the prepayment risk associated with mortgage-backed securities. In addition,
credit card receivables are unsecured obligations of the card holder.

The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be a limited secondary market for such
securities.

BANKERS' ACCEPTANCES--A banker's acceptance is a bill of exchange or time
draft drawn on and accepted by a commercial bank. Bankers' acceptances are used
by corporations to finance the shipment and storage of goods and to furnish
dollar exchange. Maturities are generally six months or less.

CERTIFICATES OF DEPOSIT--A certificate of deposit is a negotiable,
interest-bearing instrument with a specific maturity. Certificates of deposit
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.

COMMERCIAL PAPER--The Corporate Daily Income, Money Market and Prime
Obligation Funds may invest in commercial paper. Commercial paper is the term
used to designate unsecured short-term promissory notes issued by corporations
and other entities. Maturities on these issues vary from a few days to nine
months.

COMMERCIAL PAPER RATINGS: The following descriptions of commercial paper
ratings have been published by Standard & Poor's Corporation ("S&P"), Moody's
Investors Service, Inc. ("Moody's"), Fitch Investors Service, Inc. ("Fitch"),
Duff & Phelps, Inc. ("Duff"), Thomson BankWatch ("Thomson") and IBCA Limited and
IBCA, Inc. (together, "IBCA").

Commercial paper rated A by S&P is regarded by S&P as having the greatest
capacity for timely payment. Issues rated A are further refined by use of the
numbers 1+, 1 and 2 to indicate the relative degree of safety. Issues rated A-1+
are those with an "overwhelming degree" of credit protection. Those rated A-1
reflect a "very strong" degree of safety regarding timely payment. Those rated
A-2 reflect a safety regarding timely payment, but not as high as A-1.

Moody's employs two designations, judged to be high grade commercial paper,
to indicate the relative repayment capacity of rated issuers as follows:

<TABLE>
<S> <C>
Prime-1 Superior Quality
Prime-2 Strong Quality
</TABLE>

The rating Fitch-1 (Highest Grade) is the highest commercial paper rating
assigned by Fitch. Paper rated Fitch-1 is regarded as having the strongest
degree of assurance for timely payment. The rating Fitch-2 (Very Good Grade) is
the second highest commercial paper rating assigned by Fitch and reflects an
assurance of timely payment only slightly lower in degree than the strongest
issues.

The rating Duff-1 is the highest commercial paper rating assigned by Duff.
Paper rated Duff-1 is regarded as having very high certainty of timely payment
with excellent liquidity factors that are supported by ample asset protection.
Risk factors are minor. Paper rated Duff-2 is regarded as having good certainty
of timely payment, good access to capital markets and sound liquidity factors
and company fundamentals. Risk factors are small.

The rating TBW-1 is the highest commercial paper rating assigned by Thomson.
Paper rated TBW-1 indicates a very high likelihood that principal and interest
will be paid on a timely basis. The rating TBW-2 is the second-highest rating
category assigned by Thomson. The relative degree of safety regarding timely
repayment of principal and interest is strong. However, the relative degree of
safety is not as high as for issues rated TBW-1.

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<PAGE>
The designation A1 by IBCA indicates that the obligation is supported by a
very strong capacity for timely repayment. Those obligations rated A1+ are
supported by the highest capacity for timely repayment. Obligations rated A2 are
supported by a strong capacity for timely repayment, although such capacity may
be susceptible to adverse changes in business, economic or financial conditions.

DOLLAR ROLLS--The GNMA Fund may enter into dollar rolls. Dollars rolls and
"covered rolls" are transactions in which the Fund sells securities (usually
mortgage-backed securities) and simultaneously contracts to repurchase,
typically in 30 or 60 days, substantially similar, but not identical, securities
on a specified future date. During the roll commitment period, a Fund forgoes
principal and interest paid on such securities. A Fund is compensated by the
difference between the current sales price and the forward price for the future
purchase (often referred to as the "drop") as well as by the interest earned on
the cash proceeds of the initial sale. A "covered roll" is a specific type of
dollar roll for which there is an offsetting cash position or cash equivalent
securities position that matures on or before the forward settlement date of the
dollar roll transaction. As used herein the term "dollar roll" refers to dollar
rolls that are not "covered rolls." At the end of the roll commitment period, a
Fund may or may not take delivery of the securities the Fund has contracted to
purchase.

FIXED INCOME SECURITIES--Fixed income securities are debt obligations issued
by corporations, municipalities and other borrowers. The market value of a
Fund's fixed income investments will change in response to interest rate changes
and other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Securities with longer maturities are subject to greater fluctuations in value
than securities with shorter maturities. Fixed income securities rated in the
fourth highest rating category lack outstanding investment characteristics, and
have speculative characteristics as well. Changes by an NRSRO in the rating of
any fixed income security and in the ability of an issuer to make payments of
interest and principal also affect the value of these investments. Changes in
the value of a Fund's securities will not affect cash income derived from these
securities but will affect the Fund's net asset value.

Securities held by a Fund that are guaranteed by the U.S. Government, its
agencies or instrumentalities guarantee only the payment of principal and
interest, and do not guarantee the securities' yield or value or the yield or
value of a Fund's shares.

There is a risk that the current interest rate on floating and variable rate
instruments may not accurately reflect existing market interest rates.

FOREIGN SECURITIES--The Money Market Fund may invest in foreign securities.
These instruments may subject the holder to investment risks that differ in some
respects from those related to investments in obligations of U.S. issuers. Such
risks include future adverse political and economic developments, the possible
imposition of withholding taxes on interest or other income, possible seizure,
nationalization, or expropriation of foreign deposits, the possible
establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in exchange rates, or the adoption of other
foreign governmental restrictions, which might adversely affect the payment of
principal and interest on such obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks. Although the Fund's foreign
securities will be denominated in U.S. dollars, their value may be impacted by
the exchange rate between the U.S. dollar and the foreign currency of the
issuer.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS--Transactions in the
foregoing instruments may be entered into by certain Funds on U.S. exchanges
regulated by the Securities and Exchange Commission ("SEC") or the Commodities
Futures Trading Commission ("CFTC"). Over-the-counter transactions involve
certain risks which may not be present in an exchange environment.

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<PAGE>
FUTURES CONTRACTS: The Intermediate-Duration Government and GNMA Funds may
enter into futures contracts for hedging purposes only. A futures contract is a
bilateral agreement providing for the purchase and sale for future delivery of a
fixed income security, or a futures contract may be based on municipal bond or
other financial indices, including any index of fixed income securities. A
"sale" of a futures contract means a contractual obligation to deliver the
securities called for by the contract at a specified price on a specified date.
A "purchase" of a futures contract means a contractual obligation to acquire the
securities called for by the contract at a specified price on a specified date.
Although futures contracts call for the actual delivery or acquisition of
securities or, in the case of futures contracts based on an index, the making or
acceptance of a cash settlement at a specified future time, the contractual
obligation is usually fulfilled before such date without the making or taking of
delivery by "closing out" the contract, that is, by buying or selling, as the
case may be, on a commodities exchange, an identical futures contract calling
for settlement in the same month, subject to the availability of a liquid
secondary market; there can be no assurance that a liquid secondary market will
exist for any particular futures contract. Brokerage commissions are incurred
when a futures contract is bought or sold.

Futures contracts have been designed by exchanges, which have been
designated as "contract markets" by the CFTC, and must be executed through a
futures commission merchant or brokerage firm that is a member of the relevant
contract market. Presently, futures contracts are based on such debt securities
as long-term U.S. Treasury Bonds, Treasury Notes, three-month U.S. Treasury
Bills and bank certificates of deposit. Existing contract markets include the
Chicago Board of Trade and the International Monetary Market of the Chicago
Mercantile Exchange. Futures contracts are traded on these markets, and, through
their clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.

Futures traders are required to make a good faith margin deposit in cash or
government securities with or for the account of a broker or custodian to
initiate and maintain open positions in futures contracts. A margin deposit is
intended to assure completion of the contract (delivery or acceptance of the
underlying security) if it is not terminated prior to the specified delivery
date. Minimal initial margin requirements are established by the futures
exchange and may be changed. Brokers may establish deposit requirements which
are higher than the exchange minimums. Deposit requirements on futures contracts
customarily range upward from less than 5% of the value of the contract being
traded.

After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes to the extent that
the margin on deposit does not satisfy the required margin, payment of an
additional "variation" margin will be required. Conversely, change in the
contract value may reduce the required margin, resulting in a repayment of the
excess margin to the contract holder. Variation margin payments are made to and
from the futures broker for as long as the contract remains open. The Funds
expect to earn interest income on their margin deposits.

At the time of delivery of securities pursuant to a futures contract based
on fixed income securities, adjustments are made to recognize differences in
value arising from the delivery of securities with a different interest rate
from that specified in the contract. In some (but not many) cases, securities
called for by a futures contract may not have been issued when the contract was
written.

Traders in futures contracts and related options may be broadly classified
as either "hedgers" or "speculators." Hedgers use the futures markets primarily
to offset unfavorable changes in the value of securities otherwise held or
expected to be acquired for investment purposes. Speculators are less inclined
to own the securities underlying the futures contracts which they trade, and use
futures contracts with the expectation of realizing profits from fluctuations in
the prices of underlying securities. The purpose of the purchase or sale of a
futures contract, in the case of a Fund that holds or intends to acquire
long-term fixed income securities, is to hedge, that is, to attempt to protect
the Fund from fluctuations in interest rates without actually buying or selling
long-term fixed income securities. For example, if a Fund owns long-term bonds
and interest rates were expected to increase, the Fund might enter into futures
contracts for the sale of debt securities. Such a sale would have much the same
effect as selling an equivalent value of the long-

S-7
<PAGE>
term bonds owned by the Fund. If interest rates did increase, the value of the
debt securities in the Fund would decline, but the value of the futures
contracts would increase at approximately the same rate, thereby keeping the net
asset value of the Fund from declining as much as it otherwise would have. The
Fund could accomplish similar results by selling bonds with long maturities and
investing in bonds with short maturities when interest rates are expected to
increase. However, the use of futures contracts as an investment technique
allows a Fund to maintain a hedging position without having to sell its Fund
securities.

Similarly, when it is expected that interest rates may decline, futures
contracts may be purchased to attempt to hedge against anticipated purchases of
long-term bonds at higher prices. Since the fluctuations in the value of futures
contracts should be similar to that of long-term bonds, a Fund could take
advantage of the anticipated rise in the value of long-term bonds without
actually buying them until the market had stabilized. At that time, the futures
contracts could be liquidated and the Fund could then buy long-term bonds. To
the extent a Fund purchases futures contracts for this purpose, the assets in
the segregated asset account maintained to cover the Fund's obligations with
respect to such futures contracts will consist of cash or liquid securities in
an amount equal to the difference between the fluctuating market value of such
futures contracts and the aggregate value of the initial and variation margin
payments made by the Fund with respect to such futures contracts.

In order to insure that no Fund will be deemed to be a "commodity pool" as
defined in CFTC Regulations, all futures transactions must constitute either
bona fide hedging transactions or transactions for other purposes so long as the
aggregate initial margin and premiums required for such transaction will not
exceed five percent of the liquidation value of the qualifying entity's
portfolio, after taking into account unrealized profits and unrealized losses on
any such contracts it has entered into. The Fund will only sell futures
contracts to protect securities owned against declines in price or purchase
contracts to protect against an increase in the price of securities intended for
purchase. As evidence of this hedging interest, the Fund expects that
approximately 75% of its futures contracts will be "completed"; that is,
equivalent amounts of related securities will have been purchased or are being
purchased by the Portfolio upon sale of open futures contracts.

OPTIONS ON FUTURES CONTRACTS: The Intermediate-Duration Government and GNMA
Funds, subject to any applicable laws, may purchase and write options on futures
contracts ("options on futures contracts") for hedging purposes only. An option
on a futures contract provides the holder with the right to enter into a "long"
position in the underlying futures contract (i.e., a purchase of the futures
contract), in the case of a call option, or a "short" position in the underlying
futures contract (i.e., a sale of the futures contract), in the case of a put
option, at a fixed exercise price up to a stated expiration date or, in the case
of certain options, on such date. Such options on futures contracts will be
traded on contract markets regulated by the CFTC. Depending on the pricing of
the option compared to either the price of the futures contract upon which it is
based or the price of the underlying debt securities, it may or may not be less
risky than ownership of the futures contract or underlying debt securities. As
with the purchase of futures contracts, when a Fund is not fully invested,
Wellington Management Company, LLP (the "Adviser") may purchase a call option on
a futures contract on behalf of the Fund to hedge against a market advance due
to declining interest rates.

The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the securities which are deliverable upon
exercise of the futures contract. If the futures price at expiration of the
option is below the exercise price, a Fund will retain the full amount of the
option premium which provides a partial hedge against any decline that may have
occurred in the Fund's holdings. The writing of a put option on a futures
contract constitutes a partial hedge against increasing prices of the securities
which are deliverable upon exercise of the futures contract. If the futures
price at expiration of the options is higher than the exercise price, a Fund
will retain the full amount of the option premium, less related transaction
costs, which provides a partial hedge against any increase in the price of
securities which the Fund intends to purchase. If a put or call option a Fund
has written is exercised, the Fund may incur a loss

S-8
<PAGE>
which will be reduced by the amount of the premium it receives, less related
transaction costs. A straddle involves the simultaneous writing of put and call
options with respect to a futures contract. The Funds will cover these straddles
in accordance with applicable law. Depending on the degree of correlation
between changes in the value of the portfolio securities of a Fund and changes
in the value of its futures positions, a Fund's losses from existing options on
futures contracts may to some extent be reduced or increased by changes in the
value of the Fund's securities. The writer of an option on futures contract is
subject to the requirement of initial and variation margin payments.

A Fund may cover the writing of call options on futures contracts (a)
through purchases of the underlying futures contract, or (b) through the holding
of a call on the same futures contract and in the same principal amount as the
call written where the exercise price of the call held (i) is equal to or less
than the exercise price of the call written or (ii) is greater than the exercise
price of the call written if the difference is maintained by the Trust on behalf
of a Fund in cash, cash equivalents or U.S. Treasury securities in a segregated
account with its custodian. The Trust may cover the writing of put options on
futures contracts on behalf of a Fund (a) through sales of the underlying
futures contract, (b) through segregation of cash, cash equivalents or U.S.
Treasury securities in an amount equal to the value of the security or index
underlying the futures contract, or (c) through the holding of a put on the same
futures contract and in the same principal amount as the put written where the
exercise price of the put held is equal to or greater than the exercise price of
the put written or less than the exercise price of the put written if the
difference is maintained by the Fund in cash or liquid securities in a
segregated account with its custodian. Put and call options on futures contracts
written by the Trust on behalf of a Fund may also be covered in such other
manner as may be in accordance with the requirements of the exchange on which
they are traded and applicable laws and regulations.

The amount of risk a Fund assumes when it purchases an option on a futures
contract is the premium paid for the option plus related transaction costs,
although in order to realize a profit, it may be necessary to exercise the
option and close out the underlying futures contract, subject to the risks of
futures trading described herein. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that changes in the value
of the underlying futures contract will not be fully reflected in the value of
the option purchased. The writing of an option on a futures contract, however,
involves all of the risks of futures trading, including the requirement to make
initial and variation margin payments.

Although techniques other than the sale and purchase of futures contracts
and options on futures contracts could be used to control a Fund's exposure to
market fluctuations, the use of futures contracts may be a more effective means
of hedging this exposure. While a Fund will incur commission expenses in both
opening and closing out futures positions, these costs are lower than
transaction costs incurred in the purchase and sale of the underlying
securities.

RISKS OF FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS: Various
additional risks exist with respect to the trading of futures contracts and
options on futures contracts. For example, the Trust's ability to effectively
hedge all or a portion of the holdings of a Fund through transactions in such
instruments will depend on the degree to which price movements in the underlying
index or instrument correlate with price movements in the relevant portion of
the Fund's holdings. The trading of futures contracts and options entails the
additional risk of imperfect correlation between movements in the futures or
option price and the price of the underlying index or obligation, while the
writing of options also entails the risk of imperfect correlation between
securities used to cover options written and the securities underlying such
options.

Positions in futures contracts may be closed out only on an exchange that
provides a secondary market for such futures. However, there can be no assurance
that a liquid secondary market will exist for any particular futures contract at
any specific time. Thus, it may not be possible to close a futures position. In
the event of adverse price movements, a Fund unable to close out a futures
position would continue to be required to make daily cash payments to maintain
its required margin. In such situations, if a Fund has

S-9
<PAGE>
insufficient cash, it may have to sell portfolio securities to meet daily margin
requirements at a time when it may be disadvantageous to do so. In addition, a
Fund may be required to make delivery of the instruments underlying futures
contracts it holds. The inability to close options and futures positions also
could have an adverse impact on the ability of the Fund to hedge effectively. A
Fund will minimize the risk
that it will be unable to close out a futures contract by only entering into
futures which are traded on national futures exchanges and for which there
appears to be a liquid secondary market.

Moreover, if the Adviser's investment judgment about the general direction
of interest rates is incorrect, the overall performance of a Fund that has
entered into a futures contract would be poorer than if it had not entered into
any such contract. If, for example, a Fund has hedged against the possibility of
an increase in interest rates, which increase would adversely affect the price
of bonds held in its portfolio, and interest rates decrease instead, the Fund
will lose part or all of the benefit of the increased value of its hedged bonds
because it will have offsetting losses in its futures positions. In addition, in
such situations, if a Fund has insufficient cash, it may have to sell bonds from
its portfolio to meet daily variation margin requirements. Such sales of bonds
may be, but will not necessarily be, at increased prices that reflect the rising
market. A Fund may, therefore, have to sell securities at a time when it may be
disadvantageous to do so.

The risk of loss in trading futures contracts in some strategies can be
substantial, due to both the low margin deposits required and the extremely high
degree of leverage involved in futures pricing. As a result, a relatively small
price movement in a futures contract may result in immediate and substantial
loss (as well as gain) to a Fund. For example, if at the time of purchase 10% of
the value of the futures contract is deposited as margin, a subsequent 10%
decrease in the value of the futures contract would result in a total (100%)
loss of the margin deposit, before any deduction for the transaction costs, if
the account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount invested in the contract. However, because a Fund will engage in futures
strategies only for hedging purposes, the Adviser does not believe that the Fund
is subject to the risks of loss frequently associated with futures transactions.
A Fund would presumably have sustained comparable losses if, instead of
transacting in the futures contract, it had invested in the underlying financial
instrument and sold it after the decline. The risk of loss from the purchase of
options is less than the risk from the purchase or sale of futures contracts
because the maximum amount at risk is the premium paid for the option.

Utilization of futures transactions by a Fund does involve the risk of
imperfect or no correlation where the securities underlying futures contracts
have different maturities than the portfolio securities being hedged. It is also
possible that a Fund could both lose money on futures contracts and experience a
decline in the value of its portfolio securities. There is also the risk of loss
by a Fund of margin deposits in the event of the bankruptcy of a broker with
whom the Fund has an open position in a futures contract or related option.

Most futures exchanges limit the amount of fluctuation permitted in futures
contract prices during a single trading day. The daily limit establishes the
maximum amount that the price of a futures contract may vary either up or down
from the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of contract, no trades may
be made on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not limit
potential losses because the limit may prevent the liquidation of unfavorable
positions. Futures contract prices have occasionally moved to the daily limit
for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of future positions and subjecting some futures
traders to substantial losses.

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 Fund's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven days, securities for

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which there is no active secondary market, and repurchase agreements with
maturities of more than seven days in length.

MORTGAGE-BACKED SECURITIES--The Corporate Daily Income, Short-Duration
Government, Intermediate-Duration Government and GNMA Funds may invest in
mortgage-backed securities. Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional 15- and 30-year fixed-rate mortgages, graduated payment
mortgages, adjustable rate mortgages and balloon mortgages. Mortgage-backed
securities represent pools of mortgage loans assembled for sale to investors by
various governmental agencies such as the Government National Mortgage
Association ("GNMA") and government-related organizations such as Fannie Mae,
and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by
non-governmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain mortgage-backed securities are guaranteed by a third party or
otherwise similarly secured, the market value of such securities, which may
fluctuate, is not so secured. If a Fund purchases a mortgage-backed security at
a premium, that portion may be lost if there is a decline in the market value of
the security, whether resulting from changes in interest rates or prepayments in
the underlying mortgage collateral. As with other interest-bearing securities,
the prices of such securities are inversely affected by changes in interest
rates. However, though the value of a mortgage-backed security may decline when
interest rates rise, the converse is not necessarily true since in periods of
declining interest rates the mortgages underlying the securities are prone to
prepayment. For this and other reasons, a mortgage-backed security's stated
maturity may be shortened by unscheduled prepayments on the underlying mortgages
and, therefore, it is not possible to accurately predict the security's return
to a Fund. In addition, regular payments received in respect of mortgage-backed
securities include both interest and principal. No assurance can be given as to
the return a Fund will receive when these amounts are reinvested.

A Fund may also invest in mortgage-backed securities that are collateralized
mortgage obligations structured on pools of mortgage pass-through certificates
or mortgage loans. For purposes of determining the average maturity of a
mortgage-backed security in its investment portfolio, a Fund will utilize the
expected average life of the security, as estimated in good faith by the
Adviser.

GOVERNMENT PASS-THROUGH SECURITIES: These are securities that are issued or
guaranteed by a U.S. Government agency representing an interest in a pool of
mortgage loans. The primary issuers or guarantors of these mortgage-backed
securities are GNMA, Fannie Mae and the Federal Home Loan Mortgage Corporation
("FHLMC"). Fannie Mae and FHLMC obligations are not backed by the full faith and
credit of the U.S. Government as GNMA certificates are, but Fannie Mae and FHLMC
securities are supported by the instrumentalities' right to borrow from the U.S.
Treasury. GNMA, Fannie Mae and FHLMC each guarantees timely distributions of
interest to certificate holders. GNMA and Fannie Mae also each guarantees timely
distributions of scheduled principal. FHLMC has in the past guaranteed only the
ultimate collection of principal of the underlying mortgage loan; however, FHLMC
now issues mortgage-backed securities (FHLMC Gold PCs) which also guarantee
timely payment of monthly principal reductions. Government and private
guarantees do not extend to the securities' value, which is likely to vary
inversely with fluctuations in interest rates.

There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-backed securities
and among the securities that they issue. Mortgage-backed securities issued by
GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") that are guaranteed as to the timely payment of principal and interest by
GNMA and are backed by the full faith and credit of the United States. GNMA is a
wholly-owned U.S. Government corporation within the Department of Housing and
Urban Development. GNMA certificates also are supported by the authority of GNMA
to borrow funds from the U.S. Treasury to make payments under its

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guarantee. Mortgage-backed securities issued by Fannie Mae include Fannie Mae
Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") that
are solely the obligations of Fannie Mae and are not backed by or entitled to
the full faith and credit of the United States. The Fannie Mae is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to timely payment of the principal and interest by Fannie
Mae. Mortgage-backed securities issued by FHLMC include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or "PC's"). FHLMC is a
corporate instrumentality of the United States, created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs are
not guaranteed by the United States or by any Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any Federal Home Loan
Bank. Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. When FHLMC
does not guarantee timely payment of principal, FHLMC may remit the amount due
on account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after it
becomes payable.

PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities
issued by a non-governmental entity, such as a trust. These securities include
collateralized mortgage obligations ("CMOs") and real estate mortgage
investments conduits ("REMICs") that are rated in one of the top two rating
categories. While they are generally structured with one or more types of credit
enhancement, private pass-through securities typically lack a guarantee by an
entity having the credit status of a governmental agency or instrumentality.

COLLATERALIZED MORTGAGE OBLIGATIONS: CMOs are debt obligations or
multiclass pass-through certificates issued by agencies or instrumentalities of
the U.S. Government or by private originators or investors in mortgage loans.
Principal and interest paid on the underlying mortgage assets may be allocated
among the several classes of a series of a CMO in a variety of ways. Principal
payments on the underlying mortgage assets may cause CMOs to be retired
substantially earlier than their stated maturities or final distribution dates,
resulting in a loss of all or part of any premium paid.

REMICS: A REMIC is a CMO that qualifies for special tax treatment under the
Internal Revenue Code and invests in certain mortgages principally secured by
interests in real property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or "residual" interests.
Guaranteed REMIC pass-through certificates ("REMIC Certificates") issued by
Fannie Mae or FHLMC represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed
mortgage pass-through certificates.

PARALLEL PAY SECURITIES, PAC BONDS: Parallel pay CMOs and REMICs are
structured to provide payments of principal on each payment date to more than
one class. These simultaneous payments are taken into account in calculating the
stated maturity date or final distribution date of each class, which must be
retired by its stated maturity date or final distribution date, but may be
retired earlier. Planned Amortization Class CMOs ("PAC Bonds") generally require
payments of a specified amount of principal on each payment date. PAC Bonds are
always parallel pay CMOs with the required principal payment on such securities
having the highest priority after interest has been paid to all classes.

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBs"): SMBs are usually structured
with two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments, and is thus termed an interest-only class ("IO"),
while the other class may receive all of the principal payments, and is thus
termed the principal-only class ("PO"). The value of IOs tends to increase as
rates rise and decrease as rates fall; the opposite is true of POs. During times
when interest rates are experiencing fluctuations, such securities can be
difficult to price on a consistent basis. The market for SMBs is not as fully
developed as other markets; SMBs, therefore, may be illiquid.

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RESETS: Interest rates on the mortgages underlying the adjustable rate
securities and other floating rate securities are reset at intervals of one year
or less in response to changes in a predetermined interest rate index. There are
two main categories of indices: those based on U.S. Treasury securities and
those derived from a calculated measure such as a cost-of-funds index or a
moving average of mortgage rates. Commonly used indices include the one-year and
three-year constant maturity Treasury rates (CMT), the three-month Treasury Bill
rate, the 180-day Treasury Bill rate, the Eleventh District Federal Home Loan
Bank Cost-of-Funds Index, and the one-month, three-month, six-month or one-year
London Interbank Offered Rate.

CAPS AND FLOORS: Underlying mortgages or other obligations that
collateralize the adjustable rate securities and other floating rate securities
will frequently have caps and floors, which limits the maximum amount by which
the loan rate may change up or down, either at each reset or adjustment interval
or over the life of the loan. This provides the mortgage borrower and lender
some degree of protection against large changes in monthly payments. Some
residential mortgage loans restrict periodic adjustments by limiting changes in
the borrower's monthly principal and interest payments rather than limiting
interest rate changes. These payment caps may result in negative amortization,
i.e., an increase in the balance of the mortgage loan. The adjustable rate
feature of the mortgages underlying the adjustable rate mortgage securities
("ARMs"), collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conduits ("REMICs") in which a Fund may invest should reduce, but
will not eliminate, price fluctuations in such securities, particularly during
periods of extreme fluctuations in market interest rates. Since the interest
rates on many mortgages underlying ARMs, CMOs and REMICs are reset on an annual
basis and generally are subject to caps, it can be expected that the prices of
such ARMs, CMOs and REMICs will fluctuate to the extent prevailing market
interest rates are not reflected in the interest rates payable on the underlying
ARMs, CMOs or REMICs. In this regard, the net asset value of the Trust's shares
could fluctuate to the extent interest rates on underlying mortgages differ from
prevailing market interest rates during interim periods between interest rate
reset dates. Accordingly, investors could experience some principal loss, or
less gain than might otherwise be achieved, if they redeem their shares of the
Trust before the interest rates on the mortgages underlying the Trust's
portfolio securities are adjusted to reflect prevailing market interest rates.

MUNICIPAL SECURITIES--The Money Market and Prime Obligation Funds may invest
in Municipal Securities. The two principal classifications of Municipal
Securities are "general obligation" and "revenue" issues. General obligation
issues are issues involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues, although the
characteristics and method of enforcement of general obligation issues may vary
according to the law applicable to the particular issuer. Revenue issues are
payable only from the revenues derived from a particular facility or class of
facilities or other specific revenue source. A Fund may also invest in "moral
obligation" issues, which are normally issued by special purpose authorities.
Moral obligation issues are not backed by the full faith and credit of the state
but are generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal Securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public facilities,
the refunding of outstanding obligations, the payment of general operating
expenses, and the extension of loans to other public institutions and
facilities. Certain private activity bonds that are issued by or on behalf of
public authorities to finance various privately-owned or operated facilities are
included within the term "Municipal Securities." Private activity bonds and
industrial development bonds are generally revenue bonds, the credit and quality
of which are directly related to the credit of the private user of the
facilities.

Municipal Securities may also include general obligation notes, tax
anticipation notes, bond anticipation notes, revenue anticipation notes, project
notes, certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are

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sold by the Department of Housing and Urban Development. While the issuing
agency has the primary obligation with respect to its project notes, they are
also secured by the full faith and credit of the United States through
agreements with the issuing authority which provide that, if required, the
federal government will lend the issuer an amount equal to the principal of and
interest on the project notes.

The quality of Municipal Securities, both within a particular classification
and between classifications, will vary, and the yields on Municipal Securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating(s)
of the issue. In this regard, it should be emphasized that the ratings of any
nationally recognized statistical rating organization ("NRSRO") are general and
are not absolute standards of quality. Municipal Securities with the same
maturity, interest rate and rating(s) may have different yields, while Municipal
Securities of the same maturity and interest rate with different rating(s) may
have the same yield.

An issuer's obligations under its Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.

MUNICIPAL NOTE RATINGS: Moody's highest rating for state and municipal and
other short-term notes is MIG-1 and VMIG-1. Short-term Municipal Securities
rated MIG-1 or VMIG-1 are of the best quality and such securities have strong
protection afforded by established cash flows, superior liquidity support and/or
demonstrated access to the market for refinancing. Short-term Municipal
Securities rated MIG-2 and VMIG-2 are of high quality and their margins of
protection are ample, although not so large as in the preceding group.

An S&P note rating reflects the liquidity concerns and market access risks
unique to notes. Notes due in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating. The following criteria will be used in making that assessment.

- Amortization schedule (the larger the final maturity relative to other
maturities, the more likely it will be treated as a note).

- Source of payment (the more dependent the issue is on the market for its
refinancing, the more likely it will be treated as a note).

Note rate symbols are as follows:

SP-1. Very strong or strong capacity to pay principal and interest. Those
issues determined to possess overwhelming safety characteristics will be given a
plus (+) designation.

SP-2. Satisfactory capacity to pay principal and interest.

REPURCHASE AGREEMENTS--Each Fund, except the Government II and Treasury II
Funds, may invest in repurchase agreements. Repurchase agreements are agreements
under which securities are acquired from a securities dealer or bank subject to
resale on an agreed upon date and at an agreed upon price, which includes
principal and interest. A Fund involved bears a risk of loss in the event that
the other party to a repurchase agreement defaults on its obligations and the
Fund is delayed or prevented from exercising its rights to dispose of the
collateral securities. The Adviser will only enter into repurchase agreements
with financial institutions that it deems to present minimal risk of bankruptcy
during the term of the agreement based on guidelines which are periodically
reviewed by the Board of Trustees. Repurchase agreements are considered to be
loans collateralized by the underlying security. Repurchase

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agreements entered into by a Fund will provide that the underlying security
shall be fully collateralized at all times. This underlying security will be
marked to market daily and the Adviser will monitor compliance with this
requirement. Under all repurchase agreements entered into by a Fund, the Fund
must take actual or constructive possession of the underlying collateral.
However, if the seller defaults, the Fund could realize a loss on the sale of
the underlying security to the extent the proceeds of the sale are less than the
resale price. In addition, even though the Bankruptcy Code provides protection
for most repurchase agreements, if the seller should be involved in bankruptcy
or insolvency proceedings, the Fund may incur delay and costs in selling the
security and may suffer a loss of principal and interest if that Fund is treated
as an unsecured creditor. Repurchase Agreements are considered loans under the
1940 Act.

SUPRANATIONAL AGENCY OBLIGATIONS--The Money Market Fund may invest in
supranational agency obligations. Supranational agency obligations are debt
obligations established through the joint participation of several governments,
and include the Asian Development Bank, Inter-American Development Bank,
International Bank for Reconstruction and Development (World Bank), African
Development Bank, European Economic Community, European Investment Bank, and the
Nordic Investment Bank.

SWAPS, CAPS, FLOORS AND COLLARS--The Intermediate-Duration Government, GNMA
and Short-Duration Government Funds may invest in swaps, caps and floors as a
hedging strategy. Interest rate swaps, mortgage swaps, currency swaps and other
types of swap agreements such as caps, floors and collars are designed to permit
the purchaser to preserve a return or spread on a particular investment or
portion of its portfolio, and to protect against any increase in the price of
securities a Fund anticipates purchasing at a later date. In a typical interest
rate swap, one party agrees to make regular payments equal to a floating
interest rate multiplied by a "notional principal amount," in return for
payments equal to a fixed rate multiplied by the same amount, for a specific
period of time. If a swap agreement provides for payment in different
currencies, the parties might agree to exchange the notional principal amount as
well. Swaps may also depend on other prices or rates, such as the value of an
index or mortgage prepayment rates.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specific interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.

Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risk assumed. As a
result, swaps can be highly volatile and have a considerable impact on a Fund's
performance. Swap agreements are subject to risks related to the counterparty's
ability to perform, and may decline in value if the counterparty's
creditworthiness deteriorates. A Fund may also suffer losses if it is unable to
terminate outstanding swap agreements or reduce its exposure through offsetting
transactions. Any obligation a Fund may have under these types of arrangements
will be covered by setting aside cash or liquid securities in a segregated
account. A Fund will enter into swaps only with counterparties believed to be
creditworthy.

The Funds will enter into interest rate and mortgage swaps only on a net
basis, i.e., the two payment streams are netted out, with the Fund receiving or
paying, as the case may be, only the net amount of the two payments. Since these
transactions are entered into for good faith hedging purposes, the Trust and the
Adviser do not believe that such obligations constitute senior securities as
defined in the Investment Company Act of 1940 (the "1940 Act") and, accordingly,
will not treat them as being subject to the Trust's or the Fund's borrowing
restrictions. The net amount of the excess, if any, of the Fund's obligations
over its entitlements with respect to each interest rate or mortgage swap will
be accrued on a daily basis and an amount of cash or liquid securities rated in
one of the top three ratings categories by Moody's or S&P, or, if unrated by
either Moody's or S&P, deemed by the Adviser to be of comparable quality having
an aggregate

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net asset value at least equal to such accrued excess will be maintained in a
segregated account by the Fund's custodian.

TIME DEPOSITS--A time deposit is a non-negotiable receipt 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 OBLIGATIONS--Each Fund, except the Treasury, Treasury
II, Federal Securities and Treasury Securities Daily Income Funds, may invest in
U.S. agency obligations. Various agencies of the U.S. Government, issue
obligations, including, the Export Import Bank of the United States, Farmers
Home Administration, Federal Farm Credit Bank, Federal Housing Administration,
GNMA, Maritime Administration, Small Business Administration, and The Tennessee
Valley Authority. The Funds may purchase securities guaranteed by GNMA which
represent participation in Veterans Administration and Federal Housing
Administration backed mortgage pools. Obligations of instrumentalities of the
U.S. Government include securities issued by, among others, Federal Home Loan
Banks, FHLMC, Federal Intermediate Credit Banks, Federal Land Banks, Fannie Mae
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., GNMA), others (in which all Funds
permitted to invest in agencies' securities may invest) are supported by the
right of the issuer to borrow from the Treasury and still others (in which only
the Corporate Daily Income Fund may invest) are supported only by the credit of
the instrumentality (E.G., Fannie Mae). 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 the value of 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 Fund'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--U.S. Treasury 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.

VARIABLE OR FLOATING RATE INSTRUMENTS--Certain of the Funds may invest in
variable or floating rate instruments. These securities may involve a demand
feature and may include variable amount master demand notes that may be backed
by bank letters of credit. The holder of an instrument with a demand feature may
tender the instrument back to the issuer at par prior to maturity. A variable
amount master demand note is issued pursuant to a written agreement between the
issuer and the holder, its amount may be increased by the holder or decreased by
the holder or issuer, it is payable on demand and the rate of interest varies
based upon an agreed formula. The quality of the underlying credit must, in the
opinion of the Adviser, be equivalent to the long-term bond or commercial paper
ratings applicable to the Fund's permitted investments. The Adviser will monitor
on an ongoing basis the earning power, cash flow, and liquidity ratios of the
issuers of such instruments and will similarly monitor the ability of an issuer
of a demand instrument to pay principal and interest on demand.

WHEN-ISSUED SECURITIES--Each Fund may invest in when-issued securities.
These securities involve the purchase of debt obligations on a when-issued
basis, in which case delivery and payment normally take place within 45 days
after the date of commitment to purchase. The Funds will make

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commitments to purchase obligations on a when-issued basis only with the
intention of actually acquiring the securities, but may sell them before the
settlement date. When-issued securities are subject to market fluctuation, and
no interest accrues to the purchaser during the period prior to settlement. The
payment obligation and the interest rate that a Fund will receive on the
securities are each fixed at the time the Fund enters into the commitment.
Purchasing obligations on a when-issued basis is a form of leveraging and can
involve a risk that the yields available in the market when delivery takes place
may actually be higher than those obtained in the transaction itself, in which
case the Fund could experience an unrealized loss at the time of delivery.

Segregated accounts comprised of cash or liquid securities will be
established with the custodian for a Fund in an amount at least equal in value
to each such Fund's commitments to purchase when-issued securities. If the value
of these assets declines, the appropriate Fund will place additional liquid
assets in the account on a daily basis so that the value of the assets in the
account is equal to the amount of such commitments.

YEAR 2000

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

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

The following investment limitations are fundamental policies of each Fund
which cannot be changed with respect to a Fund without the consent of the
holders of a majority of that Fund's outstanding shares. The term "majority of
outstanding shares" means the vote of (i) 67% or more of a Fund's shares present
at a meeting, if not more than 50% of the outstanding shares of a Fund are
present or represented by proxy, or (ii) more than 50% of a Fund's outstanding
shares, whichever is less.

A Fund 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 Fund would be invested in the
securities of such issuer; provided, however, that any Fund except the Money
Market and Prime Obligation Fund 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 Fund 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 Fund. 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 Fund

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makes additional investments and any interest paid on such borrowings will
reduce the income of that Fund.

4. Make loans, except that each Fund may purchase or hold debt instruments in
accordance with its investment objective and policies and may enter into
repurchase agreements, provided that repurchase agreements maturing in more
than seven days, restricted securities and other illiquid securities are not
to exceed, in the aggregate, 10% of the Fund's net assets.

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

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

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

8. Purchase or sell real estate, real estate limited partnership interests,
commodities or commodities contracts including (with the exception of the
Short-Duration Government, Intermediate-Duration Government, and GNMA Funds)
futures contracts. However, subject to its permitted investments, the Funds
may purchase obligations issued by companies which invest in real estate,
commodities or commodities contracts.

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

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

11. Purchase securities of other investment companies; provided that all Funds
may purchase such securities as permitted by the 1940 Act and the rules and
regulations thereunder but, in any event, such Funds may not purchase
securities of other open-end investment companies.

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

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

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

15. Purchase warrants, puts, calls, straddles, spreads or combinations thereof,
except that the Intermediate-Duration Government and GNMA Funds may invest
in options on futures contracts.

16. Invest in interests in oil, gas or other mineral exploration or development
programs.

17. Purchase restricted securities (securities which must be registered under
the Securities Act of 1933 before they may be offered or sold to the public)
or other illiquid securities except as described in the Prospectuses and
this Statement of Additional Information.

Unregistered securities sold in reliance on the exemption from registration
in Section 4(2) of the 1933 Act and securities exempt from registration on
re-sale pursuant to Rule 144A of the 1933 Act may be

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treated as liquid securities under procedures adopted by the Board of Trustees.
Rule 144A securities are securities that are traded in the institutional market
pursuant to an exemption from registration. Rule 144A securities may not be as
liquid as exchange-traded securities since they may only be resold to certain
qualified institutional buyers.

Except with regard to the limitation on investing in illiquid securities,
the foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess or deficiency occurs or
exists immediately after and as a result of a purchase of such security. These
investment limitations and the investment limitations in each Prospectus are
fundamental policies of the Trust and may not be changed without shareholders'
approval.

In addition, it is a non-fundamental policy of the Portfolios not to invest
in oil, gas or mineral leases.

DESCRIPTION OF RATINGS

DESCRIPTION OF CORPORATE BOND RATINGS

The following descriptions of corporate bond ratings have been published by
Moody's Investor's Service, Inc. ("Moody's"), Standard and Poor's Corporation
("S&P"), Duff and Phelps, Inc. ("Duff"), Fitch Investor's Services, Inc.
("Fitch"), IBCA Limited ("IBCA") and Thomson BankWatch ("Thomson"),
respectively.

DESCRIPTION OF MOODY'S LONG-TERM RATINGS

Aaa Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.

Aa Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
the Aaa securities.

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

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

DESCRIPTION OF S&P'S LONG-TERM RATINGS

INVESTMENT GRADE

AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.

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A Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB Debt rated "BBB" is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.

DESCRIPTION OF DUFF'S LONG-TERM RATINGS

AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+ High credit quality. Protection factors are strong.

AA- Risk is modest but may vary slightly from time to time because of economic
conditions.

A+ Protection factors are average but adequate. However,

A- Risk factors are more variable and greater in periods of economic stress.

BBB+ Below average protection factors but still considered

BBB- sufficient for prudent investment. Considerable variability in risk during
economic cycles.

DESCRIPTION OF FITCH'S LONG-TERM RATINGS

INVESTMENT GRADE BOND

AAA Bonds rated AAA are judged to be strictly high grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions liable to
slight market fluctuation other than through changes in the money rate. The
prime feature of an AAA bond is a showing of earnings several times or many
times greater than interest requirements, with such stability of applicable
earnings that safety is beyond reasonable question whatever changes occur
in conditions.

AA Bonds rated AA are judged to be of safety virtually beyond question and are
readily salable, whose merits are not unlike those of the AAA class, but
whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to rating
by the lesser financial power of the enterprise and more local type market.

A Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds
with higher ratings.

DESCRIPTION OF IBCA'S LONG-TERM RATINGS

AAA Obligations rated AAA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk significantly.

S-20
<PAGE>
AA Obligations for which there is a very low expectation of investment risk
are rated AA. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions
may increase investment risk albeit not very significantly.

A Bonds rated A are obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.

BBB Bonds rated BBB are obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal
and interest is adequate, although adverse changes in business, economic or
financial conditions are more likely to lead to increased investment risk
than for obligations in other categories.

DESCRIPTION OF THOMSON'S LONG-TERM DEBT RATINGS

INVESTMENT GRADE

AAA Bonds rated AAA indicate that the ability to repay principal and interest
on a timely basis is very high.

AA Bonds rated AA indicate a superior ability to repay principal and interest
on a timely basis, with limited incremental risk compared to issues rated
in the highest category.

A Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse developments
(both internal and external) than obligations with higher ratings.

BBB Bonds rated BBB indicate an acceptable capacity to repay principal and
interest. Issues rated BBB are, however, more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

The following descriptions of commercial paper ratings have been published
by Moody's, Standard and Poor's, Duff and Phelps, Fitch, IBCA and Thomson
BankWatch, respectively.

DESCRIPTION OF MOODY'S SHORT-TERM RATINGS

PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

S-21
<PAGE>
S&P'S SHORT-TERM RATINGS

<TABLE>
<S> <C>
A-1 This highest category indicates that the degree of safety regarding timely payment
is strong. Debt determined to possess extremely strong safety characteristics is
denoted with a plus sign (+) designation.

A-2 Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
'A-1'.

DESCRIPTION OF DUFF'S SHORT-TERM RATINGS

Duff 1+ Highest certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is outstanding,
and safety is just below risk-free U.S. Treasury short-term obligations.

Duff 1 Very high certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors are minor.

Duff 1- High certainty of timely payment. Liquidity factors are strong and supported by
good fundamental protection factors. Risk factors are very small.

GOOD GRADE

Duff 2 Good certainty of timely payment. Liquidity factors and company fundamentals are
sound. Although ongoing funding needs may enlarge total financing requirements,
access to capital markets is good. Risk factors are small.

DESCRIPTION OF FITCH'S SHORT-TERM RATINGS

F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as
having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than issues rated 'F-1+'

F-2 Good Credit Quality. Issues assigned this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as for
issues assigned 'F-1+' and 'F-1' ratings.

LOC The symbol LOC indicates that the rating is based on a letter of credit issued by
a commercial bank.

DESCRIPTION OF IBCA'S SHORT-TERM RATINGS (UP TO 12 MONTHS)

A1+ Obligations supported by the highest capacity for timely repayment.

A1 Obligations supported by a strong capacity for timely repayment.

A2 Obligations supported by a satisfactory capacity for timely repayment, although
such capacity may be susceptible to adverse changes in business, economic, or
financial conditions.

DESCRIPTION OF THOMSON'S SHORT-TERM RATINGS

TBW-1 The highest category; indicates a very high likelihood that principal and interest
will be paid on a timely basis.

TBW-2 The second-highest category; while the degree of safety regarding timely repayment
of principal and interest is strong, the relative degree of safety is not as high
as for issues rated "TBW-1".
</TABLE>

S-22
<PAGE>
THE ADMINISTRATOR

The Trust and SEI Investments Fund Management ("SEI Management" or the
"Administrator") have entered into a Management Agreement (the "Management
Agreement"). The Management Agreement provides that the Administrator shall not
be liable for any error of judgement or mistake of law or for any loss suffered
by the Trust in connection with the matters to which the Management Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard of its duties and obligations thereunder.

The continuance of the Management Agreement with respect to each Fund must
be specifically approved at least annually (i) by the vote of a majority of the
Trustees or by the vote of a majority of the outstanding voting securities of
that Fund, and (ii) by the vote of a majority of the Trustees of the Trust who
are not parties to the Management Agreement or an "interested person" (as that
term is defined in the 1940 Act) of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Management
Agreement is terminable, without penalty, at any time as to any Fund by the
Trustees of the Trust, by a vote of a majority of the outstanding shares of that
Fund or by the Administrator on not less than 30 days' nor more than 60 days'
written notice. This Agreement shall not be assignable by either party without
the written consent of the other party.

The Administrator, a Delaware business trust, has its principal business
offices at Oaks, Pennsylvania 19456. SEI Investments Management Corporation
("SIMC"), a wholly-owned subsidiary of SEI Investments Company ("SEI
Investments"), is the owner of all beneficial interest in the Administrator. SEI
Investments and its subsidiaries and affiliates, including the Administrator,
are leading providers of funds evaluation services, trust accounting systems,
and brokerage and information services to financial institutions, institutional
investors, and money managers. The Administrator and its affiliates also serve
as administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select Funds,
The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CUFUND, The Expedition Funds, First American Funds,
Inc., First American Investment Funds, Inc., First American Strategy Funds,
Inc., HighMark Funds, Huntington Funds, The Nevis Funds, Oak Associates Funds,
The PBHG Funds, Inc., PBHG Advisor Funds, Inc., PBHG Insurance Series Fund,
Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
SEI Insurance Products Trust, STI Classic Funds, STI Classic Variable Trust and
TIP Funds.

The Administrator is obligated under the Management Agreement to pay the
excess of a Fund's operating expenses as disclosed in the applicable
Prospectuses. If operating expenses of any Fund exceed limitations established
by certain states, the Administrator will pay such excess. The Administrator
will not be required to bear expenses of any Fund to an extent which would
result in the Fund's inability to qualify as a regulated investment company
under provisions of the Internal Revenue Code. The term "expenses" is defined in
such laws or regulations, and generally excludes brokerage commissions,
distribution expenses, taxes, interest and extraordinary expenses. In addition,
certain voluntary and contractual fee waivers and reimbursement arrangements by
the Administrator were in effect during the fiscal year ended January 31, 1999.
The Administrator 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 (i) .20% of the Class A shares of the Prime
Obligation, Government II and Treasury Fund; (ii) .25% of the Class A shares of
Treasury II and Government Funds; (iii) 1.00% of the Class A shares of the
Federal Securities and Money Market Funds; (iv) .50% of the Class B shares of
the Prime Obligation, Government II, and Treasury Funds; (v) .55% of the Class B
shares of the Treasury II and Government Funds; (vi) 1.30% of the Class B shares
of the Money Market Funds; (vii) .70% of the Class C shares of the Prime
Obligation, Government II and Treasury Funds; (viii) .75% of the Class C shares
of the Treasury II and Government Funds; (ix) 1.50% of the Class C shares of the
Money Market Fund; and (x) 1.00% of the CNI Class shares

S-23
<PAGE>
of the Government Fund, each on an annualized basis. The Administrator has
voluntarily agreed to waive up to all of its fee in order to limit total
operating expenses to not more than (i) .18% of the average daily net assets of
the Money Market, .20% of the average daily net assets of Government Class A
shares and .60% of the average daily net assets of the Federal Securities Class
A shares; (ii) .48% of the average daily net assets of the Money Market, and
.50% of the average daily net assets of Government Class B shares; (iii) .68% of
the average daily net assets of the Money Market and .70% of the average daily
net assets of Government Class C shares; and (iv) .85% of the average daily net
assets of the Government CNI Class shares, each on an annualized basis. The
Administrator reserves the right, in its sole discretion, to terminate these
voluntary waivers at any time.

For the fiscal years ended January 31, 1997, 1998 and 1999, the Funds paid
fees to the Administrator as follows:

<TABLE>
<CAPTION>
FEES PAID (000) FEE WAIVERS (000)
--------------------------- ---------------------------
1997 1998 1999 1997 1998 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund......................... $ 131 $ 775 $ 1,283 $ 385 $ 1,309 $ 1,868
Prime Obligation Fund..................... $ 4,245 $ 4,887 $ 6,270 $ 1,097 $ 1,357 $ 1,364
Government Fund........................... $ 1,082 $ 1,481 $ 2,116 $ 812 $ 886 $ 1,132
Government II Fund........................ $ 1,155 $ 1,288 $ 1,405 $ 338 $ 406 $ 353
Treasury Fund............................. $ 56 $ 226 $ 638 $ 148 $ 214 $ 456
Treasury II Fund.......................... $ 1,013 $ 1,687 $ 1,512 $ 297 $ 367 $ 246
Federal Securities Fund................... * * * * * *
Corporate Daily Income Fund............... $ 109 $ 136 $ 183 $ 66 $ 68 $ 94
Treasury Securities Daily Income Fund..... * * * * * *
Short-Duration Government Fund............ $ 222 $ 245 $ 287 $ 27 $ 30 $ 32
Intermediate-Duration Government Fund..... $ 492 $ 390 $ 409 $ 27 $ 14 $ 8
GNMA Fund................................. $ 387 $ 276 $ 279 $ 8 $ 1 *
</TABLE>

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

* Not in operation during such period.

THE ADVISER

The Trust and Wellington Management Company, LLP (the "Adviser" or "WMC")
have entered into four advisory agreements (the "Advisory Agreements," and each
an "Advisory Agreement") dated September 30, 1983, December 15, 1986, August 4,
1993 and June 30, 1994, respectively. The Advisory Agreements provide that the
Adviser shall not be protected against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from the reckless disregard of its
obligations or duties thereunder.

WMC serves as the investment adviser for each Fund. 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 agreement, the Adviser invests
the assets of the Funds and continuously reviews, supervises and administers
each Fund's investment program. The Adviser is independent of the Administrator
and SEI and discharges its responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust.

The Adviser and its predecessor organizations have provided investment
advisory services to investment companies since 1928 and to investment
counseling clients since 1960. As of March 31, 1999, the Adviser had
discretionary management authority with respect to approximately $215 billion of
assets, including the assets of the Trust and SEI Liquid Asset Trust, each an
open-end management investment company administered by the Administrator. The
principal address of the Adviser is 75 State Street, Boston, Massachusetts
02109. WMC is a Massachusetts limited liability partnership whose managing
partners are Robert W. Doran, Duncan M. McFarland and John R. Ryan.

S-24
<PAGE>
The continuance of an Advisory Agreement with respect to a Fund after the
first two (2) years of such Agreement must be specifically approved at least
annually (i) by the vote of a majority of the outstanding shares of that Fund or
by the Trustees, and (ii) by the vote of a majority of the Trustees who are not
parties to such Advisory Agreement or "interested persons" of any party thereto,
cast in person at a meeting called for the purpose of voting on such approval.
An Advisory Agreement will terminate automatically in the event of its
assignment, and is terminable at any time without penalty by the Trustees of the
Trust or, with respect to a Fund, by a majority of the outstanding shares of
that Fund, on not less than 30 days' nor more than 60 days' written notice to
the Adviser, or by the Adviser on 90 days' written notice to the Trust.

The Adviser is entitled to a fee for its investment advisory services, which
is accrued daily and paid monthly at the following annual rates: .075% of the
combined daily net assets of the Money Market, Prime Obligation, Government,
Government II, Treasury, Treasury II and Federal Securities Funds up to $500
million and .02% of such net assets in excess of $500 million; .10% of the
combined daily net assets of the Short-Duration Government,
Intermediate-Duration Government and GNMA Funds up to $500 million, .075% of
such net assets between $500 million and $1 billion, and .05% of such net assets
in excess of $1 billion; and .10% of the combined daily net assets of the
Corporate Daily Income and Treasury Securities Daily Income Funds up to $500
million, .075% of such net assets between $500 million and $1 billion, and .05%
of such assets in excess of $1 billion. WMC may voluntarily waive portions of
its fees, although such waiver is not expected to affect any Fund's total
operating expenses, due to the nature of the Administrator's fee waivers. WMC
may terminate its waiver at any time.

For the fiscal years ended January 31, 1997, 1998 and 1999, the Funds paid
advisory fees as follows:

<TABLE>
<CAPTION>
FEES PAID (000) FEE WAIVERS (000)
--------------------------- ---------------------------
1997 1998 1999 1997 1998 1999
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund......................... $ 6 $ 36 $ 69 $ 33 $ 115 $ 153
Prime Obligation Fund..................... $ 227 $ 233 $ 293 $ 485 $ 557 $ 641
Government Fund........................... $ 44 $ 57 $ 79 $ 155 $ 180 $ 236
Government II Fund........................ $ 62 $ 61 $ 65 $ 138 $ 154 $ 150
Treasury Fund............................. $ 2 $ 8 $ 23 $ 20 $ 36 $ 83
Treasury II Fund.......................... $ 45 $ 69 $ 61 $ 93 $ 137 $ 110
Federal Securities Fund................... * * * * * *
Corporate Daily Income Fund............... $ 27 $ 33 $ 44 $ 23 $ 25 $ 35
Treasury Securities Daily Income Fund..... * * * * * *
Short-Duration Government Fund............ $ 57 $ 64 $ 72 $ 14 $ 15 $ 19
Intermediate-Duration Government Fund..... $ 137 $ 104 $ 110 $ 11 $ 11 $ 9
GNMA Fund................................. $ 120 $ 85 $ 86 $ 3 $ 1 $ 1
</TABLE>

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

* Not in operation during such period.

+ Not an adviser during such period.

DISTRIBUTION AND SHAREHOLDER SERVICING

The Trust has adopted a Distribution Plan (the "Plan") for the Sweep Class
and CNI Class shares of each Fund that offers Sweep Class or CNI Class shares
(only the Money Market, Prime Obligation, Government, Government II, Treasury
and Treasury II Funds offer Sweep Class shares, and only the Government Fund
offers CNI Class shares) in accordance with the provisions of Rule 12b-1 under
the 1940 Act, which regulates circumstances under which an investment company
may directly or indirectly bear expenses relating to the distribution of its
shares. In this regard, the Board of Trustees has determined that the Plans are
in the best interests of the shareholders. Continuance of the Plans must be
approved annually by a majority of the Trustees of the Trust and by a majority
of the Trustees who are not "interested persons" of the Trust as that term is
defined in the 1940 Act, and who have no direct or indirect financial

S-25
<PAGE>
interest in the operation of a Plan or in any agreements related thereto
("Qualified Trustees"). The Plans may not be amended to increase materially the
amount that may be spent thereunder without approval by a majority of the
outstanding shares of the Fund or class affected. All material amendments of the
Plans will require approval by a majority of the Trustees of the Trust and of
the Qualified Trustees.

The Plan adopted by the Sweep Class shareholders provides that the Trust
will pay the Distributor a fee of up to .50% of the average daily net assets of
a Fund's Sweep Class shares that the Distributor can use to compensate
broker-dealers and service providers, including affiliates of the Distributor,
that provide distribution-related services to Sweep Class shareholders or to
their customers who beneficially own Sweep Class shares.

The CNI Class Distribution Plan provides that the Trust will pay the
Distributor a fee of up to .50% of the average daily net assets of the
Government Fund's CNI Class shares that the Distributor can use to compensate
CNI Class shareholders that provide distribution-related services to their
customers.

Payments may be made under the Sweep Class and CNI Class Plans for
distribution services, including reviewing of purchase and redemption orders,
assisting in processing purchase, exchange and redemption requests from
customers, providing certain shareholder communications requested by the
Distributor, forwarding sales literature and advertisements provided by the
Distributor, and arranging for bank wires.

Except to the extent that the Administrator and/or Adviser benefitted
through increased fees from an increase in the net assets of the Trust which may
have resulted in part from the expenditures, no interested person of the Trust
nor any Trustee of the Trust who is not an interested person of the Trust has or
had a direct or indirect financial interest in the operation of any of the
distribution plans or related agreements.

Although banking laws and regulations prohibit banks from distributing
shares of open-end investment companies such as the Trust, according to an
opinion issued to the staff of the Securities and Exchange Commission ("SEC") by
the Office of the Comptroller of the Currency, financial institutions are not
prohibited from acting in other capacities for investment companies, such as
providing shareholder services. Should future legislative, judicial or
administrative action prohibit or restrict the activities of financial
institutions in connection with providing shareholder services, the Trust may be
required to alter materially or discontinue its arrangements with such financial
institutions.

For the fiscal year ended January 31, 1999, the Funds incurred the following
12b-1 expenses:

<TABLE>
<CAPTION>
AMOUNT PAID
TO
3RD PARTIES
BY
TOTAL 12b-1 SIDCO FOR
EXPENSES AS DISTRIBUTOR
TOTAL 12b-1 A % OF NET RELATED
FUND CLASS EXPENSES ASSETS SERVICES
- -------------------------------------------------------- ----- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Government Fund......................................... CNI $ 4,220,374 0.40% $4,220,374
Money Market Fund....................................... Sweep $ 4,247 0.50% $ 4,247
Prime Obligation Fund................................... Sweep $ 3,854 0.50% $ 3,854
Government Fund......................................... Sweep $ 7,338 0.50% $ 7,338
Treasury Fund........................................... Sweep $ 372,120 0.50% $ 372,120
</TABLE>

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

The Funds have also adopted shareholder servicing plans for their Class A,
Class B, Class C, CNI Class and Sweep Class shares (the "Service Plans"), and
Administrative Services Plans for their Class B and Class C shares. Under these
Service and Administrative Services Plans, the Distributor may perform, or may
compensate other service providers for performing, the following shareholder and
administrative services: maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services provided on investments;
assisting clients in changing dividend options, account designations and
addresses; sub-accounting; providing information on share positions to clients;
forwarding shareholder communications to clients; processing purchase, exchange
and redemption orders; and processing dividend payments. Under the Service and
Administrative Services Plans, the Distributor may retain as a profit any
difference between the fee it receives and the amount it pays to third parties.

S-26
<PAGE>
TRUSTEES AND OFFICERS OF THE TRUST

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select
Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CUFUND, The Expedition Funds, FMB Funds, Inc.,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Oak Associates Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund, Inc.,
The Pillar Funds, SEI Asset Allocation Trust, SEI Index Funds, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI Institutional
International Trust, SEI Insurance Products Trust, SEI Liquid Asset Trust, SEI
Tax Exempt Trust, STI Classic Funds, STI Classic Variable Trust and TIP Funds,
each of which is an open-end management investment company managed by SEI
Investments Fund Management or its affiliates and, except for PBHG Advisor
Funds, Inc., distributed by SEI Investments Distribution Co.

ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees*--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of SIMC, the Administrator and
the Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds, Oak
Associates Funds, Pillar Funds, SEI Asset Allocation Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Insurance Products Trust, SEI Liquid
Asset Trust and SEI Tax Exempt Trust.

WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, SIMC, the Administrator and the Distributor,
Director and Secretary of SEI Investments and Secretary of SIMC, the
Administrator and the Distributor. Trustee of The Advisors' Inner Circle Fund.
The Arbor Fund, The Expedition Funds, Oak Associates Funds, SEI Asset Allocation
Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional
Managed Trust, SEI Institutional International Trust, SEI Insurance Products
Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.

F. WENDELL GOOCH (DOB 12//03/32)--Trustee**--President, Orange County
Publishing Co., Inc.; Publisher, Paoli News and Paoli Republican; and Editor,
Paoli Republican, October 1981-January 1997. President, H&W Distribution, Inc.,
since July 1984. Executive Vice President, Trust Department, Harris Trust and
Savings Bank and Chairman of the Board of Directors of The Harris Trust Company
of Arizona before January 1981. Trustee of SEI Asset Allocation Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Insurance Products Trust, SEI Liquid
Asset Trust, SEI Tax Exempt Trust, STI Classic Funds and STI Classic Variable
Trust.

JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads,
from September 1987-December 1993. Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Oak Associates Funds, SEI Asset Allocation
Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional
Managed Trust, SEI Institutional International Trust, SEI Insurance Products
Trust, SEI Liquid Asset Trust, and SEI Tax Exempt Trust.

GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991-December 1996; Chief Financial Officer, Noble Partners, L.P.,
March 1991-December 1996; Treasurer and Clerk, Peak Asset Management, Inc.,
since 1991; Trustee, Navigator Securities Lending Trust, since 1995, Trustee of
The Advisor's Inner Circle Fund, The Arbor Fund, The Expedition Funds, Oak
Associates Funds, SEI Asset

S-27
<PAGE>
Allocation Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI Institutional
Investments Trust, SEI Institutional Managed Trust, SEI Institutional
International Trust, SEI Insurance Products Trust, and SEI Tax Exempt Trust.

EDWARD D. LOUGHLIN (DOB 03/07/51)--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments, SIMC and the Administrator since 1997. Senior Vice President,
SEI Investments, 1986-1991; Vice President, SEI Investments, 1981-1986.

TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, SIMC, the
Administrator and the Distributor since 1995. Associate, Dewey Ballantine (law
firm), 1994-1995. Associate, Winston & Strawn (law firm), 1991-1994.

JAMES R. FOGGO (DOB 06/30/64)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI Investments since 1998. Associate, Paul
Weiss, Rifkind, Wharton & Garrison (law firm), 1998. Associate, Baker & McKenzie
(law firm), 1995-1998. Associate, Battle Fowler L.L.P. (law firm), 1993-1995.
Operations Manager, The Shareholder Services Group, Inc., 1986-1990.

LYDIA A. GAVALIS (DOB 06/05/64)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange, 1989-1998.

KATHY HEILIG (DOB 12/21/58)--Vice President and Assistant
Secretary--Treasurer of SEI Investments Company since 1997; Assistant Controller
of SEI Investments Company since 1995; Vice President of SEI Investments Company
since 1991; Director of Taxes of SEI Investments Company 1987 to 1991. Tax
Manager, Arthur Anderson LLP prior to 1987.

JOSEPH M. O'DONNELL (DOB 11/13/54--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SIMC, the Administrator and
the Distributor since 1998. Vice President and General Counsel, FPS Services,
Inc., 1993-1997. Staff Counsel and Secretary, Provident Mutual Family of Funds,
1990-1993.

CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, SIMC,
the Administrator and the Distributor since August 1997. Branch Chief, Division
of Enforcement, U.S. Securities and Exchange Commission, January 1995-August
1997. Senior Counsel--Division of Enforcement, U.S. Securities and Exchange
Commission, September 1992-January 1995. Staff Attorney--Division of
Enforcement, U.S. Securities and Exchange Commission, September 1990-September
1992.

KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, SIMC,
the Administrator and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Adviser and the Administrator since
1994. Vice President, General Counsel and Assistant Secretary of SIMC, the
Administrator and the Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius
LLP (law firm), 1988-1992.

LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.
(1997-1998). Partner, Groom and Nordberg, Chartered, 1996-1997. Associate
General Counsel, Riggs Bank, N.A., 1991-1995.

RICHARD W. GRANT (DOB 10/25/45)--Secretary--1701 Market Street,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, SIMC, the Administrator and the Distributor.

MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Investments Mutual Fund
Services and Vice President of the

S-28
<PAGE>
Administrator since 1996. Vice President of the Distributor since December 1997.
Vice President, Fund Accounting, BISYS Fund Services September 1995 to November
1996. Senior Vice President and Site Manager, Fidelity Investments 1981 to
September 1995.

The Trustees and officers of the Trust own, as a group, less than 1% of the
outstanding shares of the Trust. The Trust pays the fees for unaffiliated
Trustees. Compensation of officers and affiliated Trustees of the Trust is paid
by the Administrator.

COMPENSATION TABLE

<TABLE>
<CAPTION>
PENSION OR TOTAL COMPENSATION FROM
AGGREGATE RETIREMENT BENEFITS ESTIMATED REGISTRANT AND FUND
COMPENSATION ACCRUED AS ANNUAL COMPLEX PAID TO DIRECTORS
NAME OF FROM REGISTRANT PART OF BENEFITS UPON FOR
PERSON AND POSITION FOR FYE 1/31/99 FUND EXPENSES RETIREMENT FYE 1/31/99
- ---------------------------------- ----------------- ----------------------- -------------- ---------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee*........ $ 0 $ 0 $ 0 $0 for services on 8 boards
William M. Doran, Trustee*........ $ 0 $ 0 $ 0 $0 for services on 8 boards
F. Wendell Gooch, Trustee**....... $ 14,086 $ 0 $ 0 $101,000 for services on 8
boards
Frank E. Morris+.................. $ 14,086 $ 0 $ 0 $101,000 for services on 8
boards
James M. Storey, Trustee**........ $ 14,086 $ 0 $ 0 $101,000 for services on 8
boards
George J. Sullivan, Trustee**..... $ 14,086 $ 0 $ 0 $101,000 for services on 8
boards
</TABLE>

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

* Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the Investment Company Act
of 1940.

** Messrs. Gooch, Storey, and Sullivan serve as members of the Audit Committee
of the Trust.

+ Mr. Morris was retired as of March 31, 1999.

Mr. Edward W. Binshadler is a Trustee Emeritus of the Trust. Mr. Binshadler
serves as a consultant to the Audit Committee and receives as compensation,
$5,000 per Audit Committee meeting attended.

PERFORMANCE

From time to time, each Fund may advertise yield and/or total return. These
figures will be based on historical earnings and are not intended to indicate
future performance.

The current yield of the Funds that are money market funds is calculated
daily based upon the 7 days ending on the date of calculation ("base period").
The yield is computed by determining the net change (exclusive of capital
changes) in the value of a hypothetical pre-existing shareholder account having
a balance of one share at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from shareholder accounts and dividing
such net change by the value of the account at the beginning of the same period
to obtain the base period return and multiplying the result by (365/7). Realized
and unrealized gains and losses are not included in the calculation of the
yield.

These money market Funds compute their effective compound yield by
determining the net changes, exclusive of capital changes, in the value of a
hypothetical pre-existing account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following

S-29
<PAGE>
formula: Effective Yield = {(Base Period Return + 1)TO THE POWER OF 365/7} - 1.
The current and the effective yields reflect the reinvestment of net income
earned daily on portfolio assets.

From time to time, the Trust may advertise the yield of the Short-Duration
Government, Intermediate-Duration Government, GNMA, Corporate Daily Income
and/or Treasury Securities Daily Income Funds. These figures will be based on
historical earnings and are not intended to indicate future performance. The
yield of these Funds refers to the annualized income generated by an investment
in a Fund over a specified 30-day period. The yield is calculated by assuming
that the income generated by the investment during that period is generated each
period over one year and is shown as a percentage of the investment. In
particular, yield will be calculated according to the following formula: Yield =
2[(((a-b)/ cd) + 1)TO THE POWER OF 6 - 1], where a = dividends and interest
earned during the period; b = expenses accrued for the period (net of
reimbursement); c = the current daily number of shares outstanding during the
period that were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period.

Actual yields will depend on such variables as asset quality, average asset
maturity, the type of instrument in which a Fund invests, changes in interest
rates on money market instruments, changes in the expenses of the Funds and
other factors.

Yields are one basis upon which investors may compare the Funds with other
mutual funds; however, yields of other mutual funds and other investment
vehicles may not be comparable because of the factors set forth above and
differences in the methods used in valuing portfolio instruments.

S-30
<PAGE>
For the seven-day period ended January 31, 1999, the end of the Trust's most
recent fiscal year, the current and effective yields for each money market Fund
were as follows:

<TABLE>
<CAPTION>
SEVEN-DAY YIELD
--------------------------
FUND CURRENT EFFECTIVE
- -------------------------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
CLASS A
Money Market Fund................................................................... 4.97% 5.09%
Prime Obligation Fund............................................................... 4.99% 5.11%
Government Fund..................................................................... 4.87% 4.99%
Government II Fund.................................................................. 4.83% 4.95%
Treasury Fund....................................................................... 4.69% 4.79%
Treasury II Fund.................................................................... 4.28% 4.37%
CLASS B
Money Market Fund................................................................... 4.67% 4.78%
Prime Obligation Fund............................................................... 4.69% 4.80%
Government Fund..................................................................... 4.57% 4.67%
Government II Fund.................................................................. 4.53% 4.63%
Treasury Fund....................................................................... 4.39% 4.48%
Treasury II Fund.................................................................... 3.98% 4.06%
CLASS C
Money Market Fund................................................................... 4.47% 4.57%
Prime Obligation Fund............................................................... 4.49% 4.59%
Government Fund..................................................................... 4.37% 4.46%
Government II Fund.................................................................. 4.33% 4.43%
Treasury Fund....................................................................... 4.19% 4.27%
Treasury II Fund.................................................................... 3.78% 3.85%
SWEEP CLASS
Money Market Fund................................................................... 4.22% 4.31%
Prime Obligation Fund............................................................... 4.24% 4.33%
Treasury Fund....................................................................... 3.94% 4.01%
Government Fund..................................................................... 4.12% 4.20%
CNI CLASS
Government Fund..................................................................... 4.22% 4.31%
</TABLE>

For the 30-day period ended January 31, 1999, the yield of each non-money
market Fund was as follows:

<TABLE>
<CAPTION>
FUND 30-DAY YIELD
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
CLASS A
Corporate Daily Income Fund....................................................................... 4.72%
Short-Duration Government Fund.................................................................... 4.75%
Intermediate-Duration Government Fund............................................................. 4.61%
GNMA Fund......................................................................................... 5.56%
CLASS B
Short-Duration Government Fund.................................................................... 4.75%
</TABLE>

From time to time, the Trust may advertise total return for one or more of
the following Funds: Short-Duration Government, Intermediate-Duration
Government, GNMA, Corporate Daily Income and Treasury Securities Daily Income.
The total return of a Fund refers to the average compounded rate of return for a
hypothetical investment for designated time periods (including, but not limited
to, the period from which the Fund commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula: P(1 + T) TO THE POWER OF n = ERV, where P = a hypothetical
initial payment of $1,000; T = average annual total

S-31
<PAGE>
return; n = number of years; and ERV = ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the designated time period as of the end
of such period.

Based on the foregoing, the average annual total returns for the Funds from
inception through January 31, 1999 and for the one, five and ten year periods
ended January 31, 1999 were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
--------------------------------------------
SINCE
FUND CLASS ONE YEAR FIVE YEAR TEN YEAR INCEPTION
- --------------------------- ----------------------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Corporate Daily Income Class A(1)............. 5.61% 5.65% * 6.09%
Fund Class B................ * * * *
Class C................ * * * *

Treasury Securities Daily Class A................ * * * *
Income Fund Class B................ * * * *
Class C................ * * * *

Short-Duration Government Class A(2)............. 6.49% 5.86% 6.93% 6.71%
Fund Class B(3)............. 6.28% 5.58% * 6.12%
Class C................ * * * *

Intermediate-Duration Class A(4)............. 7.46% 6.21% 7.93% 7.41%
Government Fund

GNMA Fund Class A(5)............. 6.76% 6.56% 8.62% 8.01%
Class B(6)............. * * * *

Money Market Fund Class A(7)............. 5.50% 5.42% 5.67% 6.50%
Class B(8)............. 5.18% * * 5.26%
Class C(9)............. 4.97% * * 5.09%
Sweep Class(10) * * * 2.13%

Prime Obligation Fund Class A(11)............ 5.48% 5.37% 5.72% 5.94%
Class B(12)............ 5.16% 5.06% * 4.60%
Class C(13)............ 4.96% * * 4.97%
Sweep Class(14) * * * 3.26%

Government Fund Class A(15)............ 5.39% * * 5.44%
Class B(16)............ 5.08% * * 5.15%
Class C(17)............ 4.87% * * 4.95%
CNI Class (18)......... 4.71% * * 4.78%
Sweep Class(19) * * * 2.96%

Government II Fund Class A(20)............ 5.33% 5.26% 5.54% 5.88%
Class B(21)............ 5.01% 4.95% * 4.51%
Class C(22)............ 4.81% * * 4.87%
Sweep Class * * * *

Treasury Fund Class A(23)............ 5.28% 5.25% * 4.77%
Class B(24)............ 4.97% * * 5.07%
Class C(25)............ 4.76% * * 4.90%
Sweep Class(26) 4.50% * * 4.61%

Treasury II Fund Class A(27)............ 4.86% 4.97% * 5.09%
Class B(28)............ 4.55% 4.66% * 4.57%
Class C(29)............ 4.34% * * 4.61%
Sweep Class * * * *

Federal Securities Fund Class A(30)............ * * * *
</TABLE>

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

* Not in operation during period.

(1) Corporate Daily Income Class A shares were offered beginning September 28,
1993.

S-32
<PAGE>
(2) Short-Duration Government Class A shares were offered beginning February
17, 1987.

(3) Short-Duration Government Class B shares were offered beginning November 5,
1990.

(4) Intermediate-Duration Government Class A shares were offered beginning
February 17, 1987.

(5) GNMA Class A shares were offered beginning March 20, 1987.

(6) GNMA Class B shares were offered beginning July 12, 1994. GNMA Class B
shares were fully liquidated on July 10, 1996.

(7) Money Market Class A shares were offered beginning November 15, 1983.

(8) Money Market Class B shares were fully liquidated March 12, 1997 and
re-offered beginning August 12, 1997.

(9) Money Market Class C shares were offered beginning May 17, 1995.

(10) Money Market Sweep Class Shares were offered beginning July 15, 1998.

(11) Prime Obligation Class A shares were offered beginning December 22, 1987.

(12) Prime Obligation Class B shares were offered beginning March 26, 1991.

(13) Prime Obligation Class C shares were reoffered beginning April 30, 1996 and
were fully liquidated October 27, 1994.

(14) Prime Obligation Sweep Class Shares were offered beginning May 18, 1998.

(15) Government Class A shares were offered beginning March 8, 1992, were fully
liquidated June 2, 1993 and were reoffered beginning October 27, 1995.

(16) Government Class B shares were offered beginning August 22, 1995.

(17) Government Class C shares were offered beginning July 1, 1997.

(18) Government Class CNI shares (formerly Class G and C) were offered beginning
April 7, 1994.

(19) Government Sweep Class Shares were offered beginning June 4, 1998.

(20) Government II Class A shares were offered beginning September 6, 1985.

(21) Government II Class B shares were offered beginning January 28, 1991.

(22) Government II Class C shares were offered beginning November 27, 1996.

(23) Treasury Class A shares were offered beginning September 30, 1992.

(24) Treasury Class B shares were offered beginning August 4, 1997.

(25) Treasury Class C shares were offered beginning July 27, 1995.

(26) Treasury Sweep Class shares were offered beginning August 1, 1997.

(27) Treasury II Class A shares were offered beginning July 28, 1989.

(28) Treasury II Class B shares were offered beginning February 15, 1990.

(29) Treasury II Class C shares were offered beginning May 8, 1995.

(30) Federal Securities Class A shares were offered beginning November 12, 1982,
and were fully liquidated July 15, 1994.

The Funds may, from time to time, compare their performance to the
performance of other mutual funds tracked by mutual fund rating services, to
broad groups of comparable mutual funds or unmanaged indices which may assume
investment of dividends but generally do not reflect deductions for
administrative and management costs.

DETERMINATION OF NET ASSET VALUE

Securities of the Money Market, Prime Obligation, Government, Government II,
Treasury, Treasury II and Federal Securities Funds will be valued by the
amortized cost method, which involves valuing a security at its cost on the date
of purchase and thereafter (absent unusual circumstances) assuming a constant
amortization to maturity of any discount or premium, regardless of the impact of
fluctuations in general market rates of interest on the value of the instrument.
While this method provides certainty in valuation, there may be periods during
which the value of an instrument, as determined by this method, is higher or
lower than the price the Trust would receive if it sold the instrument. During
periods of declining interest rates, the daily yield of a Fund may tend to be
higher than a like computation made by a company with identical investments
utilizing a method of valuation based upon market prices and estimates of

S-33
<PAGE>
market prices for all of its portfolio securities. Thus, if the use of amortized
cost by the Trust resulted in a lower aggregate portfolio value on a particular
day, a prospective investor in a Fund would be able to obtain a somewhat higher
yield than would result from investment in a company utilizing solely market
values, and existing shareholders in the Fund would experience a lower yield.
The converse would apply in a period of rising interest rates.

The Trust's use of amortized cost valuation (with respect to the Money
Market, Prime Obligation, Government, Government II, Treasury, Treasury II and
Federal Securities Funds) and the maintenance of the Trust's net asset value at
$1.00 are permitted, provided certain conditions are met, by Rule 2a-7,
promulgated by the SEC under the 1940 Act. Under Rule 2a-7, as amended, a money
market portfolio must maintain a dollar-weighted average maturity of 90 days or
less and not purchase any instrument having a remaining maturity of more than
397 days. In addition, money market funds may acquire only U.S. dollar
denominated obligations that present minimal credit risks and that are "eligible
securities." An "eligible security" is one that is (i) rated, at the time of
investment, by at least two NRSROs (one if it is the only organization rating
such obligation) in the highest short-term rating category or, if unrated,
determined to be of comparable quality (a "first tier security"), or (ii) rated
according to the foregoing criteria in the second highest short-term rating
category or, if unrated, determined to be of comparable quality ("second tier
security"). The Adviser will determine that an obligation presents minimal
credit risks or that unrated instruments are of comparable quality in accordance
with guidelines established by the Trustees. In addition, investments in second
tier securities are subject to the further constraints that (i) no more than 5%
of a money market portfolio's assets may be invested in such securities in the
aggregate, and (ii) any investment in such securities of one issuer is limited
to the greater of 1% of the Fund's total assets or $1 million. The regulations
also require the Trustees to establish procedures which are reasonably designed
to stabilize the net asset value per share at $1.00 for each Fund. However,
there is no assurance that the Trust will be able to meet this objective for any
Fund. The Trust's procedures include the determination of the extent of
deviation, if any, of each Fund's current net asset value per share calculated
using available market quotations from each Fund's amortized cost price per
share at such intervals as the Trustees deem appropriate and reasonable in light
of market conditions and periodic reviews of the amount of the deviation and the
methods used to calculate such deviation. In the event that such deviation
exceeds 1/2 of 1%, the Trustees are required to consider promptly what action,
if any, should be initiated, and, if the Trustees believe that the extent of any
deviation may result in material dilution or other unfair results to
shareholders, the Trustees are required to take such corrective action as they
deem appropriate to eliminate or reduce such dilution or unfair results to the
extent reasonably practicable. In addition, if any Fund incurs a significant
loss or liability, the Trustees have the authority to reduce pro rata the number
of shares of that Fund in each shareholder's account and to offset each
shareholder's PRO RATA portion of such loss or liability from the shareholder's
accrued but unpaid dividends or from future dividends.

Securities of the Short-Duration Government, Intermediate-Duration
Government, GNMA, Corporate Daily Income and Treasury Securities Daily Income
Funds may be valued by the Manager pursuant to valuations provided by an
independent pricing service. The pricing service relies primarily on prices of
actual market transactions as well as trader quotations. However, the service
may also use a matrix system to determine valuations, which system considers
such factors as security prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving at valuations. The
procedures of the pricing service and its valuations are reviewed by the
officers of the Trust under the general supervision of the Trustees.

PURCHASE AND REDEMPTION OF SHARES

It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in kind of readily marketable securities held
by a Fund in lieu of cash. Shareholders may incur brokerage charges on the sale
of any such securities so received in payment of redemptions. However, a
shareholder will at all times be

S-34
<PAGE>
entitled to aggregate cash redemptions from all Portfolios of the Trust during
any 90-day period of up to the lesser of $250,000 or 1% of the Trust's net
assets.

A gain or loss for federal income tax purposes may be realized by a taxable
shareholder upon an in-kind redemption depending upon the shareholder's basis in
the shares of the Trust redeemed.

The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is restricted, or during the existence of an
emergency (as determined by the SEC by rule or regulation) as a result of which
disposal or evaluation of the portfolio securities is not reasonably
practicable, or for such other periods as the SEC may by order permit. The Trust
also reserves the right to suspend sales of shares of the Funds for any period
during which the New York Stock Exchange, the Manager, the Adviser(s), the
Distributor and/or the Custodian(s) are not open for business.

The Administrator or Distributor will not accept securities as payment for
shares of the GNMA Fund unless (a) such securities meet the investment objective
and policies of the Fund; (b) the securities are acquired for investment and not
for resale; (c) such securities are liquid securities which are not restricted
as to transfer either by law or liquidity of market; and (d) such securities
have a value which is readily ascertainable (and not established only by
evaluation).

TAXES

The following is only a summary of certain additional federal tax
considerations generally affecting the Funds and their shareholders that are not
described in the Funds' prospectuses. No attempt is made to present a detailed
explanation of the federal, state or local tax treatment of the Funds or their
shareholders and the discussion here and in the Funds' prospectuses is not
intended as a substitute for careful tax planning.

This discussion of federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.

QUALIFICATION AS A RIC

In order to qualify for treatment as a regulated investment company ("RIC")
under Subchapter M of the Code, a Fund must distribute annually to its
shareholders at least 90% of its investment company taxable income (generally,
net investment income plus the excess, if any, of net short-term capital gain
over net long-term capital loss) (the "Distribution Requirement") and also must
meet several additional requirements. Among these requirements are the following
(i) at least 90% of a Fund's gross income each taxable year must be derived from
dividends, interest, payments with respect to securities loans, and gains from
the sale or other disposition of stock or securities, or other income derived
with respect to its business of investing in such stock or securities; (ii) at
the close of each quarter of a Fund's taxable year, at least 50% of the value of
its total assets must be represented by cash and cash items, U.S. Government
securities, securities of other RICs and other securities, with such other
securities limited, in respect of any one issuer, to an amount that does not
exceed 5% of the value of a Fund's assets and that does not represent more than
10% of the outstanding voting securities of such issuer; and (iv) at the close
of each quarter of a Fund's taxable year, not more than 25% of the value of its
assets may be invested in securities (other than U.S. Government securities or
the securities of other RICs) of any one issuer or of two or more issuers which
are engaged in the same, similar or related trades or businesses, if the Fund
owns at least 20% of the voting power of such issuers.

S-35
<PAGE>
Notwithstanding the Distribution Requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gain, a Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute, by the end of any calendar year, at least 98% of its
ordinary income for that year and 98% of its capital gain net income for the
one-year period ending on October 31 of that year, plus certain other amounts.

If a Fund fails to qualify as a RIC for any year, all of its income will be
subject to tax at corporate rates, and its distributions (including capital
gains distributions) will be taxable as ordinary income dividends to its
shareholders, subject to the dividends received deduction for corporate
shareholders who have held shares for more than 45 days during the 90-day period
beginning on the date which is 45 days before the date on which such shares
become exdividend with respect to such dividend.

Rules of state and local taxation of dividend and capital gains
distributions from RICs often differ from the rules for federal income taxation
described above. Shareholders are urged to consult their tax advisers as to the
consequences of these and other state and local tax rules affecting an
investment in the Trust.

STATE TAXES

A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the Fund to
shareholders and the ownership of shares may be subject to state and local
taxes.

PORTFOLIO TRANSACTIONS

The Trust has no obligation to deal with any broker-dealer or group of
brokers or dealers in the execution of transactions in portfolio securities.
Subject to policies established by the Trustees, the Adviser is responsible for
placing orders to execute Fund transactions. In placing orders, it is the
Trust's policy to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the Adviser generally seeks reasonably competitive spreads or
brokerage commissions, the Trust will not necessarily be paying the lowest
spread or commission available. The Trust's policy of investing in securities
with short maturities will result in high portfolio turnover. The Trust will not
purchase portfolio securities from any affiliated person acting as principal
except in conformity with the regulations of the SEC.

The money market securities in which certain of the Funds invest are traded
primarily in the over-the-counter market. Bonds and debentures are usually
traded over-the-counter, but may be traded on an exchange. Where possible, the
Adviser will deal directly with the broker-dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such broker-dealers usually are acting as
principal for their own account. On occasion, securities may be purchased
directly from the issuer. Money market securities are generally traded on a net
basis and do not normally involve either brokerage commissions or transfer
taxes. The cost of executing portfolio securities transactions of the Funds will
primarily consist of dealer spreads and underwriting commissions.

It is expected that certain of the Funds may execute brokerage or other
agency transactions through the Distributor, a registered broker-dealer, for a
commission, in conformity with the 1940 Act, the Securities Exchange Act of 1934
and rules of the SEC. Under these provisions, the Distributor is permitted to
receive and retain compensation for effecting portfolio transactions for a Fund
on an exchange if a written contract is in effect between the Distributor and
the Trust expressly permitting the Distributor to receive and retain such
compensation. These provisions further require that commissions paid to the
Distributor by the Trust for exchange transactions not exceed "usual and
customary" brokerage commissions. The rules define "usual and customary"
commissions to include amounts which are "reasonable and

S-36
<PAGE>
fair compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions involving
similar securities being purchased or sold on a securities exchange during a
comparable period of time." In addition, the Fund may direct commission business
to one or more designated broker-dealers, including the Distributor, in
connection with such broker-dealer's payment of certain of the Fund's expenses.
The Trustees, including those who are not "interested persons" of the Trust,
have adopted procedures for evaluating the reasonableness of commissions paid to
the Distributor and will review these procedures periodically. For the fiscal
years ended January 31, 1996, 1997 and 1998, no Fund paid any brokerage
commissions.

Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Adviser may place portfolio orders with qualified
broker-dealers who recommend the Trust to clients, and may, when a number of
brokers-dealers can provide best price and execution on a particular
transaction, consider such recommendations by a broker or dealer in selecting
among broker-dealers.

The Trust does not expect to use one particular dealer, but, subject to the
Trust's policy of seeking the best net results, dealers who provide supplemental
investment research to the Adviser may receive orders for transactions by the
Trust. Information so received will be in addition to and not in lieu of the
services required to be performed by the Adviser under the Advisory Agreement,
and the expenses of the Adviser will not necessarily be reduced as a result of
the receipt of such supplemental information.

The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the 1940 Act) which the Trust has acquired
during its most recent fiscal year. As of January 31, 1999: the Corporate Daily
Income Fund held a repurchase agreement issued by Paine Webber in the amount of
$8.579 million; the Government Fund held a repurchase agreement issued by J.P.
Morgan & Company in the amount of $135 million; the Short-Duration Government
Fund held a repurchase agreement issued by PaineWebber in the amount of $13.65
million; the Intermediate-Duration Government Fund held a repurchase agreements
issued by Paine Webber in the amount of $2.588 million; the Prime Obligation
Fund held a repurchase agreement issued by Lehman Brothers in the amount of
$62.2 million; and the GNMA Fund held a repurchase agreement issued by Paine
Webber in the amount of $2.744 million.

The portfolio turnover rate for each fixed income Fund for the fiscal years
ending January 31, 1997, 1998 and 1999 was as follows:

<TABLE>
<CAPTION>
TURNOVER RATE
-------------------------------------
FUND 1997 1998 1999
- ------------------------------------------------------------------------ ----- ----- -----
<S> <C> <C> <C>
Short-Duration Government Fund.......................................... 145% 166% 90%
Intermediate-Duration Government Fund................................... 94% 57% 21%
GNMA Fund............................................................... 12% 4% 27%
Corporate Daily Income Fund............................................. 141% 108% 48%
</TABLE>

A portfolio turnover rate would exceed 100% if all of its securities,
exclusive of U.S. Government securities and other securities whose maturities at
the time of acquisition are one year or less, are replaced in the period of one
year. Turnover rates may vary from year to year and may be affected by cash
requirements for redemptions and by requirements which enable a Fund to receive
favorable tax treatment.

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Fund, each of which represents an equal proportionate interest in
that Fund. Each share of a Fund upon liquidation of that Fund entitles a
shareholder to a PRO RATA share in the net assets of that Fund after taking into
account

S-37
<PAGE>
certain distribution expenses. Shareholders have no preemptive rights. The
Declaration of Trust provides that the Trustees of the Trust may create
additional portfolios of shares or classes of portfolios. Any consideration
received by the Trust for shares of any additional portfolio and all assets in
which such consideration is invested would belong to that portfolio and would be
subject to the liabilities related thereto. Share certificates representing the
shares will not be issued.

LIMITATION OF TRUSTEES' LIABILITY

The Declaration of Trust provides that a Trustee shall be liable only for
his or her own willful defaults and, if reasonable care has been exercised in
the selection of officers, agents, employees or administrators, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his wilful misfeasance, bad faith, gross negligence or reckless disregard of
his or her duties.

VOTING

Where the prospectuses for the Funds or this Statement of Additional
Information state that an investment limitation or a fundamental policy may not
be changed without shareholder approval, such approval means the vote of (i) 67%
or more of the Fund's shares present at a meeting if the holders of more than
50% of the outstanding shares of the Fund are present or represented by proxy,
or (ii) more than 50% of the Fund's outstanding shares, whichever is less.

SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of the Trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the Trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders incurring financial loss for that reason appears
remote because the Trust's Declaration of Trust contains an express disclaimer
of shareholder liability for obligations of the Trust and requires that notice
of such disclaimer be given in each agreement, obligation or instrument entered
into or executed by or on behalf of the Trust or the Trustees, and because the
Declaration of Trust provides for indemnification out of the Trust property for
any shareholders held personally liable for the obligations of the Trust.

CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

As of May 5, 1999, the following persons were the only persons who were
record owners (or, to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Funds. The Trust believes that most of the shares
referred to below were held by the following persons in accounts for their
fiduciary, agency, or custodial customers.

<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
CLASS A
Money Market Fund Regents of the University of Minnesota 79,400,000 7.31%
Temp Investment Pool....................
Attn: Colleen A. Davy
100 Church Street, SE Rm 311A
Minneapolis, MN 55455
</TABLE>

S-38
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Northwest Airlines...................... 69,600,000 6.41%
Attn: Cheryl Johnson
5101 Northwest Drive Dept A4500
St. Paul, MN 55111-3075

Wendy's International Inc............... 123,877,577 11.41%
Attn: Diane E. Greathouse
4288 W. Dublin-Granville Rd
Dublin, OH 43017-2093

Kmart Corporation....................... 57,011,800 5.25%
Attn: Anne Helland
3100 West Big Beaver Road
Troy, MI 48084-3163

Wausau Underwriters Insurance Co........ 83,997,315 7.74%
Attn: Richard C. Cloran
175 Berkeley St. #8D
Boston, MA 02116-5066

Wausau General Insurance Co............. 57,312,492 5.28%
Manager Cash & Security Operations
175 Berkeley St. MS 08D
Boston, MA 02116-5066

Prime Obligation Fund Marine Midland Bank..................... 308,646,556 8.12%
Attn: Christine Mincel
Trust OPS 17th Floor
One Marine Midland Center
Buffalo, NY 14203-2885

Hare & Co............................... 282,114,222 7.42%
c/o Bank of New York
Attn: Bimal Saha/Stif
One Wall Street 2nd Floor
New York, NY 10005-2501

Wellington Trust Company, NA............ 309,125,534 8.13%
Attn: Patrick Eastwood
200 State Street, Floor 10
Boston, MA 02109-2605

The New Hillman Company................. 381,821,910 10.04%
c/o Amalgamated Bank of New York
Attn: Rosemarie Rodin
1115 Union Avenue
Bronx, NY 10459-2792

Government Fund Burns and McDonnell Engineering......... 17,152,632 7.36%
9400 Ward Parkway
Kansas City, MO 64115-3319

American National Bank BK AS Trustee.... 13,041,696 5.59%
City of Chicago-Midway Airport
Attn: Robert T. Demos
33 N. LaSalle St. Fl 13
Chicago, IL 60602-2602
</TABLE>

S-39
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
The First National Bank of Chicago...... 20,250,260 8.68%
Not Individually But Solely as Trustee
for ISAC/IDAPP Series QQRR
Attn: Katherine Cokic
1 S. First National Plaza Suite 0126
Chicago, IL 60603-2000

People's Bank........................... 45,115,608 19.35%
Attn: Trust Dept, Mary Lou Varnum
850 Main St., RC 13-505
Bridgeport, CT 06604-4917

Southwest Guaranty Trust Co............. 12,508,565 5.36%
Attn: Stephanie Crippen
10411 Westheimer Rd., Ste 200
Houston, TX 77042-3500

Government II Fund Byrd & Co............................... 50,674,984 6.67%
c/o First Union National Bank
530 Walnut Street
Philadelphia, PA 19106-3620

Fleet Investment Operation.............. 108,945,770 14.34%
NY/RO/T03C
159 E. Main St.
Rochester, NY 14604-1605

PABL & Co............................... 109,244,684 14.38%
c/o Peabody & Arnold
Attn: Peggy Ohrenberger
50 Rowes Wharf
Boston, MA 02110-3339

United States Trust Company............. 214,881,931 28.29%
Attn: Rich Lynch
P.O. Box 131
Boston, MA 02101-0131

CANAT & Co.............................. 40,039,369 5.27%
c/o United National Bank & Trust Co.
Attn: Marcia Papacostas
220 Market Avenue South
Canton, OH 44702-2180

SEI Trust Co............................ 53,109,741 6.99%
c/o The Peoples Bank
One Freedom Valley Drive
Oaks, PA 19456

Treasury Fund KPMG LLP................................ 20,000,000 10.91%
Attn: Jarvey Skolnick
3 Chestnutridge Rd
Montvale, NJ 07645-1842

Anthem Blue Cross & Blue Shield......... 9,220,000 5.03%
120 Monument Circle
Indianapolis, IN 46204-4906
</TABLE>

S-40
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
City of Philadelphia/OHDC HUD Trustee... 50,092,406 27.33%
Attn: Douglas A. Smith
1401 JFK Blvd Rm. 640 MSB
Philadelphia, PA 19102-1605

Judy Baar Topinka IL State Treasure..... 10,000,000 5.46%
Regular Acct
Attn: Rhonda Poeschel
300 W. Jefferson St.
Springfield, IL 62702-5041

Wabanc & Co............................. 22,627,712 12.34%
c/o Washington Trust Bank
Attn: Lyla Morgenstern
P.O. Box 2127
Spokane, WA 99210-2127

BMS and Company......................... 31,755,549 17.32%
c/o Central Trust Bank
Attn: Wanda McGlade
P.O. Box 779
Jefferson City, MO 65102-0779

SEI Trust Company....................... 11,269,573 6.15%
Attn: Jackie Esposito
680 E. Swedesford Rd.
Wayne, PA 19087-1610

Treasury II Fund Citizens Bank........................... 33,815,077 7.29%
c/o Trust Operations 332021
101 N. Washington Ave.
Saginaw, MI 48607-1206

The Farmers Company..................... 29,428,100 6.35%
c/o Farmers First Bank-Lititz
Attn: Wendy Basehoar
P.O. Box 1000
Lititz, PA 17543-7000

BMS and Company......................... 37,864,466 8.16%
c/o Central Trust Bank
Attn: Wanda McGlade
P.O. Box 779
Jefferson City, MO 65102-0779

The New Hillman Company................. 136,999,898 29.54%
c/o Amalgamated Bank of New York
Attn: Rosemarie Rodin
1115 Union Avenue
Bronx, NY 10549-2792

Trulin & Co............................. 25,973,751 5.60%
c/o Chase Manhattan Bank
Attn: Settlement Dept.
P.O. Box 1412
Rochester, NY 14603-1412
</TABLE>

S-41
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Bellford & Co........................... 71,724,415 15.46%
Family Financial Strategies
Attn: Dawn Ohmann
600 Highway 169 S Ste 850
St. Louis Park, MN 55426-1204

Intermediate Duration
Government Fund Citizens Bank........................... 759,602 5.82%
c/o Trust Operations 332021
101 N. Washington Ave.
Saginaw, MI 48607-1206

Sheldon & Co. (Integra)................. 1,305,329 10.00%
c/o National City
P.O. Box 94777, Loc 5312
Cleveland, OH 44101-4777

SEI Trust Company....................... 4,026,630 30.84%
Attn: Jacqueline Esposito
680 E. Swedesford Rd.
Wayne, PA 19087-1610

North Carolina Trust Company............ 951,042 7.28%
Attn: Charlene Martin
P.O. Box 1108
Greensboro, NC 27402-1108

Pennsylvania Trust Company.............. 713,424 5.46%
Attn: Wallace A. Ries
5 Radnor Corporate Ctr., Ste 452
Radnor, PA 19087-4594

Meg and Co.............................. 879,576 6.74%
c/o United States National Bank
P.O. Box 520
Johnstown, PA 15907-0520

GNMA Fund SEI Trust Company....................... 3,125,008 28.23%
Attn: Jacqueline Esposito
680 E. Swedesford Rd.
Wayne, PA 19087-1610

SEI Trust Co............................ 687,538 6.21%
FBO 601 Banks
Attn: Eileen Carlucci
I Freedom Valley Dr
Oaks, PA 19456

Corporate Daily Income Wellington Trust Bank Company, NA....... 3,440,915 6.87%
Fund
Attn: Patrick Eastwood
200 State Street, Floor 10
Boston, MA 02109-2605

SEI Trust Company....................... 25,898,375 51.68%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087-1610
</TABLE>

S-42
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Roland and Company...................... 3,679,709 7.34%
c/o Mercantile Bank NA
Attn: Mutual Funds Desk
P.O. Box 387
St. Louis, MO 63166-0387

The Fulton Company...................... 2,275,782 4.54%
c/o Fulton Bank Trust Dept.
Attn: Dennis Patrick
One Penn Square
Lancaster, PA 17602-2853

Short Duration
Government Fund Capital City Trust Company.............. 875,688 7.94%
Attn: Linda Glessner
P.O. Box 1549
Tallahassee, FL 32302-1549

Trico & Co.............................. 1,435,559 13.02%
c/o National Bank of Commerce MS
P.O. Box 631
Columbus, MS 39703-0631

SEI Trust Company....................... 4,676,721 42.43%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087-1610

Meg and Co.............................. 802,490 7.28%
c/o United States National Bank
Attn: Debbie Moraca
P.O. Box 520
Johnstown, PA 15907-0520

CLASS B
Money Market Fund USBANCORP Trust Company................. 3,053,841 54.07%
Attn: Sweep Desk
P.O. Box 520
Johnstown, PA 15907-0520

Citizens First Savings Bank............. 527,578 9.34%
Attn: Stephen Armstrong
525 Water Street
Port Huron, MI 48060-5434

SEI Trust Company....................... 674,726 11.95%
c/o SEI Corporation
Attn: Sandra Crawford
P.O. Box 1100
Oaks, PA 19456-1100

Family Bank............................. 700,572 12.40%
c/o SEI Trust Co.
Attn: Mutual Fund Administrator
Oaks, PA 19456
</TABLE>

S-43
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Prime Obligation Fund Sterling Bank........................... 19,422,820 5.82%
Attn: Joe Klingen
15000 Northwest Freeway
Houston, TX 77040-3299

Brotherhood Bank and Trust Co........... 139,582,421 41.81%
Attn: Connie Herold
756 Minnesota Ave.
Kansas City, KS 66101-2704

MUIR & Co............................... 35,885,338 10.75%
c/o Frost National Bank
P.O. Box 2479
San Antonio, TX 78298-2479

Oltrust & Co............................ 67,597,265 20.25%
c/o Old National Bank in Evansville
Attn: David Crow
P.O. Box 207
Evansville, IN 47702-0207

SEI Trust Co............................ 31,924,143 9.56%
c/o The Peoples Bank
Attn: Mutual Fund Admin
One Freedom Valley Dr.
Oaks, PA 19456

Investment Trust Company................ 17,493,099 5.24%
Attn: Ethel Vick Suite 730
3200 Cherry Creek South Drive
Denver, CO 80209-3244

Government Fund Pioneer Bank & Trust.................... 4,946,205 10.53%
Attn: Donna Morgan
P.O. Box 111
Ponca City, OK 74602-0111

Brotherhood Bank and Trust Company...... 17,530,734 37.31%
Attn: Connie Herold
756 Minnesota Avenue
Kansas City, KS 66101-2704

SEI Trust Co............................ 6,873,618 14.63%
Attn: Eileen Carlucci
One Freedom Valley Drive
Oaks, PA 19456

Family Bank............................. 16,367,766 34.84%
c/o SEI Trust Co.
Attn: Mutual Fund Administrator
Oaks, PA 19456

Government II Fund MUIR & Co............................... 7,480,813 9.34%
c/o Frost National Bank
P.O. Box 2479
San Antonio, TX 78298-2479
</TABLE>

S-44
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
United States Trust Company............. 33,181,811 41.44%
Attn: Rich Lynch
P.O. Box 131
Boston, MA 02101-0131

SEI Trust Co............................ 19,036,057 23.78%
c/o The Peoples Bank
Attn: Mutual Fund Admin
One Freedom Valley Drive
Oaks, PA 19456

SEI Trust Co............................ 7,589,596 9.48%
FBO 601 Banks
Attn: Eileen Carlucci
One Freedom Valley Drive
Oaks, PA 19456

Treasury Fund Citizens Bank........................... 84,109,907 89.22%
Attn: Dept. 001065 ROD
328 South Siginaw
Flint, MI 48502-1943

SEI Trust Co............................ 7,879,077 8.36%
FBO 601 Banks
Attn: Eileen Carlucci
One Freedom Valley Drive
Oaks, PA 19456

Treasury II Fund Sovereign Bank.......................... 5,815,407 6.41%
Attn: Larry Snow
1125 Berkshire Blvd.
Wyomissing, PA 19610-1232

SEI Trust Company....................... 34,878,929 38.44%
Attn: Jacqueline Esposito
530 East Swedesford Road
Wayne, PA 19087

Muir & Co............................... 13,796,580 15.21%
C/o Frost National Bank
P.O. Box 2479
San Antonio, TX 78298-2479

Oltrust & Co............................ 9,479,265 10.45%
C/o Old National Bank in Evansville
Attn: David Crow
P.O Box 207
Evansville, IN 47702-0207

Family Bank............................. 16,186,407 17.84%
c/o SEI Trust Co.
Attn: Mutual Fund Administrator
Oaks, PA 19456
</TABLE>

S-45
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Short Duration
Government Fund Union Planters Bank..................... 1,363 100%
Attn: Upselect Janice Taylor
1749 Mallory Lane Suite #120
Brentwood, TN 37027-2931

CLASS C
Money Market Fund Bank of Nichols Hills................... 15,901,172 10.82%
Attn: Jaime Franklin
2644 NW 63 Rd.
Oklahoma City, OK 73116

USBANCORP Trust Company................. 12,379,420 8.43%
Attn: Sweep Desk
P.O. Box 520
Johnstown, PA 15907-0520

Corelink Financial Inc.................. 12,227,014 8.32%
Attn: Chris Deonier- RI
1855 Gateway Blvd. #500
Concord, CA 94520-3289

Corelink Financial Inc.................. 60,069,486 40.88%
Attn: Chris Deonier- MA
1855 Gateway Blvd. #500
Concord, CA 94520-3289

Corelink Financial Inc.................. 7,765,452 5.29%
Attn: Chris Deonier- CT
1855 Gateway Blvd. #500
Concord, CA 94520-3289

Prime Obligation Fund Citizens Bank........................... 162,451,914 50.33%
Attn: Dept 001065 ROD
328 South Siginaw
Flint, MI 48502-1943

Sterling Bank........................... 30,836,502 9.55%
Attn: Joe Klingen
15000 Northwest Freeway
Houston, TX 77040-3299

First Security Bank of Utah NA.......... 58,697,412 18.19%
Cash Management (Cash Sweep Account)
Attn: Bill Wilcox
61 South Main Street
Salt Lake City, UT 84111-1909

Government Fund Guaranty Federal Bank, F.S.B............ 20,732,927 43.63%
Attn: Stan Groom
8333 Douglas Ave.
Dallas, TX 75225-5845

Sterling Bank........................... 27,071,173 56.97%
Attn: Joe Klingen
15000 Northwest Freeway
Houston, TX 77040-3299
</TABLE>

S-46
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Government II Fund Grand Old Co............................ 26,413,749 43.59%
c/o First National Bank of Zanesville
P.O Box 2307
Zanesville, OH 43702-2307

Compass Bank Treasury Management........ 9,378,265 15.48%
Attn: Steven Cornelison
P.O Box 10566
Birmingham, AL 35296-0001

Cenco................................... 18,815,816 31.05%
c/o Compass Bank
Attn: Bobby Morris
P.O Box 10566
Birmingham, AL 35296-0001

Treasury Fund First Victoria National Bank............ 7,961,045 8.63%
Attn: Grace Pantel
P.O. Box 1338
Victoria, TX 77902-1338 v

The Bankers Bank........................ 13,856,804 15.03%
Attn: Thomas W. Neal, Jr.
2410 Pacer Ferry Rd
600 Paces Summit
Atlanta, GA 30339-4098

USBANCORP Trust Company................. 11,896,636 12.90%
Attn: Sweep Desk
P.O. Box 520
Johnstown, PA 15907-0520

Corelink Financial Inc.................. 15,792,239 17.13%
Attn: Chris Deonier- RI
1855 Gateway Blvd. #500
Concord, CA 94520-3289

Corelink Financial Inc.................. 13,893,105 15.07%
Attn: Chris Deonier- MA
1855 Gateway Blvd. #500
Concord, CA 94520-3289

First Security Bank of Utah NA.......... 9,604,458 10.42%
Cash Management (Cash Sweep Account)
Attn: Bill Wilcox
61 South Main Street
Salt Lake City, UT 84111-1909

Treasury II Fund Guaranty Federal Bank, F.S.B............ 12,484,945 60.95%
Attn: Stan Groom
8333 Douglas Ave
Dallas, TX 75225-5845

Community Bank, N.A..................... 1,955,787 9.55%
Attn: Nancy M. Lewis
201 North Union Street
Olean, NY 14760-2738
</TABLE>

S-47
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Compass Bank Treasury Management........ 1,909,231 9.32%
Attn: Steven Cornelison
P.O. Box 10566
Birmingham, AL 35296-0001

Brenham National Bank................... 1,189,537 5.81%
Attn: Douglas R. Borchardt
P.O. Box 2568
Brenham, TX 77834-2568

SWEEP CLASS
Money Market Fund Tri County Bank......................... 4,293,144 62.38%
Operations Center
P.O. Box 909
Chico, CA 95927-0909

United Community Banks.................. 2,285,157 33.20%
Attn: Lisa Strickland
P.O. Box 398
Blairsville, GA 30514-0398

Prime Obligation Fund Carnegie Agency Inc..................... 709,739 6.88%
ITF Jefferson INS Co. NY
Denise Coffer CFO
3601 Calle Tacate Ste. 200
Camarillo, CA 93012-5058

Los Robles Professional Park............ 3,380,804 32.80%
c/o Roche Property Mgmt.
Attn: William Leong, MD
310 E. Wilbur Rd.
Thousand Oaks, CA 91360-5599

Enterprise National Bank................ 1,640,223 15.91%
Attn: Cheryl Shackleford
6075 Poplar Ave Ste. 120
Memphis, TN 38119-4742

Government Fund Enterprise National Bank................ 1,748,446 33.22%
Attn: Cheryl Shackleford
6075 Poplar Ave Ste. 120
Memphis, TN 38119-4742

Manufacturers Bank...................... 1,383,784 26.29
Attn: Shigeki Okamura
515 S Figueroa Street 5th Floor
Los Angeles, CA 90071-3301

United Community Banks.................. 2,728,096 51.83
Attn: Lisa Strickland
P.O. Box 398
Blairsville, GA 30514-0398

Treasury Fund Citizens Bank........................... 70,317,657 82.25%
Attn: Dept 001065 ROD
328 South Siginaw
Flint, MI 48502-1943
</TABLE>

S-48
<PAGE>
<TABLE>
<CAPTION>
PERCENTAGE OF
FUND AND CLASS NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO'S SHARES
- ------------------------ ---------------------------------------- ---------------- -------------------
<S> <C> <C> <C>
Manufacturers Bank...................... 5,887,654 6.89%
Attn: Shigeki Okamura
515 S Figueroa Street 5th Floor
Los Angeles, CA 90071-3301

Texas Capital Bank...................... 8,318,501 9.73%
National Association
5910 N Central Expway Suite 1000
Dallas, TX 75206-5142

CNI CLASS
Government Fund City National Bank AS................... 143,112,587 99.43%
Fiduciary for Various Accounts
Attn: Trust OPS/Mutual Funds
P.O Box 60250
Los Angeles, CA 90060-0520
</TABLE>

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 Money Market and Treasury
Funds. First Union National Bank, 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,
Government, Government II, Treasury II, Corporate Daily Income, Treasury
Securities Daily Income, Short-Duration Government, Intermediate-Duration
Government, and GNMA Funds, and wire agent for the Money Market and Treasury
Funds. The Custodians hold cash, securities and other assets of the Trust as
required by the 1940 Act.

EXPERTS

The financial statements incorporated by reference into this Statement of
Additional Information and the Financial Highlights included in the prospectuses
have been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report, with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as legal counsel to the Trust.

FINANCIAL STATEMENTS

The Trust's financial statements for the fiscal year ended January 31, 1999,
including notes thereto and the report of Arthur Andersen LLP thereon, are
herein incorporated by reference. A copy of the 1999 Annual Report must
accompany the delivery of this Statement of Additional Information.

S-49