<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 1996.
File No. 2-97111
File No. 811-4283
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 19 /X/
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 21 /X/
SEI INDEX FUNDS
(Exact Name of Registrant as Specified in Charter)
c/o CT Corporation
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (800) 932-7781
David G. Lee
c/o SEI Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
(Name and Address of Agent for Service)
Copies to:
Richard W. Grant, Esquire John H. Grady, Jr., Esquire
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
2000 One Logan Square 1800 M Street, N.W.
Philadelphia, Pennsylvania 19103 Washington, D.C. 20036
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Title of Securities Amount Being Proposed Maximum Proposed Maximum Amount of
Being Registered Registered Offering Price Per Unit Aggregate Offering Price(1) Registration Fee
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares of
Beneficial Interest $219,859,815 $10.06 $219,859,815 $100
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Registrant has calculated the maximum aggregate offering price pursuant
to Rule 24e-2 under the Investment Company Act of 1940 (the "1940 Act")
for fiscal year ended March 31, 1996. Registrant had actual aggregate
redemptions of $308,741,602 for its fiscal year ended March 31, 1996;
has used $89,171,787 of available redemptions for reductions pursuant
to Rule 24f-2(c) under the 1940 Act and has previously used no
available redemptions for reductions pursuant to Rule 24e-2(a) of the
1940 Act during the current year. Registrant elects to use redemptions
in the aggregate amount of $219,569,815 for reductions in its current
amendment.
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/X/ 60 days after filing pursuant to paragraph (a)
/ / on [date] pursuant to paragraph (a) of Rule 485.
Registrant has elected to maintain registration of an indefinite number of
shares pursuant to Rule 24f-2 under the Investment Company Act of 1940.
Registrant's Rule 24f-2 Notice for fiscal year ended March 31, 1996 was filed on
May 30, 1996.
<PAGE> 2
SEI INDEX FUNDS
CROSS REFERENCE SHEET
Post-Effective Amendment No. 19
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C>
PART A - S&P 500 INDEX AND BOND INDEX PORTFOLIOS
Item 1. Cover Page Cover Page
Item 2. Synopsis *
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives and Policies;
General Investment Policies; General Information;
Investment Limitations; Description of Permitted
Investments and Risk Factors
Item 5. Management of the Fund General Information; The Administrator; The
Manager and The Transfer Agent; Distribution and
Shareholder Servicing
Item 6. Capital Stock and Other Securities Taxes; General Information;
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
PART A - S&P 500 INDEX PORTFOLIO CLASS E
Item 1. Cover Page Cover Page
Item 2. Synopsis *
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives and Policies;
General Investment Policies; General Information;
Investment Limitations; Description of Permitted
Investments and Risk Factors
Item 5. Management of the Fund General Information; The Administrator; The
Manager and The Transfer Agent; Distribution and
Shareholder Servicing
Item 6. Capital Stock and Other Securities Taxes; General Information;
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
i
<PAGE> 3
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PART B - ALL PORTFOLIOS
<S> <C> <C>
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information and History The Trust
Item 13. Investment Objectives and Policies Description of Permitted Investments; Investment
Limitations
Item 14. Management of the Registrant Trustees and Officers of the Trust; The
Adminisrator
Item 15. Control Persons and Principal Holders Trustees and Officers of the Trust; 5%
of Securities Shareholders
Item 16. Investment Advisory and Other Services The Administrator; Distribution and Shareholder
Servicing; Experts; The Manager and The Transfer
Agent; Custodian and Independent Public
Item 17. Brokerage Allocation Accountant
Portfolio Transactions; Trading Practices and
Item 18. Capital Stock and Other Securities Brokerage
Item 19. Purchase, Redemption, and Pricing of Securities Description of Shares
Being Offered Purchase and Redemption of Shares; Description of
Shares; Determination of Net Asset Value
Item 20. Tax Status Taxes
Item 21. Underwriters Distribution
Item 22. Calculation of Yield Quotations Performance
Item 23. Financial Statements Financial Information
</TABLE>
ii
<PAGE> 4
PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of the Registration Statement.
*Not Applicable
<PAGE> 5
SEI INDEX FUNDS
JULY 31, 1996
- --------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
BOND INDEX PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus concisely sets forth information about the above-referenced
Portfolios that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated July 31, 1996, has been filed with
the Securities and Exchange Commission, and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling
1-800-342-5734. The Statement of Additional Information is incorporated by
reference into this Prospectus.
SEI Index Funds (the "Trust") is an open-end management investment company,
certain classes of which offer financial institutions a convenient means of
investing their own funds, or funds for which they act in a fiduciary, agency or
custodial capacity, in professionally managed diversified portfolios of
securities. This Prospectus offers Class A shares of the portfolios (each a
"Portfolio" and, together, the "Portfolios") listed above.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
<PAGE> 6
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P 500 BOND
INDEX INDEX
------- -----
<S> <C> <C> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .19% .32%
12b-1 Fees None None
Total Other Expenses .06% .06%
Shareholder Servicing Expenses (after fee waiver) (2) .00% .00%
- ---------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waivers) (3) .25% .38%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Manager has waived, on a voluntary basis, a portion of its fee, and the
management/advisory fees shown reflect this voluntary waiver. The Manager
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such waiver, management fees would be .25% for the S&P
500 Index Portfolio and .42% for the Bond Index Portfolio.
Management/Advisory fees have been restated to reflect reductions in fee
waivers.
(2) The Distributor has waived, on a voluntary basis, all or a portion of its
shareholder servicing fee, and the Shareholder Servicing Fees shown reflect
this waiver. The Distributor reserves the right to terminate its waiver at
any time in its sole discretion. Absent such waiver, Shareholder Servicing
Fees would be .25% for each of the Portfolios.
(3) Absent these fee waivers, total operating expenses would be .56% for the
S&P 500 Index Portfolio and .73% for the Bond Index Portfolio. Additional
information may be found under "The Adviser" and "The Manager and
Shareholder Servicing Agent."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor in a Portfolio would pay the following expenses on a $1,000 investment
assuming
(1) a 5% annual return and (2) redemption at the end of each time period:
S&P 500 Index $ 3 $ 8 $ 14 $32
Bond Index $ 4 $ 12 $ 21 $48
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense table and example is to assist the investor in understanding the
various costs and expenses that may be directly or indirectly borne by investors
in Class A shares of the Portfolios. The S&P 500 Index Portfolio also offers
Class E shares, which are subject to the same expenses, except that there are
different shareholder servicing costs. A person who purchases shares through a
financial institution may be charged separate fees by that institution.
Additional Information may be found under "The Manager and Transfer Agent," "The
Adviser" and "Distribution and Shareholder Servicing."
2
<PAGE> 7
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period have been audited by Arthur Andersen LLP, independent public accountants,
whose report dated May 10, 1996, was unqualified. This information should be
read in conjunction with the Trust's financial statements and notes thereto
included in the Statement of Additional Information under the heading "Financial
Information." Additional performance information is set forth in the Trust's
1996 Annual Report to Shareholders, which is available upon request and without
charge by calling 1-800-342-5734.
<TABLE>
<CAPTION>
Income from
Investment Operations Less Distributions
---------------------------- ----------------------------------
Net Asset Net Realized and Dividends
Value, Net Unrealized Total from from Net Distributions Returns Net Asset
Beginning Investment Gain (Loss) Investment Investment from Capital of Total Value, End
of Period Income (2) on Investments Operations Income Gains Capital Distributions of Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- ---------------------------
S&P 500 INDEX PORTFOLIO
- ---------------------------
For the periods ended March 31,
1996 $ 16.40 $ 0.44 $ 4.72 $ 5.16 $(0.37) $ (0.31) $-- $ (0.66) $20.88
1995 15.07 0.42 1.79 2.21 (0.42) (0.46) -- (0.88) 16.40
1994 15.80 0.43 (0.22) 0.21 (0.42) (0.52) -- (0.94) 15.07
1993 14.17 0.40 1.69 2.09 (0.40) (0.06) -- (0.46) 15.80
1992 13.43 0.40 1.01 1.41 (0.41) (0.26) -- (0.67) 14.17
1991 12.45 0.43 1.24 1.67 (0.43) (0.26) -- (0.69) 13.43
1990 10.88 0.42 1.64 2.06 (0.43) (0.06) -- (0.49) 12.45
1989 9.63 0.39 1.26 1.65 (0.40) -- -- (0.40) 10.88
1988 12.68 0.43 (1.65) (1.22) (0.45) (1.38) -- (1.83) 9.63
1987 12.45 0.42 2.63 3.05 (0.38) (2.44) -- (2.82) 12.68
1986 (1) 10.00 0.29 2.37 2.66 (0.21) -- -- (0.21) 12.45
<CAPTION>
Ratios and Supplemental Data
---------------------------------------------------------
Ratio of
Ratios Ratio of Net Investment
of Expenses Ratio of Income
Expenses to Average Net to Average
to Net Assets Investment Net Assets
Net Assets Average (Excluding Income (Excluding Portfolio
Total End of Period Net Fee to Average Fee Turnover
Return (000) Assets Waivers) Net Assets Waivers) Rate
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
- -----------------------
S&P 500 INDEX PORTFOLIO
- -----------------------
For the periods ended March 31,
1996 31.88% $ 630,566 0.25% 0.35% 2.31% 2.21% 3.00%
1995 15.26 458,012 0.25 0.35 2.69 2.59 4.00
1994 1.19 424,647 0.25 0.33 2.57 2.49 23.00
1993 14.97 675,484 0.25 0.35 2.75 2.65 1.00
1992 10.71 470,847 0.25 0.34 2.99 2.90 1.00
1991 14.18 261,165 0.25 0.32 3.56 3.49 40.00
1990 19.02 192,154 0.25 0.36 3.58 3.47 10.00
1989 17.60 125,714 0.25 0.39 4.03 3.89 47.00
1988 (9.35) 105,473 0.25 0.43 3.74 3.56 77.00
1987 25.96 103,468 0.23 0.44 3.29 3.08 145.00
1986 (1) 40.43* 94,224 0.20* 0.44* 4.10* 3.86 66.00
* Annualized
(1) Commenced operations on 8/1/85
(2) Had management fees not been waived and certain other expenses not been absorbed by the Manager for the
Portfolio, the net investment income per share would have been $.42, $.41, $.41, $.39, $.38, $.42, $.41, $.37,
$.41, $.39 and $.27 for the periods ending 3/31/96 through 3/31/86, respectively.
</TABLE>
3
<PAGE> 8
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Income from
Investment Operations Less Distributions
---------------------------- ----------------------------------
Net Asset Net Realized and Dividends
Value, Net Unrealized Total from from Net Distributions Returns Net Asset
Beginning Investment Gain (Loss) Investment Investment from Capital of Total Value, End
of Period Income (2) on Investments Operations Income Gains Capital Distributions of Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------------
- -----------------------
BOND INDEX PORTFOLIO
- -----------------------
For the periods ended March 31,
1996 (3) $ 9.90 $ 0.64 $ 0.36 $1.00 $(0.64) $ -- $-- $ (0.64) $10.26
1995 10.09 0.63 (0.20) 0.43 (0.62) -- -- (0.62) 9.90
1994 10.43 0.56 (0.33) 0.23 (0.57) -- -- (0.57) 10.09
1993 9.87 0.66 0.56 1.22 (0.66) -- -- (0.66) 10.43
1992 9.73 0.73 0.15 0.88 (0.74) -- -- (0.74) 9.87
1991 9.46 0.80 0.28 1.08 (0.81) -- -- (0.81) 9.73
1990 9.19 0.81 0.27 1.08 (0.81) -- -- (0.81) 9.46
1989 9.62 0.82 (0.43) 0.39 (0.82) -- -- (0.82) 9.19
1988 10.22 0.85 (0.55) 0.30 (0.82) (0.08) -- (0.90) 9.62
1987 (1) 10.00 0.74 0.14 0.88 (0.66) -- -- (0.66) 10.22
<CAPTION>
Ratios and Supplemental Data
----------------------------------------------------------
Ratio of
Ratios Ratio of Net Investment
of Expenses Ratio of Income
Expenses to Average Net to Average
to Net Assets Investment Net Assets
Net Assets Average (Excluding Income (Excluding Portfolio
Total End of Period Net Fee to Average Fee Turnover
Return (000) Assets Waivers) Net Assets Waivers) Rate
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------
- ---------------------
BOND INDEX PORTFOLIO
- ---------------------
For the periods ended March 31,
1996 (3) 10.31% $51,185 0.38% 0.48% 6.20% 6.10% 59.00%
1995 4.54 45,643 0.38 0.48 6.33 6.23 21.00
1994 2.10 56,161 0.38 0.47 5.35 5.26 55.00
1993 12.73 56,032 0.38 0.45 6.49 6.42 115.00
1992 9.48 38,449 0.38 0.51 7.45 7.32 99.00
1991 11.92 22,602 0.38 0.61 8.52 8.29 26.00
1990 12.04 12,106 0.38 0.72 8.43 8.09 56.00
1989 4.21 11,457 0.38 0.80 8.62 8.20 31.00
1988 3.39 14,413 0.38 0.68 8.48 8.18 138.00
1987 (1) 9.69* 34,157 0.38* 0.80* 7.98* 7.56 96.00
* Annualized
(1) Commenced operations on 5/19/86
(2) Had management fees not been waived and certain other expenses not been absorbed by the Manager for the
Portfolio, the net investment income per share would have been $.63, $.62, $.55, $.65, $.71, $.78, $.78, $.78,
$.81 and $.69 for the periods ending 3/31/96 through 3/31/87, respectively.
(3) The Investment Adviser was changed from World Asset Management to Mellon Bond Associates effective 10/2/96.
</TABLE>
4
<PAGE> 9
THE TRUST
SEI INDEX FUNDS (the "Trust") is an open-end management investment company that
offers units of beneficial interest ("shares") in two separate, diversified
investment portfolios. This prospectus offers Class A shares of the Trust's S&P
500 Index and Bond Index Portfolios (each a "Portfolio" and, together, the
"Portfolios"). Each Portfolio may have separate classes of shares which provide
for variations in shareholder servicing expenses. The S&P 500 Index Portfolio
has Class A and Class E shares, which provide for variations in shareholder
servicing expenses. Class E shares of the S&P 500 Index Portfolio are offered by
a separate prospectus. Additional information pertaining to the Trust may be
obtained in writing from SEI Financial Services Company, 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658, or by calling 1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES
S&P 500 INDEX
PORTFOLIO The S&P 500 Index Portfolio seeks to provide investment
results that correspond to the aggregate price and
dividend performance of the securities in the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500
Index"), which is comprised of 500 selected common stocks,
most which are listed on the New York Stock Exchange.
The S&P 500 Index Portfolio's ability to duplicate
the performance of the S&P 500 Index will depend to some
extent on the size and timing of cashflows into and out of
the Portfolio, as well as on the level of the Portfolio's
expenses.
Adjustments made to accommodate cash flows will
track the index to the maximum extent possible, and may
result in brokerage expenses for the Portfolio. Over time,
the correlation between the performance of the Portfolio
and the S&P 500 Index is expected to be over 0.95. A
correlation of 1.00 would indicate perfect correlation,
which would be achieved when the net asset value of the
Portfolio, including the value of its dividend and capital
gains distributions, increased or decreased in exact
proportion to changes in the S&P 500 Index. An investment
in shares of the Portfolio involves risks similar to those
of investing in a portfolio consisting of the common
stocks of some or all of the companies included in the
Index.
The Portfolio will normally be invested in all of
the stocks which comprise the S&P 500 Index, except when
changes are made to the S&P 500 Index itself. The
Portfolio's policy is to be fully invested in common
stocks, and it is expected that cash reserves or other
non-Index securities would normally be less than 10% of
net assets.
The weightings of stocks in the S&P 500 Index are
based on each stock's relative total market value, i.e.,
market price per share times the number of shares
outstanding. Because of this weighting, approximately 50%
of the S&P 500 Index is currently composed of stocks of
the 50 largest companies in the S&P 500 Index,
5
<PAGE> 10
and the S&P 500 Index currently represents over 65% of the market value of all
U.S. common stocks listed on the New York Stock Exchange.
World Asset Management ("World"), the Portfolio's
investment adviser, makes no attempt to "manage" the
Portfolio in the traditional sense (i.e., by using
economic, financial or market analyses). The adverse
financial situation of a company usually will not result
in the elimination of a stock from the Portfolio. However,
the Trust reserves the right to remove an investment from
the Portfolio if, in the judgment of World, the merit of
the investment has been substantially impaired by
extraordinary events or adverse financial conditions.
Furthermore, administrative adjustments may be made in the
Portfolio from time to time because of mergers, changes in
the composition of the S&P 500 Index and similar reasons.
In certain circumstances, World may exercise discretion in
determining whether to exercise warrants or rights issued
in respect to portfolio securities or whether to tender
portfolio securities pursuant to a tender or exchange
offer.
The S&P 500 Index Portfolio is not sponsored,
endorsed, sold or promoted by Standard & Poor's
Corporation ("S&P"). S&P makes no representation or
warranty, implied or express, to the purchasers of the
Portfolio or any member of the public regarding the
advisability of investing in index funds or the Portfolio
or the ability of the Index to track general stock market
performance.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN.
S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE PORTFOLIO, OWNERS OF THE PORTFOLIO,
OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND HEREBY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN.
S&P'S ONLY RELATIONSHIP TO THE PORTFOLIO IS THE LICENSING
OF THE S&P MARKS AND THE INDEX, WHICH IS DETERMINED,
COMPOSED, AND CALCULATED BY S&P WITHOUT REGARD TO THE
LICENSEE OR THE PORTFOLIO.
The equity securities in which the S&P 500 Index
Portfolio invests are common stocks, preferred stocks, and
securities convertible into common stock.
The Portfolio may enter into stock index futures
contracts, provided that the value of these contracts does
not exceed 20% of the Portfolio's total assets. The
Portfolio may purchase futures contracts solely to
maintain adequate liquidity to meet its redemption demands
while maximizing the level of the Portfolio's assets which
are tracking the performance of the Index. In addition,
the Portfolio may only purchase those stock index futures
contracts--such as futures contracts on the index--that
are likely to closely duplicate the performance of the S&P
500 Index. The Portfolio also can sell such futures
contracts in order to close out a previously established
position. The Portfolio will not enter into any stock
index futures
6
<PAGE> 11
contract for the purpose of speculation, and will only
enter into contracts traded on national securities
exchanges with standardized maturity dates.
The Portfolio may invest in securities of foreign
issuers traded in the United States. The Portfolio
ordinarily will purchase securities of foreign issuers in
U.S. markets. However, the Portfolio may purchase
securities of foreign issuers directly in foreign markets
if the Adviser determines that it is in the best interest
of the Portfolio to do so.
The Portfolio may invest cash reserves in
securities issued by the U.S. Government, its agencies or
instrumentalities, bankers' acceptances, commercial paper
rated at least A-1 by S&P and/or Prime-1 by Moody's
Investors Services, Inc. ("Moody's"), certificates of
deposit and repurchase agreements involving such
obligations. Such investments will not be used for
defensive purposes.
BOND INDEX PORTFOLIO The Bond Index Portfolio currently seeks to provide
investment results that correspond to the aggregate price
and interest performance of the Lehman Aggregate Bond
Index (the "Lehman Index"), which tracks the performance
of debt securities. The Lehman Index is made up of the
Government/Corporate Index, the Mortgage-Backed Securities
Index and the Asset-Backed Securities Index. The Lehman
Index includes fixed rate debt issues rated investment
grade or higher by one or more nationally recognized
statistical ratings organizations ("NRSROs"). All issues
have at least one year to maturity and an outstanding par
value of at least $100 million. Price, coupon and total
return are reported for all sectors on a month-end to
month-end basis. All returns are market value-weighted
inclusive of accrued interest. Lehman Brothers, Inc. is
neither a sponsor of nor in any other way affiliated with
the Trust. Inclusion of a security in the Lehman Index in
no way implies an opinion of Lehman Brothers, Inc. as to
its attractiveness or appropriateness as an investment.
In seeking to generate results that correspond to
the performance of the Lehman Index, the Portfolio will
invest in the following obligations: (i) debt obligations
issued or guaranteed by the United States Government or
its agencies or instrumentalities; (ii) investment-grade
debt obligations issued by U.S. corporations; (iii) debt
obligations issued or guaranteed by foreign sovereign
governments, municipalities, governmental agencies or
international agencies; (iv) mortgage-backed securities,
including conventional 15 and 30 year fixed rate
mortgages, graduated payment mortgages, balloon mortgages
and adjustable rate mortgages; (v) asset backed
securities; and (vi) any issues that are included in the
Lehman Index.
Fixed income securities in which the Bond Index
Portfolio may invest must be rated BBB or better by S&P or
Baa or better by Moody's. Debt securities rated BBB or Baa
lack outstanding investment characteristics and have
speculative characteristics as well. In the event that a
security held by the Portfolio is rated below investment
grade, the adviser will promptly review the situation and
take appropriate action.
7
<PAGE> 12
If an obligation which is included in the Lehman
Index on the first day of the month ceases to meet any of
the qualifications for inclusion in the Lehman Index
during that month, the obligation remains in the Lehman
Index through the end of that month and then is eliminated
from the Lehman Index. Mellon Bond Associates ("MBA"), the
Portfolio's investment adviser, will monitor portfolio
securities in order to determine whether any of these
obligations have ceased to qualify for inclusion in the
Lehman Index. If an obligation has ceased to qualify for
inclusion in the Lehman Index as a result of: (i) a
lowered investment rating, (ii) an aggregate outstanding
principal amount of less than $100 million, or (iii) a
remaining maturity that no longer exceeds one year
(collectively, "Ineligible Obligations"), the investment
adviser may either undertake to sell such Ineligible
Obligations as quickly as is financially prudent, which
may be prior to or later than the time that obligation is
removed from the Lehman Index, or may determine to retain
the security. To the extent that the investment adviser
determines to retain Ineligible Obligations, such
Ineligible Obligations, together with cash and money
market instruments, will not exceed 20% of the Portfolio's
net assets. Although the Portfolio retains the right to
invest up to 20% of its net assets in Ineligible
Obligations, cash and money market instruments, these
items are expected to constitute less than 10% of the net
assets of the Portfolio. Obligations held by the Portfolio
that became Ineligible Obligations as a result of being
rated below investment grade (which securities are often
referred to as "junk bonds") will not constitute more than
5% of the Portfolio's net assets. In addition, cash
holdings will not exceed 5% of the Portfolio's net assets.
In addition, obligations that become eligible for
inclusion in the Lehman Index during a particular month
generally will not actually be included in the Index until
the next month. However, the Portfolio may elect to
purchase any such obligation and deem it to be included in
the Lehman Index once it becomes eligible.
The Portfolio will be unable to hold all of the
individual issues which comprise the Lehman Index because
of the large number of securities involved. Instead, the
Portfolio will hold a representative sample of the
securities in the Index, selecting issues to represent
entire "classes" or types of securities in the Index.
Obligations included in the Lehman Index have been
categorized by MBA into sectors which have been organized
on the basis of type of issuer, and then further
classified by quality and remaining maturities. The
percentage of the Portfolio's assets to be invested in the
aggregate obligations included in a particular sector of
the Lehman Index will approximate, to the maximum extent
feasible, the percentage such sector represents in the
Lehman Index. The Portfolio's ability to duplicate the
performance of the Lehman Index will depend to some extent
on the size and timing of cash flows into and out of the
Portfolio, as well as on the level of the Portfolio's
expenses, and the capability of the Portfolio's Adviser to
select a representative sample of the securities included
in the Lehman Index. To the extent
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<PAGE> 13
that the size of the Portfolio's assets limits the number
of issues that the Portfolio can purchase, there is more
potential for deviation from the Lehman Index's
performance than at larger asset levels. Under these
circumstances, MBA will implement strategies designed to
minimize this potential for greater deviation.
The Portfolio may invest in restricted securities,
including Rule 144A securities, included in the Lehman
Index.
There can be no assurance that the Portfolios will
achieve their respective investment objectives. For a
description of the above ratings, see the Statement of
Additional Information.
GENERAL
INVESTMENT
POLICIES
Each Portfolio may lend up to 20% of its assets to
qualified institutions for the purpose of realizing
additional income, however neither Portfolio has any
present intention to lend its securities. Each Portfolio
may invest in illiquid securities; however, not more than
10% of the total assets of each Portfolio will be invested
in such instruments. The Portfolios may enter into forward
commitments, or purchase securities on a when-issued or
delayed delivery basis.
For additional information regarding the
Portfolios' permitted investments see "Description of
Permitted Investments and Risk Factors" in this Prospectus
and in the Statement of Additional Information.
INVESTMENT
LIMITATIONS
The investment objective and certain of the investment
limitations are fundamental policies of the Portfolios.
Fundamental policies cannot be changed with respect to the
Trust or a Portfolio without the consent of the holders of
a majority of the Trust's or that Portfolio's outstanding
shares.
Each Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government,
its agencies or instrumentalities) if, as a result,
more than 5% of the Portfolio's total assets would be
invested in the securities of such issuer. This
restriction applies to 75% of each Portfolio's total
assets.
2. Purchase any securities which would cause more than 25%
of the Portfolio's total assets to be invested in the
securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
United States Government or its agencies and
instrumentalities.
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<PAGE> 14
3. Borrow money, except for temporary or emergency
purposes and then only in an amount not exceeding 10%
of the value of the total assets of that Portfolio.
This borrowing provision is included solely to
facilitate the orderly sale of portfolio securities to
accommodate substantial redemption requests if they
should occur, and is not for investment purposes. All
borrowings will be repaid before making additional
investments for that Portfolio, and any interest paid
on such borrowings will reduce the Portfolio's income.
4. Make loans, except that each Portfolio (i) may enter
into repurchase agreements, provided that repurchase
agreements and time deposits maturing in more than
seven days, and other illiquid securities, including
securities which are not readily marketable or are
restricted, are not to exceed, in the aggregate, 10% of
the Portfolio's total assets, (ii) may engage in
securities lending as described in this Prospectus, and
(iii) may purchase or hold debt instruments in
accordance with its investment objectives and policies.
The foregoing percentage limitations (except the
limitation on borrowings) will apply at the time of the
purchase of a security. Additional fundamental investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER
AND TRANSFER AGENT
SEI Financial Management Corporation (the "Manager" and
the "Transfer Agent"), a wholly-owned subsidiary of SEI
Corporation ("SEI"), and the Trust are parties to a
management agreement (the "Management Agreement"). Under
the terms of the Management Agreement, the Manager is
responsible for providing the Trust with overall
management services, regulatory reporting, all necessary
office space, equipment, personnel and facilities and for
acting as transfer agent, dividend disbursing agent, and
shareholder servicing agent.
For these services, the Manager is entitled to a
fee, which is calculated daily and paid monthly, at an
annual rate of .22% of the average daily net assets of the
S&P 500 Index Portfolio and .35% of the average daily net
assets of the Bond Index Portfolio. The Manager may from
time to time waive all or a portion of its fee in order to
limit the operating expenses of a Portfolio. Any such
waiver is voluntary and may be terminated at any time in
its sole discretion.
For the fiscal year ended March 31, 1996, the S&P
500 Index and Bond Index Portfolios paid management fees,
after fee waivers, of .12% and .25%, respectively, of
their average daily net assets.
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<PAGE> 15
THE ADVISERS
WORLD ASSET
MANAGEMENT World Asset Management ("World") serves as investment
adviser to the S&P 500 Index Portfolio.
World is a general partnership organized by Munder
Capital Management ("MCM"), a general partnership formed
in December, 1994, which engages in investment management
and advisory services. As of December 31, 1995 total
assets under management of World were $9.0 billion and
assets under management of MCM were $30.0 billion. The
principal business address for World is 255 Brown Street
Centre, 2nd Floor, Birmingham, Michigan 48009.
Under the terms of the Advisory Agreement, World
provides the Trust with certain record keeping and
management services in connection with the S&P 500 Index
Portfolio, including monitoring the indexing systems and
determining which securities to purchase and sell in order
to keep the S&P 500 Index Portfolio in balance with its
index.
For its services, World is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of
.03% of the average daily net assets of the S&P 500 Index
Portfolio. For the fiscal year ended March 31, 1996, the
S&P 500 Index Portfolio paid World an advisory fee of .03%
of its average daily net assets. For the period from March
31, 1995 to October 2, 1995, the Bond Index Portfolio paid
an advisory fee of .03% of its average daily net assets.
MELLON BOND
ASSOCIATES
Mellon Bond Associates ("MBA") serves as the investment
adviser to the Bond Index Portfolio.
MBA is a Pennsylvania business trust. MBA's sole
beneficiary is MBC Investment Corporation, a wholly-owned
subsidiary of Mellon Bank Corporation. MBA was established
in October, 1986, as a spin-off of the Institutional Bond
Management division of Mellon Bank's Trust and Investment
Department. As of March 31, 1996, total assets under
management of MBA were $33.8 billion. The principal
business address for MBA is One Mellon Bank Center, Suite
4135, Pittsburgh, Pennsylvania 15258.
For its services, MBA is entitled to a fee, which
is calculated daily and paid monthly, at the annual rate
of .07% of the average daily net assets of the Bond Index
Portfolio. For the period from October 2, 1995 to March
31, 1996, the Bond Index Portfolio paid MBA an advisory
fee of .07% of its average daily net assets.
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<PAGE> 16
DISTRIBUTION
AND SHAREHOLDER
SERVICES
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement with the
Trust. The S&P 500 Index Portfolio has adopted a
shareholder servicing plan similar to the plan described
below for its Class E shares (the "Class E Plan").
The Portfolios have adopted a shareholder servicing
plan for Class A shares (the "Service Plan") under which a
shareholder servicing fee of up to .25% of average daily
net assets attributable to Class A shares will be paid to
the Distributor. Under the Service Plan, the Distributor
may perform, or may compensate other service providers for
performing, the following shareholder and administrative
services: maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services
provided on investments; assisting clients in changing
dividend options, account designations and addresses;
sub-accounting; providing information on share positions
to clients; forwarding shareholder communications to
clients; processing purchase, exchange and redemption
orders; and processing dividend payments. Under the
Service Plan, the Distributor may retain as a profit any
difference between the fee it receives and the amount it
pays to third parties.
It is possible that an institution may offer
different classes of shares to its customers and thus
receive different compensation with respect to different
classes. These financial institutions may also charge
separate fees to their customers.
The Trust may also execute brokerage or other
agency transactions through the Distributor for which the
Distributor may receive usual and customary compensation.
In addition, the Distributor may, from time to time
in its sole discretion, institute one or more promotional
incentive programs, which will be paid by the Distributor
from its own resources. Under any such program, the
Distributor will provide promotional incentives, in the
form of cash or other compensation, including merchandise,
airline vouchers, trips and vacation packages, to all
dealers selling shares of the Portfolios. Such promotional
incentives will be offered uniformly to all dealers and
predicated upon the amount of shares of the Portfolios
sold by the dealer.
PURCHASE AND
REDEMPTION OF
SHARES
Financial institutions may acquire shares of the
Portfolios for their own account, or as a record owner on
behalf of fiduciary, agency or custody accounts, by
placing orders with the Transfer Agent. Institutions that
use certain SEI proprietary systems may place orders
electronically through those systems. State securities
laws may
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<PAGE> 17
require banks and financial institutions purchasing
shares for their customers to register as dealers
pursuant to state laws. Financial institutions may impose
an earlier cut-off time for receipt of purchase orders
directed through them to allow for processing and
transmittal of these orders to the Transfer Agent for
effectiveness on the same day. Financial institutions
which purchase shares for the accounts of their customers
may impose separate charges on these customers for
account services. Shares of the Portfolios are offered
only to residents of states in which the shares are
eligible for purchase.
Shares of each Portfolio may be purchased or
redeemed on days on which the New York Stock Exchange is
open for business ("Business Days"). However, shares
cannot be purchased by Federal Reserve wire on Federal
holidays restricting wire transfers.
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent prior to
4:00 p.m. Eastern time on any Business Day for the order
to be accepted on that Business Day. Generally, cash
investments must be transmitted or delivered in federal
funds to the wire agent on the next Business Day
following the day the order is placed. The Trust reserves
the right to reject a purchase order when the Distributor
determines that it is not in the best interest of the
Trust or shareholders to accept such purchase order.
Purchases will be made in full and fractional
shares of the Portfolios calculated to three decimal
places. The Trust will send shareholders a statement of
shares owned after each transaction. The purchase price
of shares is the net asset value next determined after a
purchase order is received and accepted by the Trust. The
net asset value per share of each Portfolio is determined
by dividing the total market value of a Portfolio's
investment and other assets, less any liabilities, by the
total number of outstanding shares of that Portfolio. Net
asset value per share is determined daily as of the close
of business of the New York Stock Exchange (currently,
4:00 p.m. Eastern time) on any Business Day.
The market value of each portfolio security is
obtained by the Manager from an independent pricing
service. The pricing service relies primarily on prices
of actual market transactions as well as trader
quotations. However, the pricing service may use a matrix
system to determine valuations of equity and fixed income
securities. This system considers such factors as
security prices, yields, maturities, call features,
ratings and developments relating to specific securities
in arriving at valuations. The pricing service may also
provide market quotations. The procedures of the pricing
service and its valuations are reviewed by the officers
of the Trust under the general supervision of the
Trustees. Shareholders who desire to redeem shares of the
Portfolios must place their redemption orders with the
Transfer Agent prior to 4:00 p.m. Eastern time on any
Business Day. The redemption price is the net asset value
per share of the Portfolio next determined after receipt
by the Transfer Agent of the redemption order.
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<PAGE> 18
Payment on redemption will be made as promptly as
possible and, in any event, within seven days after the
redemption order is received.
Shares of a Portfolio may be purchased in exchange
for securities included in the Portfolio subject to an
adviser's determination that the securities are
acceptable. Securities accepted in an exchange will be
valued at market value. All accrued interest and
subscription of other rights which are reflected in the
market price of accepted securities at the time of
valuation become the property of the Trust and must be
delivered by the Shareholder to the Trust upon receipt
from the issuer.
A Portfolio will not accept securities unless (1)
such securities are appropriate in the Portfolio at the
time of the exchange; (2) such an exchange will not cause
the Portfolio's weightings to become materially imbalanced
with respect to the weightings of the securities included
in the Index; (3) such securities are acquired for
investment and not for resale; (4) the Shareholder
represents that all securities offered to the Trust for
the Portfolio are not subject to any restrictions upon
their sale by the Portfolio under the Securities Act of
1933, or otherwise; (5) such securities are traded on the
American Stock Exchange, the New York Stock Exchange or on
NASDAQ in an unrelated transaction with a quoted sales
price on the same day the exchange valuation is made or,
if not listed on such exchanges or on NASDAQ, have prices
available from an independent pricing service approved by
the Trust's Board of Trustees; and (6) the securities may
be acquired under investment restrictions applicable to
the Portfolio.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Trust's transfer
agent will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon
telephone instructions that it reasonably believes to be
genuine. The Trust and the Trust's transfer agent will
each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine,
including requiring a form of personal identification
prior to acting upon instructions received by telephone
and recording telephone instructions. If reasonable
procedures are not employed, the Trust and/or Trust's
Transfer Agent may be liable for any losses due to
unauthorized or fraudulent telephone transactions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by
other means.
PERFORMANCE
From time to time, each Portfolio may advertise yield and
total return. These figures will be based on historical
earnings and are not intended to indicate future
performance. No representation can be made concerning
actual future yields or returns. The yield of a Portfolio
refers to the income generated by a hypothetical
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<PAGE> 19
investment in such Portfolio over a thirty day period.
This income is then "annualized," i.e., the income over
thirty days is assumed to be generated over one year, and
is shown as a percentage of the investment.
The total return of a Portfolio refers to the
average compounded rate of return on a hypothetical
investment for designated time periods, assuming that the
entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital
gain distributions.
A Portfolio may periodically compare its
performance to the performance of: other mutual funds
tracked by mutual fund rating services (such as Lipper
Analytical); financial and business publications and
periodicals; broad groups of comparable mutual funds;
unmanaged indices which may assume investment of dividends
but generally do not reflect deductions for administrative
and management costs; or to other investment alternatives.
A Portfolio may quote Morningstar, Inc., a service that
ranks mutual funds on the basis of risk-adjusted
performance. A Portfolio may use long-term performance of
these capital markets to demonstrate general long-term
risk versus reward scenarios and could include the value
of a hypothetical investment in any of the capital
markets. A Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy and investment
techniques.
A Portfolio may quote various measures of
volatility and benchmark correlation in advertising and
may compare these measures to those of other funds.
Measures of volatility attempt to compare historical share
price fluctuations or total returns to a benchmark while
measures of benchmark correlation indicate how valid a
comparative benchmark might be. Measures of volatility and
correlation are calculated using averages of historical
data and cannot be calculated precisely.
The performance of Class A shares of the S&P 500
Index Portfolio will normally be higher than that on the
Class E shares of the S&P 500 Index Portfolio because of
the different shareholder servicing expenses actually
charged to Class E shares.
TAXES
The following summary of federal income tax consequences
is based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state or local income tax treatment of the
Portfolios or their shareholders. In addition, state and
local tax consequences of an investment in a Portfolio may
differ from the federal income tax consequences described
below. Accordingly, shareholders are urged to consult
their tax advisers regarding specific questions as to
federal, state and local taxes. Additional information
concerning taxes is set forth in the Statement of
Additional Information.
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<PAGE> 20
Tax Status
of the Portfolios Each Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolios intend to qualify for the
special tax treatment afforded regulated investment
companies ("RICs") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), so as to be
relieved of federal income tax on net investment company
taxable income and net capital gains (the excess of net
long-term capital gain over net short-term capital losses)
distributed to shareholders.
Tax Status
of Distributions Each Portfolio will distribute substantially all of its
net investment income (including net short-term capital
gains) to shareholders. Dividends from a Portfolio's net
investment company taxable income are taxable to its
shareholders as ordinary income (whether received in cash
or in additional shares) to the extent of a Portfolio's
earnings and profits. Dividends paid by the S&P 500 Index
Portfolio to corporate shareholders will qualify for the
dividends-received deduction to the extent attributable to
dividends received by a Portfolio from domestic
corporations. Capital gains will be distributed at least
annually and will be taxable to shareholders as long-term
capital gains regardless of how long the shareholder has
held shares and regardless of whether the distributions
are received in cash or in additional shares.
Distributions from net capital gains do not qualify for
the dividends received deduction. The Portfolio will
provide annual reports to shareholders of the federal
income tax status of all distributions.
Dividends declared by a Portfolio in October,
November or December of any year and payable to
shareholders of record on a date in such a month will be
deemed to have been paid by the Portfolio and received by
the shareholders on December 31 of the year declared if
paid by the Portfolio at any time during the following
January.
Certain securities purchased by a Portfolio (such
as STRIPS, defined in "Description of Permitted
Investments and Risk Factors") are sold with original
issue discount and thus do not make periodic cash interest
payments. Each Portfolio will be required to include as
part of its current income the imputed interest on such
obligations even though the Portfolio has not received any
interest payments on such obligations during the period.
Because each Portfolio will distribute substantially all
of its net investment income to its shareholders, a
Portfolio may have to sell portfolio securities to
distribute such imputed income, which may occur at a time
when the Adviser would not have chosen to sell such
securities and which may result in a taxable gain or loss.
Investment income received directly by a Portfolio
on direct U.S. government obligations is exempt from
income tax at the state level and may be exempt, depending
on the state, when received by a shareholder as income
dividends provided certain state-specific conditions are
satisfied. Interest received on repurchase agreements
collateralized by U.S. government obligations normally is
not
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<PAGE> 21
exempt from state tax. Each Portfolio will inform
shareholders annually of the percentage of income and
distributions derived from direct U.S. obligations.
Shareholders should consult their tax advisers to
determine whether any portion of income dividends received
from a Portfolio is considered tax-exempt in their state.
Each Portfolio intends to make sufficient
distributions prior to the end of each calendar year to
avoid liability for the federal excise tax applicable to
RICs.
Investment income received by the Portfolios from
sources within foreign countries may be subject to foreign
income taxes withheld at the source. A Portfolio will not
be able to elect to treat shareholders as having paid
their proportionate share of such taxes for foreign tax
credit purposes.
Each sale, exchange or redemption of Portfolio
shares is a taxable transaction to the shareholder.
GENERAL
INFORMATION
The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated March 6, 1985. The
Declaration of Trust permits the Trust to offer separate
series of shares and different classes of each Portfolio.
All consideration received by the Trust for shares of any
class of any Portfolio, and all assets of such Portfolio
or class belong to that Portfolio or class, respectively,
and would be subject to the liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Trustees of the Trust The management and affairs of the Trust are supervised by
the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. Shareholders of each Portfolio or class will vote
separately on matters pertaining solely to that Portfolio
or class, such as any distribution plan. As a
Massachusetts business trust, the Trust is not required to
hold annual meetings of shareholders, but approval will be
sought for certain changes in the operation of the Trust
and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by
the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning
at least 10% of the outstanding shares of the
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<PAGE> 22
Trust. In the event that such a meeting is requested, the
Trust will provide appropriate assistance and information
to the shareholders requesting the meeting.
Reporting The Trust issues an unaudited report semi-annually and
audited financial statements annually. The Trust furnishes
proxy statements and other reports to shareholders of
record.
Shareholder Inquiries Shareholder inquiries should be directed to the Manager,
SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658.
Dividends Substantially all of the net investment income (not
including capital gains) of the S&P 500 Index Portfolio is
distributed in the form of quarterly dividends and that of
the Bond Index Portfolio is distributed in the form of
monthly dividends.
Shareholders automatically receive all income
dividends and capital gain distributions in additional
shares at the net asset value next determined following
the record date, unless the shareholder has elected to
take such payment in cash. Shareholders may change their
election by providing written notice to the Manager at
least 15 days prior to the distribution.
Dividends and capital gains of each Portfolio are
paid on a per-share basis. The value of each share will be
reduced by the amount of any such payment. If shares are
purchased shortly before the record date for a dividend or
capital gains distributions, a shareholder will pay the
full price for the share and receive some portion of the
price back as a taxable dividend or distribution.
The dividends on Class A shares of the S&P 500
Index Portfolio are normally higher than those on the
Class E shares because of the different shareholder
servicing expenses actually charged to Class E shares.
Counsel and Independent
Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian and Wire Agent
Comerica Bank, 411 W. Lafayette, Detroit, Michigan 48226,
acts as custodian of the Portfolios' assets. The Custodian
holds cash, securities and other assets of the Trust as
required by the 1940 Act. CoreStates Bank, N.A., Broad and
Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101 acts as wire agent of the Trust's
assets.
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<PAGE> 23
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investment practices for the Portfolios, and the
associated risk factors:
Asset-Backed Securities
(Non-mortgage) Asset-backed securities consist of securities secured by
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 purpose of owning such assets and issuing such debt. A
Fund may invest in other asset-backed securities that may
be created in the future if the Advisor determines they
are suitable.
Equity Securities Equity securities represent ownership interests in a
company or corporation and consist of common stock,
preferred stock, and securities convertible into or
exchangeable for common stock. Investments in equity
securities are subject to market risks that may cause
their prices to fluctuate over time. The value of
convertible equity securities is also affected by
prevailing interest rates, the credit quality of the
issuer and any call provisions. Fluctuations in the value
of equity securities will not necessarily affect cash
income derived from these securities, but will affect a
Portfolio's net asset value.
Fixed Income Securities
Fixed income securities are debt obligations issued by
corporations, municipalities and other borrowers. The
market value of the fixed income investments will
generally 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. Moreover, while securities with longer maturities
tend to produce higher yields, the prices of longer
maturity securities are also subject to greater market
fluctuations as a result of changes in interest rates.
Changes by recognized agencies in the rating of any fixed
income security and in the ability of an issuer to make
payments of interest and principal also affect the value
of these investments. Changes in the value of these
securities will not necessarily affect cash income derived
from these securities but will affect a Portfolio's net
asset value.
Junk Bonds Bonds rated below investment grade are often referred to
as "junk bonds." Such securities involve greater risk of
default or price declines than investment grade securities
due to changes in the issuer's creditworthiness and the
outlook for
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<PAGE> 24
economic growth. The market for these securities may be
less active, causing market price volatility and limited
liquidity in the secondary market. This may limit a
Portfolio's ability to sell such securities at their
market value. In addition, the market for these securities
may also be adversely affected by legislative and
regulatory developments. Credit quality in the junk bond
market can change suddenly and unexpectedly, and even
recently issued credit ratings may not fully reflect the
actual risks imposed by a particular security.
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 the
Portfolio's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven
days, when there is no secondary market for such security
and repurchase agreements with durations (or maturities)
over 7 days in length.
Money Market
Instruments Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks and U.S. branches of foreign banks; (ii) U.S.
Treasury obligations and obligations of agencies and
instrumentalities of the U.S. Government; (iii)
high-quality commercial paper issued by U.S. and foreign
corporations; (iv) debt obligations with a maturity of one
year or less issued by corporations that issue
high-quality commercial paper; and (v) repurchase
agreements involving any of the foregoing obligations
entered into with highly-rated banks and broker-dealers.
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
fifteen- and thirty-year fixed rate mortgages, graduated
payment mortgages, balloon mortgages and adjustable rate
mortgages. Prepayment of mortgages which underlie
securities purchased at a premium often results in capital
losses, while prepayment of mortgages purchased at a
discount often results in capital gains. Because of these
unpredictable prepayment characteristics, it is often not
possible to predict accurately the average life or
realized yield of a particular issue.
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, FNMA and FHLMC. FNMA and FHLMC
obligations are not backed by the full faith and credit of
the U.S. Government as GNMA certificates are, but FNMA and
FHLMC securities are supported by the instrumentalities'
right to borrow from the U.S. Treasury.
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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 investment
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") 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. In a CMO, series of bonds or certificates
are usually issued in multiple classes. 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. Each class of a CMO, often referred
to as a "tranche," is issued with a specific fixed or
floating coupon rate and has a stated maturity or final
distribution date. Principal payments on the underlying
mortgage assets may cause CMOs to be retired substantially
earlier then 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 FNMA or
FHLMC represent beneficial ownership interests in a REMIC
trust consisting principally of mortgage loans or FNMA,
FHLMC or GNMA-guaranteed mortgage pass-through
certificates. For FHLMC REMIC Certificates, FHLMC
guarantees the timely payment of interest, and also
guarantees the payment of principal as payments are
required to be made on the underlying mortgage
participation certificates.
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. SMBs are extremely sensitive to
changes in interest rates because of the impact thereon of
prepayment of principal on the underlying mortgage
securities.
Repurchase Agreements Repurchase agreements are agreements by which a Portfolio
obtains a security and simultaneously commits to return
the security to the seller at an agreed upon price
21
<PAGE> 26
on an agreed upon date within a number of days from the
date of purchase. The Portfolio or its agent will have
actual or constructive possession of the securities held
as collateral for the repurchase agreement. Collateral
must be maintained at a value at least equal to 100% of
the purchase price. A Portfolio bears a risk of loss in
the event the other party defaults on its obligations and
the Portfolio is delayed or prevented from exercising its
right to dispose of the collateral securities or if the
Portfolio realizes a loss on the sale of the collateral
securities. A Portfolio will enter into repurchase
agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the
agreement based on guidelines established and periodically
reviewed by the Trustees. Repurchase agreements are
considered loans under the 1940 Act.
Securities of
Foreign Issuers There are certain risks connected with investing in
foreign securities. These include risks of adverse
political and economic developments (including possible
governmental seizure or nationalization of assets), the
possible imposition of exchange controls or other
governmental restrictions, less uniformity in accounting
and reporting requirements, the possibility that there
will be less information on such securities and their
issuers available to the public, the difficulty of
obtaining or enforcing court judgments abroad,
restrictions on foreign investments in other
jurisdictions, difficulties in effecting repatriation of
capital invested abroad, and difficulties in transaction
settlements and the effect of delay on shareholder equity.
Foreign securities may be subject to foreign taxes, and
may be less marketable than comparable U.S. securities.
The value of the Portfolio's investments denominated in
foreign currencies will depend on the relative strengths
of those currencies and the U.S. dollar, and the Portfolio
may be affected favorably or unfavorably by changes in the
exchange rates or exchange control regulations between
foreign currencies and the U.S. dollars. Changes in
foreign currency exchange rates also may affect the value
of dividends and interest earned, gains and losses
realized on the sale of securities and net investment
income and gains, if any, to be distributed to
shareholders by the Portfolio.
Stock Index Futures A stock index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the stock index value
at the close of trading of the contract and the price at
which the futures contract is originally struck. No
physical delivery of the stocks comprising the Index is
made; generally contracts are closed out prior to the
expiration date of the contract. No price is paid upon
entering into futures contracts. Instead, a Portfolio is
required to deposit an amount of cash or U.S. Treasury
securities known as "initial margin." Subsequent payments,
call "variation margin," to and from the broker, would be
made on a daily basis as the value of the futures position
varies (a process known as "marking
22
<PAGE> 27
to market"). The margin is in the nature of a performance
bond or good-faith deposit on a futures contract.
In order to avoid leveraging and related risks,
when a Portfolio purchases futures contracts, it will
collateralize its position by depositing an amount of cash
or liquid, high grade debt securities equal to the market
value of the futures positions held, less margin deposits,
in a segregated account with the Trust's Custodian.
Collateral equal to the current market value of the
futures position will be marked to market on a daily
basis.
In considering the proposed use of futures
contracts, particular note should be taken that futures
contracts relate to the anticipated levels at some point
in the future, not to the current level of the underlying
instrument. Thus trading of stock index futures may not
reflect the trading of the securities which are used to
formulate an index or even actual fluctuations in the
relevant index itself. There is, in addition, a risk that
movements in the price of futures contracts will not
correlate with the movement in prices of the stock index
being tracked.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in
markets and movements in interest rates; (2) there may be
an imperfect or no correlation between the changes in
market value of the securities held by the Portfolio and
the prices of futures and options on futures; (3) there
may not be a liquid secondary market for a futures
contract or option; (4) trading restrictions or
limitations may be imposed by an exchange; and (5)
government regulations may restrict trading in futures
contracts and options on futures .
U.S. Government
Agency Obligations Obligations issued or guaranteed by agencies of the U.S.
Government including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the
Small Business Administration, and obligations issued or
guaranteed by instrumentalities of the U.S. Government
including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the
full faith and credit of the U.S. Treasury (e.g.,
Government National Mortgage Association securities),
others are supported by the right of the issuer to borrow
from the Treasury (e.g., Federal Farm Credit Bank
securities), while still others are supported only by the
credit of the instrumentality (e.g., Federal National
Mortgage Association securities). Guarantees of principal
by agencies or instrumentalities of the U.S. Government
may be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to
maturity there might not be a market and thus no means of
realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not
extend to the value or yield of these securities nor to
the value of the Portfolios' shares.
23
<PAGE> 28
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.
Variable and Floating
Rate
Instruments Certain obligations may carry variable or floating rates
of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear
interest at rates which are not fixed, but which vary with
changes in specified market rates or indices, such as a
Federal Reserve composite index. The interest rates on
these securities may be reset daily, weekly, quarterly or
at some other interval, and may have a floor or ceiling on
interest rate changes. There is a risk that the current
interest rate on such obligations may not accurately
reflect existing market interest rates. A demand
instrument with a demand notice exceeding seven days may
be considered illiquid if there is no secondary market for
such security.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. A Portfolio will maintain with the
Custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these
securities is fixed as of the purchase date, and no
interest accrues to a Portfolio before settlement. These
securities are subject to market fluctuation due to
changes in market interest rates, and it is possible that
the market value at the time of settlement could be higher
or lower than the purchase price if the general level of
interest rates has changed. Although a Portfolio generally
purchases securities on a when-issued or forward
commitment basis with the intention of actually acquiring
such securities, a Portfolio may dispose of a when-issued
security or forward commitment prior to settlement if the
adviser deems it appropriate to do so.
Additional information on other permitted
investments can be found in the Statement of Additional
Information.
24
<PAGE> 29
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses......................... 2
Financial Highlights.............................. 3
The Trust......................................... 5
Investment Objectives and Policies................ 5
General Investment Policies....................... 9
Investment Limitations............................ 9
The Manager & Transfer Agent...................... 10
The Advisers...................................... 11
Distribution and Shareholder Servicing............ 12
Purchase & Redemption of Shares................... 12
Performance....................................... 14
Taxes............................................. 15
General Information............................... 17
Description of Permitted Investments and Risk
Factors......................................... 19
</TABLE>
25
<PAGE> 30
SEI INDEX FUNDS
JULY 31, 1996
- --------------------------------------------------------------------------------
S&P 500 INDEX PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus concisely sets forth information about the above-referenced
Portfolio that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated July 31, 1996, has been filed with
the Securities and Exchange Commission, and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling
1-800-342-5734. The Statement of Additional Information is incorporated by
reference into this Prospectus.
SEI Index Funds (the "Trust") is an open-end management investment company,
certain classes of which offer financial institutions a convenient means of
investing their own funds, or funds for which they act in a fiduciary, agency or
custodial capacity, in professionally managed diversified portfolios of
securities. Each Portfolio may offer separate classes of shares that differ from
each other primarily in the allocation of certain shareholder servicing
expenses. This Prospectus offers Class E shares of the Trust's S&P 500 Index
Portfolio (the "Portfolio").
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
<PAGE> 31
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
S&P 500
INDEX
-------
<S> <C> <C>
Management/Advisory Fees (after fee waiver) (1) .19%
12b-1 Fees None
Total Other Expenses .21%
Shareholder Servicing Expenses .15%
- --------------------------------------------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver) (2) .40%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Manager has waived, on a voluntary basis, a portion of its fee, and the
management/advisory fees shown reflect this voluntary waiver. The Manager
reserves the right to terminate its waiver at any time in its sole
discretion. Absent such fee waiver, management/advisory fees for the
Portfolio would be .25%. Management/Advisory fees have been restated to
reflect reductions in fee waivers.
(2) Absent this fee waiver, total operating expenses for the Portfolio would be
.46%. Additional information may be found under "The Adviser" and "The
Manager and Transfer Agent."
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor in a Portfolio would pay the following expenses on a $1,000 investment
assuming
(1) a 5% annual return and (2) redemption at the end of each time period: $ 4 $ 13 $ 22 $51
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose
of the expense table and example is to assist the investor in understanding the
various costs and expenses that may be directly or indirectly borne by investors
in Class E shares of the Portfolio. A person who purchases shares through a
financial institution may be charged separate fees by that institution. The
Portfolio also offers Class A shares, which are subject to the same expenses,
except there are different shareholder servicing costs. Additional Information
may be found under "The Manager and Transfer Agent," "The Adviser" and
"Distribution and Shareholder Servicing."
2
<PAGE> 32
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period have been audited by Arthur Andersen LLP, independent public accountants,
whose report dated May 10, 1996, thereon was unqualified. This information
should be read in conjunction with the Trust's financial statements and notes
thereto, included in the Statement of Additional Information under the heading
"Financial Information." Additional performance information is set forth in the
Trust's 1996 Annual Report to Shareholders, which is available upon request and
without charge by calling 1-800-342-5734.
For a Class E Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Income from
Investment Operations Less Distributions
----------------------------- ----------------------------------
Net Asset Net Realized and Dividends
Value, Net Unrealized Total from from Net Distributions Returns Net Asset
Beginning Investment Gain (Loss) Investment Investment from Capital of Total Value, End
of Period Income on Investments Operations Income Gains Capital Distributions of Period
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------
S&P 500 INDEX PORTFOLIO
- ---------------------------
For the period from
February 28
to March 31, 1996 (1)
$ 20.82 $ -- $ 0.05 $ 0.05 $ -- $ -- $-- $ -- $20.87
<CAPTION>
Ratios and Supplemental Data
----------------------------------------------------------
Ratio of
Ratios Ratio of Net Investment
of Expenses Ratio of Income
Expenses to Average Net to Average
to Net Assets Investment Net Assets
Net Assets Average (Excluding Income (Excluding Portfolio
Total End of Period Net Fee to Average Fee Turnover
Return (000) Assets Waivers) Net Assets Waivers) Rate
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
- ------------------------
S&P 500 INDEX PORTFOLIO
- ------------------------
For the period from
February 28
to March 31, 1996 (1)
0.24% $ 3,007 0.46% 0.58% 0.97% 0.85% 3.00%
* Annualized
(1) S&P 500 Index Class E Shares were offered beginning February 28, 1996. All ratios for that period have been
annualized.
</TABLE>
3
<PAGE> 33
THE TRUST
SEI INDEX FUNDS (the "Trust") is an open-end management investment company that
offers units of beneficial interest ("shares") in two separate diversified
investment portfolios. This prospectus offers Class E shares of the Trust's S&P
500 Index Portfolio (the "Portfolio"). The S&P 500 Index Portfolio has Class A
and Class E shares which provide for variations in certain shareholder servicing
expenses. Class A shares of the S&P 500 Index Portfolio and the Bond Index
Portfolio are offered by a separate prospectus. Additional information
pertaining to the Trust may be obtained in writing from SEI Financial Services
Company, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, or by calling
1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES
S&P 500 INDEX
PORTFOLIO The S&P 500 Index Portfolio seeks to provide investment
results that correspond to the aggregate price and
dividend performance of the securities in the Standard &
Poor's 500 Composite Stock Price Index (the "S&P 500
Index"), which is comprised of 500 selected common stocks,
most which are listed on the New York Stock Exchange.
The S&P 500 Index Portfolio's ability to duplicate
the performance of the S&P 500 Index will depend to some
extent on the size and timing of cashflows into and out of
the Portfolio, as well as on the level of the Portfolio's
expenses.
Adjustments made to accommodate cash flows will
track the index to the maximum extent possible, and may
result in brokerage expenses for the Portfolio. Over time,
the correlation between the performance of the Portfolio
and the S&P 500 Index is expected to be over 0.95. A
correlation of 1.00 would indicate perfect correlation,
which would be achieved when the net asset value of the
Portfolio, including the value of its dividend and capital
gains distributions, increased or decreased in exact
proportion to changes in the S&P 500 Index. An investment
in shares of the Portfolio involves risks similar to those
of investing in a portfolio consisting of the common
stocks of some or all of the companies included in the
Index.
The Portfolio will normally be invested in all of
the stocks which comprise the S&P 500 Index, except when
changes are made to the S&P 500 Index itself. The
Portfolio's policy is to be fully invested in common
stocks, and it is expected that cash reserve items would
normally be less than 10% of net assets.
The weightings of stocks in the S&P 500 Index are
based on each stock's relative total market value, i.e.,
market price per share times the number of shares
outstanding. Because of this weighting, approximately 50%
of the S&P 500 Index is currently composed of stocks of
the 50 largest companies in the S&P 500 Index, and the S&P
500 Index currently represents over 65% of the market
value of all U.S. common stocks listed on the New York
Stock Exchange.
4
<PAGE> 34
World Asset Management ("World"), the Portfolio's
investment adviser, makes no attempt to "manage" the
Portfolio in the traditional sense (i.e. by using
economic, financial or market analyses). The adverse
financial situation of a company usually will not result
in the elimination of a stock from the Portfolio. However,
the Trust reserves the right to remove an investment from
the Portfolio if, in the judgment of World, the merit of
the investment has been substantially impaired by
extraordinary events or adverse financial conditions.
Furthermore, administrative adjustments may be made in the
Portfolio from time to time because of mergers, changes in
the composition of the S&P 500 Index and similar reasons.
In certain circumstances, World may exercise discretion in
determining whether to exercise warrants or rights issued
in respect to portfolio securities or whether to tender
portfolio securities pursuant to a tender or exchange
offer.
The S&P 500 Index Portfolio is not sponsored,
endorsed, sold or promoted by Standard & Poor's
Corporation ("S&P"). S&P makes no representation or
warranty, implied or express, to the purchasers of the
Portfolio or any member of the public regarding the
advisability of investing in index funds or the Portfolio
or the ability of the Index to track general stock market
performance.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE
COMPLETENESS OF THE INDEX OR ANY DATA INCLUDED THEREIN.
S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY THE PORTFOLIO, OWNERS OF THE PORTFOLIO,
OR ANY DATA INCLUDED THEREIN. S&P MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND HEREBY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE INDEX OR ANY DATA INCLUDED THEREIN.
S&P'S ONLY RELATIONSHIP TO THE PORTFOLIO IS THE LICENSING
OF THE S&P MARKS AND THE INDEX, WHICH IS DETERMINED,
COMPOSED, AND CALCULATED BY S&P WITHOUT REGARD TO THE
LICENSEE OR THE PORTFOLIO.
The equity securities in which the S&P 500 Index
Portfolio invests are common stocks, preferred stocks, and
securities convertible into common stock.
The Portfolio may enter into stock index futures
contracts, provided that the value of these contracts does
not exceed 20% of the Portfolio's total assets. The
Portfolio may purchase futures contracts solely to
maintain adequate liquidity to meet its redemption demands
while maximizing the level of the Portfolio's assets which
are tracking the performance of the Index. In addition,
the Portfolio may only purchase those stock index futures
contracts-such as futures contracts on the index-that are
likely to closely duplicate the performance of the S&P 500
Index. The Portfolio also can sell such futures contracts
in order to close out a previously established position.
The Portfolio will not enter into any stock index futures
contract for the purpose of speculation, and will only
enter into contracts traded on national securities
exchanges with standardized maturity dates.
5
<PAGE> 35
The Portfolio may invest in securities of foreign
issuers traded in the United States. The Portfolio
ordinarily will purchase securities of foreign issuers in
U.S. markets. However, the Portfolio may purchase
securities of foreign issuers directly in foreign markets
if the Adviser determines that it is in the best interest
of the Portfolio to do so.
The Portfolio may invest cash reserves in
securities issued by the U.S. Government, its agencies or
instrumentalities, bankers' acceptances, commercial paper
rated at least A-1 by S&P and/or Prime-1 by Moody's
Investors Services, Inc. ("Moody's"), certificates of
deposit and repurchase agreements involving such
obligations. Such investments will not be used for
defensive purposes.
There can be no assurance that the Portfolio will
achieve its investment objective. For a description of the
above ratings, see the Statement of Additional
Information.
GENERAL
INVESTMENT
POLICIES
The Portfolio may lend up to 20% of its assets to
qualified institutions for the purpose of realizing
additional income, however the Portfolio has no present
intention to lend its securities. The Portfolio may invest
in illiquid securities; however, not more than 10% of the
total assets of the Portfolio will be invested in such
instruments. The Portfolio may enter into forward
commitments, or purchase securities on a when-issued or
delayed delivery basis.
For additional information regarding the
Portfolio's permitted investments see "Description of
Permitted Investments and Risk Factors" in this Prospectus
and in the Statement of Additional Information.
INVESTMENT
LIMITATIONS
The investment objective and certain of the investment
limitations are fundamental policies of the Portfolio.
Fundamental policies cannot be changed with respect to the
Trust or a Portfolio without the consent of the holders of
a majority of the Trust's or that Portfolio's outstanding
shares.
The Portfolio may not:
1. Purchase securities of any issuer (except securities
issued or guaranteed by the United States Government,
its agencies or instrumentalities) if, as a result,
more than 5% of the Portfolio's total assets would be
invested in the securities of such issuer. This
restriction applies to 75% of the Portfolio's total
assets.
2. Purchase any securities which would cause more than
25% of the Portfolio's total assets to be invested in
the securities of one or more issuers conducting
6
<PAGE> 36
their principal business activities in the same
industry, provided that this limitation does not apply
to investments in obligations issued or guaranteed by
the United States 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 the Portfolio.
This borrowing provision is included solely to
facilitate the orderly sale of portfolio securities to
accommodate substantial redemption requests if they
should occur, and is not for investment purposes. All
borrowings will be repaid before making additional
investments for the Portfolio, and any interest paid
on such borrowings will reduce the Portfolio's income.
4. Make loans, except that the Portfolio (i) may enter
into repurchase agreements, provided that repurchase
agreements and time deposits maturing in more than
seven days, and other illiquid securities, including
securities which are not readily marketable or are
restricted, are not to exceed, in the aggregate, 10%
of the Portfolio's total assets, (ii) may engage in
securities lending as described in this Prospectus,
and (iii) may purchase or hold debt instruments in
accordance with its investment objectives and
policies.
The foregoing percentage limitations (except the
limitation on borrowings) will apply at the time of the
purchase of a security. Additional fundamental investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER
AND TRANSFER
AGENT
SEI Financial Management Corporation (the "Manager" or the
"Transfer Agent"), a wholly-owned subsidiary of SEI
Corporation ("SEI"), and the Trust are parties to a
management agreement (the "Management Agreement"). Under
the terms of the Management Agreement, the Manager is
responsible for providing the Trust with overall
management services, regulatory reporting, all necessary
office space, equipment, personnel and facilities and for
acting as transfer agent, dividend disbursing agent, and
shareholder servicing agent.
For these services, the Manager is entitled to a
fee, which is calculated daily and paid monthly, at an
annual rate of .22% of the average daily net assets of the
Portfolio. The Manager may from time to time waive all or
a portion of its fee in order to limit the operating
expenses of the Portfolio. Any such waiver is voluntary
and may be terminated at any time in its sole discretion.
For the fiscal year ended March 31, 1996, the
Portfolio paid management fees, after fee waivers, of .12%
of its average daily net assets.
7
<PAGE> 37
THE ADVISER
World Asset Management ("World") serves as investment
adviser to the S&P 500 Index Portfolio.
World is a general partnership organized by Munder
Capital Management ("MCM"), a general partnership formed
in December, 1994, which engages in investment management
and advisory services. As of December 31, 1995 total
assets under management of World were $9.0 billion and
assets under management of MCM were $30.0 billion. The
principal business address for World is 255 Brown Street
Centre, 2nd Floor, Birmingham, Michigan 48009.
Under the terms of this Advisory Agreement, World
provides the Trust with certain record keeping and
management services in connection with the Portfolio
including monitoring the indexing systems and determining
which securities to purchase and sell in order to keep the
Portfolio in balance with its index.
World is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .03% of the
average daily net assets of the Portfolio. For the fiscal
year ended March 31, 1996, the Portfolio paid World an
advisory fee of .03% of its average daily net assets.
DISTRIBUTION
AND SHAREHOLDER
SERVICES
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as the Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. The Portfolio
has also adopted a shareholder servicing plan for its
Class A shares (the "Class A Service Plan") which is
similar to the Plan described below.
The Portfolios have adopted a shareholder servicing
plan for Class E shares (the "Service Plan") under which a
shareholder servicing fee of up to .15% of average daily
net assets attributable to Class E shares will be paid to
the Distributor. Under the Service Plan, the Distributor
may perform, or may compensate other service providers for
performing, the following shareholder and administrative
services; maintaining client accounts; arranging for bank
wires; responding to client inquiries concerning services
provided on investments; assisting clients in changing
dividend options, account designations and addresses; sub-
accounting; providing information on share positions to
clients; forwarding shareholder communications to clients;
processing purchase, exchange and redemption orders; and
processing dividend payments. Under the Service Plan, the
Distributor may retain as a profit any difference between
the fee it receives and the amount it pays to third
parties.
8
<PAGE> 38
It is possible that an institution may offer
different classes of shares to its customers and thus
receive different compensation with respect to different
classes. These financial institutions may also charge
separate fees to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from
its own resources. Under any such program, the Distributor
will provide promotional incentives, in the form of cash
or other compensation, including merchandise, airline
vouchers, trips and vacation packages, to all dealers
selling shares of the Portfolio. Such promotional
incentives will be offered uniformly to all shares of the
Portfolio, and also will be offered uniformly to all
dealers, predicated upon the amount of shares of the
Portfolio sold by such dealer.
PURCHASE AND
REDEMPTION OF
SHARES
Financial institutions may acquire shares of the Portfolio
for their own account, or as a record owner on behalf of
fiduciary, agency or custody accounts, by placing orders
with the Transfer Agent. Institutions that use certain SEI
proprietary systems may place orders electronically
through those systems. State securities laws may require
banks and financial institutions purchasing shares for
their customers to register as dealers pursuant to state
laws. Financial institutions may impose an earlier cut-off
time for receipt of purchase orders directed through them
to allow for processing and transmittal of these orders to
the Transfer Agent for effectiveness on the same day.
Financial institutions which purchase shares for the
accounts of their customers may impose separate charges on
these customers for account services. Shares of the
Portfolio are offered only to residents of states in which
the shares are eligible for purchase.
Shares of the Portfolio may be purchased or
redeemed on days on which the New York Stock Exchange is
open for business ("Business Days"). However, shares
cannot be purchased by Federal Reserve wire on federal
holidays restricting wire transfers.
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent prior to
4:00 p.m. Eastern time on any Business Day for the order
to be accepted on that Business Day. Generally, cash
investments must be transmitted or delivered in federal
funds to the wire agent on the next Business Day following
the day the order is placed. The Trust reserves the right
to reject a purchase order when the Distributor determines
that it is not in the best interest of the Trust or
shareholders to accept such purchase order.
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<PAGE> 39
Purchases will be made in full and fractional
shares of the Portfolio calculated to three decimal
places. The Trust will send shareholders a statement of
shares owned after each transaction. The purchase price of
shares is the net asset value next determined after a
purchase order is received and accepted by the Trust. The
net asset value per share of the Portfolio is determined
by dividing the total market value of the Portfolio's
investment and other assets, less any liabilities, by the
total number of outstanding shares of the Portfolio. Net
asset value per share is determined daily as of the close
of business of the New York Stock Exchange (currently,
4:00 p.m. Eastern time) on any Business Day.
The market value of each portfolio security is
obtained by the Manager from an independent pricing
service. The pricing service relies primarily on prices of
actual market transactions as well as trader quotations.
However, the pricing service may use a matrix system to
determine valuations of equity and fixed income
securities. This system considers such factors as security
prices, yields, maturities, call features, ratings and
developments relating to specific securities in arriving
at valuations. The pricing service may also provide market
quotations. The procedures of the pricing service and its
valuations are reviewed by the officers of the Trust under
the general supervision of the Trustees.
Shareholders who desire to redeem shares of the
Portfolio must place their redemption orders with the
Transfer Agent prior to 4:00 p.m. Eastern time on any
Business Day. The redemption price is the net asset value
per share of the Portfolio next determined after receipt
by the Transfer Agent of the redemption order. Payment on
redemption will be made as promptly as possible and, in
any event, within seven days after the redemption order is
received.
Shares of the Portfolio may be purchased in
exchange for securities included in the Portfolio subject
to the adviser's determination that the securities are
acceptable. Securities accepted in an exchange will be
valued at market value. All accrued interest and
subscription of other rights which are reflected in the
market price of accepted securities at the time of
valuation become the property of the Trust and must be
delivered by the Shareholder to the Trust upon receipt
from the issuer.
A Portfolio will not accept securities unless (1)
such securities are appropriate in the Portfolio at the
time of the exchange; (2) such an exchange will not cause
the Portfolio's weightings to become materially imbalanced
with respect to the weightings of the securities included
in the Index; (3) such securities are acquired for
investment and not for resale; (4) the Shareholder
represents that all securities offered to the Trust for
the Portfolio are not subject to any restrictions upon
their sale by the Portfolio under the Securities Act of
1933, or otherwise; (5) such securities are traded on the
American Stock Exchange, the New York Stock Exchange or on
NASDAQ in an unrelated transaction with a quoted sales
price on the same day the exchange valuation is made or,
if not listed on such exchanges or
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<PAGE> 40
on NASDAQ, have prices available from an independent
pricing service approved by the Trust's Board of Trustees;
and (6) the securities may be acquired under investment
restrictions applicable to the Portfolio.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Trust's transfer
agent will be responsible for any loss, liability, cost or
expense for acting upon wire instructions or upon
telephone instructions that it reasonably believes to be
genuine. The Trust and the Trust's transfer agent will
each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine,
including requiring a form of personal identification
prior to acting upon instructions received by telephone
and recording telephone instructions. If reasonable
procedures are not employed, the Trust and/or Trust's
Transfer Agent may be liable for any losses due to
unauthorized or fraudulent telephone transactions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, shareholders may
experience difficulties placing redemption orders by
telephone, and may wish to consider placing orders by
other means.
PERFORMANCE
From time to time, the Portfolio may advertise yield and
total return. These figures will be based on historical
earnings and are not intended to indicate future
performance. No representation can be made concerning
actual future yields or returns. The yield of a Portfolio
refers to the income generated by a hypothetical
investment in the Portfolio over a thirty day period. This
income is then "annualized," i.e., the income over thirty
days is assumed to be generated over one year, and is
shown as a percentage of the investment.
The total return of the Portfolio refers to the
average compounded rate of return on a hypothetical
investment for designated time periods, assuming that the
entire investment is redeemed at the end of each period
and assuming the reinvestment of all dividend and capital
gain distributions.
The Portfolio may periodically compare its
performance to the performance of: other mutual funds
tracked by mutual fund rating services (such as Lipper
Analytical); financial and business publications and
periodicals; broad groups of comparable mutual funds;
unmanaged indices which may assume investment of dividends
but generally do not reflect deductions for administrative
and management costs; or to other investment alternatives.
The Portfolio may quote Morningstar, Inc., a service that
ranks mutual funds on the basis of risk-adjusted
performance. The Portfolio may use long-term performance
of these capital markets to demonstrate general long-term
risk versus reward scenarios and could include the value
of a hypothetical investment in any of the capital
markets. The
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<PAGE> 41
Portfolio may also quote financial and business
publications and periodicals as they relate to fund
management, investment philosophy and investment
techniques.
The Portfolio may quote various measures of
volatility and benchmark correlation in advertising, and
may compare these measures to those of other funds.
Measures of volatility attempt to compare historical share
price fluctuations or total returns to a benchmark while
measures of benchmark correlation indicate how valid a
comparative benchmark might be. Measures of volatility and
correlation are calculated using averages of historical
data and cannot be calculated precisely.
The performance on Class A shares will normally be
higher than that on the Class E shares of the S&P 500
Index Portfolio because of the different shareholder
servicing expenses actually charged to Class E shares.
TAXES
The following summary of federal income tax consequences
is based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state or local income tax treatment of the
Portfolio or its shareholders. In addition, state and
local tax consequences of an investment in the Portfolio
may differ from the federal income tax consequences
described below. Accordingly, shareholders are urged to
consult their tax advisers regarding specific questions as
to federal, state and local taxes. Additional information
concerning taxes is set forth in the Statement of
Additional Information.
Tax Status
of the Portfolio The Portfolio is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other portfolios. The Portfolio intends to qualify for the
special tax treatment afforded regulated investment
companies ("RICs") under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), so as to be
relieved of federal income tax on net investment company
taxable income and net capital gains (the excess of net
long-term capital gain over net short-term capital losses)
distributed to shareholders regardless of how long the
shareholder has held shares and regardless of whether the
distributions are received in cash or in additional
shares. Distributions from net capital gains do not
qualify for the dividends-received deduction.
Tax Status
of Distributions The Portfolio will distribute substantially all of its net
investment income (including net short-term capital gains)
to shareholders. Dividends from the Portfolio's net
investment company taxable income are taxable to its
shareholders as ordinary income (whether received in cash
or in additional shares) to the extent of the Portfolio's
earnings and profits. Dividends paid by the Portfolio to
corporate shareholders will qualify for the
dividends-received deduction to the extent attributable to
dividends received by the Portfolio from domestic
corporations.
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<PAGE> 42
Capital gains will be distributed at least annually and
will be taxable to shareholders as long-term capital
gains. The Portfolio will provide annual reports to
shareholders of the federal income tax status of all
distributions.
Dividends declared by the Portfolio in October,
November or December of any year and payable to
shareholders of record on a date in such a month will be
deemed to have been paid by the Portfolio and received by
the shareholders on December 31 of the year declared if
paid by the Portfolio at any time during the following
January.
Investment income received directly by the
Portfolio on direct U.S. government obligations is exempt
from income tax at the state level and may be exempt,
depending on the state, when received by a shareholder as
income dividends provided certain state-specific
conditions are satisfied. Interest received on repurchase
agreements collateralized by U.S. government obligations
normally is not exempt from state tax. The Portfolio will
inform shareholders annually of the percentage of income
and distributions derived from direct U.S. obligations.
Shareholders should consult their tax advisers to
determine whether any portion of income dividends received
from the Portfolio is considered tax-exempt in their
state.
The Portfolio intends to make sufficient
distributions to avoid liability for the federal excise
tax applicable to RICs.
Investment income received by the Portfolio from
sources within foreign countries may be subject to foreign
income taxes withheld at the source. The Portfolio will
not be able to elect to treat shareholders as having paid
their proportionate share of such taxes for foreign tax
credit purposes.
Each sale, exchange or redemption of Portfolio
shares is a taxable transaction to the shareholder.
GENERAL
INFORMATION
The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated March 6, 1985. The
Declaration of Trust permits the Trust to offer separate
series of shares and different classes of the Portfolio.
In addition to the Portfolio, the Trust consists of the
Bond Index Portfolio. All consideration received by the
Trust for shares of any class of any Portfolio, and all
assets of such Portfolio or class belong to that Portfolio
or class, respectively, and would be subject to the
liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
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<PAGE> 43
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Trustees of the Trust The management and affairs of the
Trust are supervised by the Trustees under the laws of the
Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain
companies provide essential management services to the
Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. Shareholders of each Portfolio or class will vote
separately on matters pertaining solely to that Portfolio
or class, such as any distribution plan. As a
Massachusetts business trust, the Trust is not required to
hold annual meetings of shareholders, but approval will be
sought for certain changes in the operation of the Trust
and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by
the remaining Trustees or by shareholders at a special
meeting called upon written request of shareholders owning
at least 10% of the outstanding shares of the Trust. In
the event that such a meeting is requested, the Trust will
provide appropriate assistance and information to the
shareholders requesting the meeting.
Reporting The Trust issues an unaudited report semi-annually and
audited financial statements annually. The Trust furnishes
proxy statements and other reports to shareholders of
record.
Shareholder Inquiries Shareholder inquiries should be directed to the Manager,
SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658.
Dividends Substantially all of the net investment income (exclusive
of capital gains) of the Portfolio is periodically
declared and paid as a dividend. Dividends are paid
currently on a quarterly basis. Currently, net capital
gains (the excess of net long-term capital gain over net
short-term capital loss) realized, if any, will be
distributed at least annually.
Shareholders automatically receive all income
dividends and capital gain distributions in additional
shares at the net asset value next determined following
the record date, unless the shareholder has elected to
take such payment in cash. Shareholders may change their
election by providing written notice to the Manager at
least 15 days prior to the distribution.
Dividends and capital gains of the Portfolio are
paid on a per-share basis. The value of each share will be
reduced by the amount of any such payment. If shares are
purchased shortly before the record date for a dividend or
capital gains distributions, a shareholder will pay the
full price for the share and receive some portion of the
price back as a taxable dividend or distribution.
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<PAGE> 44
The dividends on Class A shares of the Portfolio
are normally higher than those on the Class E shares
because of the different shareholder servicing expenses
actually charged to Class E shares.
Counsel and Independent
Accountants Morgan, Lewis & Bockius LLP serves as counsel to the
Trust. Arthur Andersen LLP serves as the independent
public accountants of the Trust.
Custodian
and Wire Agent Comerica Bank, 411 W. Lafayette, Detroit, Michigan 48226,
acts as custodian of the Trust's assets. The Custodian
holds cash, securities and other assets of the Trust as
required by the 1940 Act. CoreStates Bank, N.A., Broad and
Chestnut Streets, P.O. Box 7618, Philadelphia,
Pennsylvania 19101 acts as wire agent of the Trust's
assets.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS
The following is a description of certain of the permitted
investment practices for the Portfolio, and the associated
risk factors:
Equity Securities Equity securities represent ownership interests in a
company or corporation and consist of common stock,
preferred stock, and securities convertible into or
exchangeable for common stock. Investments in equity
securities are subject to market risks that may cause
their prices to fluctuate over time. The value of
convertible equity securities is also affected by
prevailing interest rates, the credit quality of the
issuer and any call provisions. Fluctuations in the value
of equity securities will not necessarily affect cash
income derived from these securities, but will affect a
Portfolio's net asset value.
Junk Bonds Bonds rated below investment grade are often referred to
as "junk bonds." Such securities involve greater risk of
default or price declines than investment grade securities
due to changes in the issuer's creditworthiness and the
outlook for economic growth. The market for these
securities may be less active, causing market price
volatility and limited liquidity in the secondary market.
This may limit a Portfolio's ability to sell such
securities at their market value. In addition, the market
for these securities may also be adversely affected by
legislative and regulatory developments. Credit quality in
the junk bond market can change suddenly and unexpectedly
and even recently issued credit ratings may not fully
reflect the actual risks imposed by a particular security.
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 the
Portfolio's books. Illiquid securities include demand
instruments with demand notice periods
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exceeding seven days, when there is no secondary market
for such security and repurchase agreements with durations
(or maturities) over 7 days in length.
Money Market
Instruments Money market securities are high-quality,
dollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S.
banks and U.S. branches of foreign banks; (ii) U.S.
Treasury obligations and obligations of agencies and
instrumentalities of the U.S. Government; (iii)
high-quality commercial paper issued by U.S. and foreign
corporations; (iv) debt obligations with a maturity of one
year or less issued by corporations that issue
high-quality commercial paper; and (v) repurchase
agreements involving any of the foregoing obligations
entered into with highly-rated banks and broker-dealers.
Repurchase Agreements Repurchase agreements are agreements by which the
Portfolio obtains a security and simultaneously commits to
return the security to the seller at an agreed upon price
on an agreed upon date within a number of days from the
date of purchase. The Portfolio or its agent will have
actual or constructive possession of the securities held
as collateral for the repurchase agreement. Collateral
must be maintained at a value at least equal to 100% of
the purchase price. The Portfolio bears a risk of loss in
the event the other party defaults on its obligations and
the Portfolio is delayed or prevented from exercising its
right to dispose of the collateral securities or if the
Portfolio realizes a loss on the sale of the collateral
securities. The Portfolio will enter into repurchase
agreements only with financial institutions deemed to
present minimal risk of bankruptcy during the term of the
agreement based on established guidelines. Repurchase
agreements are considered loans under the 1940 Act, as
well as for federal and state income tax purposes.
Securities of
Foreign Issuers There are certain risks connected with investing in
foreign securities. These include risks of adverse
political and economic developments (including possible
governmental seizure or nationalization of assets), the
possible imposition of exchange controls or other
governmental restrictions, less uniformity in accounting
and reporting requirements, the possibility that there
will be less information on such securities and their
issuers available to the public, the difficulty of
obtaining or enforcing court judgments abroad,
restrictions on foreign investments in other
jurisdictions, difficulties in effecting repatriation of
capital invested abroad, and difficulties in transaction
settlements and the effect of delay on shareholder equity.
Foreign securities may be subject to foreign taxes, and
may be less marketable than comparable U.S. securities.
The value of the Portfolio's investments denominated in
foreign currencies will depend on the relative strengths
of those currencies and the U.S. dollar, and the Portfolio
may be affected favorably or unfavorably by changes in the
exchange rates or exchange control regulations between
foreign currencies and the U.S. dollars. Changes in
foreign currency exchange rates also may affect the
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<PAGE> 46
value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment
income and gains, if any, to be distributed to
shareholders by the Portfolio.
Stock Index Futures A stock index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make
delivery of an amount of cash equal to a specified dollar
amount times the difference between the stock index value
at the close of trading of the contract and the price at
which the futures contract is originally struck. No
physical delivery of the stocks comprising the Index is
made; generally contracts are closed out prior to the
expiration date of the contract. No price is paid upon
entering into futures contracts. Instead, a Portfolio is
required to deposit an amount of cash or U.S. Treasury
securities known as "initial margin." Subsequent payments,
call "variation margin," to and from the broker, would be
made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The
margin is in the nature of a performance bond or
good-faith deposit on a futures contract.
In order to avoid leveraging and related risks,
when a Portfolio purchases futures contracts, it will
collateralize its position by depositing an amount of cash
or liquid, high grade debt securities equal to the market
value of the futures positions held, less margin deposits,
in a segregated account with the Trust's Custodian.
Collateral equal to the current market value of the
futures position will be marked to market on a daily
basis.
In considering the proposed use of futures
contracts, particular note should be taken that futures
contracts relate to the anticipated levels at some point
in the future, not to the current level of the underlying
instrument. Thus trading of stock index futures may not
reflect the trading of the securities which are used to
formulate an index or even actual fluctuations in the
relevant index itself. There is, in addition, a risk that
movements in the price of futures contracts will not
correlate with the movement in prices of the stock index
being tracked.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in
markets and movements in interest rates; (2) there may be
an imperfect or no correlation between the changes in
market value of the securities held by the Portfolio and
the prices of futures and options on futures; (3) there
may not be a liquid secondary market for a futures
contract or option; (4) trading restrictions or
limitations may be imposed by an exchange; and (5)
government regulations may restrict trading in futures
contracts and options on futures.
U.S. Government
Agency Obligations Obligations issued or guaranteed by agencies of the U.S.
Government including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the
Small Business Administration, and obligations issued or
guaranteed by
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<PAGE> 47
instrumentalities of the U.S. Government including, among
others, the Federal Home Loan Mortgage Corporation, the
Federal Land Banks and the U.S. Postal Service. Some of
these securities are supported by the full faith and
credit of the U.S. Treasury (e.g., Government National
Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank securities), while still others
are supported only by the credit of the instrumentality
(e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities
of the U.S. Government may be a guarantee of payment at
the maturity of the obligation so that in the event of a
default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to
maturity. Guarantees as to the timely payment of principal
and interest do not extend to the value or yield of these
securities nor to the value of the Portfolios' shares.
When-Issued and Delayed
Delivery Securities When-issued or delayed delivery transactions involve the
purchase of an instrument with payment and delivery taking
place in the future. Delivery of and payment for these
securities may occur a month or more after the date of the
purchase commitment. A Portfolio will maintain with the
Custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these
securities is fixed as of the purchase date, and no
interest accrues to a Portfolio before settlement. These
securities are subject to market fluctuation due to
changes in market interest rates, and it is possible that
the market value at the time of settlement could be higher
or lower than the purchase price if the general level of
interest rates has changed. Although the Portfolio
generally purchases securities on a when-issued or forward
commitment basis with the intention of actually acquiring
such securities, the Portfolio may dispose of a
when-issued security or forward commitment prior to
settlement if the adviser deems it appropriate to do so.
Additional information on other permitted
investments can be found in the Statement of Additional
Information.
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TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Annual Operating Expenses......................... 2
Financial Highlights.............................. 3
The Trust......................................... 4
Investment Objectives and Policies................ 4
General Investment Policies....................... 6
Investment Limitations............................ 6
The Manager & Transfer Agent...................... 7
The Adviser....................................... 8
Distribution and Shareholder Servicing............ 8
Purchase & Redemption of Shares................... 9
Performance....................................... 11
Taxes............................................. 12
General Information............................... 13
Description of Permitted Investments and Risk
Factors......................................... 15
</TABLE>
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<PAGE> 49
SEI INDEX FUNDS
MANAGER AND SHAREHOLDER SERVICING AGENT:
SEI FINANCIAL MANAGEMENT CORPORATION
DISTRIBUTOR:
SEI FINANCIAL SERVICES COMPANY
INVESTMENT ADVISERS:
WORLD ASSET MANAGEMENT
MELLON BOND ASSOCIATES
This Statement of Additional Information is not a Prospectus. It is intended to
provide additional information regarding the activities and operations of the
Trust and should be read in conjunction with the Trust's Prospectuses dated July
31, 1996. Prospectuses may be obtained without charge by writing the Trust's
distributor, SEI Financial Services Company, 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658, or by calling 1-800-342-5734. Unless otherwise defined
herein, capitalized terms used herein but not defined herein shall have the
respective meanings set forth in the Prospectus.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust ................................................................. 2
Description of Certain Permitted Investments .............................. 2
Investment Limitations .................................................... 5
The Manager and Transfer Agent ............................................ 6
The Advisers .............................................................. 7
Distribution and Shareholder Servicing .................................... 8
Trustees and Officers of the Trust ........................................ 9
Performance ............................................................... 11
Purchase and Redemption of Shares ......................................... 12
Taxes ..................................................................... 13
Portfolio Transactions .................................................... 15
Description of Shares ..................................................... 16
Limitation of Trustees' Liability ......................................... 17
Shareholder Liability ..................................................... 17
5% Shareholders ........................................................... 17
Custodian and Independent Public Accountant ............................... 18
Experts ................................................................... 19
Financial Information ..................................................... F-1
</TABLE>
July 31, 1996
<PAGE> 50
THE TRUST
SEI Index Funds (the "Trust") is a diversified, open-end management investment
company established as a Massachusetts business trust pursuant to a Declaration
of Trust dated March 6, 1985. The Declaration of Trust permits the Trust to
offer separate series of units of beneficial interest ("shares") and separate
classes of series. Except for differences between Class A and Class E shares of
the S&P 500 Index Portfolio pertaining to shareholder service plans, each share
of each portfolio represents an equal proportionate interest in that portfolio
with each other share of that portfolio. This Statement of Additional
Information relates to the Trust's S&P 500 Index Portfolio and the Bond Index
Portfolio (the "Portfolios").
The S&P 500 Index Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's Corporation ("S&P"). S&P makes no representation or warranty,
express or implied, to the purchasers of the Portfolio or any member of the
public regarding the advisability of investing in index funds or the Portfolio
or the ability of the S&P 500 Composite Stock Price Index (the "S&P 500 Index")
to track general stock market performance. S&P's only relationship to the
licensee, the Trust, is the licensing of certain trademarks and trade names of
S&P and of the S&P 500 Index which is determined, composed and calculated by S&P
without regard to the licensee or the Portfolio. S&P has no obligation to take
the needs of the licensee or the owners of the Portfolio into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of, the timing of, prices at,
or quantities of the Portfolio to be issued or in the determination or
calculation of the equation by which the Portfolio is to be converted into cash.
S&P has no obligation or liability in connection with the administration,
marketing or trading of the Portfolio.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500 INDEX
OR ANY DATA INCLUDED THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO
RESULTS TO BE OBTAINED BY THE PORTFOLIO, OWNERS OF THE PORTFOLIO, OR ANY OTHER
PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN
IN CONNECTION WITH THE RIGHTS LICENSED HEREUNDER OR FOR ANY OTHER USE. S&P MAKES
NO EXPRESS OR IMPLIED WARRANTIES, AND HEREBY DISCLAIMS ALL WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE
S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY OF THE
FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL, PUNITIVE,
INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF
THE POSSIBILITY OF SUCH DAMAGES.
DESCRIPTION OF CERTAIN PERMITTED INVESTMENTS
The following information supplements the information about permitted
investments set forth in the corresponding Prospectus for the relevant
Portfolio.
BANK OBLIGATIONS - The Portfolios may invest in bank obligations of U.S.
commercial banks or savings and loan institutions, including certificates of
deposit, time deposits and bankers' acceptances. A time deposit is an account
containing a currency balance pledged to remain at a particular bank for a
specified period in return for payment of interest. A bankers' acceptance is a
bill of exchange guaranteed by a bank or trust company for payment within one to
six months. Bankers' acceptances are used to provide manufacturers and exporters
with capital to operate between the time of manufacture or export and payment by
the purchaser. A certificate of deposit is an interest-bearing instrument with a
specific maturity issued by a bank or savings and loan institution in exchange
for the deposit of funds that normally can be traded in the secondary market
prior to maturity.
MORTGAGE PASS-THROUGH SECURITIES - The Bond Index Portfolio may purchase
securities representing
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<PAGE> 51
interests in mortgage pools guaranteed by U.S. Government agencies or
instrumentalities, including Government National Mortgage Association ("GNMA"),
Federal National Mortgage Association ("FNMA") and Federal Home Loan Mortgage
Corporation ("FHLMC"), conventional mortgage-pass through obligations, and
Federal Housing Administration-insured mortgage pools.
GNMA is a wholly-owned U.S. Government corporation which guarantees the timely
payment of principal and interest. The market value and interest yield of these
instruments can vary due to market interest rate fluctuations and early
prepayments of underlying mortgages. These securities represent ownership in a
pool of federally insured mortgage loans. GNMA certificates consist of
underlying mortgages with a maximum maturity of 30 years. However, due to
scheduled and unscheduled principal payments, GNMA certificates have a shorter
average maturity and, therefore, less principal volatility than a comparable 30-
year bond. Since prepayment rates vary widely, it is not possible to predict
accurately the average maturity of a particular GNMA pool. The scheduled monthly
interest and principal payments relating to mortgages in the pool will be
"passed through" to investors. GNMA securities differ from conventional bonds in
that principal is paid back to the certificate holders over the life of the loan
rather than at maturity. As a result, the Portfolio will receive monthly
scheduled payments of principal and interest. In addition, the Portfolio may
receive unscheduled principal payments representing prepayments on the
underlying mortgages. Any prepayments will be reinvested at the then prevailing
interest rate.
Mortgage-backed securities issued by the FNMA include FNMA Guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") that are solely the
obligations of the FNMA and are not backed by or entitled to the full faith and
credit of the United States. The FNMA is a government-sponsored organization
owned entirely by private stockholders. Fannie Maes are guaranteed as to
timely payment of the principal and interest by FNMA. Mortgage-backed
securities issued by the FHLMC include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PC's"). The 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 the FHLMC. The FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans. When
the 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.
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 Portfolio bears a risk of loss in the event that the other party to
a repurchase agreement defaults on its obligations and the Portfolio is delayed
or prevented from exercising its rights to dispose of the collateral securities.
A portfolio may enter into repurchase agreements only with financial
institutions that its adviser deems to present minimal risk of bankruptcy during
the term of the agreement, based on guidelines that are periodically reviewed by
the Board of Trustees. These guidelines currently permit each Portfolio to enter
into repurchase agreements only with approved banks and primary securities
dealers, as recognized by the Federal Reserve Bank of New York, which have
minimum net capital of $100 million, or with a member bank of the Federal
Reserve System. Repurchase agreements are considered to be loans collateralized
by the underlying security. Repurchase agreements entered into by a Portfolio
will provide that the underlying security at all times shall have a value at
least equal to 102% of the price stated in the agreement. This underlying
security will be marked to market daily. Each adviser will monitor compliance
with this requirement. Under all repurchase agreements entered into by a
Portfolio, the Custodian or its agent must take possession of the underlying
collateral. However, if the seller defaults, a Portfolio 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, a Portfolio may incur delay
and costs in selling the security and may suffer a loss if the Portfolio is
treated as an unsecured creditor.
SECURITIES LENDING - In order to generate additional income, a Portfolio may
lend its securities pursuant to agreements requiring that the loans be
continuously secured by cash, securities of the U.S. Government or its agencies,
or any combination of cash and such securities, in an amount at least equal to
the market value of the loaned securities. Loans are made only to borrowers
deemed by the advisers to be in good standing and when, in the judgment of the
advisers, the consideration that can be earned currently from such loaned
securities justifies the attendant risk. Any loan may be terminated by either
party upon reasonable notice to the other party. Each of the Portfolios may use
the Distributor as a broker in these transactions.
STOCK INDEX FUTURES - The S&P 500 Index Portfolio may invest in stock index
futures. The nature of initial and variation margin in futures transactions is
different from that of margin in security transactions in that
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<PAGE> 52
futures contract margin does not involve the borrowing of funds to finance the
transactions. Rather, the margin is in the nature of a performance bond or
good-faith deposit on the contract that is returned to the Portfolio upon
termination of the contract, assuming all contractual obligations have been
satisfied. Positions in futures contracts may be closed only on an exchange or
board of trade providing a secondary market for such futures contracts. The
value of the contract usually will vary in direct proportion to the total face
value. Market value of a stock index futures position is defined as the closing
value of the Index multiplied by 500 times the number of contracts held.
The Portfolio's ability to effectively utilize futures contracts depends on
several factors. First, it is possible that there will not be a perfect price
correlation between the futures contracts and their underlying stock index. In
addition, the purchase of a futures contract involves the risk that the
Portfolio could lose more than the original margin deposit required to initiate
a futures transaction.
In considering the proposed use of futures contracts, particular note should be
taken that futures contracts relate to the anticipated levels at some point in
the future not to the current level of the underlying instrument; thus, for
example, trading of stock index futures may not reflect the trading of the
securities which are used to formulate an index or even actual fluctuations in
the relevant index itself. There is, in addition, a risk that movements in the
price of futures contracts will not correlate with the movement in prices of the
stock index being tracked. There may be several reasons unrelated to the value
of the underlying securities which causes this situation to occur. First, all
participants in the futures market are subject to initial and variation margin
requirements. If, to avoid meeting additional margin deposit requirements or for
other reasons, investors choose to close a significant number of futures
contracts through offsetting transactions, distortions in the normal price
relationship between the securities markets and the futures markets may occur.
Second, because the deposit requirements in the futures market are less onerous
than margin requirements in the securities market, there may be increased
participation by speculators in the futures market which may also cause
temporary price distortions.
The Portfolio has undertaken to restrict its futures contract trading as
follows: First, the Portfolio will not engage in transactions in futures
contracts for speculative purposes. Second, the Portfolio will not market itself
to the public as a commodity pool or otherwise as a vehicle for trading in the
commodities futures or commodity options markets. Third, the Portfolio will
disclose to all prospective shareholders the purpose of and limitations on its
commodity futures trading. Fourth, the Portfolio will submit to the Commodity
Futures Trading Commission ("CFTC") special calls for information. Accordingly,
registration as a commodities pool operator with the CFTC is not expected to be
required.
U.S. GOVERNMENT SECURITIES - The Portfolios may invest in U.S. Government
Securities, which include bills, notes and bonds issued by the United States
Treasury, obligations issued or guaranteed by agencies of the United States
Government including, among others, Export Import Bank of the United States,
Farmers Home Administration, Federal Farm Credit Bank, Federal Housing
Administration, Maritime Administration, Small Business Administration, and The
Tennessee Valley Authority and obligations issued or guaranteed by
instrumentalities of the United States Government including, among others,
Federal Home Loan Banks, FHLMC, Federal Intermediate Credit Banks, Federal Land
Banks, FNMA and the United States Postal Service. Some of these securities are
supported by the full faith and credit of the United States Treasury (e.g., GNMA
securities), others are supported by the right of the issuer to borrow from the
Treasury (e.g., Federal Farm Credit Bank securities) and still others are
supported only by the credit of the instrumentality (e.g., FNMA securities).
Guarantees of principal by agencies or instrumentalities of the United States
Government may be a guarantee of payment at the maturity of the obligation so
that, in the event of a default prior to maturity, there might not be a market
and thus no means of realizing on the obligation prior to maturity. Guarantees
as to the timely payment of principal and interest do not extend to the value or
yield of these securities nor to the value of the Portfolio's shares.
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<PAGE> 53
WHEN-ISSUED SECURITIES - The Bond Index Portfolio may purchase debt obligations
on a when-issued basis, in which case delivery and payment normally take place
within 45 days after the date of the commitment to purchase. The Portfolio will
only make commitments to purchase obligations on a when- issued basis with the
intention of actually acquiring the securities, but may sell them before the
settlement date if it is deemed advisable. The 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 will be received on the securities are each fixed at the time the purchaser
enters into the commitment. Purchasing obligations on a when-issued basis is a
form of leveraging, and can involve a risk that the yields available in the
market when the delivery takes place may actually be higher than those obtained
in the transaction itself, in which case there could be an unrealized loss at
the time of delivery.
The Portfolio will establish a segregated account with its Custodian and
maintain liquid, high grade, assets in an amount at least equal in value to the
Portfolio's commitments to purchase when-issued securities. If the value of
these assets declines, the Portfolio 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.
INVESTMENT LIMITATIONS
Neither Portfolio may:
1. Pledge, mortgage or hypothecate assets except to secure temporary
borrowings as described in the Prospectus in aggregate amounts not to
exceed 10% of the net assets of the Portfolio taken at current value at
the time of the incurrence of such loan and, as to the S&P 500 Index
Portfolio, in connection with stock index futures trading as provided
in the Prospectus and this Statement of Additional Information.
2. Invest in companies for the purpose of exercising control.
3. Purchase or sell real estate, real estate limited partnership
interests, physical commodities or commodities contracts. However,
subject to its permitted investments, a Portfolio may purchase (i)
obligations issued by companies which invest in real estate,
commodities or commodities contracts, and (ii) commodities contracts
related to financial instruments, such as financial futures contracts.
4. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term
credits as necessary for the clearance of security transactions.
5. Act as an underwriter of securities of other issuers except as it may
be deemed an underwriter in selling a portfolio security.
6. Purchase securities of other investment companies except as permitted
by the Investment Company Act of 1940 and the rules and regulations
thereunder and may only purchase securities of money market funds.
7. Issue senior securities (as defined in the Investment Company Act of
1940) except in connection with permitted borrowings as described in
the Prospectus and this Statement of Additional Information or as
permitted by rule, regulation or order of the Securities and Exchange
Commission ("SEC").
8. 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
<PAGE> 54
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.
9. Purchase securities of any company which has (with predecessors) a
record of less than three years continuing operations if, as a result,
more than 5% of the total assets (taken at current value) would be
invested in such securities.
10. Purchase warrants, puts, calls, straddles, spreads or combinations
thereof.
11. Invest in interests in oil, gas or other mineral exploration or
development programs.
12. 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
Prospectus and this Statement of Additional Information.
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 the Prospectus are
fundamental policies of the Trust and may not be changed without shareholder
approval.
THE MANAGER AND TRANSFER AGENT
The Management Agreement provides that the Manager, SEI Financial Management
Corporation, shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to which the
Management Agreement relates, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of the Manager in the performance of
its duties or from reckless disregard of its duties and obligations thereunder.
The continuance of the Management Agreement must be specifically approved at
least annually (i) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (ii) by the
vote of a majority of the Trustees of the Trust who are not parties to the
Management Agreement or an "interested person" (as that term is defined in the
Investment Company Act of 1940) of any party thereto, cast in person at a
meeting called for the purpose of voting on such approval. The Management
Agreement is terminable at any time without penalty by the Trustees of the
Trust, by a vote of a majority of the outstanding shares of a Portfolio or by
the Manager 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 Manager, a wholly-owned subsidiary of SEI Corporation ("SEI"), was organized
as a Delaware corporation in 1969 and has its principal business offices at 680
East Swedesford Road, Wayne, Pennsylvania 19087-1658. Alfred P. West, Jr., Henry
H. Greer and Carmen V. Romeo constitute the Board of Directors of the Manager
and Distributor. Mr. West is the Chairman of the Board and Chief Executive
Officer of the Manager, the Distributor and of SEI. Mr. Greer is the President
and Chief Operating Officer of the Manager, the Distributor and of SEI. SEI and
its subsidiaries are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. The Manager also
serves as administrator to the following other mutual funds: The Achievement
Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop
Street Funds, CoreFunds, Inc., CrestFunds, Inc., CUFUND, First American Funds,
Inc., First American Investment Funds, Inc., FMB Funds, Inc., Insurance
Investment Products Trust,
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<PAGE> 55
Inventor Funds, Inc., Marquis Funds(R), Monitor Funds, Morgan Grenfell
Investment Trust, The PBHG Funds, Inc., The Pillar Funds, Rembrandt Funds(R),
1784 Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Institutional Managed Trust, SEI International Trust, SEI Liquid Asset Trust,
SEI Tax Exempt Trust, Stepstone Funds, STI Classic Funds, STI Classic Variable
Trust and Turner Funds.
If operating expenses of either Portfolio exceed limitations established by
certain states, the Manager will pay such excess. The Manager will not be
required to bear expenses of the Portfolios to an extent which would result in
the Portfolio'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.
For the fiscal years ended March 31, 1994, 1995 and 1996 the Manager received
fees of $1,206,920, $933,762, and $657,618 respectively, from the S&P 500 Index
Portfolio, of which $436,000, $404,164 and $524,362 respectively, was waived.
For the fiscal years ended March 31, 1994, 1995 and 1996 the Manager received
fees of $216,261, $174,635 and $110,937 from the Bond Index Portfolio, of which
$55,472, $49,700 and $44,781 respectively, was waived.
THE ADVISERS
Each Investment Advisory Agreement provides 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 reckless disregard of its obligations or
duties thereunder.
The continuance of each Investment Advisory Agreement after the first two (2)
years must be specifically approved at least annually (i) by the vote of a
majority of the outstanding shares of the Portfolios or by the Trustees, and
(ii) by the vote of a majority of the Trustees who are not parties to such
Investment Advisory Agreement or "interested persons" of any party thereto, cast
in person at a meeting called for the purpose of voting on such approval. The
Investment 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 the Portfolio, by a majority of the outstanding shares
of the Portfolio, 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.
World Asset Management, the adviser to the S&P 500 Index Portfolio, is a general
partnership organized by Munder Capital Management, a general partnership formed
in December, 1994, which engages in investment management and advisory services.
World is entitled to a fee for its investment advisory services which is
calculated daily and paid monthly at an annual rate of .03% of the average daily
net assets of each Portfolio. No monthly payment to World shall exceed the
payment actually made to the Manager pursuant to the current Management
Agreement between the Manager and the Trust.
For the fiscal years ended March 31, 1994, 1995 and 1996, World received fees of
$164,581, $127,331 and, $161,179, respectively, from the S&P 500 Index
Portfolio, and for the fiscal years ended March 31, 1994 and 1995, World
received fees of $18,537 and $14,969, respectively, from the Bond Index
Portfolio. For the period from March 31, 1995 to October 2, 1995, World received
a fee of $6,597 from the Bond Index Portfolio.
Mellon Bond Associates ("MBA") serves as the investment adviser to the
Bond Index Portfolio. MBA has been serving as the adviser to the Bond Index
Portfolio since October 2, 1995. MBA is a Pennsylvania business trust. MBA's
sole beneficiary is MBC Investment Corporation, a wholly-owned subsidiary of
Mellon Bank Corporation. MBA was established in October, 1986, as a spin-off of
the Institutional Bond Management division of Mellon Bank's Trust and Investment
Department. As of March
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<PAGE> 56
31, 1996, total assets under management of MBA were $33.8 billion. The principal
business address for MBA is One Mellon Bank Center, Suite 4135, Pittsburgh,
Pennsylvania 15258.
For its services, MBA is entitled to a fee, which is calculated daily
and paid monthly, at the annual rate of .07% of the average daily net assets of
the Bond Index Portfolio. For the period from October 2, 1995 to March 31, 1996,
MBA received a fee of $12,342 from the Bond Index Portfolio.
DISTRIBUTION AND SHAREHOLDER SERVICING
The Distribution Agreement is renewable annually and may be terminated by the
Distributor, a majority vote of the Disinterested Trustees or by a majority vote
of the outstanding securities of the Trust upon not more than 60 days' written
notice by either party. No compensation is paid to the Distributor under the
Distribution Agreement. The Distributor, SEI Financial Services Company, is a
wholly-owned subsidiary of SEI.
The Portfolios have adopted shareholder servicing plans for its Class A and
Class E shares (the "Service Plans"). Under these 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 Plans, the Distributor may retain as a profit any
difference between the fee it receives and the amount it pays to third parties.
Certain institutions may also charge separate fees for related services. It is
possible that an institution may offer different classes of shares to its
customers and thus receive compensation with respect to different classes.
Certain Class A and Class E shareholders offering shares to their customers may
be required to register as dealers pursuant to state laws.
Prior to May 1, 1996, Class A shares of the Portfolio were subject to a Rule
12b-1 distribution plan. In addition, prior to _______, 1996, Class E shares
were subject to a Rule 12b-1 distribution plan. Distribution expenditures by the
Portfolios under the former plans were the lesser of the approved budget or
actual expenditures by the Distributor. For the fiscal year ended March 31,
1994, the S&P 500 Index Portfolio and the Bond Index Portfolio incurred
distribution expenses of $210,394 and $26,265 under the Plan or .05% of net
assets, respectively, during such period. These expenditures included $170,537
and $13,104, respectively, for sales expenses; and $39,857 and $13,161,
respectively, for printing and mailing costs.
For the fiscal year ended March 31, 1995, the S&P Index Portfolio and the Bond
Index Portfolio incurred distribution expenses of $201,693 and $25,212 under the
Plan or .05% of net assets, respectively, during such period. These expenditures
included $134,725 and $14,686, respectively, for sales expenses; $32,836 and
$6,763, respectively, for printing and mailing costs; and $34,132 and $3,763,
respectively, for costs associated with registration fees.
For the fiscal year ended March 31, 1996, the Class A S&P Index Portfolio, Class
E S&P Index Portfolio and the Class A Bond Index Portfolio incurred distribution
expenses of $283,605, $70 and $22,472 under the Plan or .05%, .20% and .05% of
net assets, respectively, during such period. These expenditures included
$184,195, $12 and $10,681, respectively, for sales expenses; $63,981, $6 and
$7,784, respectively, for printing and mailing costs; and $35,429, $2 and
$4,007, respectively, for costs associated with registration
8
<PAGE> 57
fees. In addition, the Class E S&P Index Portfolio paid $50 to 3rd parties by
SEI Financial Services Company for Distributor related services.
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and executive officers of the Trust and their principal occupations
for the last five years are set forth below. Each may have held other positions
with the named companies during that period. Unless otherwise noted, the
business address of each Trustee and executive officer is SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658. Certain officers of the Trust also serve as trustees and/or officers
of The Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund,
ARK Funds, Bishop Street Funds, CoreFunds, Inc., CrestFunds, Inc., CUFUND, First
American Funds, Inc., First American Investment Funds, Inc., FMB Funds, Inc.,
Insurance Investment Products Trust, Inventor Funds, Inc., Marquis Funds(R),
Monitor Funds, Morgan Grenfell Investment Trust, The PBHG Funds, Inc., The
Pillar Funds, Rembrandt Funds(R), 1784 Funds, SEI Asset Allocation Trust, SEI
Daily Income Trust, SEI Institutional Managed Trust, SEI International Trust,
SEI Liquid Asset Trust, SEI Tax Exempt Trust, Stepstone Funds, STI Classic
Funds, STI Classic Variable Trust and Turner Funds, open-end management
investment companies which are managed by SEI Financial Management Corporation
and with the exception of Rembrandt Funds, are distributed by SEI Financial
Services Company.
ROBERT A. NESHER (DOB 08/17/46) - Chairman of the Board of Trustees* - Retired
since 1994. Executive Vice President of SEI, 1986-1994. Director and Executive
Vice President of the Manager and the Distributor, 1981-1994 - Trustee of the
Arbor Fund, Marquis Funds(R), Advisors' Inner Circle Fund, and Inventor Funds,
Inc.
WILLIAM M. DORAN (DOB 05/26/40) - Trustee* - 2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Manager and Distributor, Director and Secretary of SEI and
Secretary of the Manager and Distributor.
F. WENDELL GOOCH (DOB 12/03/37) - Trustee** - P.O. Box 190, Paoli, IN 47454.
President, Orange County Publishing Co., Inc. since October 1981. Publisher of
the Paoli News and the Paoli Republican and Editor of the Paoli Republican since
January 1981. President, H & W Distribution, Inc. since July 1984. Executive
Vice President, Trust Department, Harris Trust and Savings Bank and Chairman of
the Board of Directors of The Harris Trust Company of Arizona before January
1981. Trustee of STI Classic Funds.
FRANK E. MORRIS (DOB 12/30/23) - Trustee** - 105 Walpole Street, Dover, MA
02030. Retired since 1990. Peter Drucker Professor of Management, Boston
College, 1989-1990. President, Federal Reserve Bank of Boston, 1968-1988.
Trustee of the Arbor Fund, Marquis Funds(R), Advisors' Inner Circle Fund and
Inventor Funds, Inc.
DAVID G. LEE (DOB 04/16/52) - President and Chief Executive Officer - Senior
Vice President of the Manager and Distributor since 1993. Vice President of the
Manager and Distributor, 1991-1993. President, GW Sierra Trust Funds before
1991.
SANDRA K. ORLOW (DOB 10/18/53) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of the Manager and Distributor since 1988.
KEVIN P. ROBINS (DOB 04/15/61) - Vice President and Assistant Secretary - Senior
Vice President and General Counsel of SEI, the Administrator and Distributor
since 1994. Vice President and Assistant Secretary of SEI, the Administrator and
Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP (law firm),
1988-1992.
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RICHARD W. GRANT (DOB 10/25/45) - Secretary - 2000 One Logan Square,
Philadelphia, PA 19103, Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, Manager and Distributor.
KATHRYN L. STANTON (DOB 11/19/58) - Vice President and Assistant Secretary -
Vice President, Assistant Secretary of SEI, the Administrator and Distributor
since 1994. Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
JOSEPH P. LYDON (DOB 09/27/59) - Vice President and Assistant Secretary -
Director, Business Administration of Fund Resources, April 1995. Vice President,
Fund Group, Dremen Value Management, LP, President Dremen Financial Services,
Inc. prior to 1995.
JEFFREY A. COHEN (DOB 04/22/61) - Controller and Chief Financial Officer -
Director, International and Domestic Funds Accounting, SEI Corporation, 1991 to
Present; Price Waterhouse, Audit Manager prior to 1991.
TODD CIPPERMAN (DOB 01/14/66) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and the Distributor
since 1995. Associate, Dewey Ballantine (law firm) (1994-1995). Associate,
Winston & Strawn (law firm) (1991-1994).
BARBARA A. NUGENT (DOB ) - Vice President and Assistant Secretary - Vice
President and Assistant Secretary of SEI, the Administrator and Distributor
since 1996. Associate, Drinker, Biddle & Reath (law firm). Assistant Vice
President/Administration, Delaware Service Company, Inc.
MARC H. CAHN (DOB ) - Vice President and Assistant Secretary - Vice President
and Assistant Secreatry of SEI, the Administrator and Distributor since 1996.
Associate General Counsel, Barclays Bank PLC. ERISA counsel, First Fidelity
Bancorporation.
- -------------------------
* 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 and Morris serve as members of the Audit Committee of
the Trust.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust.
As of March 31, 1996, the Trustees and officers of the Trust received
the following compensation:
<TABLE>
<CAPTION>
Pension or Total
Aggregate Retirement Estimated Compensation From
NAME OF PERSON Compensation Benefits Accrued Annual Registrant and
AND POSITION From Registrant as Part of Fund Benefits Upon Fund Complex Paid to
for FYE 96 Expenses Retirement Directors for FYE 96
<S> <C> <C> <C> <C>
Robert A. Nesher, -- -- -- $------- for services on 6
Chairman of the Board board(s)
F. Wendell Gooch, -- -- $------- for services on 6
Trustee board(s)
Frank E. Morris, Trustee -- -- $------- for services on 6
board(s)
Richard F. Blanchard -- -- $------- for services on 6
Trustee board(s)
</TABLE>
PERFORMANCE
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<PAGE> 59
From time to time, a Portfolio may advertise yield. These figures will be based
on historical earnings and are not intended to indicate future performance. The
yield of a Portfolio refers to the annualized income generated by an investment
in such Portfolio over a specified 30-day period. The yield is calculated by
assuming that the income generated by the investment during that period is
generated over a one year and is shown as a percentage of the investment. In
particular, yield will be calculated according to the following formula:
Yield = 2[(a-b/cd + 1)6 - 1], where a = dividends and interest earned
during the period; b = expenses accrued for the period (net of
reimbursement); c = the current daily number of shares outstanding
during the period that were entitled to receive dividends; and d = the
maximum offering price per share on the last day of the period.
Actual yield will depend on such variables as asset quality, average asset
maturity, the type of instruments a Portfolio invests in, changes in interest
rates on money market instruments, changes in the expenses of the Portfolio and
other factors. For the 30-day period ending March 31, 1996, the yield for the
Class A S&P 500 Index Portfolio was 2.16% and the yield for the Class A Bond
Index Portfolio was 6.16%.
From time to time, each Portfolio may advertise total return. The total return
of a Portfolio refers to the average compounded rate of return to a hypothetical
investment for designated time periods (including, but not limited to, the
period from which the Portfolio commenced operations through the specified
date), assuming that the entire investment is redeemed at the end of each
period. In particular, total return will be calculated according to the
following formula:
P(1 + T)n = ERV, where P = a hypothetical initial payment of $1,000;
T = average annual total return; n = number of years; and ERV = ending
redeemable value of a hypothetical $1,000 payment made at the beginning
of the designated time period as of the end of such period.
For the fiscal year ended March 31, 1996, the one year total return of the Class
A S&P 500 Index Portfolio was 31.88% and the average annual total return for the
past five years and since the inception of the Portfolio was 14.38% and 15.19%,
respectively. The total annualized return of the Class E S&P Portfolio since its
inception was 2.77%. For the fiscal year ended March 31, 1996, the one year
total return of the Class A Bond Index Portfolio was 10.31% and the average
annual total return for the past five years and since the inception of the
Portfolio was 7.76% and 7.96%, respectively.
PURCHASE AND REDEMPTION OF SHARES
The market value of portfolio securities is obtained by the Manager from
independent pricing services and from brokers. Portfolio securities listed on a
securities exchange for which market quotations are available are valued at the
last quoted sale price on each Business Day or, if there is no such reported
sale, at the most recently quoted bid price. Unlisted securities for which
market quotations are readily available are valued at the most recently quoted
bid price. The pricing 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.
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 Portfolio
11
<PAGE> 60
for any period during which the New York Stock Exchange, the Manager, the
Administrator, the Distributor and/or the Custodians are not open for business.
The New York Stock Exchange will not open in observance of the following
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
It is currently the Trust's policy to pay for 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 securities held by a Portfolio 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 entitled to aggregate cash redemptions from the Portfolio of the
Trust during any 90-day period of up to the lesser of $250,000 or 1% of the
Trust's net assets in cash. A gain or loss for federal income tax purposes would
be realized by a shareholder subject to taxation upon an in-kind redemption
depending upon the shareholder's basis in the shares of the Portfolio redeemed.
TAXES
QUALIFICATION AS A RIC
The following discussion of federal income tax consequences is based on the
Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder as in effect on the date of this Statement of Additional
Information. Certain legislation proposed at the time of writing, as well as
administrative changes or court decisions, may significantly change the
conclusions expressed herein and may have a retroactive effect with respect to
the transactions contemplated herein.
Each Portfolio intends to qualify as a "regulated investment company" ("RIC") as
defined under Subchapter M of the Code. By following such a policy, each
Portfolio expects to eliminate or reduce to a nominal amount the federal taxes
to which such Portfolio may be subject. In order to qualify for treatment as a
RIC under the Code, each Portfolio must distribute annually to its shareholders
at least 90% of its investment company taxable income (generally, net investment
income, including net short-term capital gain) and 90% of its net interest
exempt income, if any (the excess of its tax-exempt interest income over certain
deductions attributable to that income), ("Distribution Requirement") and must
meet several additional requirements. Among these requirements are the
following: (i) at least 90% of the Portfolio's gross income each taxable year
must be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stocks or securities or
certain other income (including gains from options, futures or forward
contracts) derived with respect to its business of investing in stocks or
securities; (ii) less than 30% of a Portfolio's gross income each taxable year
may be derived from the sale or other disposition of any of the following
investments that were held for less than three months: (a) stock or securities
(as defined in Section 2(a)(30) of the Investment Company Act); (b) options,
futures, or forward contracts (other than options, futures, or forward contracts
on foreign currencies); and (c) foreign currencies (or options, futures, or
forward contracts on foreign currencies) but only if such currencies (or
options, futures, or forward contracts) are not directly related to the
Portfolio's principal business of investing in stock or securities; (iii) at the
close of each quarter of a Portfolio'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 the Portfolio's total assets and that does not
represent more than 10% of the outstanding voting securities of the issuer; and
(iv) at the close of each quarter of the Portfolio's taxable year, not more than
25% of the value of its total 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 that are engaged in the same, similar or related
trades or businesses, if the Portfolio owns at least 20% of the voting power of
such issuers.
12
<PAGE> 61
Notwithstanding the Distribution Requirement described above, a Portfolio will
be subject to a nondeductible 4% federal excise tax to the extent it fails to
distribute by the end of any calendar year 98% of its ordinary income for that
year and 98% of its capital gain net income (the excess of short and long-term
capital gains over short and long-term capital losses) for the one-year period
ending on October 31 of that year (and any retained amount from the prior
calendar year).
Although each Portfolio intends to distribute substantially all of its net
investment income and capital gains for any taxable (i.e., fiscal) year, a
Portfolio will be subject to Federal income taxation to the extent any such
income or gains are not distributed. If for any taxable year a Portfolio does
not qualify as a RIC, all of its taxable income will be subject to tax at
regular corporate rates without any deduction for distributions to shareholders.
In such case, distributions (including capital gains distributions) will be
taxable as ordinary dividends to the extent of the Portfolio's current and
accumulated earnings and profits.
Tax Status of Distributions: Dividends from a Portfolio's net investment income
will be taxable to shareholders as ordinary income (whether received in cash or
in additional shares) to the extent of the Portfolio's earnings and profits.
Dividends paid by the S&P 500 Index Portfolio will be eligible for the
dividends-received deduction allowed to corporate shareholders to the extent
they are derived from dividends from domestic corporations, subject to certain
limitations; however, dividends received by a corporate shareholder which
qualify for the dividends-received deduction may be subject to the alternative
minimum tax.
Each Portfolio may either retain or distribute to shareholders its excess of net
long-term capital gains over net short-term capital losses ("net capital
gains"). If such gains are distributed as capital gains, they will not qualify
for the dividends received deduction, and they are taxable to shareholders as
long-term capital gains, regardless of the length of time the shareholder has
held shares. Conversely, if a Portfolio elects to retain its net capital gains,
it will be taxed thereon (except to the extent of any available capital loss
carryovers) at the applicable corporate capital gains tax rate. In this event,
it is expected that a Portfolio also will elect to have shareholders treated as
having received a distribution of such gains, with the result that they will be
required to report such gains on their returns as long-term capital gains, will
receive a tax credit for their allocable share of capital gains tax paid by the
Portfolio on the gains, and will increase the tax basis for their shares by an
amount equal to the deemed distribution less the tax credit.
Generally, gains or losses on the sale or exchange of a share will be capital
gains or losses which will be long-term if the share is held for more than one
year. However, if a shareholder realizes a loss on the sale, exchange or
redemption of a share held for six months or less and has previously received a
capital gains distribution with respect to the share (or there are undistributed
net capital gains of a Portfolio with respect to such share which have been
included in determining the shareholder's long-term capital gains), the
shareholder must treat the loss as a long-term capital loss to the extent of the
amount of the prior capital gains distribution (or any undistributed net capital
gains of the Portfolio which have been included in determining such investor's
long-term capital gains). In addition, any loss realized on a sale or other
disposition of shares will be disallowed to the extent an investor repurchases
(or enters into a contract or option to repurchase) shares within a period of 61
days (beginning 30 days before and ending 30 days after the disposition of the
shares). Investors should particularly note that this loss disallowance rule
will apply to shares received through the reinvestment of dividends during the
61-day period.
Each Portfolio will be required in certain cases to withhold and remit to the
United States Treasury 31% of distributions payable to any individual or
non-corporate shareholder who (1) has provided either an incorrect tax
identification number or no number at all, (2) who is subject to backup
withholding by the Internal Revenue Service for failure to properly report
payments of interest or dividends, or (3) who has failed to certify to the
Portfolio that such shareholder is not subject to backup withholding.
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<PAGE> 62
The S&P 500 Index Portfolio may invest in stock index futures. The use of stock
index futures contracts involves specialized and complex income tax rules that
will determine the character and timing of recognition of the income received in
connection therewith by the Portfolio and thereby affect the amount and
proportion of income that will be available for distribution as dividends or
capital gain distributions.
Stock index futures contracts held by the Portfolio at the end of each taxable
year will be required to be "marked to market" for Federal income tax purposes
(that is, treated as having been sold at that time at market value). Any
unrealized gain or loss taxed pursuant to this rule will be added to realized
gains and losses recognized on other futures contracts sold by the Portfolio
during the year, and the resulting gain or loss will be deemed to consist of 60%
long-term capital gain or loss and 40% short-term capital gain or loss. The
Portfolio may elect to exclude certain hedging transactions from the
mark-to-market rule. Gain from hedging transactions is treated as ordinary
income.
The Trust has obtained a private letter ruling from the Internal Revenue Service
confirming that the income and assets attributable to transactions in stock
index futures contracts qualify under the above-described income and asset tests
applicable to RICs.
For purposes of the Distribution Requirement (as well as for other purposes) the
Bond Index Portfolio will be required to treat any recognized market discount on
debt obligations which it holds as interest income. Generally, market discount
is the amount by which the stated redemption price of a bond exceeds the amount
paid by a purchaser of the bond (most common where the value of a bond decreases
after original issue as a result of a decline in the creditworthiness of the
issuer or an increase in prevailing interest rates). Generally, market discount
is recognized on the disposition, or receipt of any principal payment, with
respect to a bond bearing market discount, by treating a portion of the proceeds
as interest income. The application of these rules (and the rules regarding
original issue discount) to debt obligations held by the Bond Index Portfolio
could affect (i) the amount and timing of distributions to shareholders and (ii)
the ability of the Portfolio to satisfy the Distribution Requirement.
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<PAGE> 63
STATE TAXES
Neither Portfolio is liable for any income or franchise tax in Massachusetts if
it qualifies as a RIC for Federal income tax purposes. Distributions by the
Portfolios 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 dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, each Administrator is responsible for placing
orders to execute portfolio transactions. In placing orders, it is the Trust's
policy to seek to obtain the best net results taking into account such factors
as price (including the applicable dealer spread), size, type and difficulty of
the transaction involved, the firm's general execution and operational
facilities, and the firm's risk in positioning the securities involved. While
each Administrator generally seeks reasonably competitive spreads or
commissions, the Trust will not necessarily be paying the lowest spread or
commission available. The Trust's policy of investing in securities with short
maturities will result in high portfolio turnover. The Trust will not purchase
portfolio securities from any affiliated person acting as principal except in
conformity with the regulations of the SEC.
The Trust does not expect to use one particular dealer, but, subject to the
Trust's policy of seeking the best net results, dealers who provide supplemental
investment research to an Administrator 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 Administrator under the Administration
Agreement, and the expenses of the Administrator will not necessarily be reduced
as a result of the receipt of such supplemental information.
The money market securities in which the Portfolios invest are traded primarily
in the over-the-counter market generally do not involve either brokerage
commissions or transfer taxes. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, each
Administrator will deal directly with the dealers who make a market in the
securities involved except in those circumstances where better prices and
execution are available elsewhere. Such dealers usually are acting as principal
for their own account. On occasion, securities may be purchased directly from
the issuer. The cost of executing portfolio securities transactions of the
Portfolio will primarily consist of dealer spreads and underwriting commissions.
Each Portfolio may execute brokerage or other agency transactions through the
Distributor, a registered broker-dealer, for a commission, in conformity with
the Investment Company Act of 1940, the Securities Exchange Act of 1934 and the
rules and regulations thereunder. Under these provisions, the Distributor is
permitted to receive and retain compensation for effecting portfolio
transactions for a Portfolio on an exchange if a written contract is in effect
between the Distributor and the Trust expressly permitting the Distributor to
receive and retain such compensation. These provisions further require that
commissions paid to the Distributor by the Trust for exchange transactions not
exceed "usual and customary" brokerage commissions. The rules define "usual and
customary" commissions to include amounts which are "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities being purchased or sold on a securities exchange during a comparable
period of time." The Trustees, including those who are not "interested persons"
of the Trust, have adopted procedures for evaluating the reasonableness of
commissions paid to the Distributor and will review these procedures
periodically.
Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Administrator may place portfolio orders with qualified
broker-dealers who recommend the Trust to clients, and may, when a number of
brokers and dealers can provide best price
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<PAGE> 64
and execution on a particular transaction, consider such recommendations by a
broker or dealer in selecting among broker-dealers.
It is expected that the Portfolio turnover rate will normally not exceed 100%
for any Portfolio. A Portfolio turnover rate would exceed 100% if all of its
securities, exclusive of U.S. Government securities and other securities whose
maturities at the time of acquisition are one year or less, are replaced in the
period of one year. Turnover rates may vary from year to year and may be
affected by cash requirements for redemptions and by requirements which enable a
Portfolio to receive favorable tax treatment.
The portfolio turnover rate for the S&P 500 Index Portfolio for the fiscal years
ending March 31, 1994, 1995 and 1996 were 23%, 4% and 3%, respectively. The
portfolio turnover rate for the Bond Index Portfolio for the fiscal years ending
March 31, 1994, 1995 and 1996 were 55%, 21% and 59%, respectively.
For the fiscal years ended March 31, 1994, 1995 and 1996, the S&P 500 Index
Portfolio paid $27,000, $33,285 and $36,384 for brokerage commissions. For the
fiscal years ended March 31, 1994, 1995 and 1996 the Bond Index Portfolio paid
no brokerage commissions.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Portfolio, each of which represents an equal proportionate
interest in such Portfolio. Each share upon liquidation entitles a shareholder
to a pro rata share in the net assets of the Portfolio. Shareholders have no
preemptive rights. The Declaration of Trust provides that the Trustees of the
Trust may create additional portfolios of shares or classes of portfolios. Share
certificates representing the shares will not be issued.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the selection
of officers, agents, employees or administrators, shall not be liable for any
neglect or wrongdoing of any such person. The Declaration of Trust also provides
that the Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with actual or threatened litigation in which
they may be involved because of their offices with the Trust unless it is
determined in the manner provided in the Declaration of Trust that they have not
acted in good faith in the reasonable belief that their actions were in the best
interests of the Trust. However, nothing in the Declaration of Trust shall
protect or indemnify a Trustee against any liability for his wilful misfeasance,
bad faith, gross negligence or reckless disregard of his duties.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a Trust could, under
certain circumstances, be held personally liable as partners for the obligations
of the Trust. Even if, however, the Trust were held to be a partnership, the
possibility of the shareholders' incurring financial loss for that reason
appears remote because the Trust's Declaration of Trust contains an express
disclaimer of shareholder liability for obligations of the Trust and requires
that notice of such disclaimer be given in each agreement, obligation or
instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because, the Declaration of Trust provides for indemnification out
of the Trust property for any shareholders held personally liable for the
obligations of the Trust.
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<PAGE> 65
5% SHAREHOLDERS
As of May 15, 1996, 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 Portfolios. The Trust believes that most of the shares
referred to above were held by the above persons in accounts for their
fiduciary, agency, or custodial customers.
<TABLE>
<CAPTION>
Address Number of Shares Percentage
------- ---------------- ----------
<S> <C> <C>
S&P 500 Index Portfolio:
Nabank & Co. 3,875,674.966 12.578%
c/o Bank of Oklahoma, N.A.
Attn: Lisa Marrs
P.O. Box 2300
Tulsa, OK 74192
West One Bank, Idaho N.A. 2,059,489.8600 6.684%
Attn: Tom Coleman
Trust Department Securities
Clearance
P.O. Box 7928
Boise, ID 83707
Lane & Company 1,653,687.9460 5.367%
c/o Union Bank
Attn: Linda Brown
P.O. Box 109
San Diego, CA 92112
Transco & Company 1,805,127.9230 5.858%
c/o Intrust Bank, N.A.
Attn: Pat Wills
P..O. Box 48698
Wichita, KS 67201
S&P 500 Index Class E Portfolio:
SEI Trust Company 847,239.330 97.818%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087
Bond Index Portfolio:
Transco & Company 1,328,869.5940 25.814%
c/o Intrust Bank, N.A.
Attn: Pat Wills
P..O. Box 48698
Wichita, KS 67201
</TABLE>
17
<PAGE> 66
<TABLE>
<S> <C> <C>
Smith & Co. 280,139.7400 5.442%
c/o First Security Bank of
Utah, N.A.
Attn: Rick Parr
P.O. Box 30007
Salt Lake City, UT 84130
SEI Trust Company 1,266,444.0560 24.601%
Attn: Jacqueline Esposito
680 E. Swedesford Road
Wayne, PA 19087
</TABLE>
CUSTODIAN AND INDEPENDENT PUBLIC ACCOUNTANTS
Comerica Bank, the custodian for the Portfolios, holds cash, securities and
other assets of the Trust as required by the Investment Company Act of 1940. The
principal business address of Comerica Bank is 411 W. Lafayette, Detroit,
Michigan 48226.
Arthur Andersen LLP, the independent public accountants for the Portfolios,
provides audit services and assistance and consultation with respect to taxes
and the preparation of filings with the Securities and Exchange Commission. The
principal business address of Arthur Andersen LLP is 1601 Market Street,
Philadelphia, Pennsylvania 19103.
EXPERTS
The financial statements in this Statement of Additional Information and the
Financial Highlights included in the Prospectus 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.
FINANCIAL INFORMATION
The Trust's financial statements for the fiscal year ended March 31, 1996 are
herein incorporated by reference to Exhibit 12 of this Post Effective Amendment
No. 19.
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<PAGE> 67
SEI INDEX FUNDS
Post-Effective Amendment No. 19
PART C: OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements
Part A:
Financial Highlights
(b) Additional Exhibits
<TABLE>
<S> <C>
(1) Declaration of Trust is incorporated by reference to
Registrant's Registration Statement on Form N-1A (File No.
2-97111) filed with the Securities and Exchange Commission on
April 17, 1985.
(2) By-Laws are incorporated by reference to Registrant's
Registration Statement on Form N- 1A (File No. 2-97111) filed
with the Securities and Exchange Commission on April 17, 1985.
(3) Not Applicable
(4) Not Applicable
(5)(a) Investment Administrator Agreement with Manufacturers National
Bank of Detroit is incorporated by reference to Post Effective
Amendment No. 12 to Registrant's Registration Statement on Form
N-1A (File No. 2-97111) filed with the Securities and
Exchange Commission on July 11, 1990.
(5)(b) Investment Administration Agreement with Woodbridge Capital
Management, Inc. as originally filed with Post-Effective
Amendment No. 15 to Registrant's Registration Statement on Form
N-1A (File No. 2-97111) filed with the Securities and Exchange
Commission on July 29, 1993 is filed herewith.
(5)(c) Investment Advisory Agreement with World Asset Management is
incorporated by refernce to Post- Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A (File No. 2-
97111) filed with the Securities and Exchange Commission on May
31, 1995.
(5)(d) Investment Advisory Agreement with Mellon Bond Associates is
filed herewith.
(6)(a) Distribution Agreement with SEI Financial Services Company as
originally filed with Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N- 1A (File No.
2-97111) filed with the Securities and Exchange Commission on
July 12, 1985 is filed herewith.
(6)(b) Form of Amended and Restated Distribution Agreement with SEI
Financial Services Company is incorporated by reference to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A (File No. 2-97111) filed with the
Securities and Exchange Commission on December 28, 1995.
(7) Not Applicable
(8) Custodian Agreement with Manufacturers National Bank of Detroit
is incorporated by reference to Pre-Effective Amendment No. 2
to Registrant's Registration Statement on Form N-1A (File No.
2-97111) filed with the Securities and Exchange Commission on
July 12, 1985.
(9)(a) Management Agreement by and between TrustFunds Equity Index
Funds and SEI Financial Management Corporation is filed
herewith.
(9)(b) Management Agreement by and between TrustFunds Equity Index
Funds and SEI Financial
</TABLE>
C -1
<PAGE> 68
<TABLE>
<S> <C>
Management Corporation is filed herewith.
(9)(c) Form of Class A Shareholder Service Plan and Agreement is filed
herewith.
(9)(d) Form of Class E Shareholder Service Plan and Agreement is filed
herewith.
(10) Opinion and Consent of Counsel is incorporated by reference to
Pre-Effective Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 2-97111) filed with the
Securities and Exchange Commission on June 14, 1985.
(11) Consent of Independent Public Accountants is filed herewith.
(12) Financial Statements for the fiscal year ended March 31, 1996
are filed herewith.
(13) Not Applicable
(14) Not Applicable
(15)(a) Distribution Plan with SEI Financial Services Company as
originally filed with Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No.
2-97111) filed with the Securities and Exchange Commission on
June 14, 1985 is filed herewith.
(15)(b) Form of Distribution Plan is incorporated by reference to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A (File No. 2-97111) filed with the
Securities and Exchange Commission on December 28, 1995.
(15)(c) Amended and Restated Class E Distribution Plan is filed
herewith.
(16) Performance Quotation Computation is incorporated by reference
to Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A (File No. 2-97111) filed with the
Securities and Exchange Commission on July 29, 1993.
(17) Powers of Attorney are incorporated by reference to
Post-Effective Amendment No. 17 to Registrant's Registration
Statement on Form N-1A (File No. 2-97111) filed with the
Securities and Exchange Commission on May 31, 1995.
(18)(a) Rule 18f-3 Plan is incorporated by reference to Post-Effective
Amendment No. 18 to Registrant's Registration Statement on Form
N-1A (File No. 2-97111) filed with the Securities and Exchange
Commission on December 28, 1995.
(18)(b) Amendment No. 1 to Rule 18f-3 Plan relating to Class A and E
shares is filed herewith.
(27)(1) Financial Data Schedules for the Bond Index Portfolio
(27)(2) Financial Data Schedules for the S&P 500 Index Portfolio
Class A
(27)(1) Financial Data Schedules for the S&P 500 Index Portfolio
Class E
</TABLE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT:
See the Prospectuses and Statement of Additional Information filed
herewith regarding the Trust's control relationships. The Manager is a
subsidiary of SEI Corporation which also controls the distributor of the
Registrant, SEI Financial Services Company, and other corporations engaged in
providing various financial and record keeping services, primarily to bank trust
departments, pension plan sponsors, and investment managers.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES:
As of May 15, 1996:
Number of
Title of Class Record Holders
Units of beneficial interest, without par value-
<PAGE> 69
<TABLE>
<S> <C>
S&P 500 Index Portfolio Class A 402
S&P 500 Index Portfolio Class E 9
Bond Index Portfolio 148
</TABLE>
ITEM 27. INDEMNIFICATION:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1
to the Registration Statement dated April 17, 1985 is incorporated by reference.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to trustees, directors, officers and controlling persons
of the Registrant by the Registrant pursuant to the Declaration of Trust or
otherwise, the Registrant is aware that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and, therefore, is unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by trustees, directors, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, directors,
officers or controlling persons in connection with the shares being registered,
the Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER:
The list required by this Item 28 of officers and directors of World Asset
Management, together with information as to any other business, profession,
vocation or employment of a substantital nature engaged in by such officers and
directors during the past two years, is incorporated by reference to Schedules A
and D of Form ADV, filed by World Asset Management pursuant to the Investment
Advisers Act of 1940 (SEC File No. 801-48470).
The list required by this Item 28 of officers and directors of Mellon Bond
Associates, together with information as to any other business, profession,
vocation or employment of a substantital nature engaged in by such officers and
directors during the past two years, is incorporated by reference to Schedules A
and D of Form ADV, filed by Mellon Bond Associates pursuant to the Investment
Advisers Act of 1940 (SEC File No. 801-28576).
C -3
<PAGE> 70
ITEM 29. PRINCIPAL UNDERWRITERS:
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds(R) August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
Inventor Funds, Inc. August 1, 1994
The Achievement Funds Trust December 27, 1994
Insurance Investment Products Trust December 30, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
Conestoga Family of Funds May 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB, Inc. Funds March 1, 1996
SEI Asset Allocation Trust April 1, 1996
Turner Funds May 1, 1996
SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include portfolio
evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in
the answer to Item 21 of Part B. Unless otherwise noted, the business
address of each director or officer is 680 East Swedesford Road, Wayne,
Pennsylvania 19087-1658.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
</TABLE>
C -4
<PAGE> 71
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Charles A. Marsh Executive Vice President-Capital Resources Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President
Jerome Hickey Senior Vice President --
David G. Lee Senior Vice President President and Chief
Executive Officer
William Madden Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
James V. Morris Senior Vice President
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Vice President and
Secretary Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Crudup Managing Director --
Vic Galef Managing Director --
Kim Kirk Managing Director --
John Krzeminski Managing Director
Carolyn McLaurin Managing Director & Vice President --
Barbara Moore Managing Director --
Donald Pepin Managing Director --
Mark Samuels Managing Director --
Wayne M. Withrow Managing Director --
Mick Duncan Assistant Secretary --
Robert S. Ludwig Assistant Secretary --
Vicki Malloy Assistant Secretary --
Robert Aller Vice President --
Steve Bendinelli Vice President --
W. Kelso Morrill Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President and
Assistant Secretary
Ed Daly Vice President --
Jeff Drennen Vice President --
Lucinda Duncalfe Vice President --
Kathy Heilig Vice President --
Larry Hutchison Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary Vice President and
</TABLE>
C -5
<PAGE> 72
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ---------------- ---------------
<S> <C> <C>
Assistant Secretary
Larry Pokora Vice President --
Kim Rainey Vice President --
Paul Sachs Vice President --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President and
Assistant Secretary
William Zawaski Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records are maintained
at the offices of Registrant's Custodian for those portfolios:
Comerica Bank
411 W. Lafayette
Detroit, MI 48226
(b) With respect to Rules 31a-1(a); 31a-1(b)(1), (2)(C) and (D); (4); (5);
(6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Manager:
SEI Financial Management Corporation
680 E. Swedesford Road
Wayne, PA 19087
(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of
the Registrant's Adviser for those portfolios:
S&P 500 Index Portfolio Bond Index Portfolio
World Asset Management Mellon Bond Associates
255 Brown Street Centre, 2nd Floor One Mellon Bank, Suite 4135
Birmingham, MI 48009 Pittsburgh, PA 15258
ITEM 31. MANAGEMENT SERVICES:
None.
ITEM 32. UNDERTAKINGS:
Registrant undertakes to call a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to Shareholder communications.
C -6
<PAGE> 73
Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
Registrant hereby undertakes that whenever shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Directors of their desire to communicate with Shareholders of the Fund,
the Directors will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate costs of mailing or afford said
Shareholders access to a list of Shareholders.
C -7
<PAGE> 74
NOTICE
A copy of the Agreement and Declaration of Trust of SEI Index Funds is on
file with the Secretary of State of the Commonwealth of Massachusetts and notice
is hereby given that this Registration Statement has been executed on behalf of
the Trust by an officer of the Trust as an officer and by its Trustees as
trustees and not individually and the obligations of or arising out of this
Registration Statement are not binding upon any of the Trustees, officers, or
Shareholders individually but are binding only upon the assets and property of
the Trust.
C -8
<PAGE> 75
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant has duly caused this Post-Effective
Amendment to Registration Statement No. 2-97111 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Wayne, Commonwealth
of Pennsylvania, on the 31st day of May, 1996.
SEI INDEX FUNDS
By: /s/ David G. Lee
-----------------------------------
David G. Lee
President, Chief Executive Officer
Attest:
/s/ Jeffrey A. Cohen
- -----------------------------------
Jeffrey A. Cohen
Controller, Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity and on the dates indicated.
<TABLE>
<S> <C> <C>
* Trustee May 31, 1996
- --------------------------------
William M. Doran
* Trustee May 31, 1996
- --------------------------------
F. Wendell Gooch
* Trustee May 31, 1996
- --------------------------------
Frank E. Morris
* Trustee May 31, 1996
- --------------------------------
Robert A. Nesher
/s/ David G. Lee President, Chief Executive Officer May 31, 1996
- --------------------------------
David G. Lee
/s/ Jeffrey A. Cohen Controller, Chief Financial Officer May 31, 1996
- --------------------------------
Jeffrey A. Cohen
</TABLE>
* By: /s/ David G. Lee
-------------------------
David G. Lee
Attorney-in-Fact
<PAGE> 76
EXHIBIT INDEX
<TABLE>
<S> <C>
EX-99.B1 Declaration of Trust is incorporated by reference to Registrant's
Registration Statement on Form N-1A (File No. 2-97111) filed with
the Securities and Exchange Commission on April 17, 1985.
EX-99.B2 By-Laws are incorporated by reference to Registrant's
Registration Statement on Form N-1A (File No. 2-97111) filed with
the Securities and Exchange Commission on April 17, 1985.
EX-99.B3 Not Applicable
EX-99.B4 Not Applicable
EX-99.B5(a) Investment Administrator Agreement with Manufacturers National
Bank of Detroit is incorporated by reference to Post Effective
Amendment No. 12 to Registrant's Registration Statement on Form
N-1A (File No. 2-97111) filed with the Securities and Exchange
Commission on July 11, 1990.
EX-99.B5(b) Investment Administration Agreement with Woodbridge Capital
Management, Inc. as originally filed with Post-Effective Amendment
No. 15 to Registrant's Registration Statement on Form N-1A (File
No. 2-97111) filed with the Securities and Exchange Commission on
July 29, 1993 is filed herewith.
EX-99.B5(c) Investment Advisory Agreement with World Asset Management is
incorporated by refernce to Post- Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A (File No. 2-
97111) filed with the Securities and Exchange Commission on May
31, 1995.
EX-99.B5(d) Investment Advisory Agreement with Mellon Bond Associates is filed
herewith.
EX-99.B6(a) Distribution Agreement with SEI Financial Services Company as
originally filed with Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A (File No.
2-97111) filed with the Securities and Exchange Commission
on July 12, 1985 is filed herewith.
EX-99.B6(b) Form of Amended and Restated Distribution Agreement with SEI
Financial Services Company is incorporated by reference to
Post-Effective Amendment No. 18 to Registrant's Registration
Statement on Form N-1A (File No. 2-97111) filed with the
Securities and Exchange Commission on December 28, 1995.
EX-99.B7 Not Applicable
EX-99.B8 Custodian Agreement with Manufacturers National Bank of Detroit is
incorporated by reference to Pre-Effective Amendment No. 2 to
Registrant's Registration Statement on Form N-1A (File No.
2-97111) filed with the Securities and Exchange Commission on July
12, 1985.
EX-99.B9(a) Management Agreement by and between TrustFunds Equity Index
Funds and SEI Financial Management Corporation is filed herewith.
EX-99.B9(b) Management Agreement by and between TrustFunds Equity Index
Funds and SEI Financial Management Corporation is filed herewith.
EX-99.B9(c) Form of Class A Shareholder Service Plan and Agreement is filed
herewith.
EX-99.B9(d) Form of Class E Shareholder Service Plan and
Agreement is filed herewith.
EX-99.B10 Opinion and Consent of Counsel is incorporated by reference to
Pre-Effective
Amendment No. 1 to Registrant's Registration
Statement on Form N-1A (File No. 2- 97111) filed with the
Securities and Exchange Commission on June 14, 1985.
EX-99.B11 Consent of Independent Public Accountants is filed herewith.
EX-99.B12 Financial Statements for the fiscal year ended March 31, 1996 are
filed herewith.
EX-99.B13 Not Applicable
EX-99.B14 Not Applicable
EX-99.B15(a) Distribution Plan with SEI Financial Services Company as
originally filed with Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No.
2-97111) filed with the Securities and Exchange Commission on June
14, 1985 is filed herewith.
EX-99.B15(b) Form of Distribution Plan is incorporated by reference to
Post-Effective Amendment No. 18 to
</TABLE>
<PAGE> 77
<TABLE>
<S> <C>
Registrant's Registration Statement on Form N-1A (File No.
2-97111) filed with the Securities and Exchange Commission on
December 28, 1995.
EX-99.B15(c) Amended and Restated Class E Distribution Plan is filed herewith.
EX-99.B16 Performance Quotation Computation is incorporated by reference to
Post-Effective Amendment No. 15 to Registrant's Registration
Statement on Form N-1A (File No. 2-97111) filed with the
Securities and Exchange Commission on July 29, 1993.
EX-99.B17 Powers of Attorney are incorporated by reference to Post-Effective
Amendment No. 17 to Registrant's Registration Statement on Form
N-1A (File No. 2-97111) filed with the Securities and Exchange
Commission on May 31, 1995.
EX-99.B18(a) Rule 18f-3 Plan is incorporated by reference to Post-Effective
Amendment No. 18 to Registrant's Registration Statement on Form
N-1A (File No. 2-97111) filed with the Securities and Exchange
Commission on December 28, 1995.
EX-99.B18(b) Amendment No. 1 to Rule 18f-3 Plan relating to Class A and E
shares is filed herewith.
EX-17.1 Financial Data Schedules for the Bond Index Portfolio
EX-27.2 Financial Data Schedules for the S&P 500 Index Portfolio Class A
EX-27.1 Financial Data Schedules for the S&P 500 Index Portfolio Class E
</TABLE>
C -11
<PAGE> 1
EXHIBIT-99.B5(b)
INVESTMENT ADMINISTRATION AGREEMENT
Agreement made as of this 22nd day of June, 1992, by and between SEI Index
Funds, a Massachusetts business trust (the "Trust"), and Woodbridge Capital
Management, Inc., a Michigan corporation (the "Administrator").
WHEREAS, the Trust is an open-end, diversified investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several separate portfolios of securities, each of which has the
investment objective of providing investment results that correspond to the
price and yield performance of a designated index or securities group;
WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Manager") to provide certain management services for the Trust subject to the
control of the Board of Trustees; and
WHEREAS, the Trust desires to retain the Administrator to render monitoring,
administrative adjustment and related services to the Trust with respect to its
S&P 500 Index Portfolio, its Bond Index Portfolio and such other portfolios as
the parties hereafter may agree on (collectively, the "Portfolios") and the
Administrator is willing to render such services;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
ARTICLE 1. Duties of Administrator. The Trust employs the Administrator (i) to
------------------------
continuously review, supervise, and administer the investment program of the
Portfolios; (ii) to monitor regularly the S&P 500 Index and the Bond Index and
the relevant index or other designated securities for any other portfolios as
the parties hereto may hereafter agree upon (all such indexes or other
designated securities to be as defined from time to time in the Trust's current
Prospectus) to determine if portfolio adjustments are warranted due to changes
in index composition, mergers or other similar reasons and, if so, to make such
adjustments on a periodic basis; (iii) to determine, in the Administrator's
discretion, the securities to be purchased or sold or exchanged in order to
keep each Portfolio in approximate balance with its designated index or
designated securities group; (iv) to determine, in the Administrator's
discretion, whether to exercise warrants or other rights with respect
<PAGE> 2
to Portfolio securities, and whether to accept tender offers with respect to
such securities (with any finders fees realized in connection with tender
offers or other rights with respect to Portfolio securities being rebated to
the Portfolios); (v) to determine, in the Administrator's discretion, whether
the merit of a Portfolio investment has been substantially impaired by
extraordinary events or financial conditions, thereby warranting the removal of
such securities from a Portfolio, notwithstanding its inclusion in the
designated index or securities group; (vi) to calculate and provide to the
Manager the net asset value of each Portfolio on each day that the Trust's
custodian banks and the New York Stock Exchange are open for business; (vii)
to provide the Manager and the Trust on behalf of the Portfolios with records
concerning the Administrator's activities which the Trust is required to by law
maintain; and (viii) to render regular reports to the Manager and to the
Trust's officers and Trustees concerning the Administrator's discharge of the
foregoing responsibilities. The Administrator shall discharge the foregoing
responsibilities subject to the oversight of the Manager and in compliance with
such policies as the Trustees of the Trust may from time to time establish, and
in compliance with the objectives, policies, and limitations for each
Portfolio as set forth in the Trust's then current registration statement under
the Act and applicable laws and regulations. The Administrator accepts such
employment and agrees, at its own expense, to render the services and to provide
the office space, furnishings and equipment and the personnel required by it to
perform the services on the terms and for the compensation provided herein.
ARTICLE 2. Portfolio Transactions. The Administrator is authorized to select
-----------------------
the brokers or dealers, including SEI Financial Services Company, that will
execute the purchases and sales of portfolio securities for each Portfolio and
is directed to use its best efforts to obtain the best net results, as
described in the Trust's then current registration statement and, as
appropriate, to place such purchase and sale orders. The Administrator will
promptly communicate to the Manager and to the officers and the Trustees of the
Trust such information relating to Portfolio transactions as they may
reasonably request.
ARTICLE 3. Compensation of the Administrator. For the services to be
----------------------------------
rendered by the Administrator as provided in Articles 1 and 2 of this Agreement
the Trust shall pay to the Administrator compensation at an annual rate of .03%
of the average daily net assets of the Portfolios. Such compensation shall be
calculated and accrued daily and paid to the Administrator monthly. This fee
shall be allocated among the Portfolios on the basis of their relative net
assets. If this Agreement becomes effective subsequent to the first day of a
month or terminates before the last day of a month, the Administrator's
compensation for that part of
<PAGE> 3
the month in which this Agreement is in effect shall be prorated in a manner
consistent with the calculation of the fees as set forth above. Payment of
the Administrator's fee as provided above is subject to the limitation that no
monthly payment shall exceed the payment actually made to the Manager with
respect to the Portfolios pursuant to the current Management Agreement between
the Manager and the Trust.
ARTICLE 4. Other Services. At the request of the Trust or the Manager, the
---------------
Administrator, in its discretion, may make available to the Trust its office
facilities, equipment and personnel for other services.
ARTICLE 5. Status of Administrator. The services of the Administrator to the
------------------------
Trust are not to be deemed exclusive, and the Administrator shall be free to
render similar services to others so long as its services to the Trust are not
impaired thereby. The Administrator shall be deemed to be an independent
contractor and shall, unless otherwise expressly provided or authorized, have
no authority to act for or represent the Trust or the Manager in any way or
otherwise be deemed an agent of the Trust or the Manager.
ARTICLE 6. Certain Records. Any records required to be maintained and
---------------
preserved pursuant to the provisions of Rules 31a-1 and 31a-2 promulgated under
the 1940 Act which are prepared or maintained by the Administrator on behalf of
the Trust are the property of the Trust and will be surrendered promptly to the
Trust on request. Such records shall be maintained in a readily accessible
place as required by the rules under the 1940 Act.
ARTICLE 7. Limitation of Liability Administrator. The Administrator shall not
-------------------------------------
be liable for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with the matters to which this Agreement relates,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services or 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 by it of its
obligations and duties under this Agreement.
ARTICLE 8. Permissible Interests. Trustees, agents, and Shareholders of
---------------------
the Trust are or may be interested in the Administrator (or any successor
thereof) as directors, partners, officers, shareholders or otherwise;
directors, partners, officers, agents and shareholders of the Administrator (or
any successor) are or may be interested in the Trust as Trustees, Shareholders
or otherwise; and the Administrator (or any successor) is or may be interested
in the Trust as a Shareholder or
<PAGE> 4
otherwise.
ARTICLE 9. Duration and Termination. This Agreement, unless sooner terminated
------------------------
as provided herein, shall continue as to each Portfolio for two years following
the date of this Agreement, and thereafter, with respect to each Portfolio,
for periods of one year so long as such continuance thereafter is specifically
approved at least annually (a) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of such Portfolio, and (b) by the
vote of a majority of those Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval; provided, however, that if
the Shareholders of any Portfolio disapprove of this Agreement as provided
herein, the Administrator may continue to serve hereunder in the manner and to
the extent permitted by the 1940 Act and the rules thereunder. The foregoing
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder. This Agreement may be terminated as to
any Portfolio at any time, without the payment of any penalty by vote of a
majority of the Trustees of the Trust or by vote of a majority of the
outstanding voting securities of the Portfolio on not less than 30 days nor
more than 60 days written notice to the Administrator, or by the Administrator
at any time without the payment of any penalty upon 90 days written notice to
the Trust. This Agreement will automatically and immediately terminate in the
event of its assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, to the other party at the
last designated mailing address of such party.
ARTICLE 10. Amendments. This Agreement may be amended as to any Portfolio by
-----------
the parties hereto only if such amendment is specifically approved (i) by the
vote of a majority of outstanding voting securities of such Portfolio, and (ii)
by the vote of a majority of the Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval. For special cases,
the parties hereto may amend such procedures set forth herein as may be
appropriate or practical under the circumstances, and the Administrator may
conclusively assume that any special procedure which has been approved by the
Trust does not conflict with or violate any requirements of its Declaration of
Trust, By-Laws or prospectus, or any rule, regulation or requirement of any
regulatory body.
<PAGE> 5
ARTICLE 11. Certain Records. The Administrator shall maintain customary
---------------
records in connection with its duties as specified in this Agreement. Any
records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Administrator
on behalf of the Trust shall be prepared and maintained at the expense of the
Administrator, but shall be the property of the Trust and will be made
available to or surrendered promptly to the Trust or the Manager on request.
In case of any request or demand for the inspection of such records by another
party, the Administrator shall notify the Trust and follow the Trust's
instructions as to permitting or refusing such inspection; provided that the
Administrator may exhibit such records to any person in any case where it is
advised by its counsel that it may be held liable for failure to do so, unless
the Trust has agreed to indemnify the Administrator against such liability.
ARTICLE 12. Definitions of Certain Terms. The terms "vote of a majority of the
----------------------------
outstanding voting securities", "assignment", "interested person" and
"affiliated person", when used in this Agreement, shall have the respective
meanings specified in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Securities and Exchange
Commission.
ARTICLE 13, Governing Law. This Agreement shall be construed in accordance
-------------
with the laws of the Commonwealth of Massachusetts and the applicable
provisions of the 1940 Act. To the extent that the applicable laws of the
Commonwealth of Massachusetts or any of the provisions herein, conflict with
the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 14. Multiple Originals. This Agreement may be executed in two or more
------------------
counterparts, each of which when so executed shall be deemed to be an original,
but such counterparts shall together constitute but one and the same
instrument.
A copy of the Declaration of Trust of the Trust is on file with the Secretary
of The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees, and
are not individually and that the obligations of this instrument are not
binding upon any of the Trustees, officers, or shareholders of the Trust
individually but binding only upon the assets and property of the Trust.
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SEI INDEX FUNDS
By: SIGNATURE APPEARS HERE
-------------------------
WOODBRIDGE CAPITAL MANAGEMENT, INC.
By: CLINTON P. SCHLOOP
-------------------------
<PAGE> 1
EXHIBIT-99.B5(d)
INVESTMENT ADVISORY AGREEMENT
SEI INDEX FUNDS
AGREEMENT made this 2nd day of October, 1995 by and between
SEI Index Funds, A Massachusetts business trust (the "Trust"), and Mellon Bond
Associates (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), consisting of several series of shares, each having
its own investment policies; and
WHEREAS, the Trust has retained SEI Financial Management
Corporation (the "Administrator") to provide administration of the Trust's
operations, subject to the control of the Board of Trustees;
WHEREAS, THE Trust desires to retain the Adviser to render
investment management services with respect to the portfolio(s) listed in
Schedule A to this Agreement and such other portfolios as the Trust and the
Adviser may agree upon (the "Portfolios"), and the Adviser is willing to render
such services:
NOW, THEREFORE, in consideration of mutual covenants herein
contained, the parties hereto agree as follows:
1. DUTIES OF THE ADVISER. The Trust employs the Adviser
to manage the investment and reinvestment of
the assets, and to continuously review,
supervise, and administer the investment
program of the Portfolios, to determine in its
discretion the securities to be purchased or
sold, to provide the Administrator and the
Trust with records concerning the Adviser's
activities which the Trust is required to
maintain, and to render regular reports to the
Administrator and to the Trust's Officers and
Trustees concerning the Adviser's discharge of
the foregoing responsibilities.
The Adviser shall discharge the foregoing
responsibilities subject to the control of the Board
of Trustees of the Trust and in compliance with such
policies as the Trustees may from time to time
establish, and in compliance with the objectives,
policies, and limitations for each such Portfolio set
forth in the Trust's prospectus and statement of
additional information as amended from time to time,
and applicable laws and regulations.
The Adviser accepts such employment and agrees, at
its own expense, to render the services and to
provide the office space, furnishings and equipment
and the personnel required by it to perform the
services on the terms and for the compensation
provided herein.
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to
select the brokers or dealers that will execute
the purchases and sales of portfolio securities
for the Portfolios and is directed to use its
best efforts to obtain the best net results as
described in the Trust's prospectus and
statement of additional information from time
to time. The Adviser will promptly communicate
to the Administrator and to the officers and
the Trustees of the Trust such information
relating to portfolio transactions as they may
reasonably request.
It is understood that the Adviser will not be deemed
to have acted unlawfully, or to have breached a
fiduciary duty to the Trust or be in breach of any
obligation owing to the Trust under this Agreement,
or otherwise, solely by reason of its having directed
a securities transaction on behalf of the Trust to a
broker-dealer in compliance with the provisions of
Section 28(e) of the Securities Exchange Act of 1934.
3. COMPENSATION OF THE ADVISER. For the services to be
rendered by the Adviser as provided in Sections
1 and 2 of this Agreement, the Trust shall pay
to the Adviser compensation at the rate
specified in Schedule A which is attached
hereto and made a part of this Agreement. Such
compensation shall be paid to the Adviser at
the end of each month, and calculated by
applying a daily rate, based on the annual
percentage rates as specified in Schedule A, to
the assets. The fee shall be based on the
average daily net assets for the month
involved.
All rights of compensation under this Agreement for
services performed as of the termination date shall
survive the termination of this Agreement.
4. REPORTS. The Trust and the Adviser agree to furnish
to each other, if applicable, current prospectuses,
proxy statements, reports to shareholders, certified
copies of their financial statements, and such other
information with regard to their affairs as each may
reasonably request.
5. STATUS OF THE ADVISER. The services of the Adviser
to the Trust are not to be deemed exclusive, and the
Adviser shall be free to render similar services to
others so long as its services to the Trust are not
impaired thereby. The Adviser shall be deemed to be
an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority
to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
1
<PAGE> 2
6. CERTAIN RECORDS. Any records required to be
maintained and preserved pursuant to the provisions
of Rule 31a-1 and Rule 31a-2 promulgated under the
1940 Act which are prepared or maintained by the
Adviser on behalf of the Trust are the property of
the Trust and will be surrendered promptly to the
Trust on request.
7. LIMITATION OF LIABILITY OF THE ADVISER. The duties
of the Adviser shall be confined to those expressly
set forth herein, and no implied duties are assumed
by or may be asserted against the Adviser hereunder.
The Adviser shall not be liable for any error of
judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in
carrying out its duties hereunder, except a loss
resulting from willful misfeasance, bad faith or
gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations
and duties hereunder, except as may otherwise be
provided under provisions of applicable state law
which cannot be waived or modified hereby. (As used
in this Section 7, the term "Adviser" shall include
directors, officers, employees and other corporate
agents of the Adviser as well as that corporation
itself).
8. PERMISSIBLE INTERESTS. Trustees, agents, and
shareholders of the Trust are or may be interested in
the Adviser (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and
shareholders of the Adviser are or may be interested
in the Trust as Trustees, shareholders or otherwise;
and the Adviser (or any successor) is or may be
interested in the Trust as a shareholder or
otherwise. In addition, brokerage transactions for
the Trust may be effected through affiliates of the
Adviser if approved by the Board of Trustees, subject
to the rules and regulations of the Securities and
Exchange Commission.
9. DURATION AND TERMINATION. This Agreement, unless
sooner terminated as provided herein, shall remain in
effect until two years from date of execution, and
thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at
least annually (a) by the vote of a majority of those
Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Trustees of
the Trust or by vote of a majority of the outstanding
voting securities of each Portfolio; provided,
however, that if the shareholders of any Portfolio
fail to approve the Agreement as provided herein, the
Adviser may continue to serve hereunder in the manner
and to the extent permitted by the 1940 Act and rules
and regulations thereunder. The foregoing
requirement that continuance of this Agreement be
"specifically approved at least annually" shall be
construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio
at any time, without the payment of any penalty by
vote of a majority of the Trustees of the Trust or by
vote of a majority of the outstanding voting
securities of the Portfolio on not less than 30 days
nor more than 60 days written notice to the Adviser,
or by the Adviser at any time without the payment of
any penalty, on 90 days written notice to the Trust.
This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice
under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the
other party at any office of such party.
As used in this Section 9, the terms "assignment",
"interested persons", and a "vote of a majority of
the outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the
rules and regulations thereunder; subject to such
exemptions as may be granted by the Securities and
Exchange Commission under said Act.
10. GOVERNING LAW. This Agreement shall be governed by
the internal laws of the Commonwealth of
Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein
shall be construed as being inconsistent with the
1940 Act.
11. NOTICE. Any notice required or permitted to be given
by either party to the other shall be deemed
sufficient if sent by registered or certified mail,
postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by
the other party to the party giving notice: if to the
Trust, at 680 East Swedesford Road, Wayne, PA,
Attention: President and if to the Adviser at: One
Mellon Bank Center, Suite 4135, Pittsburgh, PA
15258-0001.
12. SEVERABILITY. If any provision of this Agreement
shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, is are not binding upon any of the Trustees, officers, or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
No portfolio of the Trust shall be liable for the obligations of any other
portfolio of the Trust. Without limiting the generality of the foregoing, the
Adviser shall look only to the assets of the Portfolios for payment of fees for
services rendered to the Portfolios.
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Investment Advisory
Agreement to be executed as of the day and year first written above.
<TABLE>
<S> <C> <C> <C>
SEI INDEX FUNDS MELLON BOND ASSOCIATES
By: /s/ Robert B. Carroll By: /s/ Paul R. McCann
--------------------- ------------------
Name: Robert B. Carroll Name: Paul R. McCann
Attest: /s/ Jennifer L. Klass Attest: /s/ Robert W. Gray
--------------------- ------------------
NAME: Jennifer L. Klass Name: Robert W. Gray
</TABLE>
3
<PAGE> 4
SCHEDULE A DATED OCTOBER 2, 1995
TO THE
INVESMENT ADVISORY AGREEMENT
DATED OCTOBER 2, 1995
BETWEEN
SEI INDEX FUNDS
AND
MELLON BOND ASSOCIATES
From the effective date of this Investment Advisory Agreement (the "Agreement")
until such time as the shareholders of the Portfolio approve the Agreement, the
Trust shall, pursuant to Article 3, pay the Adviser compensation at an annual
rate as follows:
Bond Index Portfolio .03 (in basis points)
Beginning on the day following the day on which the shareholders approve the
Agreement, the Trust shall, pursuant to Article 3, pay the Adviser compensation
at an annual rate as follows:
Bond Index Portfolio .07 (in basis points)
4
<PAGE> 1
EXHIBIT-99.B6(a)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this 10th day of July, 1985,
between TrustFunds Equity Index Funds, a Massachusetts business trust (the
"Trust") , and SEI Finanial Services Company (the "Distributor"), a
Pennsylvania corporation.
WHEREAS the Trust is registered as an investment company with
the Securities and Exchange Commission ("SEC") under the Investment Company Act
of 1940, as amended ("1940 Act"), and its Units are registered with the SEC
under the Securities Act of 1933, as amended ("1933 Act"); and
WHEREAS Distributor is registered as a broker-dealer with the
SEC under the Securities Exchange Act of 1934, as amended;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter contained, the Trust and Distributor hereby agree as follows:
ARTICLE 1. Sale of Units. The Trust grants to the Distributor
-------------
the exclusive right to sell Units of the Trust at the net asset value per Unit,
as agent and on behalf of the Trust, during the term of this Agreement and
subject to the registration requirements of the 1933 Act, the rules and
regulations of the SEC and the laws governing the sale of securities in the
various states ("Blue Sky laws").
<PAGE> 2
Article 2. Solicitation of Sales. In consideration of these
---------------------
rights granted to the Distributor, the Distributor agrees to use all reasonable
efforts, consistent with its other business, to obtain purchasers for Units of
the Trust; provided, however, that the Distributor shall not be prevented from
entering into like arrangements with other issuers. The provisions of this
paragraph do not obligate the Distributor to register as a broker or dealer
under the Blue Sky laws of any jurisdiction when it determines it would be
uneconomical for it to do so or to maintain its registration in any
jurisdication in which it is now registered.
Article 3. Authorized Representations. The Distributor is not
--------------------------
authorized by the Trust to give any information or to make any representations
other than those contained in the current registration statements and
prospectuses of the Trust filed with the SEC or contained in Unitholder reports
or other material that may be prepared by or on behalf of the Trust for the
Distributor's use. The Distributor may prepare and distribute sales literature
and other material as it may deem appropriate, provided that such literature
and materials have been approved by the Trust prior to their use.
Article 4. Registration of Units. The Trust agrees that it
---------------------
will take all action necessary to register Units under the federal and state
securities laws so that there will be available for sale the number of Units
the Distributor may reasonably be expected to sell. The Trust shall make
available to the Distributor such number of
- 2 -
<PAGE> 3
copies of its currently effective prospectus and statement of additional
information as the Distributor may reasonably request. The Trust shall furnish
to the Distributor copies of all information, financial statements and other
papers which the Distributor may reasonably request for use in connection with
the distribution of Units of the Trust.
ARTICLE 5. Compensation. As compensation for the services
------------
performed and the expenses assumed by the Distributor under this Agreement, and
to the extent provided in the Trust's annual budget under its Distribution Plan
adopted in accordance with Rule 12b-1 under the 1940 Act, the Trust shall
reimburse the Distributor for (i) the cost of prospectuses and statements of
additional information, reports to Unitholders, sales literature and other
materials for potential investors, (ii) the costs of complying with the Federal
and state securities laws pertaining to the distribution of Units, (iii)
advertising, and (iv) expenses incurred in promoting and selling Units,
including expenses for travel, communication, and compensation and benefits of
sales personnel. To the extent not so provided in such budget, the Distributor
shall pay expenses of (i) any supplemental sales literature used by the
Distributor in connection with such offering and (ii) advertising in connection
with such offering. Separate and apart from the services and compensation
provided for under this Agreement, the Distributor may retain additional
compensation that it receives from the Trust on portfolio transactions that it
effects for the Trust
- 3 -
<PAGE> 4
in accordance with applicable rules of the Securities and Exchange Commission.
ARTICLE 6. Indemnification of Distributor. The Trust agrees
------------------------------
to indemnify and hold harmless the Distributor and each of its directors and
officers and each person, if any, who controls the Distributor within the
meaning of Section 15 of the 1933 Act against any loss, liability, claim,
damages or expense (including the reasonable cost of investigating or defending
any alleged loss, liability, claim, damages, or expense and reasonable counsel
fees and disbursements incurred in connection therewith), arising by reason of
any person acquiring any Units, based upon the ground that the registration
statement, prospectus, Unitholder reports or other information filed or made
public by the Trust (as from time to time amended) included an untrue statement
of a material fact or omitted to state a material fact required to be stated or
necessary in order to make the statements made not misleading. However, the
Trust does not agree to indemnify the Distributor or hold it harmless to the
extent that the statement or omission was made in reliance upon, and in
conformity with, information furnished to the Trust by or on behalf of the
Distributor.
In no case (i) is the indemnity of the Trust to be deemed to
protect the Distributor or any person against any liability to the Trust or its
Unitholders to which the Distributor or such person otherwise would be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance
- 4 -
<PAGE> 5
of its duties or by reason of its reckless disregard of its obligations and
duties under this Agreement, or (ii) is the Trust to be liable to the
Distributor under the indemnity agreement contained in this paragraph with
respect to any claim made against the Distributor or any person indemnified
unless the Distributor or other person shall have notified the Trust in writing
of the claim within a reasonable time after the summons or other first written
notification giving information of the nature of the claim shall have been
served upon the Distributor or such other person (or after the Distributor or
the person shall have received notice of service on any designated agent).
However, failure to notify the Trust of any claim shall not relieve the Trust
from any liability which it may have to the Distributor or any person against
whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph.
The Trust shall be entitled to participate at its own expense
in the defense or, if it so elects, to assume the defense of any suit brought
to enforce any claims subject to this indemnity provision. If the Trust elects
to assume the defense of any such claim, the defense shall be conducted by
counsel chosen by the Trust and satisfactory to the indemnified defendants in
the suit whose approval shall not be unreasonably withheld. In the event that
the Trust elects to assume the defense of any suit and retain counsel, the
indemnified defendants shall bear the fees and expenses of any additional
- 5 -
<PAGE> 6
counsel retained by them. If the Trust does not elect to assume the defense of
a suit, it will reimburse the indemnified defendants for the reasonable fees
and expenses of any counsel retained by the indemnified defendants.
The Trust agrees to notify the Distributor promptly of the
commencement of any litigation or proceedings against it or any of its officers
or Trustees in connection with the issuance or sale of any of its Units.
ARTICLE 7. Indemnification of Trust. The Distributor
------------------------
covenants and agrees that it will indemnify and hold harmless the Trust and
each of its Trustees and officers and each person, if any, who controls the
Trust within the meaning of Section 15 of the Act, against any loss, liability,
damages, claim or expense (including the reasonable cost of investigating or
defending any alleged loss, liability, damages, claim or expense and reasonable
counsel fees incurred in connection therewith) based upon the 1933 Act or any
other statute or common law and arising by reason of any person acquiring any
Units, and alleging a wrongful act of the Distributor or any of its employees
or alleging that the registration statement, prospectus, Unitholder reports or
other information filed or made public by the Trust (as from time to time
amended) included an untrue statement of a material fact or omitted to state a
material fact required to be stated or necessary in order to make the
- 6 -
<PAGE> 7
statements not misleading, insofar as the statement or omission was made in
reliance upon and in conformity with information furnished to the Trust by or
on behalf of the Distributor.
In no case (i) is the indemnity of the Distributor in favor of
the Trust or any other person indemnified to be deemed to protect the Trust or
any other person against any liability to which the Trust or such other person
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Agreement, or (ii) is the
Distributor to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Trust or any person
indemnified unless the Trust or person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim shall have been served upon the Trust or upon any person (or after
the Trust or such person shall have received notice of service on any
designated agent). However, failure to notify the Distributor of any claim
shall not relieve the Distributor from any liability which it may have to the
Trust or any person against whom the action is brought otherwise than on
account of its indemnity agreement contained in this paragraph.
The Distributor shall be entitled to participate, at its own
expense, in the defense or, if it so elects, to assume the
- 7 -
<PAGE> 8
defense of any suit brought to enforce the claim, but if the Distributor elects
to assume the defense, the defense shall be conducted by counsel chosen by the
Distributor and satisfactory to the indemnified defendants whose approval shall
not be unreasonably withheld. In the event that the Distributor elects to
assume the defense of any suit and retain counsel, the defendants in the suit
shall bear the fees and expenses of any additional counsel retained by them.
If the Distributor does not elect to assume the defense of any suit, it will
reimburse the indemnified defendants in the suit for the reasonable fees and
expenses of any counsel retained by them.
The Distributor agrees to notify the Trust promptly of the
commencement of any litigation or proceedings against it in connection with the
issue and sale of any of the Trusts' Units.
ARTICLE 8. Effective Date. This Agreement shall be effective
--------------
upon its execution, and unless terminated as provided, shall continue in force
for one year from the effective date and thereafter from year to year, provided
that such annual continuance is approved by (i) either the vote of a majority
of the Trustees of the Trust, or the vote of a majority of the outstanding
voting securities of the Trust, and (ii) the vote of a majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of any party ("Qualified Trustees"), cast in person at a meeting called
for the purpose of voting on the approval. This Agreement shall automatically
terminate in the event of its assignment. As
- 8 -
<PAGE> 9
used in this paragraph the terms "vote of a majority of the outstanding voting
securities", "assignment" and "interested person" shall have the respective
meanings specified in the 1940 Act. In addition, this Agreement may at any
time be terminated without penalty by SFS, by a vote of a majority of Qualified
Trustees or by vote of a majority of the outstanding voting securities of the
Trust upon not less than sixty days prior written notice to the other party.
ARTICLE 9. Notices. Any notice required or permitted to be
-------
given by either party to the other shall be deemed sufficient if sent by
registered or certified mail, postage prepaid, addressed by the party giving
notice to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at 28 State Street, Boston,
Massachusetts 02109, and if to the Distributor, 680 E. Swedesford Road, Wayne,
Pennsylvania 19087.
ARTICLE 10. Limitation of Liability. A copy of the
-----------------------
Declaration of Trust of the Trust is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that this Agreement
is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees, officers or unitholders of the Trust individually but
binding only upon the assets and property of the Trust.
- 9 -
<PAGE> 10
ARTICLE 11. Governing Law. This Agreement shall be construed
-------------
in accordance with the laws of the Commonwealth of Massachusetts and the
applicable provisions of the 1940 Act. To the extent that the applicable laws
of the Commonwealth of Massachusetts, or any of the provisions herein, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 12. Multiple Originals. This Agreement may be
------------------
executed in two or more counterparts, each of which when so executed shall be
deemed to be an original, but such counterparts shall together constitute but
one and the same instrument.
IN WITNESS, the Trust and Distributor have each duly executed
this Agreement, as of the day and year above written.
TRUSTFUNDS EQUITY INDEX FUNDS
By: [SIGNATURE APPEARS HERE]
---------------------------
President
SEI FINANCIAL SERVICES COMPANY
By: [SIGNATURE APPEARS HERE]
---------------------------
Vice President
- 10 -
<PAGE> 1
EXHIBIT-99.B9(a)
MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of this 20th day of January, 1986,
by and between TrustFunds Equity Index Funds ("Trust"), a Massachusetts
business trust, and SEI Financial Management Corporation ("Manager"), a
Delaware corporation.
WHEREAS the Trust is a diversified open-end investment company
registered under the Investment Company Act of 1940, as amended ("1940 Act"),
consisting of several separate portfolios of securities, each of which has the
investment objective of providing investment results that correspond to the
price and yield performance of a designated index;
WHEREAS the Trust has retained Wells Fargo Investment Advisors
("INVESTMENT Administrator") to manage the securities portfolio of the Trust's
Bond Index Portfolio ("Portfolio") pursuant to an Investment Administration
Agreement dated January 20, 1986 ("Administration Agreement");
WHEREAS the Manager is,registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and as a transfer agent
under the Securities Exchange Act of 1934, as amended; and
WHEREAS the Trust desires to retain the Manager to provide
certain management, administrative, transfer agent and unitholder servicing
services to the Portfolio on the terms and conditions hereinafter set forth,
and the Manager is willing to render such services:
NOW, THEREFORE, in consideration of the mutual promises and
the covenants herein contained, the Trust and the Manager hereby agree as
follows:
ARTICLE 1. Retention of the Manager. The Trust hereby retains
------------------------
the Manager to act as the Manager, Transfer Agent and Unitholder Servicing
Agent of the Portfolio and to furnish the Portfolio with the management,
administrative, transfer agent and unitholder servicing services as set forth
below. The Manager hereby accepts such employment to perform the duties set
forth below. The Manager shall, for all purposes herein, be deemed to be an
independent contractor and, unless otherwise expressly provided or authorized,
shall have no authority to act for or represent the Trust in any way and shall
not be deemed an agent of the Trust. All of the Manager's duties shall be
subject always to the objectives, policies and restrictions contained in the
Trust's current registration statement filed with the Securities and Exchange
Commission ("Registration Statement"), to the Trust's Declaration of Trust and
By-Laws, to the provisions
<PAGE> 2
of the 194O Act and all other applicable laws and regulations, and to any other
guidelines that may be established by the Trust's Trustees.
ARTICLE 2. Evaluation Services. The Manager shall monitor the
-------------------
performance of the Portfolio's Investment Administrator and shall furnish to
the Trust such information, evaluations, analyses and opinions regarding said
performance as the Trustees may, from time to time, reasonably request.
ARTICLE 3. Transfer Agent Services. The Manager shall act as
-----------------------
Transfer Agent for the Portfolio and, as such, will record in an account
("Account") the total number of units of the Portfolio ("Units") issued and
outstanding from time to time and will maintain Unit transfer records in which
it will note the names and registered addresses of Unitholders, and the number
of Units from time to time owned by each of them. Each Unitholder will be
assigned one or more account numbers. The Manager is authorized to set up
Unitholder accounts and record transactions in the accounts on the basis of
instructions received from Unitholders when accompanied by remittance in
appropriate amounts as provided in the Trust's then current Registration
Statement. The Trust will not issue certificates representing its Units.
Whenever Units are purchased or issued, the Manager shall credit the Account
with the Units issued, and credit the proper number of Units to the account of
the appropriate Unitholder. Likewise, whenever the Manager has occasion to
redeem Units owned by a Unitholder, the Trust authorizes the Manager to process
the transaction by making appropriate entries in Its Unit transfer records and
debiting the redeemed Units from the Account.
Upon receipt by (i) the Trust's Wire Agent on behalf of the
Trust of funds through the Federal Reserve wire system or conversion into
Federal funds of funds transmitted by other means or (ii) the Trust's Custodian
of securities for the purchase of Units of the Bond Index Portfolio in
accordance with the Trust's current Registration Statement, the Manager shall
notify the Trust and the Investment Administrator of such deposits or receipt
of securities on a daily basis. The Manager shall credit the Unitholder's
account with the number of shares purchased according to the price of the Units
and procedures in effect for such purchases determined in the manner set forth
in the Trust's then current Registration Statement. The Manager shall process
each order for the redemption of Units received from or on behalf of a
Unitholder, and shall cause cash proceeds to be wired in Federal funds or
in-kind payment of securities to be made as set forth in the then current
Registration Statement. The requirements as to instruments of transfer and
other documentation, the applicable redemption price and the time of payment
shall be as provided in the then current Registration Statement, subject to
such supplemental requirements consistent with such Registration Statement as
may be established by mutual agreement between the Trust and Manager. If the
Manager or the Trust determines that a request for redemption does not comply
with the requirements for
- 2 -
<PAGE> 3
redemption, the Manager shall promptly so notify the Unitholder, together with
the reason therefor, and shall effect such redemption at the price next
determined after receipt of documents complying with said standards. On each
"Business Day" as defined in the Trust's current Registration Statement, the
Manager shall notify the Custodian of the amount of cash or other assets
required to meet payments made pursuant to the provisions of this paragraph,
and the Trust shall instruct the Custodian to make available from time to time
sufficient funds or other assets therefor. In addition to the foregoing, the
Manager shall perform all other usual and customary transfer agent services in
accordance with the policies and procedures determined by the Trust's Trustees
and set forth in the Trust's current Registration Statement. The authority of
the Manager to perform its responsibilities under this paragraph shall be
suspended upon receipt by it of notification from the Securities and Exchange
Commission or the Trustees of the suspension of the determination of the
Trust's net asset value.
In registering transfers, the manager may rely upon the
opinion of counsel in not requiring complete documentation, in registering
transfers without inquiry into adverse claims, in delaying registration for
purposes of such inquiry, or in refusing registration where in counsel's
judgment an adverse claim requires such refusal.
The Trust warrants that it has or shall deliver to the
Manager, as transfer agent:
(i) A copy of the Declaration of Trust of the Trust,
incorporating all amendments thereto, certified by
the Secretary or Assistant Secretary of the Trust;
(ii) an opinion of counsel to the Trust with respect to
(a) the validity and continuing existence of the
Trust, (b) the validity of its outstanding Units of
beneficial interest, and (c) the number of Units
authorized for issuance and stating that upon
issuance they will be validly issued and
nonassessable, and as to such other matters as the
Manager may reasonably request; and
(iii) the Trust's Secretary's or Assistant Secretary's
certificate as to the authorized outstanding Units
of the Trust, its address to which notices may be
sent, the names and specimen signatures of its
officers who are authorized to sign instructions or
requests to the Manager on behalf of the Trust, and
the name and address of legal counsel to the Trust.
In the event of any future amendment or change in
respect of any of the foregoing, prompt written
notification of such change shall be given by the
Trust to the Manager, together with copies of all
relevant resolutions,instruments or other documents,
specimen signatures, certificates, opinions or the
like as the Manager may deem
- 3 -
<PAGE> 4
necessary or appropriate, but until the Manager
receives such notification it may rely conclusively
on the last certificate previously received by it
hereunder.
ARTICLE 4. Dividend Disbursing Agent. The Manager
-------------------------
shall act as Dividend Disbursing Agent for the Portfolio and, as such, in
accordance with the provisions of the Trust's Declaration of Trust By-Laws and
then current Registration Statement, shall prepare and wire or credit income
and capital gains distributions to Unitholders. The Trust agrees that it shall
promptly inform the manager of the declaration of any dividend or distribution
on the Units, and that on or before the payment date of a distribution, it
shall instruct the Custodian to make available, sufficient funds for the cash
amount to be paid out. If a Unitholder is entitled to receive additional Units
by virtue of any such distribution or dividend, appropriate credits will be
made by the Manager to the Unitholder's account.
ARTICLE 5. Other Administrative Services. In
-----------------------------
addition to the services described above, the Manager shall perform or
supervise the performance by others of other administrative services in
connection with the operations of the Portfolio, and, on behalf of the
Portfolio, will investigate, assist in the selection of and conduct relations
with custodians, depositories, attorneys, accountants, underwriters, brokers
and dealers, corporate fiduciaries, insurers, banks and persons in any other
capacity deemed to be necessary or desirable for the Portfolio's operation.
The Manager shall on each Business Day, and on such other days as may be
required by the 1940 Act, calculate the Portfolio's net asset value per Unit in
accordance with the procedures set forth by the Trust's Trustees and in the
Trust's current Registration Statement. In its calculation of net asset value
per Unit, the Manager may utilize and rely on information as to the value of
the assets of the Portfolio provided by the Portfolio's Custodian, the
Investment Administrator or such other entity as has been authorized to perform
this valuation by the Trust, and the Manager shall not be responsible for the
expenses of such asset valuation. The Manager shall provide the Portfolio with
regulatory reporting, all necessary office space, equipment, personnel
compensation and facilities (including facilities for Unitholders' and Trustees'
meetings) for handling the affairs of the Portfolio and such other services as
the Manager shall, from time to time, determine to be necessary to perform its
obligations under this Agreement. The Manager shall make reports to the
Trust's Trustees concerning the performance of its obligations hereunder;
furnish advice and recommendations with respect to other aspects of the
business and affairs of the Portfolio as the Trust shall determine desirable;
and shall provide the Portfolio's Unitholders with the reports described in the
Trust's current Registration Statement. Also, the Manager will perform other
services for the Trust with regard to the Portfolio as agreed from time to
time, including, but not limited to, preparation and mailing of appropriate
federal income tax forms; mailing the annual reports; preparing an annual list
of
- 4 -
<PAGE> 5
Unitholders of the Portfolio; furnishing the Trust with such reports regarding
the sale and redemption of Units as may be required in order to comply with
federal and state securities law; and mailing notices of Unitholders' meetings,
proxies and proxy statements, for all of which the Portfolio will pay the
Manager's out-of-pocket expenses.
ARTICLE 6. Allocation of Charges and Expenses.
----------------------------------
(A) The Manager. The Manager shall furnish at its, own
-----------
expense the facilities, equipment and personnel necessary to perform its
obligations under this Agreement. The Manager shall also provide the items
which it is obligated to provide under this Agreement, and with respect to the
Portfolio shall pay all compensation if any, of officers of the Trust as well
as all Trustees of the Trust who are affiliated persons of the Manager or any
affiliated corporation; provided, however, that unless otherwise specifically
provided, the Manager shall not be obligated to pay the compensation of any
employee of the Trust retained by the Trustees of the Trust to perform services
on behalf of the Trust.
(B) The Trust. The Trust assumes and shall pay or cause to
---------
be paid all other expenses of the Portfolio not otherwise allocated herein,
including, without limitation, organizational costs, taxes, expenses for legal
and auditing services, the expenses of preparing (including typesetting),
printing and mailing reports, prospectuses, statements of additional
information, proxy solicitation material and notices to existing Unitholders,
all expenses incurred in connection with the acquisition, valuation, or
disposition of any investments of the Trust, the costs of custodial services,
the cost of initial registration of the Trust's Units under federal and state
securities laws, the cost of ongoing registration under the federal and state
securities laws, fees and out-of-pocket expenses of Trustees who are not
affiliated persons of the Manager or any affiliated corporation, insurance,
interest, brokerage costs, litigation and other extraordinary or nonrecurring
expenses.
ARTICLE 7. Compensation of the Manager.
---------------------------
(A) Management Fee. For the services to be rendered by the
--------------
Manager pursuant to this Agreement, the Trust shall pay to the Manager at the
end of each month a fee equal to an annual rate of .25% of the average daily net
assets of the Portfolio. Such fee shall accrue and be computed on a daily
basis.
(B) Excess Expenses. If the annualized expenses of the
---------------
Portfolio on any day (including fees and other amounts payable to the Manager
and the Investment Administrator, but excluding interest, taxes, brokerage
costs, and litigation and other extraordinary costs) ("Annualized Expenses")
would exceed an annual rate of .38% of the Portfolio's average daily net asset
value
- 5 -
<PAGE> 6
calculated on a cumulative basis for the then current fiscal year ("Expense
Limit"), the Manager shall waive, and the Trust shall not be required to pay,
such part of its fee for that day as, when combined with any fee waiver
required of the Investment Administrator for that day pursuant to Article 4(B)
of the Administration Agreement is necessary to reduce the Portfolio's
Annualized Expenses to the Expense Limit. In the event that the waiver of fees
by the Manager and the Investment Administrator is not sufficient (i) to cause
the Portfolio's Annualized Expenses to be reduced to the Expense Limit or (ii)
to meet the expense limitations imposed on investment companies by any
applicable statute or regulatory authority of any jurisdiction in which the
Portfolio's Units are qualified for offer and sale ("Blue Sky Limit"), then
the Manager shall bear a sufficient amount of the other expenses of the
Portfolio as shall reduce the total daily expense to the Expense Limit or the
Blue Sky Limit, whichever is lower. Any daily fees or parts thereof waived or
other expenses borne by the Manager pursuant to this provision and by the
Investment Administrator pursuant to Article 4(B) of the Administration
Agreement, may be recovered from the Portfolio by the Manager and Administrator
on such days as such recovery would not cause the Annualized Expenses of the
Portfolio to exceed the Expense Limit, provided (i) that any such recovery
shall be divided between the Manager and the Administrator in the proportion
that the total fees that have been previously waived by each of them over the
preceding 730 days and not recovered bear to each other, (ii) that the
Administrator shall have no right to recover any fees waived until the Manager
has recovered from the Trust any and all expenses of the Trust which the
Manager is then eligible to recover and which have been borne by the Manager
other than through the waiver of its fees, and (iii) that neither the
Administrator nor the Manager shall have any right to recover any daily fees
waived or parts thereof or other expenses borne after a period of 730 days from
the date such fee waiver or expense payment occurs. Notwithstanding the
foregoing, the Manager shall not be required to bear expenses of the Portfolio
to an extent which would result in the Trust's inability to qualify as a
regulated investment company under applicable provisions of the Internal
Revenue Code. For the purposes of this paragraph, Annualized Expenses shall be
based on an allocation of expenses in the same manner as the Portfolio's daily
expenses are allocated for the purposes of determining the Portfolio's daily
net asset value per unit.
(C) Survival of Compensation Rates. All rights of
------------------------------
compensation under this Agreement shall survive the termination of this
Agreement, provided that the right to recover any fees waived or other expenses
borne by the Manager pursuant to Article 7(B) hereof shall not survive the
termination of this Agreement.
(D) Compensation From Transactions. The Trust hereby
------------------------------
authorizes any entity or person associated with the Manager which is a member
of a national securities exchange to effect any transaction on the exchange for
the account of the Portfolio
- 6 -
<PAGE> 7
which is permitted by Section 11(a) of the Securities Exchange Act of 1934 and
Rule 11a2-2(T) thereunder, and the Trust hereby consents to the retention of
compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
ARTICLE 8. Limitation of Liability of the Manager. The duties
--------------------------------------
of the Manager shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Manager hereunder.
The Manager shall not be liable for any error of judgment or mistake of law or
for any loss arising out of any investment or for any act or omission in
carrying out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder, except
as may otherwise be provided under provisions of applicable federal and state
law which cannot be waived or modified hereby. (As used in this Article 8, the
term "Manager" shall include directors, officers, employees and other corporate
agents of the Manager as well as that corporation itself.) So long as the
Manager acts in good faith and with due diligence and without gross negligence,
the Trust assumes full responsibility and shall indemnify the Manager and hold
it harmless from and against any and all actions, suits and claims, whether
groundless or otherwise, and from and against any and all losses, damages,
costs, charges, reasonable counsel fees and disbursements, payments, expenses
and liabilities (including reasonable investigation expenses) arising
directly or indirectly out of said management and transfer, dividend disbursing
and unitholder servicing agency relationship to the Trust or any other service
rendered to the Trust hereunder. The indemnity and defense provisions set
forth herein shall indefinitely survive the termination of this Agreement. The
rights hereunder shall include the right to reasonable advances of defense
expenses in the event of any pending or threatened litigation with respect to
which indemnification hereunder may ultimately be merited. In order that the
indemnification provision contained herein shall apply, however, it is
understood that if in any case the Trust may be asked to indemnify or hold the
Manager harmless, the Trust shall be fully and promptly advised of all
pertinent facts concerning the situation in question, and it is further
understood that the Manager will use all reasonable care to identify and notify
the Trust promptly concerning any situation which presents or appears likely to
present the probability of such a claim for indemnification against the Trust,
but failure to do so in good faith shall not affect the rights hereunder.
The Manager may apply to the Trust at any time for
instructions and may consult counsel for the Trust or its own counsel and with
accountants and other experts with respect to any matter arising in connection
with the Manager's duties, and the Manager shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or
- 7 -
<PAGE> 8
other experts. Also, the Manager shall be protected in acting upon any
document which it reasonably believes to be genuine and to have been signed or
presented by the proper person or persons.
ARTICLE 9. Activities of the Manager. The services of the
-------------------------
Manager rendered to the Trust are not to be deemed to be exclusive. The
Manager is free to render such services to others and to have other businesses
and interests. It is understood that Trustees, officers, employees and
Unitholders of the Trust are or may be or become interested in the Manager,
as directors, officers, employees and shareholders or otherwise and that
directors, officers, employees and shareholders of the Manager and its counsel
are or may be or become similarly interested in the Trust, and that the Manager
may be or become interested in the Trust as a Unitholder or otherwise.
ARTICLE 10. Duration and Termination of this Agreement.
------------------------------------------
This Agreement, unless terminated sooner as provided herein, shall remain in
effect for two years after the date of the Agreement and shall continue in
effect for successive periods of one year if such continuance is specifically
approved at least annually (i) by the Trustees of the Trust or by the vote of a
majority of the outstanding voting securities of the Portfolio and (ii) by the
vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party, cast in person at a Board of
Trustees meeting called for the purpose of voting on such approval; provided,
however, that if the Unitholders fail to approve the Agreement as provided
herein, the Manager may continue to serve hereunder in the manner and to the
extent permitted by the 1940 Act and the rules thereunder.
This Agreement may be terminated at any time and without
penalty by the Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio on not less than 30 days nor
more than 60 days written notice to the Manager. The Manager may without
penalty terminate this Agreement upon not less than 90 days written notice to
the Trust. This Agreement shall automatically terminate in the event of its
assignment. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at the
designated mailing address of such party.
ARTICLE 11. Amendments. This Agreement may be amended by the
----------
parties hereto only if such amendment is specifically approved (i) by the vote
of a majority of outstanding voting securities of the Portfolio, and (ii) by
the vote of a majority of the Trustees of the Trust who are not parties to this
Agreement or interested persons of any such party, cast in person at a Board of
Trustees meeting called for the purpose of voting on such approval. For
special cases the parties hereto may amend such procedures set forth herein
as may be appropriate or practical under the circumstances, and the Manager may
- 8 -
<PAGE> 9
conclusively assume that any special procedure which has been approved by the
Trust does not conflict with or violate any requirements of the Trust's
Declaration of Trust, the Trust's By-Laws or current Registration Statement, or
any applicable law or regulation.
ARTICLE 12. Trustees' Liability. A copy of the Declaration
-------------------
of Trust of the Trust is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees, officers or Unitholders of the Trust individually, but
binding only upon the assets and property of the Trust.
ARTICLE 13. Certain Records. The Manager shall maintain
---------------
customary records in connection with its duties as specified in this Agreement.
Any records required to be maintained and preserved under the 1940 Act which
are prepared or maintained by the Manager on behalf of the Trust shall be
prepared and maintained at the expense of the Manager, but shall be the
property of the Trust and will be made available to or surrendered promptly to
the Trust on request. In case of any request or demand for the inspection of
such records by another party, the Manager shall notify the Trust and follow
the Trust's instructions as to permitting or refusing such inspection; provided
that the Manager may exhibit such records to any person in any case where it is
advised by its counsel that it may he held liable for failure to do so, unless
(in cases involving potential exposure only to civil liability) the Trust has
agreed to indemnify the Manager against such liability.
ARTICLE 14. Definitions of Certain Terms. The terms "vote of
----------------------------
a majority of the outstanding voting securities," "assignment," "interested
person" and "affiliated person," when used in this Agreement, shall have the
respective meanings specified in the 1940 Act and the rules and regulations
thereunder, subject to such exemptions as may be granted by the Securities and
Exchange Commission.
ARTICLE 15. Governing Law. This Agreement shall be construed
-------------
in accordance with the laws of the Commonwealth of Massachusetts and the
applicable provisions of the 1940 Act. To the extent that the applicable laws
of the Commonwealth of Massachusetts, or any of the provisions herein, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be
------------------
executed in two or more counterparts, each of which when so executed shall be
deemed to be an original, but such counterparts shall together constitute but
one and the same instrument.
- 9 -
<PAGE> 10
AMENDMENT TO THE
MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of this 3rd day of January 1986, by
and between TrustFunds Equity Index Funds (the "Trust"), a Massachusetts
business trust, and SEI Financial Management Corporation (the "Manager"), a
Delaware corporation.
WHEREAS the Trust and Manager have entered into a Management
Agreement dated July 10, 1985 ("Management Agreement") under which the Manager
agreed to provide management, administrative, transfer agent and unitholder
servicing services to certain of the Trust's portfolios; and
WHEREAS the Trust and Manager desire to amend the Management
Agreement so as to limit the applicability of the Management Agreement to
solely the Trust's S&P 500 Index Portfolio and Extended Market Index Portfolio;
NOW, THEREFORE, the parties hereto agree as follows:
1. Notwithstanding any contrary provisions in the
Management Agreement, the services to be provided and expenses
to be borne by the Manager under the Management Agreement shall
relate solely to the Trust's S&P 500 Index Portfolio and
Extended Market Index Portfolio.
2. Notwithstanding any contrary provisions in the
Management Agreement, the compensation to be paid to the
Manager pursuant to Article VII of the Management Agreement
shall be calculated based solely upon the assets of the
Trust's S&P 500 Index Portfolio and Extended Market Index
Portfolio.
3. This Amendment to the Management Agreement shall
become effective only if such Amendment is specifically
approved (i) by the vote of a majority of outstanding voting
securities of each Trust portfolio and (ii) by the vote of a
majority of the Trustees of the Trust who are not parties to
this Amendment or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on
such approval.
4. This Agreement may be executed in two or more
counterparts, each of which when so executed shall be deemed
to be an original, but such counterparts shall together
constitute but one and the same instrument.
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
TRUSTFUNDS EQUITY INDEX FUNDS
By [SIGNATURE APPEARS HERE]
---------------------------
SEI FINANCIAL MANAGEMENT
CORPORATION
By [SIGNATURE APPEARS HERE]
---------------------------
- 2 -
<PAGE> 1
EXHIBIT-99.B9(b)
MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of this 25th day of July, 1986 by
and between TrustFunds Index Funds (the "Trust"), a Massachusetts business
trust, and SEI Financial Management Corporation (the "Manager"), a Delaware
corporation.
WHEREAS the Trust is a diversified open-end investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS the Manager is willing to provide, or oversee the
performance of others who will provide, management, administrative, transfer
agent and unitholder servicing services to the Trust's S&P 500 Index Portfolio,
Extended Market Index Portfolio and such other portfolios as the Trust and the
Manager may agree on (collectively, "Portfolios"), on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, the Trust and the Manager hereby agree an
follows:
ARTICLE 1. Retention of the Manager. The Trust hereby retains
------------------------
the Manager to act as the Manager and Unitholder Servicing Agent of the
Portfolios and to furnish the Portfolios with the management, administrative,
transfer agent and unitholder servicing services as set forth below. The
Manager hereby accepts such employment to perform the duties set forth below.
The Manager shall, for all purposes herein, be deemed to be an independent
contractor and, unless otherwise expressly provided or authorized, shall have
no authority to act for or represent the Trust in any way and shall not be
deemed an agent of the Trust. All of the Manager's duties shall be subject
always to the objectives, policies and restrictions contained in the Trust's
current registration statement under the 1940 Act, to the Trust's Declaration
of Trust and By-Laws, to the provisions of the 1940 Act, and to any other
guidelines that may be established by the Trust's Trustees. The Manager shall
calculate the daily net asset value of the Portfolios in accordance with the
procedures prescribed in the Trust's Registration Statement and such other
procedures as may be established by the Trustees of the Trust.
ARTICLE 2. Evaluation Services. The Manager shall oversee and
-------------------
monitor the performance of the Portfolios' investment administrator and shall
furnish to the Trust such information, evaluations, analyses and opinions
regarding said performance as the Trustees may, from time to time, reasonably
request; provided,
- 1 -
<PAGE> 2
however, that the Manager shall have no authority to make and shall not make
investment decisions for the Portfolios nor furnish any advice with respect to
the desireability of making such investment decisions.
ARTICLE 3. Transfer Agent Services. The Manager will act as
-----------------------
Transfer Agent for the Portfolios and, as such, will record in an account (the
"Account") the total number of units of beneficial interest ("Units") of each
Portfolio issued and outstanding from time to time and will maintain Unit
transfer records in which it will note the names and registered addresses of
Unitholders, and the number of Units from time to time owned by each of them.
Each Unitholder will be assigned one or more account numbers. The Manager is
authorized to set up accounts and record transactions in the accounts on the
basis of instructions received from Unitholders when accompanied by remittance
in appropriate amount as provided in the Trust's then current prospectus. The
Trust will not issue certificates representing its Units. Whenever Units are
purchased or issued, the Manager shall credit the Account with the Units
issued, and credit the proper number of Units to the appropriate Unitholder.
Likewise, whenever the Manager has occasion to redeem Units owned by a
Unitholder, the Trust authorizes the Manager to process the transaction by
making appropriate entries in its Unit transfer records and debiting the
Account.
Upon receipt by the Trust's Wire Agent (currently the United
States National Bank of Oregon) on behalf of the Manager of funds through the
Federal Reserve wire system or conversion into Federal funds of funds
transmitted by other means for the purchase of Units in accordance with the
Trust's current prospectus, the Manager shall notify the Trust of such deposits
on a daily basis. The Manager shall credit the Unitholder's account with the
number of shares purchased according to the price of the Units in effect for
such purchases determined in the manner set forth in the Trust's then current
prospectus. The Manager shall process each order for the redemption of Units
from or on behalf of a Unitholder, and shall cause cash proceeds to be wired in
Federal funds. The requirements as to instruments of transfer and other
documentation, the applicable redemption price and the time of payment shall be
as provided in the then current prospectus, subject to such supplemental
requirements consistent with such prospectus as may be established by mutual
agreement between the Trust and Manager. If the Manager or the Trust
determines that a request for redemption does not comply with the requirements
for redemption, the Manager shall promptly so notify the Unitholder, together
with the reason therefor, and shall effect such redemption at the price next
determined after receipt of documents complying with said standards. On each
day that the Trust's custodian banks and the New York Stock Exchange are open
for business ("Business Day"), the Manager shall notify the Custodian of the
amount of cash or other assets required to meet payments made pursuant to the
provisions of this paragraph, and
- 2 -
<PAGE> 3
the Trust shall instruct the Custodian to make available from time to time
sufficient funds or other assets therefor. The authority of the Manager to
perform its responsibilities under this paragraph shall be suspended upon
receipt by it of notification from the Securities and Exchange Commission or
the Trustees of the suspension of the determination of the Trust's net asset
value.
In registering transfers, the Manager may rely upon the
opinion of counsel in not requiring complete documentation, in registering
transfers without inquiry into adverse claims, in delaying registration for
purposes of such inquiry, or in refusing registration where in its judgment an
adverse claim requires such refusal.
The Trust warrants that it has or shall deliver to the Manager,
as transfer agents:
(a) a copy of the Declaration of Trust of the
Trust, incorporating all amendments thereto, certified by the
Secretary or Assistant Secretary of the Trust;
(b) an opinion of counsel to the Trust
with respect to (i) the legality and continuing existence of
the Trust, (ii) the legality of its outstanding Units of
beneficial interest, and (iii) the number of Units authorized
for issuance and stating that upon issuance they will be
validly issued and nonassessable; and
(c) the Trust's Secretary's or Assistant
Secretary's certificate as to the authorized outstanding Units
of the Trust, its address to which notices may be sent, the
names and specimen signatures of its officers who are
authorized to sign instructions or requests to the Manager on
behalf of the Trust, and the name and address of legal counsel
to the Trust. In the event of any future amendment or change
in respect of any of the foregoing, prompt written
notification of such change shall be given by the Trust to the
Manager, together with copies of all relevant resolutions,
instruments or other documents, specimen signatures,
certificates, opinions or the like as the Manager may deem
necessary or appropriate.
ARTICLE 4. Dividend Disbursing Agent. The Manager shall act
-------------------------
as Dividend Disbursing Agent for the Trust and, as such, in accordance with the
provisions of the Trust's Declaration of Trust and then current prospectus,
shall prepare and wire or credit income and capital gains distributions to
Unitholders. The Trust agrees that it shall promptly inform the Manager of the
declaration of any dividend or distribution an its Units, and that on or before
the payment date of a distribution, it shall instruct the Custodian to make
available, at the instruction of the Dividend Disbursing Agent, sufficient
funds for the cash
- 3 -
<PAGE> 4
amount to be paid out. If a Unitholder is entitled to receive additional Units
by virtue of any such distribution or dividend, appropriate credits will be
made to the Unitholder's account.
ARTICLE 5. Other Administrative Services. In addition to the
-----------------------------
services described above, the Manager shall perform or supervise the
performance by others of other administrative services in connection with the
operations of the Portfolios, and, on behalf of the Trust, will investigate,
assist in the selection of and conduct relations with custodians, depositories,
accountants, underwriters, brokers and dealers, corporate fiduciaries,
insurers, banks and persons in any other capacity deemed to be necessary or
desirable for the Portfolios' operation. The Manager shall provide the Trust
with regulatory reporting and related bookkeeping services, all necessary
office space, equipment, personnel compensation and facilities (including
facilities for Unitholders' and Trustees' meetings) for handling the affairs of
the Portfolios and such other services as the Manager shall, from time to time,
determine to be necessary to perform its obligations under this Agreement. The
Manager shall make reports to the Trust's Trustees concerning the performance
of its obligations hereunder; furnish advice and recommendations with respect
to other aspects of the business and affairs of the Portfolios an the Trust
shall determine desirable; and shall provide the Portfolios' Unitholders with
the reports described in the Trust's current prospectus. Also, the Manager
will perform other services for the Trust as agreed from time to time,
including, but not limited to, preparation and mailing of appropriate federal
income tax forms; mailing the annual reports of the Trust; preparing an annual
list of Unitholders; furnishing the Trust with such reports regarding the sale
and redemption of Units as may be required in order to comply with federal and
state securities law; and mailing notices of Unitholders' meetings, proxies and
proxy statements, for all of which the Trust will pay the Manager's
out-of-pocket expenses.
ARTICLE 6. Allocation of Charges and Expenses.
----------------------------------
(A) The Manager. The Manager shall furnish at its own
-----------
expense the executive, supervisory and clerical personnel necessary to perform
its obligations under this Agreement. The Manager shall also provide the items
which it is obligated to provide under this Agreement, and shall pay all
compensation, if any, of officers of the Trust as well as all Trustees of the
Trust who are affiliated persons of the Manager or any affiliated corporation;
provided, however, that unless otherwise specifically provided, the Manager
shall not be obligated to pay the compensation of any employee of the Trust
retained by the Trustees of the Trust to perform services on behalf of the
Trust.
(B) The Trust. The Trust assumed and shall pay or cause to
---------
be paid all other expanses of the Trust not otherwise allocated herein,
including, without limitation, organizational costs,
- 4 -
<PAGE> 5
taxes, expenses for legal and auditing services, the expenses of preparing
(including typesetting), printing and mailing reports, prospectuses, statements
of additional information, proxy solicitation material and notices to existing
Unitholders, all expenses incurred in connection with issuing and redeeming
Trust Units, the costs of custodial services, the cost of initial and ongoing
registration of the Trust's Units under federal and state securities laws, fees
and out-of-pocket expenses of Trustees who are not affiliated persons of the
Manager or any affiliated corporation, insurance, interest, brokerage costs,
litigation and other extraordinary or nonrecurring expenses, all fees and
charges of investment advisers to the Trust, and distribution expenses in
accordance with the Trust's Distribution Plan.
ARTICLE 7. Compensation of the Manager.
---------------------------
(A) Management Fee. For the services to be rendered, the
--------------
facilities furnished and the expenses assumed by the Manager pursuant to this
Agreement, the Trust shall pay to the Manager compensation with respect to each
Portfolio at an annual rate of .19% of the average daily net assets of the
Portfolio. Such compensation shall be calculated and accrued daily, and paid
to the Manager monthly (subject to any expenses to be borne by the Manager
under Article 7(B) herein). If this Agreement becomes effective subsequent to
the first day of a month or terminates before the last day of a month, the
Manager's compensation for that part of the month in which this Agreement is in
effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above. Payment of the Manager's compensation for the
preceding month shall be made promptly after completion of the computations
contemplated by paragraph (B) of this Article 7.
(B) Excess Expenses. If the annualized expenses of any
---------------
Portfolio on any day (including fees and other amounts payable to the Manager
and the Investment Administrator, but excluding interest, taxes, brokerage
costs, and litigation and other extraordinary costs) ("Annualized Expenses")
would exceed an annual rate of .25% of the Portfolio's average daily net asset
value calculated on a cumulative basis for the then current fiscal year
("Expense Limit"), the Manager shall waive, and the Trust shall not be required
to pay, such part of its fee for that day as, when combined with any fee waiver
required of the Portfolio's Investment Administrator for that day pursuant to
the Trust's Investment Administration Agreement, is necessary to reduce the
Portfolio's Annualized Expenses to the Expense Limit. In the event that the
waiver of fees by the Manager and the Investment Administrator is
not-sufficient (i) to cause the Portfolio's Annualized Expenses to be reduced
to the Expense Limit or (ii) to meet the expense limitations imposed on
investment companies by any applicable statute or regulatory authority of any
jurisdiction in which the Portfolio's Units are qualified for offer and sale
("Blue Sky Limit"), then the Manager
- 5 -
<PAGE> 6
shall bear a sufficient amount of the other expenses of the Portfolio as shall
reduce the total daily expense to the Expense Limit or the Blue Sky Limit,
whichever Is lower. Any daily fees or parts thereof waived or other expenses
borne by "a Manager pursuant to this provision may be recovered from the
applicable Portfolio by the Manager on those days when such recovery would not
cause the Annualized Expenses of the Portfolio to exceed the Expense Limit,
provided that any such recovery must occur within two years of the time the
fees being recovered initially were waived. Notwithstanding the foregoing, the
Manager shall not be required to bear expenses of the Portfolio to an extent
which would result in the Trust's inability to qualify as a regulated
investment company under applicable provisions of the Internal Revenue Code.
For the purposes of this paragraph, Annualized Expenses shall be based on an
allocation of expenses in the same manner as the Portfolio's daily expenses are
allocated for the purposes of determining the Portfolio's daily not asset value
per unit.
(C) Survival of Compensation Rates. All rights of
------------------------------
compensation under this Agreement shall survive the termination of this
Agreement, provided that the right to recover any fees waived or other expenses
borne by the Manager pursuant to Article 7(B) hereof shall not survive the
termination of this Agreement.
(D) Compensation from Transactions. The Trust hereby
------------------------------
authorizes any entity or person associated with the Manager which is a member
of a national securities exchange to effect any transaction on the exchange for
the account of the Trust which in permitted by Section 11(a) of the Securities
Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Trust hereby
consents to the retention of compensation for such transactions in accordance
with Rule 11a2-2(T)(a)(2)(iv).
ARTICLE 8. Limitation of Liability of the Manager. The duties
--------------------------------------
of the Manager shall be confined to those expressly set forth herein, and no
implied duties are assumed by or may be asserted against the Manager hereunder.
The Manager shall not be liable for any error of judgment or mistake of law or
for any loss arising out of any investment or for any act or omission in
carrying out its duties hereunder, except a loss resulting from Willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder, except
as may Otherwise be provided under provisions of applicable state law which
cannot be waived or modified hereby. (As used in this Article 8, the term
"Manager" shall include directors, officers, employees and other corporate
agents of the Manager as well as that corporation itself.) So long as the
Manager acts in good faith and with due diligence and without gross negligence,
the Trust assumes full responsibility and shall indemnify the Manager and hold
it harmless from and against any and all actions, suits and claims, whether
groundless or otherwise, and from and against any and all
- 6 -
<PAGE> 7
losses, damages, costs, charges, reasonable counsel fees and disbursements,
payments, expenses and liabilities (including reasonable investigation
expenses) arising directly or indirectly out of said management and transfer,
dividend disbursing and unitholder servicing agency relationship to the Trust
or any other service rendered to the Trust hereunder. The indemnity and
defense provisions set forth herein shall indefinitely survive the termination
of this Agreement. The rights hereunder shall include the right to reasonable
advances of defense expenses in the event of any pending or threatened
litigation with respect to which indemnification hereunder may ultimately be
merited. In order that the indemnification provision contained herein shall
apply, however, it is understood that if in any case the Trust may be asked to
indemnify or hold the Manager harmless, the Trust shall be fully and promptly
advised of all pertinent facts concerning the situation in question, and it is
further understood that the Manager will use all reasonable care to identify
and notify the Trust promptly concerning any situation which presents or
appears likely to present the probability of such a claim for indemnification
against the Trust, but failure to do so in good faith shall not affect the
rights hereunder.
The Manager may apply to the Trust at any time for
instructions and may consult counsel for the Trust or its own counsel and with
accountants and other experts with respect to any matter arising in connection
with the Manager's duties, and the Manager shall not be liable or accountable
for any action taken or omitted by it in good faith in accordance with such
instruction or with the opinion of such counsel, accountants or other experts.
Also, the Manager shall be protected in acting upon any document which it
reasonably believes to be genuine and to have been signed or presented by the
proper person or persons. Nor shall the Manager be hold to have notice of any
change of authority of any officer, employee or agent of the Trust until
receipt of written notice thereof from the Trust.
ARTICLE 9. Activities of the Manager. The services of the
-------------------------
Manager rendered to the Trust are not to be deemed to be exclusive. The
Manager is free to render such services to others and to have other businesses
and interests. It is understood that Trustees, officers, employees and
Unitholders of the Trust are or may be or become interested in the Manager, as
directors, officers, employees and shareholders or otherwise and that
directors, officers, employees and shareholders of the Manager and its counsel
are or may be or become similarly interested in the Trust, and that the Manager
may be or become interested in the Trust as a Unitholder or otherwise.
ARTICLE 10. Duration and Termination of This Agreement. This
------------------------------------------
Agreement, unless terminated sooner as provided herein, shall remain in effect
for two years after the date of the Agreement and shall continue in effect for
successive periods of one year if such continuance is specifically approved at
least
- 7 -
<PAGE> 8
annually (i) by the Trustees of the Trust and (ii) by the vote of a majority of
the Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a Board of Trustees meeting called
for the purpose of voting on such approval. This Agreement may be terminated
at any time and without penalty by the Trustees of the Trust or by the Manager
on not less than 30 days nor more than 60 days written notice to the other
party hereto. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at the
designated mailing address of such party.
This Agreement shall not be assignable by either party without
the written consent of the other party.
ARTICLE 11. Amendments. This Agreement may be amended by the
----------
parties hereto only if such amendment is specifically approved (i) by the vote
of a majority of the Trustees of the Trust, and (ii) by the vote of a majority
of the Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a Board of Trustees
meeting called for the purpose of voting on such approval. For special cases,
the parties hereto may amend such procedures set forth herein as may be
appropriate or practical under the circumstances, and the Manager may
conclusively assume that any special procedure which his been approved by the
Trust does not conflict with or violate any requirements of its Declaration of
Trust, By-Laws or prospectus, or any rule, regulation or requirement of any
regulatory body.
ARTICLE 12. Trustees' Liability. A copy of the Declaration
-------------------
of Trust of the Trust is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that this instrument
is executed on behalf of the Trustees of the Trust as Trustees and not
individually and that the obligations of this instrument are not binding upon
any of the Trustees, officers or Unitholders of the Trust individually, but
binding only upon the assets and property of the Trust.
ARTICLE 13. Certain Records. The Manager shall maintain
---------------
customary records in connection with its duties as specified in this Agreement.
Any records required to be maintained and preserved pursuant to Rules 31a-1 and
31a-2 under the 1940 Act which are prepared or maintained by the Manager on
behalf of the Trust shall be prepared and maintained at the expense of the
Manager, but shall be the property of the Trust and will be made available to
or surrendered promptly to the Trust on request. In case of any request or
demand for the inspection of such records by another party, the Manager shall
notify the Trust and follow the Trust's instructions as to permitting or
refusing such inspection; provided that the Manager may exhibit such records to
any person in any case where it is advised by its counsel that it
- 8 -
<PAGE> 9
may be hold liable for failure to do so, unless (in cases involving potential
exposure only to civil liability) the Trust has agreed to indemnify the Manager
against such liability.
ARTICLE 14. Definitions of Certain Terms. The terms
----------------------------
"interested person" and "affiliated person," when used in this Agreement, shall
have the respective meanings specified in the 1940 Act and the rules and
regulations thereunder, subject to such exemptions as may be granted by the
Securities and Exchange Commission.
ARTICLE 15. Governing Law. This Agreement shall be construed
-------------
in accordance with the laws of the Commonwealth of Massachusetts and the
applicable provisions of the 1940 Act. To the extent that the applicable laws
of the Commonwealth of Massachusetts, or any of the provisions herein, conflict
with the applicable provisions of the 1940 Act, the latter shall control.
ARTICLE 16. Multiple Originals. This Agreement may be
------------------
executed in two or more counterparts, each of which when so executed shall be
deemed to be an original, but such counterparts shall together constitute but
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day and year first above written.
TRUSTFUNDS INDEX FUNDS
By [SIGNATURE APPEARS HERE]
--------------------------------
SEI FINANCIAL MANAGEMENT CORPORATION
By [SIGNATURE APPEARS HERE]
--------------------------------
Executive Vice President
- 9 -
<PAGE> 1
EXHIBIT 99.B9(c)
SHAREHOLDER SERVICE PLAN AND AGREEMENT
SEI INDEX FUNDS
CLASS A
SEI Index Funds (the "Fund") is an open-end investment company
registered under the Investment Company Act of 1940, as amended, and currently
consisting of a number of separately managed portfolios (the "Portfolios"). The
Fund desires to retain SEI Financial Services Company (the "Distributor"), a
Pennsylvania corporation, to itself provide or to compensate service providers
who themselves provide, the services described herein to clients (the "Clients")
who from time to time beneficially own Class A shares ("Shares") of any
Portfolio of the Fund. The Distributor is willing to itself provide or to
compensate service providers for providing, such shareholder services in
accordance with the terms and conditions of this Agreement.
SECTION 1. The Distributor will provide, or will enter into written agreements
in the form attached hereto with service providers pursuant to which the service
providers will provide, one or more of the following shareholder services to
Clients who may from time to time beneficially own Shares:
(i) maintaining accounts relating to Clients that invest in Shares;
(ii) providing information periodically to Clients showing their
positions in Shares;
(iii) arranging for bank wires;
(iv) responding to Client inquiries relating to the services performed
by the Distributor or any service provider;
(v) responding to inquiries from Clients concerning their investments
in Shares;
(vi) forwarding shareholder communications from the Fund (such as
proxies, shareholder reports, annual and semi-annual financial
statements and dividend, distribution and tax notices) to Clients;
(vii) processing purchase, exchange and redemption requests from
Clients and placing such orders with the Fund or its service providers;
(viii) assisting Clients in changing dividend options, account
designations, and addresses;
<PAGE> 2
(ix) providing subaccounting with respect to Shares beneficially owned
by Clients;
(x) processing dividend payments from the Fund on behalf of Clients;
and
(xi) providing such other similar services as the Fund may reasonably
request to the extent that the Distributor and/or the service provider
is permitted to do so under applicable laws or regulations.
SECTION 2. The Distributor will provide all office space and equipment,
telephone facilities and personnel (which may be part of the space, equipment
and facilities currently used in the Distributor's business, or any personnel
employed by the Distributor) as may be reasonably necessary or beneficial in
order to fulfill its responsibilities under this Agreement.
SECTION 3. Neither the Distributor nor any of its officers, employees, or agents
is authorized to make any representations concerning the Fund or the Shares
except those contained in the Fund's then-current prospectus or Statement of
Additional Information for the Shares, copies of which will be supplied to the
Distributor, or in such supplemental literature or advertising as may be
authorized in writing.
SECTION 4. For purposes of this Agreement, the Distributor and each service
provider will be deemed to be independent contractors, and will have no
authority to act as agent for the Fund in any matter or in any respect. By its
written acceptance of this Agreement, the Distributor agrees to and does
release, indemnify, and hold the Fund harmless from and against any and all
direct or indirect liabilities or losses resulting from requests, directions,
actions, or inactions of or by the Distributor or its officers, employees, or
agents regarding the Distributor's responsibilities under this Agreement, the
provision of the aforementioned services to Clients by the Distributor or any
service provider, or the purchase, redemption, transfer, or registration of
Shares (or orders relating to the same) by or on behalf of Clients. The
Distributor and its officers and employees will, upon request, be available
during normal business hours to consult with representatives of the Fund or its
designees concerning the performance of the Distributor's responsibilities under
this Agreement.
SECTION 5. In consideration of the services and facilities to be provided by the
Distributor or any service provider, each Portfolio that has issued Class A
shares will pay to the Distributor a fee, as agreed from time to time, at an
annual rate of up to .25% (twenty-five basis points) of the average net asset
value of all Class A shares of each Portfolio, which fee will be computed daily
and paid monthly. The Fund may, in its discretion and without
<PAGE> 3
notice, suspend or withdraw the sale of Class A Shares of any Portfolio,
including the sale of Class A Shares to any service provider for the account of
any Client or Clients. The Distributor may waive all or any portion of its fee
from time to time.
SECTION 6. The Fund may enter into other similar servicing agreements with any
other person or persons without the Distributor's consent.
SECTION 7. By its written acceptance of this Agreement, the Distributor
represents, warrants, and agrees that the services provided by the Distributor
under this Agreement will in no event be primarily intended to result in the
sale of Shares.
SECTION 8. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by the Fund or its designee and shall
continue until terminated by either party. This Agreement is terminable with
respect to the Class A Shares of any Portfolio, without penalty, at any time by
the Fund or by the Distributor upon written notice to the Fund.
SECTION 9. All notices and other communications to either the Fund or to the
Distributor will be duly given if mailed, telegraphed, telefaxed, or transmitted
by similar communications device to the appropriate address stated herein, or to
such other address as either party shall so provide the other.
SECTION 10. This Agreement will be construed in accordance with the laws of the
Commonwealth of Pennsylvania and may not be "assigned" by either party thereto
as that term is defined in the Investment Company Act of 1940.
SECTION 11. References to the "SEI Index Funds," the "Fund," and the "Trustees"
of the Fund refer respectively to the Trust created and the Trustees as
trustees, but not individually or personally, acting from time to time under the
Declaration of Trust of the Fund dated March 6, 1985, as amended, a copy of
which is on file with the Department of State of the Commonwealth of
Pennsylvania and at the Fund's principal office. The obligations of the Fund
entered into in the name or on behalf thereof by any of the Trustees, officers,
representatives, or agents are made not individually, but in such capacities,
and are not binding upon any of the Trustees, shareholders, officers,
representatives, or agents of the Fund personally. Further, any obligations of
the Fund with respect to any one Portfolio shall not be binding upon any other
Portfolio.
By their signatures, the Fund and the Distributor agree to the terms of this
Agreement.
SEI INDEX FUNDS
- 3 -
<PAGE> 4
By: ___________________________________ Date: ________________
SEI FINANCIAL SERVICES COMPANY
By: ___________________________________ Date: ________________
- 4 -
<PAGE> 1
EXHIBIT 99.B9(d)
SHAREHOLDER SERVICE PLAN AND AGREEMENT
SEI INDEX FUNDS
CLASS E
SEI Index Funds (the "Fund") is an open-end investment company
registered under the Investment Company Act of 1940, as amended, and currently
consisting of a number of separately managed portfolios (the "Portfolios").
The Fund desires to retain SEI Financial Services Company (the "Distributor"),
a Pennsylvania corporation, to itself provide or to compensate service
providers who themselves provide, the services described herein to clients (the
"Clients") who from time to time beneficially own Class E shares ("Shares") of
any Portfolio of the Fund. The Distributor is willing to itself provide or to
compensate service providers for providing, such shareholder services in
accordance with the terms and conditions of this Agreement.
SECTION 1. The Distributor will provide, or will enter into written agreements
in the form attached hereto with service providers pursuant to which the
service providers will provide, one or more of the following shareholder
services to Clients who may from time to time beneficially own Shares:
(i) maintaining accounts relating to Clients that invest in
Shares;
(ii) providing information periodically to Clients showing
their positions in Shares;
(iii) arranging for bank wires;
(iv) responding to Client inquiries relating to the services
performed by the Distributor or any service provider;
(v) responding to inquiries from Clients concerning their
investments in Shares;
(vi) forwarding shareholder communications from the Fund (such
as proxies, shareholder reports, annual and semi-annual
financial statements and dividend, distribution and tax
notices) to Clients;
(vii) processing purchase, exchange and redemption requests
from Clients and placing such orders with the Fund or its
service providers;
(viii) assisting Clients in changing dividend options, account
designations, and addresses;
<PAGE> 2
(ix) providing subaccounting with respect to Shares
beneficially owned by Clients;
(x) processing dividend payments from the Fund on behalf of
Clients; and
(xi) providing such other similar services as the Fund may
reasonably request to the extent that the Distributor and/or
the service provider is permitted to do so under applicable
laws or regulations.
SECTION 2. The Distributor will provide all office space and equipment,
telephone facilities and personnel (which may be part of the space, equipment
and facilities currently used in the Distributor's business, or any personnel
employed by the Distributor) as may be reasonably necessary or beneficial in
order to fulfill its responsibilities under this Agreement.
SECTION 3. Neither the Distributor nor any of its officers, employees, or
agents is authorized to make any representations concerning the Fund or the
Shares except those contained in the Fund's then-current prospectus or
Statement of Additional Information for the Shares, copies of which will be
supplied to the Distributor, or in such supplemental literature or advertising
as may be authorized in writing.
SECTION 4. For purposes of this Agreement, the Distributor and each service
provider will be deemed to be independent contractors, and will have no
authority to act as agent for the Fund in any matter or in any respect. By its
written acceptance of this Agreement, the Distributor agrees to and does
release, indemnify, and hold the Fund harmless from and against any and all
direct or indirect liabilities or losses resulting from requests, directions,
actions, or inactions of or by the Distributor or its officers, employees, or
agents regarding the Distributor's responsibilities under this Agreement, the
provision of the aforementioned services to Clients by the Distributor or any
service provider, or the purchase, redemption, transfer, or registration of
Shares (or orders relating to the same) by or on behalf of Clients. The
Distributor and its officers and employees will, upon request, be available
during normal business hours to consult with representatives of the Fund or its
designees concerning the performance of the Distributor's responsibilities
under this Agreement.
SECTION 5. In consideration of the services and facilities to be provided by
the Distributor or any service provider, each Portfolio that has issued Class E
shares will pay to the Distributor a fee, as agreed from time to time, at an
annual rate of up to .15% (fifteen basis points) of the average net asset value
of all Class E shares of each Portfolio, which fee will be computed daily and
paid monthly. The Fund may, in its discretion and without notice,
<PAGE> 3
suspend or withdraw the sale of Class E Shares of any Portfolio, including the
sale of Class E Shares to any service provider for the account of any Client or
Clients. The Distributor may waive all or any portion of its fee from time to
time.
SECTION 6. The Fund may enter into other similar servicing agreements with any
other person or persons without the Distributor's consent.
SECTION 7. By its written acceptance of this Agreement, the Distributor
represents, warrants, and agrees that the services provided by the Distributor
under this Agreement will in no event be primarily intended to result in the
sale of Shares.
SECTION 8. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by the Fund or its designee and shall
continue until terminated by either party. This Agreement is terminable with
respect to the Class E Shares of any Portfolio, without penalty, at any time by
the Fund or by the Distributor upon written notice to the Fund.
SECTION 9. All notices and other communications to either the Fund or to the
Distributor will be duly given if mailed, telegraphed, telefaxed, or
transmitted by similar communications device to the appropriate address stated
herein, or to such other address as either party shall so provide the other.
SECTION 10. This Agreement will be construed in accordance with the laws of
the Commonwealth of Pennsylvania and may not be "assigned" by either party
thereto as that term is defined in the Investment Company Act of 1940.
SECTION 11. References to the "SEI Index Funds," the "Fund," and the
"Trustees" of the Fund refer respectively to the Trust created and the Trustees
as trustees, but not individually or personally, acting from time to time under
the Declaration of Trust of the Fund dated March 6, 1985, a copy of which is on
file with the Department of State of the Commonwealth of Pennsylvania and at
the Fund's principal office. The obligations of the Fund entered into in the
name or on behalf thereof by any of the Trustees, officers, representatives, or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, officers, representatives, or agents of
the Fund personally. Further, any obligations of the Fund with respect to any
one Portfolio shall not be binding upon any other Portfolio.
By their signatures, the Fund and the Distributor agree to the terms of this
Agreement.
SEI INDEX FUNDS
- 3 -
<PAGE> 4
By: Date:
----------------------------------- ----------------
SEI FINANCIAL SERVICES COMPANY
By: Date:
----------------------------------- ----------------
- 4 -
<PAGE> 1
ARTHUR ANDERSEN LLP
EX-99.B11
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use in this
Registration Statement of our report dated May 10, 1996 included in the
Post-Effective Amendment No. 19 to the Registration Statement on Form N-1 A of
the SEI Index Funds (No. 2-97111), and to all references to our firm included
in this Registration Statement File No. 2-97111.
/s/ Arthur Andersen LLP
Philadelphia, Pa.,
May 28, 1996
<PAGE> 1
EX-99.B12
==============================================================================
SEI INDEX FUNDS
==============================================================================
1996 ANNUAL REPORT
==============================================================================
MARCH 31, 1996
<PAGE> 2
TABLE OF CONTENTS
===============================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FUND PERFORMANCE
S&P 500 INDEX PORTFOLIO........................................ 1
BOND INDEX PORTFOLIO........................................... 2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS............................. 5
STATEMENT OF NET ASSETS.............................................. 6
STATEMENT OF OPERATIONS.............................................. 15
STATEMENTS OF CHANGES IN NET ASSETS.................................. 16
FINANCIAL HIGHLIGHTS................................................. 17
NOTES TO FINANCIAL STATEMENTS........................................ 18
SHAREHOLDER VOTING RESULTS........................................... 21
NOTICE TO SHAREHOLDERS............................................... 22
<PAGE> 3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
S&P 500 INDEX PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN(1)
<TABLE>
<CAPTION>
Since
1 Year 3 Year 5 Year 10 Year Inception
<S> <C> <C> <C> <C>
31.88% 15.44% 14.38% 13.54% 15.19%
</TABLE>
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in SEI Index Funds S&P
500 Index Portfolio from July 31, 1985 through March 31, 1996 as compared with
the growth of a $10,000 investment in the Standard & Poor's 500 Composite Stock
Price Index. The plot points used to draw the line graph were as follows:
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE SEI S&P 500
INDEX PORTFOLIO, VERSUS THE S&P 500 COMPOSITE INDEX
<TABLE>
<CAPTION>
Growth of $10,000 Growth of $10,000
Invested in S&P 500 Invested in S&P 500
Period Ended Index Portfolio Composite Index
<S> <C> <C>
7/31/85 $10,000 $10,000
3/31/86 $12,692 $12,846
3/31/87 $15,918 $16,213
3/31/88 $14,441 $14,864
3/31/89 $16,982 $17,559
3/31/90 $20,212 $20,946
3/31/91 $23,079 $23,965
3/31/92 $25,543 $26,613
3/31/93 $29,367 $30,663
3/31/94 $29,720 $31,117
3/31/95 $34,255 $35,956
3/31/96 $45,175 $47,494
</TABLE>
(1) For the periods ended March 31, 1996. Past performance is no indication of
future performance. The Portfolio was offered beginning 08/01/85.
OBJECTIVES. The S&P 500 Index Portfolio seeks to provide investment
results that correspond to the aggregate price and dividend performance of the
securities in the Standard and Poor's 500 Composite Stock Price Index (the
"Index"). The fifty largest stocks in the Index account for approximately 50% of
the weighting of the Index, and the Index represents approximately two-thirds of
the market value of the common stocks listed on the New York Stock Exchange.
STRATEGY. The S&P 500 Index Portfolio attempts to match the performance of
the widely followed Index by duplicating its composition in full. Deviation on
performance between the portfolio and the index, called tracking error, is
typically attributable to trading costs and cash reserves held for liquidity
needs. The presence of cash in the Portfolio will result in underperformance of
the Index during rising markets and overperformance during falling markets.
Transaction costs incurred during portfolio purchases and sales will also
contribute to tracking error. To mitigate these effects, the Portfolio may use
stock index futures to hedge its cash position. Futures contracts enable the
Portfolio to maintain exposure to the market and reduce trading expenses as the
cost of a contract is nominal in comparison to the cost of purchasing 500 stocks
in the Index. The value of stock index futures held by the Portfolio may not
exceed 20% of the Portfolio's assets.
ANALYSIS. For the fiscal year ended March 31, 1996, the SEI S&P 500 Index
Portfolio was up a sharp 31.88% versus the S&P 500 Index which was up 32.04% for
the year. The return differential was mostly attributable to Fund expenses.
The performance of the S&P 500 Index Portfolio throughout the year was
reflective of the favorable environment for investing in US equity markets.
Corporations, in almost every market sector, experienced very strong earnings
growth while inflation remained under control. Economic growth was sustainable
while trade balances improved during the year. With inflation under control and
little threat of the economy overheating, the Federal Reserve Board of Governors
enacted an expansionary monetary policy by lowering interest rates. Finally,
with the positive economic news, unemployment below 6% and strong market
returns, investors poured record amounts of new money into the market. This huge
cash injection fueled the markets higher.
1
<PAGE> 4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
S&P 500 INDEX (CONTINUED)
The market's gain was steady throughout the year though the first half was
somewhat stronger than the second half. While market fundamentals remained
strong, the first quarter of 1996 began with analyst reducing estimates for
corporate earnings growth but record inflows sustained the market's advance.
There was no clear style in favor during the year as growth and value
indices finish the year with nearly identical gains. Small-cap stocks fell
behind the market's strong first half advance. However, the second half proved
to be very strong for small-cap stocks. This narrowed the gap between large-cap
and small-cap returns for the year.
BOND INDEX PORTFOLIO
AVERAGE ANNUAL TOTAL RETURN(1)
<TABLE>
<CAPTION>
Since
1 Year 3 Year 5 Year Inception
<S> <C> <C> <C> <C>
10.31% 5.60% 7.76% 7.96%
</TABLE>
A line graph depicting the total growth (including reinvestment of dividends and
capital gains) of a hypothetical investment of $10,000 in SEI Index Funds Bond
Index Portfolio from May 31, 1986 through March 31, 1996 as compared with the
growth of a $10,000 investment in the Salomon Broad Bond Index and the Lehman
Aggregate Bond Index. The plot points used to draw the line graph were as
follows:
COMPARISON OF CHANGE IN THE VALUE OF A $10,000 INVESTMENT IN THE SEI BOND INDEX
PORTFOLIO, VERSUS THE SALOMON BROAD BOND INDEX, AND THE LEHMAN AGGREGATE BOND
INDEX
<TABLE>
<CAPTION>
Growth of $10,000 Growth of $10,000 Growth of $10,000
Invested in Bond Invested in Salomon Invested in Lehman
Period Ended Index Portfolio Broad Bond Index Aggregate Bond Index
<S> <C> <C> <C>
5/31/86 $10,000 $10,000 $10,000
3/31/87 $10,973 $11,013 $11,024
3/31/88 $11,343 $11,579 $11,566
3/31/89 $11,821 $12,185 $12,161
3/31/90 $13,244 $13,674 $13,662
3/31/91 $14,823 $15,426 $15,427
3/31/92 $16,224 $17,227 $17,184
3/31/93 $18,289 $19,532 $19,468
3/31/94 $18,673 $20,028 $19,928
3/31/95 $19,521 $21,033 $20,924
3/31/96 $21,533 $23,319 $23,180
</TABLE>
(1) For the periods ended March 31, 1996. Past performance is no indication of
future performance. The Portfolio was offered beginning 05/19/86.
OBJECTIVES. The Bond Index Portfolio seeks to provide investment results
that correspond to the aggregate price and interest performance of a specified
index that tracks the performance of debt securities.
The Bond Index Portfolio seeks to provide investment results that
correspond to the aggregate price and performance of the Lehman Aggregate Bond
Index (the "Lehman Index"). The Portfolio's ability to duplicate the performance
of the Lehman Index will depend to some extent on the size and timing of cash
flows into and out of the Portfolio as well as on the level of the Portfolio's
expenses, and the capability of the Portfolio to select a representative sample
of the securities included in the Lehman Index.
2
<PAGE> 5
BOND INDEX (CONTINUED)
The Lehman Index is made up of the Government/Corporate Index, the
Mortgage Backed Securities Index and the Asset-Backed Securities Index. The
Lehman Index includes fixed rate debt issues rated investment grade or higher by
Moody's Investor Service, Standard & Poor's Corporation or Fitch Investor's
Service in that order. All issues have at least one year to maturity and an
outstanding par value of at least $100 million. Price, coupon and total return
are reported for all sectors on a month-end basis. All returns are market value
weighted inclusive of accrued interest.
STRATEGY. The Portfolio intends to invest its assets primarily in up to
300 of the debt obligations included in the Lehman Index so long as the net
assets of the Portfolio are less than $100 million. The Portfolio will be
invested in 100 to 500 of such obligations at net asset levels of $100 million
or more. The Portfolio will be managed in a manner designed to reflect generally
the current performance of the Lehman Index. Obligations included in the Lehman
Index have been categorized into sectors which have been organized on the basis
of type of issuer and then further classified by quality and remaining
maturities.
The percentage of the Portfolio's assets to be invested in the aggregate
obligations included in a particular sector of the Lehman Index will
approximate, to the maximum extent feasible, the percentage such sector
represents in that Lehman Index. The ability of the Portfolio to duplicate the
Lehman Index's performance can be influenced by the Portfolio's asset size. To
the extent that the size of Portfolio assets limits the number of issues that
the Portfolio can purchase, there is more potential for deviation from the
Lehman Index's performance than at larger asset levels. Under these
circumstances, the Portfolio will implement strategies designed to minimize this
potential for greater deviation.
ANALYSIS. The investment-grade fixed income market posted strong gains for
the fiscal year ended March 31, 1996, as bonds rallied due to expectations of
slow economic growth and mild inflation. Employment, retail sales, and
manufacturing activity were sluggish in 1995. In response to the weakness, the
Federal Reserve lowered the Federal Funds rate three times during the fiscal
year from 6.00% to 5.25%. The first interest rate cut in July 1995 marked a
reversal of Fed policy, as it was the first reduction after seven consecutive
increases. The market also shrugged off the stalemates in the federal budget
negotiations and instead reacted favorably to the prospect of a balanced budget.
A smaller budget deficit would lower the supply of available Treasury securities
and remove some government spending stimulus from the economy, thus reducing the
risk of accelerating inflation. The front-end of the yield curve inverted as the
2-year note hit a low of 4.72% in early February 1996, more than 50 basis points
below the overnight lending rate. The 2- to 30-year Treasury spread widened 55
basis points from the beginning of the fiscal year to early February 1996 as
market participants drove short-term bond prices up in anticipation of further
interest rate cuts.
The positive tone of the market changed dramatically in mid-February as
heavy Treasury refunding supply, political uncertainties related to the
Republican primaries, and rising gold prices caused the market to sell off.
Bonds extended their losses and suffered their largest one-day decline in 6
years due to a much stronger than anticipated February
3
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
BOND INDEX (CONTINUED)
employment report. The 2- to 30-year spread narrowed 30 basis points from early
February to fiscal year end as market participants believed further interest
rate cuts were unlikely near-term.
Corporates were the best performing sector returning 12.43% for the fiscal
year. Rising profits, strong investor demand, and limited growth in new supply
lent strength to the sector. Mortgage securities paced governments for the
fiscal year, returning 10.49% and 10.47%, respectively. Fears of accelerated
prepayments and lack of investor demand dampened mortgage performance through
1995. Higher interest rates for the first quarter of 1996 eased prepayment fears
and boosted performance of mortgages for that period.
Over the entire fiscal year, the fixed income market as measured by the
Lehman Aggregate returned 10.78%, while the SEI Bond Index Portfolio returned
10.31%. The return differential was mostly attributable to Fund expenses and the
transaction costs associated with keeping the Portfolio aligned with the Index.
In October 1995, Mellon Bond Associates replaced World Asset Management as
adviser to the fund. The departures of key bond indexation personnel prompted
the replacement.
4
<PAGE> 7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
===============================================================================
To the Shareholders and Trustees of
SEI Index Funds:
We have audited the accompanying statements of net assets of the S&P 500 Index
and Bond Index Portfolios of SEI Index Funds as of March 31, 1996, and the
related statements of operations, statements of changes in net assets and
financial highlights for the years presented. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of March
31, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
S&P 500 Index and Bond Index Portfolios of SEI Index Funds as of March 31, 1996,
the results of their operations, changes in their net assets and financial
highlights for the years presented, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Philadelphia, PA
May 10, 1996
5
<PAGE> 8
STATEMENT OF NET ASSETS
================================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
COMMON STOCKS -- 94.4%
AGRICULTURE -- 0.1%
<S> <C> <C>
Pioneer Hi Bred International 10,500 $ 553
------
AIR TRANSPORTATION -- 0.4%
AMR* 9,385 840
Delta Air Lines 6,485 499
Federal Express* 6,835 478
Southwest Airlines 17,700 524
US Air Group* 7,765 142
------
2,483
------
AIRCRAFT -- 2.0%
Allied Signal 34,770 2,056
Boeing 42,203 3,656
General Dynamics 7,730 452
Lockheed Martin 24,716 1,875
McDonnell Douglas 13,795 1,264
Northrop 6,065 386
Teledyne 6,850 192
Textron 10,455 836
United Technologies 14,965 1,680
------
12,397
------
APPAREL/TEXTILES -- 0.2%
Fruit of the Loom*, Cl A 9,400 243
Liz Claiborne 9,050 310
Russell 4,865 130
Springs Industries, Cl A 2,470 114
VF 7,930 438
------
1,235
------
AUTOMOTIVE -- 2.7%
Chrysler 47,042 2,928
Cooper Tire & Rubber 10,300 265
Dana 12,630 422
Eaton 9,630 580
Echlin 7,335 266
Fleetwood Enterprises 5,690 141
Ford Motor 132,140 4,542
General Motors 91,930 4,895
Genuine Parts 15,095 679
Goodyear Tire & Rubber 18,770 957
ITT Industries 14,365 366
Navistar International* 9,026 94
Paccar 4,854 237
TRW 7,960 709
------
17,081
------
BANKS -- 6.8%
H.F. Ahmanson 14,700 356
Banc One 55,186 1,966
Bank of Boston 14,056 698
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Bank of New York 24,600 $ 1,267
BankAmerica 45,488 3,525
Bankers Trust, New York 9,913 703
Barnett Banks 11,635 724
Boatmen's Bancshares 19,000 746
Chase Manhattan 21,980 1,616
Chemical Banking 30,934 2,181
Citicorp 59,645 4,772
Comerica 14,700 614
CoreStates Financial 17,200 729
Fifth Third Bancorp 13,300 771
First Chicago, NBD 39,502 1,639
First Interstate Bancorp 9,440 1,638
First Union 34,662 2,097
Fleet Financial Group 32,289 1,308
Golden West Financial 7,405 397
Great Western Financial 16,870 407
KeyCorp 29,171 1,127
Mellon Bank 16,405 904
J.P. Morgan 23,130 1,920
National City 18,100 636
NationsBank 36,361 2,913
Norwest 43,486 1,598
PNC Bank 42,060 1,293
Republic New York 7,100 422
SunTrust Banks 14,065 985
U.S. Bancorp, Oregon 18,600 632
Wachovia 21,000 940
Wells Fargo 5,935 1,549
------
43,073
------
CHEMICALS -- 3.5%
Air Products & Chemicals 13,770 752
Dow Chemical 32,250 2,802
E.I. du Pont de Nemours 68,295 5,668
Eastman Chemical 9,891 684
FMC* 4,465 335
B.F. Goodrich 3,295 262
W.R. Grace 11,905 932
Great Lakes Chemical 8,100 546
Hercules 13,795 855
Eli Lilly 67,810 4,408
Monsanto 14,310 2,197
Morton International 18,295 702
Nalco Chemical 8,400 258
Praxair 17,265 688
Rohm & Haas 8,235 548
Union Carbide 16,965 842
------
22,479
------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
COMMUNICATIONS -- 9.5%
<S> <C> <C>
Airtouch Communications* 60,890 $ 1,895
ALLTEL 23,200 719
Ameritech 68,110 3,712
AT&T 195,799 11,993
Avon Products 8,435 723
Baker Hughes 17,415 509
Bell Atlantic 53,800 3,322
BellSouth 123,234 4,560
Comcast, Special Cl A 29,527 522
DSC Communications* 14,430 390
GTE 119,180 5,229
Harris 4,665 289
Interpublic Group 9,800 463
MCI Communications 83,430 2,524
Motorola 72,560 3,846
Northern Telecom Ltd. 31,165 1,488
NYNEX 52,500 2,618
Pacific Telesis Group 52,690 1,456
SBC Communications 74,890 3,941
Scientific-Atlanta 9,684 172
Sprint 42,900 1,630
Tele-Communications, Cl A* 80,335 1,491
Tellabs* 11,100 537
US West 57,960 1,876
US West Media Group* 58,060 1,197
Viacom, Cl B* 44,400 1,870
Worldcom* 22,000 1,012
------
59,984
------
COMPUTERS & SERVICES -- 6.7%
Amdahl* 14,900 127
Apple Computer* 15,320 376
Autodesk 5,700 215
Automatic Data Processing 35,720 1,406
Bay Networks* 22,400 689
CUC International* 22,000 644
Cabletron Systems* 9,000 596
Ceridian* 8,265 355
Cisco Systems* 67,400 3,126
Compaq Computer* 32,690 1,263
Computer Associates International 29,757 2,131
Computer Sciences* 6,760 476
Data General* 4,670 68
Digital Equipment* 18,515 1,021
First Data 27,352 1,928
EMC/Mass* 25,000 547
Hewlett Packard 62,930 5,915
Intergraph* 5,835 93
International Business Machines 69,980 7,777
Microsoft* 72,900 7,518
Novell* 45,600 610
Oracle Systems* 53,375 2,515
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Pitney Bowes 18,660 $ 914
Safety-Kleen 7,110 102
Shared Medical Systems 2,895 174
Silicon Graphics* 19,800 495
Sun Microsystems* 22,700 993
Tandem Computers* 14,350 127
Tandy 7,797 361
Unisys* 21,085 127
------
42,689
------
CONSTRUCTION -- 0.4%
Armstrong World Industries 4,465 277
Centex 3,440 107
Fluor 10,430 712
Foster Wheeler 4,965 220
Halliburton 14,070 800
McDermott International 6,665 128
Owens-Corning Fiberglass* 6,265 251
------
2,495
------
CONTAINERS & PACKAGING -- 0.1%
Ball 3,695 115
Crown Cork & Seal * 15,485 755
------
870
------
ELECTRONIC & OTHER ELECTRICAL
EQUIPMENT -- 2.5%
3Com* 20,200 805
Advanced Micro Devices* 15,830 273
AMP 26,778 1,108
Honeywell 15,560 860
Intel 101,320 5,763
Johnson Controls 5,065 378
LSI Logic* 15,700 420
Loral 21,180 1,038
Micron Technology 25,400 797
Millipore 5,490 210
National Semiconductor* 16,325 227
Perkin Elmer 5,265 285
Raytheon 29,840 1,529
Rockwell International 26,730 1,574
Tektronix 4,070 132
Thomas & Betts 2,470 185
------
15,584
------
ENVIRONMENTAL SERVICES -- 0.5%
Browning-Ferris Industries 26,135 823
Laidlaw, Cl B 36,200 385
WMX Technologies 59,680 1,895
------
3,103
------
</TABLE>
7
<PAGE> 10
STATEMENT OF NET ASSETS
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
FINANCIAL SERVICES -- 3.5%
<S> <C> <C>
Allstate 55,152 $ 2,323
American Express 59,547 2,940
Beneficial 6,490 374
Dean Witter Discover 20,808 1,191
Federal Home Loan Mortgage
Corporation 22,200 1,893
Federal National Mortgage
Association 134,060 4,273
First Bank System 17,000 1,014
Green Tree Financial 16,500 567
Household International 12,230 822
MBNA 27,400 812
Merrill Lynch 21,600 1,312
Morgan Stanley Group 19,500 1,009
Salomon 13,365 501
Transamerica 8,530 639
Travelers Group 39,272 2,592
------
22,262
------
FOOD, BEVERAGE & TOBACCO -- 8.3%
American Brands 22,340 947
Anheuser Busch 31,200 2,102
Archer Daniels Midland 65,194 1,198
Brown-Forman, Cl B 8,460 339
CPC International 17,960 1,246
Campbell Soup 30,630 1,865
Coca-Cola 154,380 12,756
ConAgra 30,342 1,233
Adolph Coors, Cl B 4,665 83
Fleming Companies 4,670 67
General Mills 19,460 1,136
H.J. Heinz 45,420 1,505
Hershey Foods 9,600 715
Kellogg 26,740 2,026
PepsiCo 96,890 6,128
Philip Morris 103,310 9,065
Quaker Oats 16,460 549
Ralston-Ralston Purina Group 13,260 887
Sara Lee 59,580 1,944
Seagram 45,900 1,486
Supervalu 8,430 260
Sysco 22,410 737
UST 23,740 757
Unilever NV, ADR 19,635 2,665
Whitman 12,995 315
William Wrigley, Jr. 14,305 839
------
52,850
------
FOOTWEAR -- 0.3%
Brown Group 2,270 31
Nike, Cl B 17,660 1,435
Premark International 7,450 400
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Reebok International 9,320 $ 257
Stride Rite 6,200 57
-----
2,180
-----
GLASS PRODUCTS -- 0.4%
Corning 28,260 989
Newell 19,500 522
PPG Industries 24,090 1,177
-----
2,688
-----
HOUSEHOLD PRODUCTS -- 3.6%
Alberto-Culver, Cl B 3,390 131
Atlantic Richfield 19,780 2,354
Clorox 6,335 546
Colgate Palmolive 17,894 1,393
Dial 11,800 330
Ecolab 7,950 239
Gillette 54,588 2,825
International Flavors & Fragrances 13,695 656
Jostens 4,750 106
Masco 19,740 572
Maytag 13,230 268
Minnesota Mining &
Manufacturing 51,630 3,349
National Service Industries 6,085 221
Procter & Gamble 84,454 7,157
Raychem 5,365 346
Rubbermaid 19,360 549
Sherwin Williams 10,680 474
Snap-On Tools 4,965 232
Stanley Works 5,515 303
Whirlpool 9,005 498
------
22,549
------
INSURANCE -- 3.1%
Aetna Life & Casualty 14,295 1,079
Alexander & Alexander Services 5,365 101
American General 25,180 869
American International Group 58,326 5,461
Chubb 10,730 1,007
Cigna 9,530 1,089
General Re 10,300 1,501
ITT Hartford Group 14,365 704
Jefferson-Pilot 8,670 467
Lincoln National 12,930 656
Loews 14,600 1,104
Marsh & McLennan 9,005 836
Providian 11,730 523
SAFECO 15,720 527
St. Paul 10,380 576
Torchmark 8,687 391
UNUM 8,900 530
USF&G 13,830 214
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
United Healthcare 21,500 $ 1,322
U.S. Healthcare 18,900 867
USLIFE 4,345 128
------
19,952
------
LUMBER & WOOD PRODUCTS -- 0.2%
Georgia-Pacific 11,500 798
Louisiana-Pacific 13,312 324
-----
1,122
-----
MACHINERY -- 5.3%
Applied Materials* 21,900 764
Black & Decker 10,735 407
Briggs & Stratton 3,640 157
Brunswick 12,030 277
Case Equipment 8,700 443
Caterpillar 24,350 1,656
Cincinnati Milacron 4,195 110
Cooper Industries 13,295 519
Crane 3,742 151
Cummins Engine 5,040 203
Deere 32,290 1,348
Dover 14,120 646
Dresser Industries 22,470 685
Emerson Electric 27,565 2,226
General Electric 205,580 16,010
General Instrument* 14,000 383
General Signal 5,994 217
Giddings & Lewis 4,200 80
Harnischfeger Industries 5,805 225
Illinois Tool Works 14,470 935
Ingersoll Rand 13,670 557
Kaufman & Broad Home 3,937 63
NACCO Industries, Cl A 1,125 64
Outboard Marine 2,470 47
Pall 14,293 366
Parker-Hannifin 9,252 347
PULTE 3,295 89
Tenneco 21,912 1,224
Texas Instruments 23,160 1,178
Timken 3,870 179
Trinova 3,515 112
Tyco International 18,800 672
Varity* 4,870 211
Westinghouse Electric 50,580 974
------
33,525
------
MEDICAL PRODUCTS & SERVICES -- 8.9%
Abbott Laboratories 97,160 3,959
Allergan 8,100 299
ALZA* 10,100 311
American Home Products 38,470 4,169
Amgen* 32,700 1,901
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Asarco 5,165 $ 181
Bausch & Lomb 7,080 262
Baxter International 33,973 1,537
Becton Dickinson 7,830 641
Beverly Enterprises* 11,985 132
Biomet* 14,200 199
Boston Scientific* 21,000 966
Bristol-Myers Squibb 62,420 5,345
Columbia HCA Healthcare 54,773 3,163
Community Psychiatric Centers* 5,265 44
C.R. Bard 7,135 254
Humana* 19,900 500
Johnson & Johnson 81,720 7,539
Mallinckrodt Group 9,085 342
Manor Care 7,647 300
Medtronic 28,520 1,700
Merck 152,025 9,464
Pfizer 78,020 5,227
Pharmacia & Upjohn 62,042 2,474
Schering Plough 45,180 2,626
St. Jude Medical 8,750 326
Tenet Healthcare* 25,760 541
United States Surgical 7,000 229
Warner Lambert 16,610 1,715
------
56,346
------
METAL & METAL INDUSTRIES -- 1.7%
Alcan Aluminum 27,752 895
Aluminum Company of America 21,800 1,365
Armco* 13,100 70
Barrick Gold 43,500 1,321
Bethlehem Steel* 14,130 185
Cyprus AMAX Minerals 11,602 328
Echo Bay Mines 15,500 209
Engelhard 17,717 414
Freeport-McMoran Copper &
Gold, Cl B 24,900 787
Homestake Mining 17,000 329
Inco 14,600 462
Inland Steel Industries 5,965 148
Newmont Mining 11,801 668
Nucor 10,980 649
Phelps Dodge 8,630 592
Placer Dome Group 29,429 850
Reynolds Metals 7,935 469
Santa Fe Pacific Gold* 16,112 258
USX-U.S. Steel Group 10,367 359
Worthington Industries 11,122 221
------
10,579
------
OIL & GAS -- 7.7%
Amerada Hess 11,430 629
Amoco 61,195 4,421
</TABLE>
9
<PAGE> 12
STATEMENT OF NET ASSETS
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Ashland 7,925 $ 304
Burlington Resources 15,800 587
Chevron 80,220 4,502
Exxon 152,695 12,464
Helmerich & Payne 2,995 101
Kerr McGee 6,335 402
Louisiana Land & Exploration 4,140 193
Mobil 48,645 5,637
Occidental Petroleum 39,230 1,049
Oryx Energy* 12,770 177
Pennzoil 5,665 225
Phillips Petroleum 32,235 1,273
Rowan* 10,405 133
Royal Dutch Petroleum 65,935 9,313
Santa Fe Energy Resources* 11,081 116
Schlumberger 29,765 2,355
Sun 9,270 268
Texaco 32,510 2,796
Unocal 30,390 1,014
USX-Marathon Group 35,435 682
Western Atlas* 6,490 389
------
49,030
------
PAPER & PAPER PRODUCTS -- 1.6%
Alco Standard 14,830 773
Avery Dennison 6,665 360
Bemis 6,690 210
Boise Cascade 5,831 245
Champion International 12,100 548
Earthgrains 1,248 37
International Paper 37,279 1,468
James River 10,502 270
Kimberly-Clark 34,207 2,548
Mead 6,660 360
Potlatch 3,570 153
Stone Container 12,116 170
Temple-Inland 6,890 323
Union Camp 8,555 425
Westvaco 12,690 373
Weyerhaeuser 25,270 1,166
Willamette Industries 6,900 416
-----
9,845
-----
PHOTOGRAPHIC EQUIPMENT &
SUPPLIES -- 0.8%
Eastman Kodak 42,065 2,987
Polaroid 5,758 259
Xerox 13,525 1,697
-----
4,943
-----
PRINTING & PUBLISHING -- 1.2%
American Greetings, Cl A 9,100 251
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Deluxe 10,155 $ 319
R.R. Donnelley & Sons 18,860 651
Dow Jones 12,000 462
Gannett 17,235 1,159
John H. Harland 3,750 83
Knight-Ridder 6,035 411
McGraw-Hill 6,135 532
Meredith 3,340 138
Moore 12,200 238
New York Times, Cl A 11,830 343
Time Warner 47,564 1,944
Times Mirror, Cl A 13,365 526
Tribune 7,830 516
-----
7,573
-----
PROFESSIONAL SERVICES -- 0.4%
H&R Block 12,770 461
Dun & Bradstreet 20,832 1,263
EG & G 5,940 133
Ogden 6,065 118
Service International 14,422 703
-----
2,678
-----
RECREATIONAL PRODUCTS &
SERVICES -- 1.4%
Andrew* 9,310 356
Bally Entertainment* 5,845 101
Walt Disney 84,167 5,376
Harrah's Entertainment* 12,785 376
Hasbro 10,752 398
Hilton Hotels 5,940 558
ITT* 14,365 862
King World Productions* 4,562 189
Mattel 33,977 922
-----
9,138
-----
RETAIL -- 5.4%
Albertson's 31,040 1,152
American Stores 18,160 599
Charming Shoppes* 12,570 65
Circuit City Stores 11,900 356
Darden Restaurants* 19,460 263
Dayton-Hudson 8,730 741
Dillard Department Stores, Cl A 13,920 482
Federated Department Stores* 24,900 803
The Gap 17,760 983
Giant Food, Cl A 7,460 246
Great Atlantic & Pacific Tea 4,765 148
Harcourt General 8,966 407
Home Depot 58,674 2,809
Kmart* 56,480 530
Kroger* 15,180 615
</TABLE>
10
<PAGE> 13
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
MARKET
SHARES VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
The Limited 33,612 $ 639
Longs Drug Stores 2,495 118
Lowe's 19,760 706
Luby's Cafeterias 2,855 66
Marriott International 15,370 730
May Department Stores 30,662 1,479
McDonald's 85,400 4,099
Melville 12,970 465
Mercantile Stores 4,615 283
Nordstrom 10,130 491
J.C. Penney 27,730 1,380
Pep Boys - Manny Moe & Jack 7,550 253
Price/Costco* 23,958 449
Rite Aid 10,330 319
Ryan's Family Steak Houses* 6,725 61
Sears Roebuck 47,925 2,336
Shoney's* 5,115 46
TJX 9,010 226
Toys "R" Us* 33,565 906
Wal-Mart Stores 282,420 6,531
Walgreen 30,240 987
Wendy's International 14,375 261
Winn Dixie Stores 18,560 624
F.W. Woolworth* 16,320 255
------
33,909
------
TRANSPORTATION SERVICES -- 1.1%
Burlington Northern-Santa Fe 17,500 1,437
CSX 25,918 1,183
Caliber System 4,865 209
Conrail 9,710 695
Consolidated Freightways 5,215 134
Norfolk Southern 15,900 1,351
Ryder System 9,730 265
Union Pacific 25,340 1,739
Yellow* 3,420 43
-----
7,056
-----
UTILITIES, ELECTRIC & GAS -- 4.0%
American Electric Power 22,925 957
Baltimore Gas & Electric 18,195 503
Carolina Power & Light 18,900 704
Central & South West 25,400 724
Cinergy 19,292 579
Coastal 13,102 518
Columbia Gas System 6,215 285
Consolidated Edison of New York 28,890 921
Consolidated Natural Gas 11,430 497
Dominion Resources 21,375 847
DTE Energy 17,835 600
Duke Power 25,250 1,275
Eastern Enterprises 2,491 88
Edison International 54,740 937
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
SHARES/FACE MARKET
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Enron 30,960 $ 1,142
Enserch 8,535 139
Entergy 28,020 785
FPL Group 22,928 1,037
General Public Utilities 14,600 482
Houston Industries 32,340 699
Niagara Mohawk Power* 17,765 118
Nicor 6,200 166
Noram Energy 15,325 142
Northern States Power 8,460 412
Ohio Edison 18,735 424
Oneok 3,300 79
PECO Energy 27,275 726
PP&L Resources 19,500 475
Pacific Enterprises 10,642 275
Pacific Gas & Electric 52,145 1,180
Pacificorp 36,000 752
Panhandle Eastern 18,664 581
Peoples Energy 4,240 137
Public Service Enterprise Group 30,083 827
Sonat 10,730 386
Southern 81,926 1,956
Texas Utilities 27,805 1,150
UNICOM 26,395 713
Union Electric 12,500 512
Williams 12,430 626
------
25,356
------
WHOLESALE -- 0.1%
Sigma Aldrich 6,100 349
W.W. Grainger 6,290 422
------
771
------
Total Common Stocks
(Cost $417,787,000) 598,378
-------
PREFERRED STOCKS -- 0.0%
Teledyne, Series E 327 5
-------
Total Preferred Stocks
(Cost $2,000) 5
-------
U.S. TREASURY OBLIGATIONS -- 0.3%
U.S. Treasury Bills
5.240%, 04/04/96 (A) $1,500 1,499
5.060%, 12/12/96 (A) 500 482
------
Total U.S. Treasury Obligations
(Cost $1,981,000) 1,981
------
</TABLE>
11
<PAGE> 14
STATEMENT OF NET ASSETS
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
S&P 500 INDEX PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE MARKET
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 6.4%
J.P. Morgan
5.35%, dated 03/29/96, matures
04/01/96, repurchase price
$40,284,641 (collateralized by
FHLMC obligation, par value
$5,032,747, 7.000%, matures
11/01/10; various FNMA obliga-
tions ranging in par value
$288,886-$6,271,335, 6.500%,
01/01/26-03/01/26: total
market value $41,072,023) $40,267 $ 40,267
--------
Total Repurchase Agreement
(Cost $40,267,000) 40,267
--------
Total Investments -- 101.1%
(Cost $460,037,000) 640,631
--------
OTHER ASSETS AND LIABILITIES -- (1.1%)
Other Assets and Liabilities, Net (7,058)
--------
NET ASSETS:
Portfolio shares of Class A (unlimited
authorization -- no par value) based
on 30,195,096 outstanding shares of
beneficial interest 440,029
Portfolio shares of Class E (unlimited
authorization -- no par value) based
on 144,096 outstanding shares of
beneficial interest 3,024
Accumulated net realized gain
on investments 6,547
Net unrealized appreciation
on investments 180,594
Net unrealized appreciation
on futures contracts 118
Undistributed net investment income 3,261
--------
Total Net Assets:-- 100.0% $633,573
========
Net Asset Value, Offering Price and
Redemption Price Per Share --
Class A $ 20.88
========
Net Asset Value, Offering Price and
Redemption Price Per Share --
Class E $ 20.87
========
</TABLE>
(A)SECURITY PLEDGED AS COLLATERAL ON OPEN FUTURES CONTRACTS.
*NON-INCOME PRODUCING SECURITY.
ADR--AMERICAN DEPOSITORY RECEIPT
CL--CLASS
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
BOND INDEX PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE MARKET
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 45.5%
U.S. Treasury Bonds
13.125%, 05/15/01 $ 525 $ 685
10.750%, 05/15/03 2,300 2,875
12.375%, 05/15/04 50 69
12.000%, 05/15/05 300 414
10.750%, 08/15/05 350 454
7.625%, 02/15/07 350 371
10.375%, 11/15/12 300 389
9.250%, 02/15/16 1,600 2,016
8.875%, 02/15/19 340 418
8.125%, 08/15/19 180 206
8.500%, 02/15/20 200 237
7.875%, 02/15/21 680 759
8.000%, 11/15/21 1,315 1,490
U.S. Treasury Notes
8.500%, 04/15/97 60 62
8.500%, 05/15/97 1,663 1,715
8.500%, 07/15/97 900 932
7.875%, 04/15/98 1,400 1,455
5.125%, 06/30/98 500 493
5.875%, 08/15/98 350 350
8.875%, 11/15/98 1,720 1,842
9.125%, 05/15/99 2,015 2,192
6.875%, 07/31/99 300 308
6.375%, 01/15/00 1,700 1,718
6.375%, 08/15/02 1,350 1,358
5.875%, 11/15/05 500 482
------
Total U.S. Treasury Obligations
(Cost $23,247,000) 23,290
------
U.S. GOVERNMENT AGENCY POOLED
MORTGAGES -- 29.0%
FHLMC
6.000%, 04/01/98 246 244
8.500%, 10/01/01 22 22
9.000%, 11/01/04 46 49
7.500%, 05/01/07 164 167
8.500%, 08/01/07 127 132
7.000%, 11/01/07 132 132
7.000%, 03/01/08 356 356
6.500%, 07/01/08 209 205
6.000%, 01/01/09 150 144
9.000%, 07/01/09 25 26
8.500%, 01/01/10 109 113
9.500%, 08/01/17 74 79
10.500%, 12/01/17 39 43
9.500%, 01/01/19 43 46
10.500%, 06/01/19 19 21
9.500%, 10/01/20 46 49
9.500%, 02/01/21 17 18
8.000%, 01/01/22 26 26
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE MARKET
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
7.500%, 01/01/23 $ 171 $ 171
8.500%, 01/01/23 74 76
7.500%, 05/01/23 222 221
7.000%, 08/01/23 688 672
7.000%, 05/01/24 235 230
8.000%, 01/01/25 200 204
6.500%, 10/01/25 1,008 959
FNMA
6.500%, 02/01/03 244 242
8.250%, 10/12/04 500 529
9.000%, 10/01/06 40 42
8.500%, 05/01/07 46 48
7.500%, 06/01/07 138 140
8.000%, 08/01/07 117 120
7.500%, 01/01/08 156 158
7.000%, 02/01/08 230 230
7.000%, 04/01/08 71 71
8.000%, 12/01/08 91 93
6.000%, 12/25/08 390 374
6.500%, 03/01/11 149 146
6.500%, 04/01/11 200 196
10.500%, 03/01/14 39 43
10.500%, 06/01/18 107 119
8.000%, 02/01/19 110 112
9.500%, 07/01/20 23 24
9.500%, 02/01/21 15 16
8.500%, 03/01/22 146 151
8.000%, 06/01/22 314 319
8.500%, 10/01/22 95 98
7.500%, 01/01/23 328 327
8.000%, 05/01/23 211 215
7.000%, 06/01/23 404 394
6.000%, 12/25/23 177 163
6.000%, 01/01/24 513 474
8.000%, 01/01/24 55 56
7.500%, 01/01/26 485 484
6.500%, 02/01/26 299 284
7.000%, 03/01/26 612 597
GNMA
8.000%, 10/15/07 51 52
9.500%, 09/15/09 42 46
6.500%, 03/15/11 150 148
11.500%, 04/15/15 40 45
8.500%, 02/15/17 75 79
9.000%, 04/15/17 333 351
8.500%, 05/15/17 146 152
9.500%, 07/15/17 51 55
9.750%, 10/15/17 58 63
10.000%, 09/15/18 43 47
11.000%, 10/15/19 8 9
9.000%, 11/15/19 323 341
10.000%, 02/20/21 31 34
9.000%, 08/15/21 31 33
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE MARKET
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
8.500%, 11/15/21 $ 104 $ 109
8.500%, 08/15/22 277 288
8.500%, 11/15/22 47 49
7.500%, 01/15/23 210 210
7.000%, 05/15/23 374 364
8.000%, 09/15/23 325 332
7.000%, 11/15/23 359 350
6.500%, 02/15/24 332 314
7.500%, 02/15/26 245 245
7.500%, 03/15/26 459 459
------
Total U.S. Government Agency
Pooled Mortgages
(Cost $15,061,000) 14,845
------
CORPORATE BONDS -- 14.9%
BP America
8.875%, 12/01/97 200 209
Baltimore Gas & Electric
7.250%, 07/01/02 200 204
Banc One
7.250%, 08/01/02 200 205
BankAmerica
6.000%, 07/15/97 500 500
Cabot
8.340%, 08/05/22 500 530
Campbell Soup
8.875%, 05/01/21 300 355
Chemical Bank
8.625%, 05/01/02 150 164
Commonwealth Edison
6.500%, 04/15/00 250 247
ConAgra
7.400%, 09/15/04 260 266
R.R. Donnelley & Sons
9.125%, 12/01/00 239 266
First Union
7.050%, 08/01/05 500 501
Integra Financial
8.500%, 05/15/02 250 266
Landeskredit Bank
7.875%, 04/15/04 250 268
Manufacturers Hanover
8.500%, 02/15/99 200 211
Masco
9.000%, 04/15/96 100 100
J.P. Morgan
5.750%, 10/15/08 200 178
New York Telephone
8.625%, 11/15/10 200 228
Rockwell International
6.750%, 09/15/02 150 153
</TABLE>
13
<PAGE> 16
STATEMENT OF NET ASSETS
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
BOND INDEX PORTFOLIO
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE MARKET
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
Southern California Edison
6.375%, 01/15/06 $ 200 $ 189
Sprint
9.250%, 04/15/22 300 359
Tenneco
9.875%, 02/01/01 250 282
Texaco Capital
9.000%, 12/15/99 200 218
Texas Utilities
6.750%, 03/01/03 300 297
Tokyo Metropolis
8.700%, 10/05/99 125 134
Union Electric
5.500%, 03/01/97 345 343
Union Oil California
9.150%, 02/15/06 350 403
Virginia Electric & Power
7.250%, 03/01/97 165 167
Whirlpool
9.100%, 02/01/08 250 291
Xerox
9.200%, 07/15/99 100 101
-----
Total Corporate Bonds
(Cost $7,444,000) 7,635
-----
YANKEE BONDS -- 2.6%
International Bank
8.250%, 09/01/16 200 224
New Zealand Government
8.250%, 09/25/96 180 182
9.125%, 09/25/16 102 123
Quebec Province
8.625%, 01/19/05 500 549
Republic of Ireland
7.875%, 12/01/01 200 212
-----
Total Yankee Bonds
(Cost $1,288,000) 1,290
-----
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 4.9%
FHLB
8.250%, 09/25/96 255 258
8.220%, 05/29/98 125 131
5.440%, 10/15/03 150 140
FHLMC
7.900%, 09/19/01 250 269
FNMA
6.750%, 04/22/97 100 101
8.200%, 03/10/98 225 234
8.450%, 07/12/99 200 214
9.050%, 04/10/00 200 220
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
FACE MARKET
AMOUNT (000) VALUE (000)
- -------------------------------------------------------------------------------
<S> <C> <C>
8.250%, 12/18/00 $ 50 $ 54
7.500%, 02/11/02 100 105
0.000%, 07/05/14 415 113
10.350%, 12/10/15 290 391
Resolution Funding Corporation
8.875%, 04/15/30 230 289
-----
Total U.S. Government Agency
Obligations
(Cost $2,423,000) 2,519
-----
REPURCHASE AGREEMENT -- 2.7%
Lehman Brothers
5.09%, dated 03/29/96, matures
04/01/96, repurchase price
$1,386,762 (collateralized by
U.S. Treasury Note, par value
$1,367,053, 7.000%, matures
09/30/96: total market
value $1,425,957) 1,386 1,386
-----
Total Repurchase Agreement
(Cost $1,386,000) 1,386
-----
Total Investments -- 99.6%
(Cost $50,849,000) 50,965
------
OTHER ASSETS AND LIABILITIES -- 0.4%
Other Assets and Liabilities, Net 220
------
NET ASSETS:
Portfolio shares (unlimited
authorization -- no par value)
based on 4,987,277 outstanding
shares of beneficial interest 51,535
Accumulated net realized loss
on investments (704)
Net unrealized appreciation
on investments 116
Undistributed net investment
income 238
-------
Total Net Assets:-- 100.0% $51,185
=======
Net Asset Value, Offering Price and
Redemption Price Per Share $ 10.26
=======
</TABLE>
FHLB--FEDERAL HOME LOAN BANK
FHLMC--FEDERAL HOME LOAN MORTGAGE CORPORATION
FNMA--FEDERAL NATIONAL MORTGAGE ASSOCIATION
GNMA--GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<PAGE> 17
STATEMENT OF OPERATIONS (000)
===============================================================================
SEI INDEX FUNDS -- FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
---------- ----------
S&P 500 BOND
INDEX INDEX
PORTFOLIO PORTFOLIO
---------- ----------
INVESTMENT INCOME:
<S> <C> <C>
Dividends $ 12,462 --
Interest 1,258 $ 2,922
-------- -------
Total Investment Income 13,720 2,922
-------- -------
EXPENSES:
Management Fees 1,182 156
Waiver of Management Fees (524) (45)
Investment Advisory Fees 161 19
Custodian/Wire Agent Fees 85 7
Trustee Fees 19 2
Pricing Fees 14 1
Professional Fees 76 6
Registration Fees 35 4
Distribution Fees 184 11
Distribution Fees--Class E(1) -- --
Printing Expense 64 7
Other Expenses 47 1
-------- ------
Total Expenses 1,343 169
-------- ------
NET INVESTMENT INCOME 12,377 2,753
-------- ------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net Realized Gain from Securities Sold 5,923 342
Net Realized Gain from Futures Contracts 4,511 --
-------- ------
Net Realized Gain from Security Transactions 10,434 342
-------- -------
Change in Unrealized Appreciation on Investment Securities 122,482 1,178
Change in Unrealized Depreciation on Futures Contracts (404) --
-------- -------
Net Change in Unrealized Appreciation on Investments 122,078 1,178
-------- -------
Net Realized and Unrealized Gain on Investments 132,512 1,520
-------- -------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $144,889 $ 4,273
======== =======
<FN>
(1) FEES ARE INCURRED AT THE CLASS E LEVEL ONLY.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
15
<PAGE> 18
STATEMENTS OF CHANGES IN NET ASSETS (000)
===============================================================================
SEI INDEX FUNDS -- FOR THE YEARS ENDED MARCH 31
<TABLE>
<CAPTION>
------------------- -------------------
S&P 500 INDEX BOND INDEX
PORTFOLIO PORTFOLIO
------------------- -------------------
4/1/95- 4/1/94- 4/1/95- 4/1/94-
3/31/96 3/31/95 3/31/96 3/31/95
------- ------- ------- --------
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income $ 12,377 $ 11,398 $ 2,753 $ 3,153
Net Realized Gain (Loss) from Security Transactions 10,434 11,239 342 (990)
Net Change in Unrealized Appreciation (Depreciation) of
Investment Securities 122,078 37,932 1,178 (261)
-------- -------- -------- --------
Net Increase in Net Assets Resulting from Operations 144,889 60,569 4,273 1,902
-------- -------- -------- --------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income (10,329) (11,407) (2,767) (3,169)
Net Realized Gain (8,827) (12,233) -- --
-------- -------- -------- --------
Total Distributions (19,156) (23,640) (2,767) (3,169)
-------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:*
CLASS A:
Shares Issued 324,157 244,921 24,406 21,194
Shares Issued in Lieu of Cash Distributions 10,239 12,249 561 333
Shares Redeemed (287,592) (260,734) (20,931) (30,778)
-------- -------- ------- -------
Net Increase (Decrease) from Class A Transactions 46,804 (3,564) 4,036 (9,251)
-------- -------- ------- -------
CLASS E:
Shares Issued 3,243 -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed (219) -- -- --
-------- -------- ------- -------
Net Increase from Class E Transactions 3,024 -- -- --
-------- -------- ------- -------
Net Increase (Decrease) from Capital Share Transactions 49,828 (3,564) 4,036 (9,251)
-------- -------- ------- -------
Net Increase (Decrease) in Net Assets 175,561 33,365 5,542 (10,518)
-------- -------- ------- -------
NET ASSETS:
Beginning of Year 458,012 424,647 45,643 56,161
-------- ------- ------- -------
End of Year (including undistributed net investment
income of $3,261; $1,213; $238 and $252) $633,573 $458,012 $ 51,185 $ 45,643
======== ======== ========= ========
*SHARES ISSUED AND REDEEMED:
CLASS A:
Shares Issued 16,895 15,806 2,354 2,169
Shares Issued in Lieu of Cash Distributions 532 810 54 34
Shares Redeemed (15,159) (16,871) (2,033) (3,155)
------- ------- ------ ------
Total Class A Transactions 2,268 (255) 375 (952)
------- ------- ------ ------
CLASS E:
Shares Issued 155 -- -- --
Shares Issued in Lieu of Cash Distributions -- -- -- --
Shares Redeemed (11) -- -- --
------- ------- ------- ------
Total Class E Transactions 144 -- -- --
------- ------- ------- ------
Increase (Decrease) in Capital Shares 2,412 (255) 375 (952)
======= ======= ======= ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<PAGE> 19
FINANCIAL HIGHLIGHTS
===============================================================================
SEI INDEX FUNDS -- FOR THE PERIODS ENDED MARCH 31,
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET ASSET NET REALIZED AND DIVIDENDS DISTRIBUTIONS RATIO OF
VALUE, NET UNREALIZED FROM NET FROM NET ASSET NET ASSETS EXPENSES
BEGINNING INVESTMENT GAINS OR(LOSSES) INVESTMENT CAPITAL VALUE, END TOTAL END OF TO AVERAGE
OF PERIOD INCOME(1) ON SECURITIES INCOME GAINS OF PERIOD RETURN PERIOD(000) NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
- ------------------------
S&P 500 INDEX PORTFOLIO
- ------------------------
CLASS A
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1996 $16.40 $0.44 $ 4.72 $(0.37) $(0.31) $20.88 31.88% $630,566 0.25%
1995 15.07 0.42 1.79 (0.42) (0.46) 16.40 15.26% 458,012 0.25%
1994 15.80 0.43 (0.22) (0.42) (0.52) 15.07 1.19% 424,647 0.25%
1993 14.17 0.40 1.69 (0.40) (0.06) 15.80 14.97% 675,484 0.25%
1992 13.43 0.40 1.01 (0.41) (0.26) 14.17 10.71% 470,847 0.25%
CLASS E
1996(2) $20.82 $ -- $ 0.05 $ -- $ -- $20.87 0.24%* $ 3,007 0.46%
- --------------------
BOND INDEX PORTFOLIO
- --------------------
1996(3) $ 9.90 $0.64 $ 0.36 $(0.64) $ -- $10.26 10.31% $ 51,185 0.38%
1995 10.09 0.63 (0.20) (0.62) -- 9.90 4.54% 45,643 0.38%
1994 10.43 0.56 (0.33) (0.57) -- 10.09 2.10% 56,161 0.38%
1993 9.87 0.66 0.56 (0.66) -- 10.43 12.73% 56,032 0.38%
1992 9.73 0.73 0.15 (0.74) -- 9.87 9.48% 38,449 0.38%
</TABLE>
<TABLE>
<CAPTION>
RATIO OF
RATIO OF NET INVESTMENT
RATIO OF EXPENSES INCOME
NET INVESTMENT TO AVERAGE TO AVERAGE
INCOME NET ASSETS NET ASSETS PORTFOLIO
TO AVERAGE (EXCLUDING (EXCLUDING TURNOVER
NET ASSETS WAIVERS) WAIVERS) RATE
- ---------------------------------------------------------------
- -----------------------
S&P 500 INDEX PORTFOLIO
- -----------------------
CLASS A
<S> <C> <C> <C> <C>
1996 2.31% 0.35% 2.21% 3%
1995 2.69% 0.35% 2.59% 4%
1994 2.57% 0.33% 2.49% 23%
1993 2.75% 0.35% 2.65% 1%
1992 2.99% 0.34% 2.90% 1%
CLASS E
1996(2) 0.97% 0.58% 0.85% 3%
- --------------------
BOND INDEX PORTFOLIO
- --------------------
1996(3) 6.20% 0.48% 6.10% 59%
1995 6.33% 0.48% 6.23% 21%
1994 5.35% 0.47% 5.26% 55%
1993 6.49% 0.45% 6.42% 115%
1992 7.45% 0.51% 7.32% 99%
<FN>
* THE TOTAL RETURN HAS NOT BEEN ANNUALIZED.
(1) HAD MANAGEMENT FEES NOT BEEN WAIVED, AND CERTAIN OTHER EXPENSES NOT BEEN
ABSORBED BY THE MANAGER FOR THE PORTFOLIOS, THE NET INVESTMENT INCOME PER
SHARE WOULD HAVE BEEN $.42, $.41, $.41, $.39 AND $.38 FOR THE S&P 500 INDEX
PORTFOLIO FOR THE YEARS ENDED 3/31/96 THROUGH 3/31/92, RESPECTIVELY AND
$.63, $.62, $.55, $.65 AND $.71 FOR THE BOND INDEX PORTFOLIO FOR THE YEARS
ENDED 3/31/96 THROUGH 3/31/92, RESPECTIVELY.
(2) S&P 500 INDEX CLASS E SHARES WERE OFFERED BEGINNING
FEBRUARY 28, 1996. ALL RATIOS FOR THAT PERIOD HAVE BEEN ANNUALIZED.
(3) THE INVESTMENT ADVISER WAS CHANGED FROM WORLD ASSET MANAGEMENT TO MELLON
BOND ASSOCIATES EFFECTIVE 10/2/96.
</FN>
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
17
<PAGE> 20
NOTES TO FINANCIAL STATEMENTS
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
1. ORGANIZATION:
SEI Index Funds (the "Trust") was organized as a Massachusetts Business Trust
under a Declaration of Trust dated March 6, 1985. The Trust is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company with two portfolios: the S&P 500 Index Portfolio
and the Bond Index Portfolio (the "Portfolios"). The Trust's prospectus provides
a description of each Portfolio's investment objectives, policies and
strategies. The Trust is registered to offer Class A and Class E shares of the
S&P 500 Index Portfolio and Class A shares of the Bond Index Portfolio. The
assets of each Portfolio are segregated, and a shareholder's interest is limited
to the Portfolio in which shares are held.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Portfolios.
SECURITY VALUATION -- Investments in equity securities which are traded on a
national securities exchange (or reported onthe NASDAQ national market system)
are stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt obligations
exceeding sixty days to maturity for which market quotations are readily
available are valued at the most recently quoted bid price. Debt obligations
with sixty days or less remaining until maturity may be valued at their
amortized cost.
FEDERAL INCOME TAXES -- It is each Portfolio's intention to continue to
qualify as a regulated investment company for Federal income tax purposes by
complying with the appropriate provisions of the Internal Revenue Code.
Accordingly, no provisions for Federal income taxes are required in the
accompanying financial statements.
SECURITY TRANSACTIONS AND RELATED INCOME -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date, and interest income is
recognized on the accrual basis. Costs used in determining realized gains and
losses on the sales of investment securities are those of the specific
securities sold adjusted for the accretion and amortization of purchase
discounts and premiums during the respective holding periods. Purchase discounts
and premiums on securities held by the Portfolios are accreted and amortized to
maturity using a method which approximates the effective interest method.
REPURCHASE AGREEMENTS -- Securities pledged as collateral for Repurchase
Agreements are held by the custodian bank until the respective agreements
mature. Provisions of the Repurchase Agreements and procedures adopted by the
Manager and adviser ensure that the market value of the collateral, including
accrued interest thereon, is sufficient in the event of default by the
counterparty. If the counterparty defaults and the value of the collateral
declines or if the counterparty enters into an insolvency proceeding,
realization of the collateral by the Portfolios may be delayed or limited.
FUTURES CONTRACTS -- The S&P 500 Index Portfolio invests in S&P 500 futures
contracts. For each S&P 500 futures contract, the Portfolio pledges Treasury
bills with the broker valued at approximately $10,000 per contract. Subsequent
payments to and from the broker are made on a daily basis or upon expiration or
closing of the position, as the value of the S&P 500 Index fluctuates. These
fluctuations make the positions in the futures contracts more or less valuable,
which results in gains or losses to the Portfolio. The S&P 500 Index Portfolio's
investment in S&P 500 Index futures contracts is designed to assist the
Portfolio in more closely approximating the performance of the S&P 500 Index.
Risks of entering into S&P 500 Index futures contracts include the possibility
that there may be an illiquid market and that a change in the value of the
contract may not correlate with changes in the value of the underlying
securities. Should the S&P 500 Index move unexpectedly, the Portfolio may not
receive the anticipated benefits from the S&P 500 Index futures contracts and
may realize a loss.
CLASSES -- Class specific expenses are borne by that class of shares.
Income, expenses, and realized and unrealized gains/losses are allocated to the
respective classes on the basis of relative daily net assets.
18
<PAGE> 21
EXPENSES -- Expenses that are directly related to one of the Portfolios are
charged directly to that Portfolio. Other operating expenses of the Fund are
prorated to the portfolios on the basis of relative net assets.
NET ASSET VALUE PER SHARE -- The net asset value per share of each
Portfolio is calculated on each business day. In general, it is computed by
dividing the assets of each Portfolio, less its liabilities, by the number of
outstanding shares of the Portfolio.
OTHER -- Distributions from net investment income for the Porfolios are
paid to shareholders in the form of monthly dividends for the Bond Index
Portfolio and quarterly for the S&P 500 Index Portfolio. Any net realized
capital gains on sales of securities are distributed to shareholders at least
annually.
3. TRANSACTIONS WITH AFFILIATES:
The Trust and SEI Financial Management Corporation (the "Manager") are parties
to management agreements (the "Management Agreement") for the S&P 500 Index
Portfolio and Bond Index Portfolio dated July 25, 1986 and January 20, 1986,
respectively, under which the Manager provides management, administrative,
transfer agent, and shareholder services to the Portfolios for an annual fee
equal to .22% of the average daily net assets of the S&P 500 Index Portfolio and
.35% of average daily net assets of the Bond Index Portfolio. The Manager has
agreed to waive its fee so that the total annual expenses of each Portfolio will
not exceed the lower of the maximum limitations established by certain states or
voluntary expense limitations adopted by the Manager. In the event that the
total annual expenses of a Portfolio, after reflecting a waiver of all fees by
the Manager, exceed the specific limitation, the Manager has agreed to bear such
excess. Any such waiver is voluntary and may be terminated at any time at the
Manager's sole discretion.
Certain officers of the Trust are also officers of the Manager. The Trust
pays each unaffiliated Trustee an annual fee for attendance at quarterly,
interim and committee meetings. Compensation of officers is paid by the Manager.
SEI Financial Services Company acts as the distributor (the "Distributor")
of the shares of the Portfolios under a distribution plan which provides for the
Trust to reimburse the Distributor for its distribution expenses. On an annual
basis such expenses may not exceed .05% of the Portfolios' average daily net
assets.
In addition to providing for the reimbursement payments described above,
the Class E distribution plan provides for additional payments to the
Distributor of .15% of the average daily net assets of the Class E Shares.
4. INVESTMENT ADVISORY AGREEMENT:
Under an investment advisory agreement (the "Advisory Agreement"), dated
January 31, 1995, World Asset Management serves as the Investment Adviser of the
S&P 500 Index Portfolio. For its services as Investment Adviser, World Asset
Management receives a monthly fee at an annual rate of .03% of the average daily
net assets of the S&P 500 Index Portfolio. Mellon Bond Associates serves as the
Investment Adviser of the Bond Index Portfolio under an advisory agreement dated
October 2, 1995. For its services as Investment Adviser, Mellon Bond Associates
receives a monthly fee at an annual rate of .07% of the average daily net assets
of the Bond Index Portfolio. Prior to October 2, 1995, World Asset Management
served as Investment Adviser of the Bond Index Portfolio. For its services,
World Asset Management received .03% of the average daily net assets of the
Portfolio. For the year ended March 31, 1996, World Asset Management and Mellon
Bond Associates received $7,000 and $12,000, respectively, in connection with
the aforementioned agreements.
5. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from the sale of securities,
other than temporary cash investments, during the year ended March 31, 1996,
were as follows:
<TABLE>
<CAPTION>
U.S.
GOVERNMENT
SECURITIES ALL OTHER TOTAL
(000) (000) (000)
--------- --------- -----
S&P 500 INDEX PORTFOLIO
<S> <C> <C> <C>
Purchases $ 0 $69,984 $69,984
Sales 0 17,322 17,322
BOND INDEX PORTFOLIO
Purchases $26,972 $ 2,587 $29,559
Sales 24,208 1,113 25,321
</TABLE>
19
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
===============================================================================
SEI INDEX FUNDS -- MARCH 31, 1996
On March 31, 1996, the total cost of securities for Federal income tax
purposes was not materially different from amounts reported for financial
reporting purposes. The aggregate gross unrealized appreciation and depreciation
on securities at March 31, 1996, for each Portfolio is as follows:
<TABLE>
<CAPTION>
NET
APPRECIATED DEPRECIATED UNREALIZED
SECURITIES SECURITIES APPRECIATION
(000) (000) (000)
-------------- -------------- --------------
<S> <C> <C> <C>
S&P 500 Index Portfolio $191,538 $(10,944) $180,594
Bond Index Portfolio 829 (713) 116
</TABLE>
The Bond Index Portfolio invests primarily in securities issued or
guaranteed as to principal and interest by the U.S. Government or its agencies
or instrumentalities. The ability of the issuers of the repurchase agreements
and other bonds held by the Portfolio to meet their obligations may be affected
by economic developments in a specific industry, state or region. The market
value of the Portfolio's investments will change in response to interest rate
changes and other factors. During periods of falling interest rates, the values
of fixed income securities generally rise. Conversely, during periods of rising
interest rates, the values of such securities generally decline. Changes by
recognized rating agencies in the ability of an issuer to make payments of
interest and principal may also affect the value of these investments. The
following is a summary of credit quality ratings for securities held by the
Portfolio at March 31, 1996.
<TABLE>
<CAPTION>
% OF
PORTFOLIO
MOODY'S VALUE
-------- ---------
<S> <C>
U.S. Government Securities ...................... 79.60%
Repurchase Agreements ........................... 2.74%
Other Bonds
Aaa ........................................ 1.27%
Aa ......................................... 3.48%
A .......................................... 7.48%
Baa ........................................ 5.43%
-------
100.00%
=======
</TABLE>
At March 31, 1996, the Bond Index Portfolio had capital loss carryforwards
to the extent provided in the regulations for Federal income tax as follows:
<TABLE>
<CAPTION>
CAPITAL LOSS
CARRYOVER EXPIRES EXPIRES EXPIRES
3/31/96 1997 2003 2004
---------- -------- -------- --------
<S> <C> <C> <C>
$672,000 $57,000 $514,000 $101,000
</TABLE>
The S&P 500 Index Portfolio had wash sales during the fiscal year ended
March 31, 1996 amounting to $178,000. These wash sale losses cannot be used for
Federal income tax purposes and are deferred.
6. FUTURES CONTRACTS:
A summary of the open S&P 500 Index futures contracts held by the S&P 500 Index
Portfolio is as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF TRADE FACE SETTLEMENT GAIN/(LOSS)
CONTRACTS PRICE AMOUNT MONTH (000)
---------- ------- -------- ---------- -----------
<S> <C> <C> <C> <C>
30 $645.30 $15,000 June 1996 $ 89
10 644.20 5,000 June 1996 35
10 647.50 5,000 June 1996 19
7 649.00 3,500 June 1996 8
5 646.80 2,500 June 1996 11
4 654.50 2,000 June 1996 (7)
3 658.50 1,500 June 1996 (11)
3 658.00 1,500 June 1996 (10)
3 653.50 1,500 June 1996 (3)
2 660.20 1,000 June 1996 (9)
2 659.50 1,000 June 1996 (8)
2 658.30 1,000 June 1996 (7)
2 657.00 1,000 June 1996 (6)
4 656.40 1,000 June 1996 (10)
2 655.80 1,000 June 1996 (5)
4 655.50 1,000 June 1996 (8)
2 653.60 1,000 June 1996 (2)
2 653.00 1,000 June 1996 (2)
2 652.80 1,000 June 1996 (2)
2 652.50 1,000 June 1996 (1)
2 652.00 1,000 June 1996 (1)
2 645.00 1,000 June 1996 6
2 643.80 1,000 June 1996 7
2 642.70 1,000 June 1996 9
2 642.40 1,000 June 1996 9
2 642.20 1,000 June 1996 9
1 639.00 500 June 1996 6
1 645.50 500 June 1996 3
1 653.50 500 June 1996 (1)
-----
$118
=====
</TABLE>
20
<PAGE> 23
SHAREHOLDER VOTING RESULTS
==============================================================================
MARCH 31, 1996--(UNAUDITED)
At a special meeting of shareholders held on December 12, 1995,
shareholders of the Bond Index Portfolio (the "Portfolio") of the SEI Index
Funds (the "Trust") voted to approve the selection of Mellon Bond Associates as
investment adviser to the Portfolio and the investment advisory agreement
between the Trust and Mellon Bond Associates. The proposal and the results of
the shareholder meeting are set forth below.
I. Proposal to approve the selection of Mellon Bond Associates as
investment adviser to the Portfolio and to approve the investment
advisory agreement between the Trust, on behalf of the Portfolio and
Mellon Bond Associates.
<TABLE>
<CAPTION>
Shares Voted
------------
<S> <C>
For 2,898,356
Against 113,882
Abstain 7,790
</TABLE>
There were no broker non-votes submitted and no other proposals voted on at
such meeting.
21
<PAGE> 24
NOTICE TO SHAREHOLDERS
================================================================================
MARCH 31, 1996 -- (UNAUDITED)
For shareholders that do not have a March 31, 1996 taxable year end, this notice
is for informational purposes only. For shareholders with a March 31, 1996
taxable year end, please consult your tax advisor as to the pertinence of this
notice.
For the fiscal year ended March 31, 1996 the Portfolios of the SEI Index Funds
are designating long term capital gains and qualifying dividend income with
regard to distributions paid during the year as follows:
<TABLE>
<CAPTION>
(A) (B)
LONG TERM ORDINARY
CAPITAL GAINS INCOME TOTAL
DISTRIBUTIONS DISTRIBUTIONS DISTRIBUTIONS
PORTFOLIO (TAX BASIS) (TAX BASIS) (TAX BASIS)
- ---------- -------------- ------------- -------------
<S> <C> <C> <C>
S&P 500 Index 36% 64% 100%
Bond Index 0% 100% 100%
<CAPTION>
(C) (D) (E)
QUALIFYING TAX-EXEMPT FOREIGN
PORTFOLIO DIVIDENDS(1) INTEREST TAX CREDIT
- ---------- ------------- ---------- -----------
<S> <C> <C> <C>
S&P 500 Index 82% 0% 0%
Bond Index 0% 0% 0%
</TABLE>
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction.
* Items (A) and (B) are based on the percentage of each Portfolio's total
distribution.
** Item (C) is based on the percentage of ordinary income of the Portfolio.
*** Items (D) and (E) are based on the percentage of gross income of the
Portfolio.
22
<PAGE> 25
===============================================================================
SEI INDEX FUNDS
===============================================================================
ANNUAL REPORT
===============================================================================
MARCH 31, 1996
Robert A. Nesher
CHAIRMAN
TRUSTEES
Richard F. Blanchard
William M. Doran
F. Wendell Gooch
Frank E. Morris
James M. Storey
OFFICERS
David G. Lee
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Todd Cipperman
VICE PRESIDENT, ASSISTANT SECRETARY
Kathryn L. Stanton
VICE PRESIDENT, ASSISTANT SECRETARY
Sandra K. Orlow
VICE PRESIDENT, ASSISTANT SECRETARY
Joseph M. Lydon
VICE PRESIDENT, ASSISTANT SECRETARY
Kevin P. Robins
VICE PRESIDENT, ASSISTANT SECRETARY
Jeffrey A. Cohen
CONTROLLER, CHIEF FINANCIAL OFFICER
Richard W. Grant
SECRETARY
John H. Grady, Jr.
ASSISTANT SECRETARY
INVESTMENT ADVISERS
World Asset Management
Mellon Bond Associates
MANAGER AND SHAREHOLDER SERVICING AGENT
SEI Financial Management Corporation
DISTRIBUTOR
SEI Financial Services Company
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
THIS ANNUAL REPORT AND THE FINANCIAL STATEMENTS CONTAINED HEREIN ARE SUBMITTED
FOR THE GENERAL INFORMATION OF THE SHAREHOLDERS OF THE TRUST AND MUST BE
PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. SHARES OF THE SEI FUNDS ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK. THE SHARES
ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC),
THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE
SHARES INVOLVES RISK, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SEI FINANCIAL
SERVICES COMPANY, THE DISTRIBUTOR OF THE SEI FUNDS, IS NOT AFFILIATED WITH ANY
BANK.
FOR MORE INFORMATION CALL 1(BULLET)800(BULLET)DIAL(BULLET)SEI/1(BULLET)800
(BULLET)342(BULLET)5734
<PAGE> 1
EXHIBIT-99.B15(a)
DISTRIBUTION PLAN
WHEREAS TrustFunds Equity Index Funds (the "Trust") is engaged
in business as an open-end investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"); and
WHEREAS the Trustees of the Trust have determined that there
is a reasonable likelihood that the following Distribution Plan will benefit
the Trust and the owners of units of beneficial interest ("Unitholders") in the
Trust's various portfolios;
NOW, THEREFORE, the Trustees of the Trust hereby adopt this
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act.
Section 1. The Trust has adopted this Distribution Plan
---------
("Plan") to enable the Trust to directly or indirectly bear expenses relating
to the distribution of securities of which the Trust is the issuer.
Section 2. The Trust may incur expenses for the items
---------
stipulated in Section 3 of this Plan as provided in a budget approved by a
majority of the Qualified Trustees (as defined in Section 10 below) for the
12-month period following the date on which this Plan shall first become
effective and a similar
<PAGE> 2
budget for each succeeding 12 month period (or portion thereof), provided that
in no event shall the expenses provided for in such budgets exceed .05% of the
Trust's average daily net assets during any fiscal year of the Trust. A
majority of the Qualified Trustees may, from time to time, change such budgets
to increase or decrease the total amount authorized to be spent, to change the
allocation of amounts among expenditure items, to suspend expenditures or
otherwise, but no expenditures shall be made in excess of those provided for in
budgets approved by a majority of the Qualified Trustees from time to time.
All expenditures pursuant to such budgets shall be made only pursuant to
authorization by the President, any Vice President or the Treasurer of the
Trust for an expense permitted pursuant to this Plan. Expenses incurred
pursuant to this Plan shall be allocated among the several series of Units of
the Trust on the basis of their relative net asset values, unless otherwise
determined by a majority of the Qualified Trustees.
Section 3. Expenses permitted pursuant to this Plan shall
---------
include, and be limited to, the following:
(a) The incremental printing costs incurred in producing
for and distributing to persons other than current
Unitholders of the Trust the reports, prospectuses,
- 2 -
<PAGE> 3
Unitholders of the Trust the reports, prospectuses,
notices and similar materials that are prepared by
the Trust for current Unitholders;
(b) the cost of complying with state and federal laws
pertaining to the distribution of the Trust's Units;
(c) advertising;
(d) the costs of preparing, printing and distributing any
literature used in connection with the offering of
the Trust's Units and not covered by Section 3(a) of
this Plan; and
(e) expenses incurred in connection with the promotion
and sale of the Trust's Units including, without lim-
itation, travel and communication expenses and
expenses for the compensation of and benefits for
sales personnel.
Section 4. This Plan shall not take effect until it has been
---------
approved (a) by a vote of at least a majority of the outstanding voting
securities of the Trust; and (b) together with any related agreements, by
votes of the majority of both
- 3 -
<PAGE> 4
cast in person at a meeting called for the purpose of voting on this Plan or
such agreement.
Section 5. This Plan shall continue in effect for a period of
---------
more than one year after it takes effect only for so long as such continuance
is specifically approved at least annually in the manner provided in Section 4
herein for the approval of this Plan.
Section 6. Any person authorized to direct the disposition of
---------
monies paid or payable by the Trust pursuant to this Plan or any related
agreement shall provide to the Trustees of the Trust, at least quarterly, a
written report of the amounts so expended and the purposes for which such
expenditures were made.
Section 7. This Plan may be terminated at any time by the vote
---------
of a majority of the Qualified Trustees or by vote of a majority of the Trust's
outstanding voting securities.
Section 8. All agreements with any person relating to
---------
implementation of this Plan shall be in writing, and any agreement related to
this Plan shall provide (a) that such agreement may be terminated at any time,
without payment of any penalty, by the vote of a majority of the Qualified
Trustees or by the
- 4 -
<PAGE> 5
vote of Unitholders holding a majority of the Trust's outstanding voting
securities, on not more than 60 days written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
Section 9. This Plan may not be amended to increase materially
---------
the amount of distribution expenses permitted pursuant to Section 2 hereof
without the approval of a majority of the outstanding voting securities of the
Trust, and all material amendments to this Plan shall be approved in the manner
provided in Section 4 herein for the approval of this Plan.
Section 10. As used in this Plan, (a) the term "Qualified
----------
Trustees" shall mean those Trustees of the Trust who are not interested persons
of the Trust, and have no direct or indirect financial interest in the
operation of this Plan or any agreements related to it, and (b) the terms
"assignment" and "interested person" shall have the respective meanings
specified in the 1940 Act and the rules and regulations thereunder, subject to
such exemptions as may be granted by the Securities and Exchange Commission.
Section 11. Nothing in this Plan shall operate or be
----------
construed to limit the extent to which the Trust's Sponsor,
- 5 -
<PAGE> 6
Manager, Distributor or Investment Administrator or any other person, other
than the Trust, may incur costs out of their own monies and bear expenses
associated with the distribution of securities of which the Trust is the
issuer.
Section 12. While this Plan is in effect, the selection and
----------
nomination of those Trustees who are not interested persons of the Trust within
the meaning of Section 2(a)(19) of the 1940 Act shall be committed to the
discretion of the Trustees then in office who are not interested persons of the
Trust.
Section 13. This Plan shall not obligate the Trust or any
----------
other party to enter into an agreement with any particular person.
- 6 -
<PAGE> 1
EXHIBIT 99.B15(c)
AMENDED AND RESTATED DISTRIBUTION PLAN
SEI INDEX FUNDS
CLASS E SHARES
WHEREAS, SEI Index Funds (the "Trust") is engaged in business as an
open-end investment company registered under the Investment Company Act of 1940,
as amended ("1940 Act"); and
WHEREAS, the parties wish to amend and restate the terms of the
Distribution Plan previously adopted as set forth herein; and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that the following Distribution Plan will benefit the
Portfolios of the Trust listed on Exhibit A hereto (the "Portfolios") and the
owners of the Class E shares of such Portfolios (the "Shares");
NOW, THEREFORE, the Trustees of the Trust hereby adopt this
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act.
SECTION 1. The Trust has adopted this Class E Distribution Plan (the
"Plan") to enable the Trust to directly or indirectly bear expenses relating to
the distribution of the Shares of the Trust.
SECTION 2. The Trust will pay the Distributor a fee on the Shares of
the Portfolios up to the amount set forth on Exhibit A. The Distributor may use
this fee toward (i) compensation for its services in connection with
distribution assistance or provision of shareholder services; or (ii) payments
to financial institutions and intermediaries such as banks, savings and loan
associations, insurance companies and investment counselors, broker-dealers and
the Distributor's affiliates and subsidiaries as compensation for services or
reimbursement of expenses incurred in connection with distribution assistance or
provision of shareholder services.
SECTION 3. This Plan shall not take effect with respect to any
Portfolio until it has been approved (a) by a vote of at least a majority of the
outstanding voting securities of the Shares of such Portfolio; and (b) together
with any related agreements, by votes of the majority of both (i) the Trustees
of the Trust and (ii) the Qualified Trustees, cast in person at a Board of
Trustees meeting called for the purpose of voting on this Plan or such
agreement.
SECTION 4. This Plan shall continue in effect for a period of more than
one year after it takes effect only for so long as such continuance is
specifically approved at least annually in the manner provided in Part (b) of
Section 3 herein for the approval of this Plan.
SECTION 5. Any person authorized to direct the disposition of monies
paid or payable by the Trust pursuant to this Plan or any related agreement
shall provide to the Trustees of the Trust, at least quarterly, a written report
of the amounts so expended and the purposes for which such expenditures were
made.
SECTION 6. This Plan may be terminated at any time by the vote of a
majority of the Qualified Trustees or by vote of a majority of the outstanding
voting securities of the Shares of the Portfolios.
SECTION 7. All agreements with any person relating to implementation of
this Plan shall be in writing, and any agreement related to this Plan shall
provide (a) that such agreement may be terminated at any time, without payment
of any penalty, by the vote of a majority of the Qualified Trustees or by the
vote of a majority of the outstanding voting securities of the Shares of the
Portfolios, on not more than 60 days written notice to any other party to the
agreement; and (b) that such agreement shall terminate automatically in the
event of its assignment.
SECTION 8. This Plan may not be amended to increase materially the
amount of distribution expenses permitted pursuant to Section 2 hereof without
the approval of Shareholders holding a majority of the outstanding voting
securities of the Shares of the Portfolios, and all material amendments to this
Plan shall be approved in the manner provided in Part (b) of Section 3 herein
for the approval of this Plan.
SECTION 9. As used in this Plan, (a) the term "Qualified Trustees"
shall mean those Trustees of the Trust who are not interested persons of the
Trust, and have no direct or indirect financial interest in the operation of
this Plan or any agreements related to it, and (b) the terms "assignment" and
"interested person" shall have the respective meanings specified in the 1940 Act
and the rules and regulations thereunder, subject to such exemptions as may be
granted by the Securities and Exchange Commission.
SECTION 10. While this Plan is in effect, the selection and nomination
of those Trustees who are not interested persons of the
1
<PAGE> 2
Trust within the meaning of Section 2(a)(19) of the 1940 Act shall be committed
to the discretion of the Trustees then in office who are not interested persons
of the Trust.
SECTION 11. This Plan shall not obligate the Trust or any other party
to enter into an agreement with any particular person.
Amended and Restated May 1, 1996
2
<PAGE> 3
EXHIBIT A
S&P 500 Index Portfolio........................................... .15%
3
<PAGE> 1
EXHIBIT 99.B18(b)
Amendment #1
SEI INDEX FUNDS
CERTIFICATE OF CLASS DESIGNATION
Class A Shares
1. Class-Specific Distribution Arrangements; Other Expenses
Class A shares are sold without a sales charge, but are subject to a
shareholder servicing fee of up to .25% payable to the Distributor. The
Distributor will provide or will enter into written agreements with service
providers who will provide one or more of the following shareholder services to
clients who may from time to time beneficially own shares: (i) maintaining
accounts relating to clients that invest in shares; (ii) providing information
periodically to clients showing their position in shares; (iii) arranging for
bank wires; (iv) responding to client inquiries relating to the services
performed by the Distributor or any service provider; (v) responding to
inquiries from clients concerning their investments in shares; (vi) forwarding
shareholder communications from the Fund (such as proxies, shareholder reports,
annual and semi-annual financial statements and dividend, distribution and tax
notices) to clients; (vii) processing purchase, exchange and redemption requests
from clients and placing such orders with the Fund or its service providers;
(viii) assisting clients in changing dividend options, account designations, and
addresses; (ix) providing subaccounting with respect to shares beneficially
owned by clients; (x) processing dividends payments from the Fund on behalf of
clients; and (xi) providing such other similar services as the Fund may
reasonably request to the extent that the Distributor and/or the service
provider is permitted to do so under applicable laws or regulations.
2. Eligibility of Purchasers
Class A shares do not require a minimum initial investment and are
available only to financial institutions and intermediaries.
3. Exchange Privileges
Class A shares of each Fund may be exchanged for Class A shares of each
other Fund of the Trust in accordance with the procedures disclosed in the
Fund's Prospectus and subject to and applicable limitations resulting from the
closing of Funds to new investors.
4. Voting Rights
Each Class A shareholder will have one vote for each full Class A share
held and a fractional vote for each fractional Class A share held. Class A
shareholders will have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to Class A (such as a distribution plan or
service agreement relating to Class A), and will have separate voting rights on
any other matter submitted to shareholders in which the interests of the Class A
shareholders differ from the interests of holders of any other class.
5. Conversion Rights
Class A shares do not have a conversion feature.
<PAGE> 2
Amendment #1
SEI INDEX FUNDS
CERTIFICATE OF CLASS DESIGNATION
Class E Shares
1. Class-Specific Distribution Arrangements; Other Expenses
Class E shares are sold without a sales charge, but are subject to Rule
12b-1 distribution plan payments of up to .15% payable to the Distributor. The
Distributor may use this fee for (i) compensation for its services in connection
with distribution assistance or provision of shareholder services; or (ii)
payments to financial institutions and intermediaries such as banks, savings and
loan associations, insurance companies and investment counselors, broker-dealers
and the Distributors' affiliates and subsidiaries as compensation for services
or reimbursement of expenses incurred in connection with distribution assistance
or provision of shareholder services.
2. Eligibility of Purchasers
Class E shares do not require a minimum initial investment and are
available only to financial institutions for their own account or as a record
owner on behalf of fiduciary, agency or custody accounts.
3. Exchange Privileges
Class E shares of each Fund may be exchanged for Class E shares of each
other Fund of the Trust in accordance with the procedures disclosed in the
Fund's Prospectus and subject to and applicable limitations resulting from the
closing of Funds to new investors.
4. Voting Rights
Each Class E shareholder will have one vote for each full Class E share
held and a fractional vote for each fractional Class E share held. Class E
shareholders will have exclusive voting rights regarding any matter submitted to
shareholders that relates solely to Class E (such as a distribution plan or
service agreement relating to Class E), and will have separate voting rights on
any other matter submitted to shareholders in which the interests of the Class E
shareholders differ from the interests of holders of any other class.
5. Conversion Rights
Class E shares do not have a conversion feature.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EX-27.1
<ARTICLE> 6
<CIK> 0000766589
<NAME> SEI INDEX FUND
<SERIES>
<NUMBER> 021
<NAME> BOND INDEX
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 50849
<INVESTMENTS-AT-VALUE> 50965
<RECEIVABLES> 0
<ASSETS-OTHER> 220
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 51185
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51535
<SHARES-COMMON-STOCK> 4987
<SHARES-COMMON-PRIOR> 4612
<ACCUMULATED-NII-CURRENT> 238
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (704)
<ACCUM-APPREC-OR-DEPREC> 116
<NET-ASSETS> 51185
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2922
<OTHER-INCOME> 0
<EXPENSES-NET> (169)
<NET-INVESTMENT-INCOME> 2753
<REALIZED-GAINS-CURRENT> 342
<APPREC-INCREASE-CURRENT> 1178
<NET-CHANGE-FROM-OPS> 4273
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2767)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2354
<NUMBER-OF-SHARES-REDEEMED> (2033)
<SHARES-REINVESTED> 54
<NET-CHANGE-IN-ASSETS> 4036
<ACCUMULATED-NII-PRIOR> 252
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (1046)
<GROSS-ADVISORY-FEES> 19
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 214
<AVERAGE-NET-ASSETS> 44396
<PER-SHARE-NAV-BEGIN> 9.90
<PER-SHARE-NII> .64
<PER-SHARE-GAIN-APPREC> .36
<PER-SHARE-DIVIDEND> (.64)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.26
<EXPENSE-RATIO> .38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EX-27.2
<ARTICLE> 6
<CIK> 0000766589
<NAME> SEI INDEX FUND
<SERIES>
<NUMBER> 011
<NAME> S&P 500 INDEX CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 460037
<INVESTMENTS-AT-VALUE> 640631
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 640631
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7058
<TOTAL-LIABILITIES> 7058
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 443053
<SHARES-COMMON-STOCK> 30195
<SHARES-COMMON-PRIOR> 27927
<ACCUMULATED-NII-CURRENT> 3261
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6547
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 180712
<NET-ASSETS> 633573
<DIVIDEND-INCOME> 12462
<INTEREST-INCOME> 1258
<OTHER-INCOME> 0
<EXPENSES-NET> (1343)
<NET-INVESTMENT-INCOME> 12377
<REALIZED-GAINS-CURRENT> 10434
<APPREC-INCREASE-CURRENT> 122078
<NET-CHANGE-FROM-OPS> 144889
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10329)
<DISTRIBUTIONS-OF-GAINS> (8827)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16895
<NUMBER-OF-SHARES-REDEEMED> (15159)
<SHARES-REINVESTED> 532
<NET-CHANGE-IN-ASSETS> 46804
<ACCUMULATED-NII-PRIOR> 1213
<ACCUMULATED-GAINS-PRIOR> 4940
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 161
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1867
<AVERAGE-NET-ASSETS> 536970
<PER-SHARE-NAV-BEGIN> 16.40
<PER-SHARE-NII> .44
<PER-SHARE-GAIN-APPREC> 4.72
<PER-SHARE-DIVIDEND> (.37)
<PER-SHARE-DISTRIBUTIONS> (.31)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.88
<EXPENSE-RATIO> .25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
EX-27.3
<ARTICLE> 6
<CIK> 00000766589
<NAME> SEI INDEX FUND
<SERIES>
<NUMBER> 012
<NAME> S&P 500 INDEX CLASS E
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 460037
<INVESTMENTS-AT-VALUE> 640631
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 640631
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7058
<TOTAL-LIABILITIES> 7058
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 443053
<SHARES-COMMON-STOCK> 144
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 3261
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 6547
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 180712
<NET-ASSETS> 633573
<DIVIDEND-INCOME> 12462
<INTEREST-INCOME> 1258
<OTHER-INCOME> 0
<EXPENSES-NET> (1343)
<NET-INVESTMENT-INCOME> 12377
<REALIZED-GAINS-CURRENT> 10434
<APPREC-INCREASE-CURRENT> 122078
<NET-CHANGE-FROM-OPS> 144889
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 155
<NUMBER-OF-SHARES-REDEEMED> (11)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3024
<ACCUMULATED-NII-PRIOR> 1213
<ACCUMULATED-GAINS-PRIOR> 4940
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 161
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1867
<AVERAGE-NET-ASSETS> 536970
<PER-SHARE-NAV-BEGIN> 20.82
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> .05
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.87
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
