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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SEI Index Funds
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(Name of Registrant as Specified In Its Charter)
same
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11(1).
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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PRELIMINARY COPY
S&P 500 INDEX PORTFOLIO
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IMPORTANT SHAREHOLDER INFORMATION
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THIS DOCUMENT CONTAINS YOUR PROXY STATEMENT AND PROXY CARD. A PROXY
CARD IS, IN ESSENCE, A BALLOT. WHEN YOU VOTE YOUR PROXY, IT TELLS US
HOW TO VOTE ON YOUR BEHALF ON IMPORTANT ISSUES RELATING TO YOUR
PORTFOLIO. EACH PROXY CARD MAY BE COMPLETED BY CHECKING THE
APPROPRIATE BOX AND VOTING FOR OR AGAINST THE SPECIFIC PROPOSALS
RELATING TO YOUR PORTFOLIO. IF YOU SIMPLY SIGN THE PROXY WITHOUT
SPECIFYING A VOTE, YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF TRUSTEES.
PLEASE SPEND A FEW MINUTES WITH THE PROXY STATEMENT, FILL OUT YOUR
PROXY CARD, AND RETURN IT TO US. VOTING YOUR PROXY, AND DOING SO
PROMPTLY, ENSURES THAT THE PORTFOLIO WILL NOT NEED TO CONDUCT
ADDITIONAL MAILINGS. IF SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN
SUFFICIENT NUMBERS, THE PORTFOLIO MAY HAVE TO INCUR THE EXPENSE OF
FOLLOW-UP SOLICITATIONS, WHICH WILL COST YOUR PORTFOLIO MONEY.
PLEASE TAKE A FEW MOMENTS TO EXERCISE YOUR RIGHT TO VOTE. THANK YOU.
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SEI INDEX FUNDS
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SEI INDEX FUNDS
Dear Shareholder,
A shareholder meeting of the S&P 500 Index Portfolio (the "Portfolio") of
SEI Index Funds (the "Trust") has been scheduled for November 18, 1998. If you
were a shareholder of record as of the close of business on September 30, 1998,
you are entitled to vote at the meeting and any adjournment of the meeting.
Mr. Lee P. Munder ("Munder"), the Chairman of Munder Capital Management
("MCM"), entered into an agreement with a subsidiary of Comerica, Inc.
("Comerica"), a publicly held bank holding company, under which Comerica
purchased 85% of Munder's interest in MCM (the "Transaction"). As a result of
the Transaction, Comerica owns or controls 88% of the partnership interests in
MCM. This Transaction resulted in an assignment of the management agreements of
World Asset Management ("World"), investment adviser to the Portfolio, because
MCM is World's general partner.
The Portfolio's Trustees have called a special shareholder meeting to
permit the Portfolio's shareholders to consider an investment advisory agreement
with World for an interim period that began on July 2, 1998. Shareholders are
also asked to consider an investment sub-advisory agreement with World to take
effect following approval of the agreement and certain other changes to the
Portfolio's management structure. The terms of the proposed new sub-advisory
agreement between SEI Investments Management Corporation ("SIMC") and World
relating to your Portfolio are substantially identical to the terms of the
Trust's current investment advisory agreement, except for the sub-advisory
nature of the relationship, the dates of execution, effectiveness and
termination, and the inclusion of escrow provisions, which are applicable since
the transaction closed prior to the approval of the new sub-advisory agreement
by shareholders. In addition, you will be asked to approve the selection of
SIMC as investment adviser to the Portfolio, and the operation of the Portfolio
as a "Manager of Managers" Fund. The enclosed proxy statement seeks shareholder
approval of these proposals, and provides additional information on the
proposals.
While you are, of course, welcome to join us at the meeting, most
shareholders cast their votes by filling out and signing the enclosed proxy
card. Whether or not you plan to attend the meeting, we need your vote. Please
mark, sign, and date the enclosed proxy card and return it in the enclosed
postage-paid envelope so the maximum number of shares may be voted. Your vote
is important to us. Please do not hesitate to call 800-DIAL SEI if you have any
questions about the proposals. Thank you for taking the time to consider this
important proposal and for your investment in the SEI Funds.
Sincerely,
Edward D. Loughlin
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SEI INDEX FUND
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IMPORTANT NOTICE
Although we recommend that you read the complete Proxy Statement, for your
convenience, we have provided a brief overview of the proposal.
QUESTIONS & ANSWERS
Q: WHY AM I RECEIVING THIS PROXY STATEMENT?
A: Federal securities laws require a vote by the Portfolio's shareholders
whenever a Portfolio's investment adviser is subject to a change in its
ownership structure or in the identity of its controlling parties. Munder
Capital Management ("MCM") is the general partner of World Asset Management
("World") which is investment adviser to the Portfolio. Mr. Lee P. Munder, the
Chairman of MCM, entered into an agreement with Comerica, Inc. ("Comerica")
pursuant to which Comerica increased its ownership in MCM to 88%. Your
Portfolio is seeking shareholder approval of a proposal to approve an interim
investment advisory agreement with World. The Portfolio is also seeking
approval of a new sub-advisory agreement with World. You will also be asked to
approve the operation of the Portfolio as a "Manager of Managers" Portfolio,
with SEI Investments Management Corporation ("SIMC") acting as investment
adviser and World acting as sub-adviser.
Please refer to the proxy statement for a detailed explanation of the proposals.
Q: WHY DO I NEED TO VOTE ON TWO CONTRACTS FOR WORLD?
A. The interim advisory agreement between Trust and World relates only to the
period from July 2, 1998, through the date on which shareholders approve the
agreement. The Sub-Advisory Agreement relates to the "Manager of Manager"
structure, and, if approved, will remain in effect for a period of two years
from the date of approval by shareholders.
Q: WHY ARE THE PORTFOLIO'S ADVISORY ARRANGEMENTS BEING RESTRUCTURED?
A: Many other SEI Funds operate as "Manager of Managers" Portfolios, and the
Board of Trustees and SIMC have found that structure to be very efficient.
Given the increasing consolidation in the asset management industry, there have
been numerous instances where SEI Funds would have had to call shareholder
meetings due to the "assignment" of sub-advisory contracts. Using a "Manager of
Managers" structure will permit the Board of Trustees and SIMC to rehire the
original adviser or sub-adviser without incurring the considerable expense of a
shareholder meeting. It will also permit SIMC to recommend new or replacement
sub-advisers for the Portfolio.
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Q: HOW WILL THIS AFFECT MY ACCOUNT?
A: You can expect the same level of management expertise and service from
World to which you've grown accustomed. The terms of the proposed new
investment sub-advisory agreement between SIMC and World relating to your
Portfolio are substantially identical to the terms of the Portfolio's current
investment advisory agreement, except for the dates of execution, effectiveness
and termination, the inclusion of escrow provisions (which are applicable since
the transaction closed prior to the approval of the sub-advisory agreement by
shareholders) and the sub-advisory nature of the relationship. The selection of
SIMC as adviser should have no impact on your account, except that SIMC will now
be the adviser and World the sub-adviser. THE PROPOSALS DO NOT REQUEST AN
INCREASE IN THE RATE OF THE PORTFOLIO'S INVESTMENT ADVISORY FEE.
Q: WILL MY VOTE MAKE A DIFFERENCE?
A: Your vote is needed to ensure that the proposals can be acted upon.
Additionally, your immediate response on the enclosed proxy card will help save
the costs of any further solicitations for a shareholder vote. We encourage all
shareholders to participate in the governance of their Portfolio.
Q: HOW DO THE TRUSTEES OF MY PORTFOLIO SUGGEST THAT I VOTE?
A: After careful consideration, the Trustees of your Portfolio, including the
independent Trustees who comprise a majority of the Portfolio's Board of
Trustees, unanimously recommend that you vote "FOR" the proposals.
Q: WHOM DO I CALL IF I HAVE QUESTIONS?
A: We will be happy to answer your questions about the proxy solicitation.
Please call us at 1-800-DIAL-SEI between 9:00 a.m. and 5:00 p.m., Eastern
Standard Time, Monday through Friday.
Q: WHERE DO I MAIL MY PROXY CARD?
A: You may use the enclosed postage-paid envelope to mail your proxy card.
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SEI INDEX FUNDS
S&P 500 INDEX PORTFOLIO
ONE FREEDOM VALLEY DRIVE
OAKS, PENNSYLVANIA 19456
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 18, 1998
To the Shareholders of SEI Index Funds:
Notice is hereby given that a special meeting of Shareholders (the
"Meeting") of the S&P Index Portfolio (the "Portfolio") of SEI Index Funds (the
"Trust"), will be held at the offices of the Trust, One Freedom Valley Drive,
Oaks, Pennsylvania 19456, on November 18, 1998 at 3:30 p.m., local time, for
the following purposes:
1. TO CONSIDER AND VOTE UPON A PROPOSAL TO APPROVE AN INTERIM ADVISORY
AGREEMENT BETWEEN THE TRUST, ON BEHALF OF THE S&P 500 INDEX PORTFOLIO (THE
"PORTFOLIO"), AND WORLD ASSET MANAGEMENT INC. ("WORLD") RELATING TO THE
MANAGEMENT OF THE ASSETS OF THE PORTFOLIO FOR THE PERIOD FROM JULY 2, 1998
THROUGH THE DATE OF SHAREHOLDER APPROVAL.
2. TO CONSIDER AND VOTE UPON A PROPOSAL TO APPROVE A NEW ADVISORY
AGREEMENT BETWEEN THE TRUST, ON BEHALF OF THE PORTFOLIO, AND SEI
INVESTMENTS MANAGEMENT CORPORATION ("SIMC") RELATING TO THE MANAGEMENT OF
THE ASSETS OF THE PORTFOLIO.
3. AUTHORIZING THE BOARD OF TRUSTEES OF THE TRUST TO APPROVE ADDITIONAL
AND REPLACEMENT SUB-ADVISERS FOR THE PORTFOLIO WITHOUT THE APPROVAL OF
SHAREHOLDERS.
4. APPROVING THE SELECTION OF WORLD AS SUB-ADVISER TO THE PORTFOLIO.
5. TO TRANSACT OTHER BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT THEREOF.
The first Proposal relates to the consideration of a new advisory agreement
between the Trust and World for an interim period from July 2, 1998, through the
date of Shareholder approval of the agreement ("Interim Advisory Agreement") and
the restructured investment advisory arrangements. The current investment
advisory agreement between the Trust and World terminated when a majority
interest in Munder Capital Management ("MCM"), World's general partner, was
purchased by Comerica, Inc. ("Comerica"). Under the Investment Company Act of
1940, this transaction resulted in an "assignment," which caused the termination
of the agreement. The Board of Trustees is recommending that Shareholders of
the Portfolio approve the Interim Advisory Agreement.
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The remaining Proposals relate to the consideration of a new advisory
agreement between the Trust and SIMC. Provided that a new investment advisory
agreement between the Trust and SIMC relating to the assets of the Portfolio, as
well as the sub-advisory agreement and the "Manager of Managers" arrangement,
are approved by Shareholders, World will serve as sub-adviser under the new
sub-advisory agreement described in the attached proxy statement. The Board of
Trustees is recommending that Shareholders of the Portfolio vote to approve the
investment advisory agreement between the Trust and SIMC, the new sub-advisory
agreement between SIMC and World, and the "Manager of Managers" arrangement.
All Shareholders are cordially invited to attend the meeting. Regardless
of whether you plan to attend the meeting, please complete, sign, and date the
enclosed proxy and return it promptly in the enclosed envelope so that a quorum
will be present and a maximum number of shares may be voted. If you are present
at the meeting, you may change your vote, if desired, at that time.
Shareholders of record at the close of business on September 30, 1998, are
entitled to receive notice of and to vote at that meeting or any adjournment
thereof.
By Order of the Board of Trustees
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Richard W. Grant
SECRETARY
October 15, 1998
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY
IS REQUESTED. A SELF-ADDRESSED, POSTAGE PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE
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SEI INDEX FUNDS
S&P 500 INDEX PORTFOLIO
ONE FREEDOM VALLEY DRIVE
OAKS, PENNSYLVANIA 19456
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 18, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Trustees of SEI Index Funds (the "Trust") on behalf of
the S&P 500 Index Portfolio (the "Portfolio"), for use at the Special Meeting of
Shareholders to be held at the offices of the Trust, One Freedom Valley Drive,
Oaks, Pennsylvania 19456, on Wednesday, November 18, 1998, at 3:30 p.m., local
time, and at any adjourned session thereof (this meeting and any adjournment
thereof are hereinafter referred to as the "Meeting"). Shareholders of record
at the close of business on September 30, 1998 ("Shareholders") are entitled to
vote at the Meeting.
As of September 30, 1998, the Portfolio had _____________ shares
outstanding.
Each share is entitled to one vote and each fractional share is entitled to
a proportionate fractional vote on each matter at the Meeting. In addition to
the solicitation of proxies by mail, directors and officers of the Trust and
officers and employees of SEI Investments Fund Management, the Administrator for
the Portfolio, may solicit proxies in person or by telephone. Persons holding
shares as nominees will, upon request, be reimbursed for their reasonable
expenses incurred in sending soliciting materials to their principals. The cost
of solicitation will be borne by Munder Capital Management ("MCM") and World
Asset Management ("World"). The Proxy Card and this Proxy Statement are being
mailed to the Shareholders on or about October 15, 1998.
Shares represented by duly executed proxies will be voted in accordance
with the instructions given. Proxies may be revoked at any time before they are
exercised by a written revocation received by the President of the Trust at One
Freedom Valley Drive, Oaks, Pennsylvania 19456, by properly executing a
later-dated proxy, or by attending the Meeting and voting in person.
INTRODUCTION
The Trust is organized as a Massachusetts business trust and is not
required to hold annual meetings of Shareholders. The Meeting is being called in
order to permit the Shareholders of the S&P 500 Index Portfolio to vote on a
number of issues related to the Portfolio's
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management structure, including new investment advisory and sub-advisory
agreements for the Portfolio to take effect upon the approval by Shareholders,
and an interim investment advisory agreement between the Trust and World.
The existing investment advisory agreement terminated upon the completion
of the transaction between Comerica, Inc. ("Comerica") and Mr. Lee P. Munder,
Chairman of World's general partner, MCM, as more fully described below (the
"Transaction"). The Transaction, which closed on July 2, 1998, caused an
"assignment" of the former advisory agreement ("Former Advisory Agreement").
Under the Investment Company Act of 1940, as amended (the "1940 Act"), this had
the effect of terminating the Former Advisory Agreement.
The first Proposal relates to the approval of an interim investment
advisory agreement between the Trust, on behalf of the Portfolio, and World
("Interim Advisory Agreement"). The Interim Advisory Agreement is currently in
effect, and will only remain in effect until Shareholders approve the Interim
Advisory Agreement and the management restructuring proposals described in this
Proxy Statement. In the event that Shareholders approve the Interim Advisory
Agreement, but do not approve the management restructuring proposals described
in this Proxy Statement, World will continue to serve as investment adviser to
the Portfolio in the same manner as it did before July 2, 1998. In that event,
World's agreement will run until March, 2000, unless terminated earlier by the
Trust or World.
The remaining proposals relate to the "Manager of Managers" structure
approved by the Trust's Board of Trustees for the Portfolio, wherein, following
Shareholder approval, SIMC will act as investment adviser to the Portfolio and
recommend to the Trustees which investment sub-advisers to appoint and replace
for the Portfolio. Apart from Shareholder approval, this structure required an
order of exemption from the SEC, which has been granted. The "Manager of
Managers" structure will enable the Trust to achieve a higher degree of
management efficiency and will reduce the need for Shareholder meetings in the
future. In connection with the "Manager of Managers" structure, the Trustees
have approved the selection of SIMC as Investment Adviser to the Portfolio, and
a new investment advisory agreement for the Portfolio.
This Proxy Statement also seeks approval of the selection of the current
investment adviser to the Portfolio (World) to serve as investment sub-adviser
to the Portfolio. If the "Manager of Managers" structure is implemented for the
Portfolio, the Trustees would be able, upon the recommendation of SIMC and
without Shareholder approval, to replace the sub-advisers and/or appoint
additional sub-advisers to the Portfolio, and to utilize investment sub-advisory
agreements for the Portfolio whose terms are different from those currently in
use by the Trust.
THE TRANSACTION
World is wholly-owned by MCM. MCM was organized as a general partnership
in 1994 when Old MCM, Inc. ("Old MCM") consolidated its investment advisory
business and Comerica, Inc. ("Comerica"), a publicly held bank holding company,
consolidated the investment advisory businesses of its indirect subsidiaries,
Woodbridge Capital Management,
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Inc. ("Woodbridge") and World, into the partnership. WAM Holdings is
wholly-owned by Comerica, Inc.. Prior to July 2, 1998, the general partnership
interests in MCM were owned by Old MCM (44%), WAM Holdings, Inc. ("WAM
Holdings") (44%), and Munder Group L.L.C. ("Munder Group") (12%). Mr. Lee P.
Munder, Chairman of MCM, owned 83% of Old MCM (representing a 36% indirect
interest in MCM) and 68% of Munder Group (representing an 8% indirect interest
in MCM). Through his ownership interest in Old MCM and Munder Group, Mr. Munder
owned or controlled approximately 44% of MCM. Employees of MCM owned the
remaining 12% of MCM.
On July 2, 1998, WAM Holdings purchased 85% of Old MCM's interest in MCM
(37.4% of MCM) and 85% of Mr. Munder's interest in Munder Group (6.9% of MCM)
(the "Transaction"). As a result, Comerica now owns or controls approximately
88% of the partnership interests in MCM, World's general partner.
The Transaction did not result in material changes in the business,
corporate structure or composition of the senior management or personnel of
World, or in the manner in which World renders advisory services to the
Portfolio. The Transaction did not result in any changes, other than changes in
the ordinary course of business, in the management or operations of World
relating to the Portfolio, or in the personnel managing the Portfolio. Comerica
and World have asserted that the Transaction did not cause any reduction in the
quality of services provided by World to the Portfolio or have any adverse
effect on World's ability to fulfill its obligations to the Portfolio.
On May 18, 1998, the Trust's Board of Trustees, including a majority of
the non-interested Trustees, approved the Interim Advisory Agreement by and
between the Trust, on behalf of the Portfolio, and World, embodying
substantially identical terms and fees as the Former Advisory Agreement, except
for the dates of execution, effectiveness and termination, and the inclusion of
escrow provisions, which are applicable since the Transaction closed prior to
the approval of the Interim Advisory Agreement by Shareholders. Accordingly,
Shareholders are being asked to approve the Interim Advisory Agreement with
respect to the Portfolio.
On September 10, 1998, the Trust's Board of Trustees, including a majority
of the non-interested Trustees, approved a new sub-advisory agreement by and
between SIMC and World (the "Sub-Advisory Agreement") embodying substantially
identical terms and fees as the Former Advisory Agreement, except for the dates
of execution, effectiveness and termination, and the sub-advisory nature of the
relationship. Accordingly, Shareholders are being asked to approve the
Sub-Advisory Agreement with respect to the Portfolio.
THE TERMS OF THE TRANSACTION
The Transaction, which closed on July 2, 1998, was subject to a number of
conditions, including:
(1) the Interim Advisory Agreement and the Sub-Advisory Agreement have
substantively the same terms and conditions as the Former Advisory
Agreement,
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(2) on or before the 150th day following the termination of the Former
Advisory Agreement (the "Interim Period"), a Special Meeting of
Shareholders be held for the purpose of approving or disapproving
of the Interim Advisory Agreement and the Sub-Advisory Agreement,
(3) the fees earned during the Interim Period be held in escrow and paid
to World only upon Shareholder approval of the Interim Advisory
Agreement,
(4) the cost of soliciting the Shareholders and holding this meeting will
be assumed by MCM and World, and
(5) World will ensure that the scope and quality of advisory services
provided to the Portfolio during the Interim Period will be
at least equivalent to the scope and quality of the services
provided prior to the Interim Period and World will apprise of and
consult the Portfolio's Board of any material change in personnel
providing services pursuant to the Interim Advisory Agreement.
If the Portfolio's Shareholders do not vote to approve the Interim Advisory
Agreement by the expiration of the Interim Period, the fees held in the escrow
account will be remitted to the Portfolio, World will no longer serve as the
Portfolio's investment adviser, and the Interim Advisory Agreement will
terminate.
The Trust's Board of Trustees approved the Interim Advisory Agreement and
the Sub-Advisory Agreement and called this special Meeting of the Shareholders
to approve these Agreements. MCM and World have agreed to pay all expenses
relating to the procurement of a Shareholder vote. In the event that
Shareholders do not approve the Interim Advisory and the Sub-Advisory Agreement,
the Trust's Board will meet to discuss its options, which may include
recommending the hiring, subject to Board and Shareholder approval, of one or
more new advisers.
PROPOSAL 1.
APPROVAL OF WORLD AS THE INVESTMENT ADVISER TO THE PORTFOLIO, AND APPROVAL OF AN
INVESTMENT ADVISORY AGREEMENT BETWEEN THE TRUST, ON BEHALF OF THE PORTFOLIO, AND
WORLD, FOR THE PERIOD FROM JULY 2, 1998 THROUGH THE DATE ON WHICH SHAREHOLDERS
APPROVE THE AGREEMENT.
The Board of Trustees is recommending that Shareholders of the Portfolio
approve World as the interim investment adviser to the Portfolio and approve the
form of investment advisory agreement (the "Interim Advisory Agreement") between
the Trust and World relating to the Portfolio (which is attached as EXHIBIT A to
this Proxy Statement). The Trustees of the Trust, including all the Trustees
who are not "interested persons" of the Trust, approved the Interim Advisory
Agreement with respect to the Fund at a meeting held on May 18, 1998.
Except for the dates of execution, effectiveness and termination, and the
inclusion of escrow provisions, which are applicable since the Transaction
closed prior to the approval of the Interim Advisory Agreement by Shareholders,
the Interim Advisory Agreement is substantially
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identical to the Former Advisory Agreement between the Trust, on behalf of the
Portfolio, and World. The Interim Advisory Agreement went into effect upon the
closing of the transaction on July 2, 1998. The Interim Advisory Agreement will
remain in effect until the later of: (a) its approval by Shareholders in the
manner described in this Proxy Statement; or (b) in the event that sub-advisory
and manager-of-managers arrangements described in this Proxy Statement are not
approved by Shareholders, until March, 2000 (unless earlier terminated).
Approval of the Interim Advisory Agreement is necessary because the
Investment Company Act of 1940 (the "1940 Act") requires that all investment
advisory contracts be approved by Trustees and Shareholders. Even though the
Trustees of the Trust are seeking Shareholder approval to permit SIMC, with the
approval of the Trust's Board, to hire and replace sub-advisers for the Trust,
Shareholder approval of the Interim Advisory Agreement is necessary to ensure
that the Portfolio receives continuous investment advisory services even after
the July 2, 1998 Transaction. Approval of the Interim Advisory Agreement will
have the effect of ratifying the Board of Trustees' actions of May 18, 1998,
and will ensure that World is compensated for its services for the period from
July 2, 1998 until Shareholder approval of the Interim Advisory Agreement.
During this period, World's fees have been paid into escrow for payment to World
only upon approval of the Interim Advisory Agreement.
DESCRIPTION OF THE FORMER ADVISORY AGREEMENT
World has served as the investment adviser to the Portfolio pursuant to the
Former Advisory Agreement, which was approved by the Portfolio's Shareholders on
_____ __, 19__ for the S&P 500 Index Portfolio. This Agreement terminated on
July 2, 1998 upon consummation of the Transaction.
World and the Trust obtained an order of the SEC permitting implementation,
without obtaining prior shareholder approval, of advisory and sub-advisory
agreements for a limited time after the consummation of the Transaction. Such
relief would permit World to receive fees earned by World during the interim
period of not more than 150 days (the "Interim Period"). This Interim Period
commenced on the date of the Transaction and will continue through the date on
which the Interim Advisory Agreement between World and the Portfolio is approved
or disapproved by the Portfolio's Shareholders (but in no event later than
November 30, 1998).
World has agreed as a condition of the order to take all appropriate steps
to ensure that the scope and quality of its advisory and other services provided
to the Portfolio during the Interim Period will be at least equivalent to the
scope and quality of services provided under the Former Advisory Agreement. In
the event of any material change in the personnel providing advisory services
pursuant to the Interim Advisory Agreement during the Interim Period, the
Trustees will be apprised of and consulted to assure that they are satisfied
that the services provided will not be diminished in scope or quality. The
Board received assurances from World that such services would be delivered for
the same fee under the Interim Advisory Agreement as is currently in place under
the Former Advisory Agreement. The terms of the Interim Advisory Agreement are
identical to the terms of the Former Advisory Agreement except for dates of
execution, effectiveness and terminations, and the inclusion of escrow
provisions.
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(Additional information about World is found on pages 13 - 14.)
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 2.
APPROVAL OF SIMC AS THE INVESTMENT ADVISER TO THE PORTFOLIO, AND APPROVAL OF AN
INVESTMENT ADVISORY AGREEMENT BETWEEN THE TRUST, ON BEHALF OF THE PORTFOLIO, AND
SIMC.
The Board of Trustees is recommending that Shareholders of the Portfolio
approve SIMC as the investment adviser to the Portfolio and approve the form of
investment advisory agreement (the "Investment Advisory Agreement") between the
Trust and SIMC relating to the Portfolio (which is attached as EXHIBIT B to this
Proxy Statement). The Trustees of the Trust, including all of the Trustees who
are not "interested persons" of the Trust, approved the Investment Advisory
Agreement with respect to the Portfolio at a meeting held on September 10, 1998.
The Investment Advisory Agreement will take effect upon Shareholder approval.
Other than the identity of the investment adviser and the provisions
relating to sub-advisory arrangements, there are no material differences between
the Investment Advisory Agreement and the Former Advisory Agreement. The
overall cost to the Portfolio of advisory and management services will NOT be
increased.
DUTIES UNDER THE INVESTMENT ADVISORY AGREEMENT. Under the Investment
Advisory Agreement, SIMC will serve as investment adviser to the Portfolio and
will provide its proprietary investment adviser selection, monitoring, and asset
allocation services to the Portfolio. Subject to Board approval, SIMC, in turn,
will enter into investment sub-advisory agreements with one or more sub-advisers
who exercise investment discretion over the assets (or a portion of the assets)
of the Portfolio. SIMC may provide specific portfolio security advice with
respect to all or some portion of the Portfolio's assets.
SIMC will perform internal due diligence on prospective sub-advisers for
the Portfolio and monitor Manager performance using its proprietary investment
adviser selection and monitoring process. SIMC will be responsible for
communicating performance targets and evaluations to sub-advisers, supervising
each sub-adviser's compliance with the Portfolio's fundamental investment
objectives and policies, authorizing sub-advisers to engage in certain
investment techniques for the Portfolio, and recommending to the Board of
Trustees whether sub-advisory agreements should be renewed, modified or
terminated. SIMC also will recommend to the Board the addition of new
sub-advisers as it deems appropriate.
For its investment advisory services, SIMC will receive an advisory fee
from the Portfolio based on the Portfolio's assets. SIMC will then pay the
sub-advisers (in this case,
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World) out of this fee. SIMC's fees under the Investment Advisory Agreement
will be the same as World's fee under the Former Advisory Agreement.
DURATION AND TERMINATION. Unless terminated earlier, the Investment
Advisory Agreement shall continue in effect as to the Portfolio until on or
about March, 2000, and thereafter, for periods of one year for so long as such
continuance is specifically approved with respect to the Portfolio at least
annually (i) by the vote of the holders of a majority of the outstanding shares
of the Portfolio or by the Trustees of the Trust, and (ii) by the vote of a
majority of those Trustees of the Trust who are not parties to the Investment
Advisory Agreement or "interested persons" (as that term is defined in the 1940
Act) of any party thereto, cast in person at a meeting called for the purpose of
voting on such approval. The 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 vote of a majority of the outstanding shares of the Portfolio on not less than
30 days' nor more than 60 days' written notice to SIMC. In addition, it is
terminable by SIMC upon 90 days' written notice to the Trust.
SIMC will discharge its responsibilities subject to the supervision of, and
policies set by, the Trustees of the Trust. The Investment Advisory Agreement
provides that SIMC 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 by SIMC of its obligations or duties thereunder.
DESCRIPTION OF THE SIMC. SIMC (the "Adviser") is a wholly-owned subsidiary
of SEI Investments Company ("SEI Investments"), a financial services company.
The principal business address of SIMC and SEI Investments is Oaks, Pennsylvania
19456. SEI Investments was founded in 1968, and is a leading provider of
investment solutions to banks, institutional investors, investment advisers and
insurance companies. Affiliates of SIMC have provided advice to institutional
investors for more than 20 years, including advice regarding selection and
evaluation of money managers. SIMC and its affiliates currently serve as
adviser or manager to more than 46 investment companies, including more than 387
Portfolios, with more than $128 billion in assets as of May 31, 1998.
Listed below are the names and principal occupations of each of the
directors and the principal executive officers of SIMC. The principal business
address of each director and the principal executive officers, as it relates to
their duties at SIMC, is One Freedom Valley Drive, Oaks, Pennsylvania 19456.
<TABLE>
<CAPTION>
NAME TITLE
- ---- -----
<S> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer
Henry H. Greer Director, President & Chief Operating Officer
Carmen V. Romeo Director, Executive Vice President & Treasurer
Richard B. Lieb Executive Vice President
Edward Loughlin Executive Vice President, President--Asset Management
Services Divisions
7
<PAGE>
Carl A. Guarino Senior Vice President
Mark Nagle Controller
Kevin P. Robins Senior Vice President, General Counsel & Secretary
</TABLE>
TRUSTEES' CONSIDERATIONS. At a meeting held on September 10, 1998, the
Board of Trustees reviewed SIMC's qualifications to act as investment adviser to
the Portfolio, placing particular emphasis on its proposed role in recommending,
monitoring and terminating sub-advisers, subject to Board of Trustees oversight,
and its performance as investment adviser to certain other Trusts advised by
SIMC. The Trustees received written and oral information regarding SIMC's key
personnel and its experience in selection and evaluation of sub-advisers. In
recommending that the Shareholders approve the Investment Advisory Agreement,
the Trustees carefully evaluated the experience of SIMC's key personnel in
institutional investing and the quality of services SIMC is expected to provide
to the Portfolio, as well as other factors relating to SIMC's provision of
investment advisory services including, but not limited to: (1) the nature and
quality of the services expected to be rendered to the Portfolio by SIMC; (2)
the distinct investment objective and policies of the Portfolio; (3) that the
compensation payable to SIMC by the Portfolio under the proposed Investment
Advisory Agreement will be at the same rate as the compensation payable to SIMC
and World under the Former Advisory Agreement; (4) the history, reputation,
qualification and background of SIMC as well as the qualifications of its
personnel and its financial condition; (5) the benefits expected to be realized
as a result of the "Manager of Managers" structure; and (6) other factors deemed
relevant. The Trustees also reviewed the fees to be paid to SIMC in comparison
to those being charged in the relevant segment of the mutual Portfolio business,
including any benefits received by SIMC or its affiliates in connection with
soft dollar payments.
In the event Shareholders of the Portfolio do not approve the selection of
SIMC as investment adviser and the Investment Advisory Agreement between the
Trust, on behalf of the Portfolio, and SIMC, or if the Shareholders of the
Portfolio do not approve the "Manager of Managers" structure discussed in the
Proxy Statement at the Special Meeting to which this Proxy Statement relates, or
any adjournment thereof, the Trustees will consider the appropriate course of
action.
DESCRIPTION OF THE PORTFOLIO. The investment objective of the Portfolio is
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
securities (most of which are common stocks listed on the New York Stock
Exchange). The Portfolio's investments consist primarily of common stocks and
other equity securities included in the S&P 500 Index.
COMPENSATION. Under the proposed Investment Advisory Agreement, the Trust
would pay SIMC a fee, which is calculated daily and paid monthly, at an annual
rate of .03% of the average daily net assets of the Portfolio. SIMC will not
retain any investment advisory fees. Instead, it will pay all advisory fees to
World under the Sub-Advisory Agreement. As SIMC did not previously serve as
investment adviser to the Portfolio, the investment advisory fees paid to
8
<PAGE>
SIMC during the last fiscal year was $0. World received $__________, which is
equal to .03% of average daily net assets.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 3.
AUTHORIZATION FOR THE BOARD OF TRUSTEES TO APPOINT INVESTMENT SUB-ADVISERS TO
THE PORTFOLIO WITHOUT SEEKING APPROVAL BY THE PORTFOLIO'S SHAREHOLDERS OF THE
CONTRACTS PURSUANT TO WHICH SUCH SUB-ADVISERS SERVE.
Section 15(a) of the 1940 Act requires that all contracts pursuant to which
persons serve as investment advisers to investment companies be approved by
shareholders. As interpreted, this requirement would apply to appointment of
sub-advisers. The SEC has granted conditional exemptions from the shareholder
approval requirements. The Trust has obtained such an exemption, and if these
Proposals are approved, the Board of Trustees would, without Shareholder
approval, be able to appoint additional or replacement sub-advisers (herein,
"Managers"). The Board would not, however, be able to replace SIMC as investment
adviser to the Portfolio without complying with the 1940 Act and applicable
regulations governing Shareholder approval of advisory contracts.
Proposals 2-4 in this Proxy Statement are intended to facilitate the
efficient operation of the "Manager of Managers" structure and afford the Trust
increased management flexibility. Assuming SIMC is approved as investment
adviser to the Portfolio, it will continuously monitor the performance of the
Managers and may from time to time recommend that the Board of Trustees replace
one or more Managers or appoint additional Managers, depending on SIMC's
assessment of what combination of Managers it believes will optimize the
Portfolio's chances of achieving its investment objective. Accordingly, while
there is no way of knowing exactly how often SIMC may recommend, and the Board
approve, the selection of an additional Manager, or the replacement of an
existing Manager, both of which would typically require a Shareholder meeting,
it is likely that the "Manager of Managers" structure would result in more
frequent Shareholder meetings than would otherwise be the case. However, the
Trustees will not be required to call a Shareholder meeting each time a new
sub-adviser is approved if these proposals are approved.
Shareholder meetings entail substantial costs which could reduce the
desired benefits of the "Manager of Managers" structure. These costs must be
weighed against the benefits of Shareholder scrutiny of proposed contracts with
additional or replacement Managers; however, even in the absence of Shareholder
approval, any proposal to add or replace Managers would receive careful review.
First, SIMC would assess the Portfolio's needs and, if it believed additional or
replacement Managers could benefit the Portfolio, would systematically search
the relevant universe of available investment Managers. Second, any
recommendations made by SIMC would have to be approved by a majority of the
Trustees, including a majority of the
9
<PAGE>
Trustees who are not "interested persons" within the meaning of the 1940 Act.
Finally, any selections of additional or replacement Managers would have to
comply with conditions contained in the SEC exemption.
Under the "Manager of Managers" structure, SIMC will have general oversight
responsibility for the investment advisory services provided to the Portfolio,
including formulating the Portfolio's investment policies and analyzing economic
trends affecting the Portfolio. SIMC will be responsible for managing the
allocation of assets among the Portfolio's sub-advisers and directing and
evaluating the investment services provided by the sub-advisers, including their
adherence to the Portfolio's investment objective and policies and the
Portfolio's investment performance and may provide specific Portfolio security
advice. In accordance with the Portfolio's investment objective and policies,
and under the supervision of SIMC and the Trust's Board of Trustees, each
sub-adviser will be responsible for the day-to-day investment management of all
or a discrete portion of the assets of the Portfolio. The sub-adviser is
authorized to make investment decisions for the Portfolio and place orders on
behalf of the Portfolio to effect the investment decisions made.
In addition, SIMC will monitor the compliance of each sub-adviser with
regulatory and tax regulations, such as those relating to Portfolio
concentration and diversification. For the most part, compliance with these
requirements by each sub-adviser with respect to its portion of a Portfolio will
assure compliance by the Portfolio as a whole. To the extent that having
multiple sub-advisers responsible for investing separate portions of a
Portfolio's assets creates the need for coordination among the sub-advisers,
there is an increased risk that the Portfolio will not comply with these
regulatory requirements.
It is possible that different sub-advisers to the Portfolio could take
opposite actions within a short period of time with respect to a particular
security. For example, one sub-adviser could buy a security for the Portfolio
and shortly thereafter another sub-adviser could sell the same security from the
portion of the Portfolio's assets allocated to it. If in these circumstances the
securities could be transferred from one sub-adviser's portion of the Portfolio
to another, the Portfolio could avoid transaction costs. Such transfers are not
practicable, but the sub-advisers and SIMC do not believe that there will be
material adverse effects on the Portfolio as a result. First, it does not appear
likely that there will be substantial overlap in the securities acquired for the
Portfolio by the various sub-advisers. Moreover, the sub-advisers would probably
only rarely engage in the types of offsetting transactions described above,
especially within a short time period. Therefore, it is a matter of speculation
whether offsetting transactions would result in any significant increases in
transaction costs.
SIMC and the Trust have obtained an exemptive order from the SEC that
permits SIMC, with the approval of the Trust's Board of Trustees, to retain
sub-advisers for the Portfolio without submitting the accompanying sub-advisory
agreement to a vote of the Portfolio's shareholders. The exemptive relief
permits the non-disclosure of amounts payable by SIMC under such sub-advisory
agreements. The Trust will notify shareholders in the event of any change in the
identity of the sub-adviser to the Portfolio. If the "Manager of Managers"
structure is approved, the
10
<PAGE>
Trustees will be able to instruct SIMC to add or replace sub-advisers without
Shareholder approval.
This Proposal will facilitate the appointment of additional and replacement
sub-advisers without a Shareholder vote if SIMC serves as "Manager of Managers"
for the Portfolio.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR THIS PROPOSAL.
PROPOSAL 4.
APPROVAL OF WORLD AS SUB-ADVISER TO THE PORTFOLIO, AND APPROVAL OF A
SUB-ADVISORY AGREEMENT BETWEEN SIMC AND WORLD RELATING TO THE PORTFOLIO.
EFFECT OF THE TRANSACTION ON THE FORMER ADVISORY AGREEMENT
Consummation of the Transaction constituted an "assignment," as that term
is defined in the 1940 Act, of the Former Advisory Agreement. Section 15(a) of
the 1940 Act provides, in relevant part, that it shall be unlawful for any
person to serve or act as investment adviser of a registered investment company
except pursuant to a written contract that has been approved by the vote of a
majority of the outstanding voting securities of such registered investment
company. Section 15(a) further requires that such written contract provide for
automatic termination in the event of its "assignment." Section 2(a)(4) of the
1940 Act defines "assignment" to include any direct or indirect transfer of a
contract by the assignor, or of a controlling block of the assignor's
outstanding voting securities by a security holder of the assignor. Section
2(a)(9) of the 1940 Act defines "control" as the power to exercise a controlling
influence over the management or policies of a company, and beneficial ownership
of more than 25% of the voting securities of a company is presumed under Section
2(a)(9) to reflect control. The Former Advisory Agreement contains the required
provisions regarding termination upon assignment.
As a result of the Transaction and in order for World to continue to serve
as the Portfolio's investment adviser after the assignment (except on a
temporary basis pursuant to an order granted by the SEC, a new investment
advisory agreement (the "Sub-Advisory Agreement") between the Trust, on behalf
of the Portfolio, and World must be approved (i) by a majority of the Trustees
of the Trust who are not parties to the Sub-Advisory Agreement or interested
persons of any party thereto (the "Independent Trustees") and (ii) by a vote of
the holders of "a majority of the outstanding voting securities" (within the
meaning of the 1940 Act) of the Portfolio.
At meetings held on May 18, 1998 and September 10, 1998, the Board of
Trustees of SEI Index Funds met to consider the implications of the Transaction.
The Board of Trustees, including the non-interested Trustees, in accordance with
Section 15(c) of the 1940 Act, approved the Interim Advisory Agreement and the
Sub-Advisory Agreement, concluded that
11
<PAGE>
payment of the investment advisory fees under the Interim Advisory Agreement
during the Interim Period would be appropriate and fair, and recommended its
approval to the Portfolio's Shareholders. The Board determined to call a
Special Meeting of Shareholders of the Portfolio for the purpose of voting on
the approval or disapproval of the Interim Advisory Agreement and the
Sub-Advisory Agreement.
In evaluating the Sub-Advisory Agreement, the Trustees reviewed materials
furnished by World and Comerica, including information regarding World,
Comerica, their respective affiliates and their personnel, operations and
financial condition. The Trustees also reviewed the terms of the Transaction
and its possible effects on the Portfolio and its shareholders. Representatives
of World indicated their belief that as a consequence of the transaction, the
operations of the Portfolio and the capabilities of World to provide advisory
and other services to the Portfolio would not be materially adversely affected
and may be enhanced by the resources of Comerica, though there could be no
assurance as to any particular benefits that may result.
In making their recommendation, the Trustees deemed to be especially
important the experience of World's key personnel in Portfolio management, the
arrangements made to secure the continued service of the key personnel in
Portfolio management, the high quality and extent of research and management
services World is expected to continue to provide to the Portfolio, and the fair
and reasonable compensation proposed to be paid to World by the Portfolio under
the Sub-Advisory Agreement and that the rate of such compensation is identical
to the rate of compensation under the Former Advisory Agreement.
The Trustees also specifically considered the following as relevant to
their recommendations: (1) that the fee and expense ratios of the Portfolio are
reasonable given the quality of services expected to be provided and the fee and
expense ratios of comparable mutual Portfolios; (2) the relative performance of
the Portfolio since commencement of operations to comparable mutual Portfolios
and unmanaged indices; (3) that the terms of the Sub-Advisory Agreement is
substantially identical to those of the Former Advisory Agreement, except for
different execution dates, effective dates and termination dates, and the
inclusion of escrow provisions (which are applicable since the Transaction
closed prior to the approval of the Sub-Advisory Agreement by Shareholders); (4)
the favorable histories, reputations, qualifications and backgrounds of World
and Comerica, as well as the qualifications of their personnel and their
respective financial conditions; (5) the commitment of World to pay the expenses
of the Portfolio in connection with the Transaction so that shareholders of the
Portfolio would not have to bear such expenses; (6) the possibility of benefits
that may be realized by the Portfolio as a result of World's continuing
affiliation with Comerica, including any resources of Comerica that would be
available to World; and (7) other factors deemed relevant by the Trustees.
The Board of Trustees is recommending that Shareholders of the Portfolio
approve World as an investment sub-adviser, and approve the form of investment
Sub-Advisory Agreement between SIMC and World, a copy of which is attached as
EXHIBIT C to this Proxy Statement.
DUTIES UNDER THE SUB-ADVISORY AGREEMENT. Under the Sub-Advisory
Agreement, the Sub-Adviser makes the investment decisions for the assets of the
Portfolio allocated to it by
12
<PAGE>
SIMC, and continuously reviews, supervises, and administers the Portfolio's
investment program with respect to these assets. The sub-adviser is independent
of SIMC and discharges its responsibilities subject to the supervision of SIMC
and the Trustees of the Trust and in a manner consistent with the Portfolio's
investment objectives, policies and limitations. The Sub-Advisory Agreement
provides that the sub-adviser shall not be protected against any liability to
the Trust, its shareholders, or SIMC by reason of willful misfeasance, bad
faith, or negligence on its part in the performance of its duties or from
reckless disregard by such sub-adviser to its obligations or duties thereunder.
DURATION AND TERMINATION. Unless terminated earlier, the Sub-Advisory
Agreement shall continue in effect as to the Portfolio through June, 1999, and
thereafter, for periods of one year for so long as such continuance is
specifically approved at least annually (i) by the vote of the holders of a
majority of the outstanding shares of the Portfolio or by the Trustees of the
Trust, and (ii) by the vote of a majority of those Trustees of the Trust who are
not parties to the Investment Advisory Agreement or Sub-Advisory Agreement or
who are not "interested persons" (as that term is defined in the 1940 Act, as
amended) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. If the "Manager of Managers" structure is
approved by Shareholders, the Trustees may add and replace sub-advisers without
Shareholder approval. Any sub-adviser so selected and approved shall be without
the protection accorded by shareholder approval of an investment adviser's
receipt of compensation under Section 36(b) of the 1940 Act.
The Sub-Advisory Agreement will terminate automatically in the event of its
assignment or in the event that SIMC's Investment Advisory Agreement is
terminated. The Sub-Advisory Agreement is terminable at any time without
penalty by the Trustees of the Trust, or, with respect to the Portfolio, by a
vote of a majority of the outstanding shares of the Portfolio on not less than
30 days' nor more than 60 days' written notice to the Portfolio's sub-adviser.
In addition, the Portfolio's Sub-Advisory Agreement is terminable by the
Portfolio's sub-adviser upon 90 days' written notice to the Trust or SIMC.
In the event Shareholders of a Portfolio do not approve the adoption of the
Sub-Advisory Agreement with World at the Special Meeting to which this Proxy
Statement relates, or any adjournment thereof, the Trustees will consider the
appropriate course of action.
INFORMATION REGARDING WORLD
World is a general partnership organized by MCM and serves as investment
adviser to the Portfolio. MCM is a general partnership formed in December,
1994. As of June 30, 1998, total assets under management of World were $___
billion and total assets under management of MCM were $50 billion. World's
principal place of business is 255 E. Brown Street, Suite 250, Birmingham,
Michigan 48009. EXHIBIT D to this Proxy Statement sets forth the name, business
address and principal occupation of each of World's executive officers. In
addition to serving as the Portfolio's investment adviser, World serves as the
investment adviser or sub-adviser to each of the similar investment companies
listed in EXHIBIT E to this Proxy Statement. EXHIBIT E also
13
<PAGE>
sets forth the size of such investment companies and the rates of World's
advisory fees charged to such investment companies.
Comerica now owns or controls approximately 88% of the partnership
interests in MCM, World's general partner.
INFORMATION CONCERNING COMERICA
Comerica is a publicly held bank holding company. It is the twenty-fifth
largest bank holding company in the United States with approximately $36 billion
in assets. WAM Holdings is a wholly-owned by Comerica. Comerica's principal
place of business is
- --------------------------------------------------------------------------------
The Board of Trustees recommends that Shareholders of the Portfolio approve
the Sub-Advisory Agreement between the Trust, on behalf of the Portfolio, and
World. The description of the Sub-Advisory Agreement set forth in this Proxy
Statement is qualified in its entirety by reference to the form of the
sub-advisory agreement attached to this Proxy Statement as EXHIBIT C.
COMPENSATION
Under the Sub-Advisory Agreement, SIMC will pay World a fee, which is
calculated daily and paid monthly, at the rate of .03% of the average daily net
assets of the Portfolio. For the Portfolio's fiscal year ended March 31, 1998,
World received $_________ in compensation from the Portfolio for its services
under the Former Advisory Agreement, which is equal to .03% of average daily net
assets.
SECTION 15(f) OF THE 1940 ACT
Section 15(f) of the 1940 Act permits, in the context of a change in
control of an investment adviser to a registered investment company, the receipt
by such investment adviser (or any of its affiliated persons) of any amount or
benefit in connection with such sale, as long as two conditions are satisfied.
First, an "unfair burden" may not be imposed on the investment company as a
result of the sale of such interest, or any express or implied terms, conditions
or understandings applicable thereto. The term "unfair burden," as defined in
the 1940 Act, includes any arrangement during the two-year period after the
transaction whereby the investment adviser (or predecessor or successor
adviser), or any interested person of any such adviser, receives or is entitled
to receive any compensation, directly or indirectly, from the investment company
or its security holders (other than fees for bona fide investment advisory and
other services), or from any person in connection with the purchase or sale of
securities or other property to, from or on behalf of the investment company
(other than ordinary fees for bona fide principal underwriting services).
14
<PAGE>
The Board has not been advised by World of any circumstances arising from
the Transaction that will result in the imposition of an "unfair burden" on the
Portfolio. Moreover, Comerica has agreed that, upon consummation of the
Transaction, it will take no action which would have the effect, directly or
indirectly, of violating any of the provisions of Section 15(f) of the 1940 Act
in respect to the Transaction. In this regard, Comerica will conduct itself and
cause World to conduct itself so that no "unfair burden" will be imposed on the
Portfolio as a result of the Transaction contemplated. During the two year
period following the Transaction, World and Comerica do not intend to change
World's policies with respect to the circumstances under which voluntary fee
waivers may be permitted to expire.
The second condition of Section 15(f) is that during the three-year period
immediately following a transaction to which Section 15(f) is applicable, at
least 75% of the subject investment company's board of trustees must not be
"interested persons," as defined in the 1940 Act, of the investment company's
investment adviser or predecessor adviser. The current composition of the
Trust's Board would comply with this condition subsequent to the Transaction.
CONCLUSION AND RECOMMENDATION OF THE BOARD
Based upon a review of the above factors, the Board concluded that the
terms of the Sub-Advisory Agreement are necessary and appropriate in the public
interest of the Portfolio and the Shareholders of the Portfolio. The terms of
the Sub-Advisory Agreement are also consistent with the protection of investors
and the purposes fairly intended by the policies and provisions of the 1940 Act.
The Trustees, including the Independent Trustees, unanimously recommend that the
Shareholders of the Portfolio vote FOR the approval of the Sub-Advisory
Agreement at the Meeting.
If the Shareholders of the Portfolio do not approve the Sub-Advisory
Agreement with respect to the Portfolio, the Trustees will consider what further
action to take consistent with their fiduciary duties to the Portfolio. Such
actions may include obtaining for the Portfolio interim investment advisory
services at cost or at the current fee rate either from World or from another
advisory organization. Thereafter, the Trustees will either negotiate a new
investment advisory agreement with an advisory organization selected by the
Trustees or make other appropriate arrangements.
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS OF THE PORTFOLIO VOTE FOR APPROVAL
OF THE SUB-ADVISORY AGREEMENT WITH WORLD.
ADMINISTRATOR
SEI Investments Fund Management ("SIFM"), an affiliate of SIMC, serves as
administrator of the Trust, pursuant to an Agreement dated July 25, 1986. In
connection with its role as administrator, SIFM provides the Trust with overall
management services, regulatory
15
<PAGE>
reporting, all necessary office space, equipment, personnel and facilities,
and acts as transfer agent, dividend disbursing agent, and shareholder
servicing agent for the Portfolio's shares. The principal offices of SIFM are
located at One Freedom Valley Drive, Oaks, Pennsylvania 19456.
For its services under the current administrative arrangements, SIFM is
entitled to a fee which is calculated daily and paid monthly at an annual rate
of .19% of the average daily net assets of the Portfolio. SIFM may waive all or
a portion of its fees in order to limit the operating expenses of the Portfolio.
Any such waiver is voluntary and may be terminated at any time in their sole
discretion. For the fiscal year ended March 31, 1998, the Trust paid SIFM the
following administration fees:
<TABLE>
<CAPTION>
PORTFOLIO FEES PAID (000) FEE WAIVERS (000)
--------- --------------- -----------------
<S> <C> <C>
S&P 500 Index $ 2,404 $ 520
Bond Index $ 78 $ 59
</TABLE>
DISTRIBUTION
SEI Investments Distribution Co. (the "Distributor"), a wholly-owned
subsidiary of SEI Investments Company ("SEI Investments"), serves as Distributor
of the Portfolio's shares pursuant to a distribution agreement dated December 5,
1995. The principal offices at the Distributor are located at One Freedom
Valley Drive, Oaks, Pennsylvania 19456.
PORTFOLIO TRANSACTIONS
For the fiscal year ended March 31, 1998, the Portfolio paid $_______ in
brokerage commissions to affiliates.
5% SHAREHOLDERS
As of September 30, 1998, the following persons were the only persons who
were, to the knowledge of the Trust, beneficial or record owners of 5% or more
of the shares of the Portfolio of the Trust voting at this Meeting:
<TABLE>
<CAPTION>
NAME AND ADDRESS PERCENTAGE OF
PORTFOLIO OF BENEFICIAL OWNER NUMBER OF SHARES PORTFOLIO SHARES
---------- ------------------- ---------------- ----------------
<S> <C> <C> <C>
S&P 500 Index
Portfolio
</TABLE>
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust.
ADJOURNMENT
16
<PAGE>
In the event that sufficient votes in favor of the Proposal set forth in
the Notice of the Special Meeting are not received by the time scheduled for the
Meeting, the persons named as proxies may propose one or more adjournments of
the Meeting for a period or periods of not more than 60 days in the aggregate to
permit further solicitation of proxies with respect to any of such Proposal. Any
such adjournment will require the affirmative vote of a majority of the votes
cast on the question in person or by proxy at the session of the Meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of the Proposal. They
will vote against any such adjournment those proxies required to be voted
against the Proposal. The costs of any such additional solicitation and of any
adjourned session will be borne by MCM and World.
REQUIRED VOTE
Approval of the Proposal requires the affirmative vote of a majority of the
outstanding voting securities of the Portfolio. The 1940 Act defines "majority
of the outstanding voting securities" as the vote of: (i) 67% or more of the
Portfolio's outstanding shares present at a meeting, if the holders of more than
50% of the outstanding shares of the Portfolio are present or represented by
proxy; or (ii) more than 50% of the Portfolio's outstanding shares, whichever is
less.
Abstentions and "broker non-votes" will not be counted for or against any
Proposal to which it relates, but will be counted for purposes of determining
whether a quorum is present. Abstentions will be counted as votes present for
purposes of determining a "majority of the outstanding voting securities"
present at the Meeting, and will therefore have the effect of counting against
the Proposal.
SHAREHOLDER PROPOSALS
The Trust does not hold annual Shareholder Meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent meeting
should send their written proposals to the Secretary of the Trust c/o SEI
Investments Company, Legal Department, One Freedom Valley Drive, Oaks,
Pennsylvania 19456.
REPORTS TO SHAREHOLDERS
The Trust will furnish, without charge, a copy of the most recent Annual
Report to Shareholders of the Trust and the most recent Semi-Annual Report
succeeding such Annual Report, if any, on request. Shareholders should make
requests by writing to the Trust c/o SEI Investments Fund Management, at One
Freedom Valley Drive, Oaks, Pennsylvania 19456, or by calling 1-800-DIAL-SEI.
OTHER MATTERS
The Trustees know of no other business to be brought before the Meeting.
However, if any other matters properly come before the Meeting, proxies which do
not contain specific
17
<PAGE>
restrictions to the contrary will be voted on such matters in accordance with
the judgment of the persons named in the enclosed form of proxy.
-----------------------------------------
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED, POSTAGE-PAID ENVELOPE.
18
<PAGE>
EXHIBIT A
INTERIM ADVISORY AGREEMENT
A-1
<PAGE>
EXHIBIT B
INVESTMENT ADVISORY AGREEMENT
SEI INDEX FUNDS
AGREEMENT made this ___th day of ____________, 1998, by and between SEI
INDEX FUNDS, a Massachusetts business trust (the "Trust"), and SEI Investments
Management Corporation, (the "Adviser").
WHEREAS, the Trust is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"),
consisting of several portfolios of shares, each having its own investment
policies; and
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to the S&P 500 Index Portfolio 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, to hire (subject to the approval of
the Trust's Board of Trustees and, except as otherwise permitted under the terms
of any exemptive relief obtained by the Adviser from the Securities and Exchange
Commission, or by rule or regulation, a majority of the outstanding voting
securities of any affected Portfolio(s)) and thereafter supervise the investment
activities of one or more sub-advisers deemed necessary to carry out the
investment program of any Portfolios of the Trust, and to continuously review,
supervise and (where appropriate) administer the investment program of the
Portfolios, to determine in its discretion (where appropriate) 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 retention of a sub-adviser by the Adviser shall not relieve the Adviser of
its responsibilities under this Agreement.
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 (referred to collectively as the "Prospectus"), and applicable laws
and regulations. The Trust will furnish the Adviser from time to time with
copies of all amendments or supplements to the Prospectus, if any.
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 (including any sub-advisers) required by it to perform the services on
the terms and for the compensation provided herein. The
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Adviser will not, however, pay for the cost of securities, commodities, and
other investments (including brokerage commissions and other transaction
charges, if any) purchased or sold for the Trust.
2. DELIVERY OF DOCUMENTS. The Trust has furnished Adviser with copies
properly certified or authenticated of each of the following:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as presently in effect and as it shall from time to time
be amended, is herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the "By-Laws");
(c) Prospectus(es) of the Portfolio(s).
3. OTHER COVENANTS. The Adviser agrees that it:
(a) will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with other applicable law;
(b) will place orders pursuant to its investment determinations for the
Portfolios either directly with the issuer or with any broker or dealer. In
executing Portfolio transactions and selecting brokers or dealers, the Adviser
will use its best efforts to seek on behalf of the Portfolio the best overall
terms available. In assessing the best overall terms available for any
transaction, the Adviser shall consider all factors that it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available, and
in selecting the broker-dealer to execute a particular transaction the Adviser
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Portfolio and/or other accounts over which the Adviser or an affiliate of the
Adviser may exercise investment discretion. The Adviser is authorized, subject
to the prior approval of the Trust's Board of Trustees, to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for any of the Portfolios which is in excess
of the amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Adviser determines in good faith
that such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer - - viewed in terms of
that particular transaction or terms of the overall responsibilities of the
Adviser to the Portfolio. In addition, the Adviser is authorized to allocate
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Adviser or the
Trust's principal underwriter) to take into account the sale of shares of the
Trust if the Adviser believes that the quality of the transaction and the
commission are comparable to what they would be with other qualified firms. In
no instance, however, will any Portfolio's securities be purchased
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from or sold to the Adviser, any sub-adviser engaged with respect to that
Portfolio, the Trust's principal underwriter, or any affiliated person of either
the Trust, the Adviser, sub-adviser or the principal underwriter, acting as
principal in the transaction, except to the extent permitted by the Securities
and Exchange Commission and the 1940 Act.
4. 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(s) specified in the Schedule(s) which
are 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 the attached
Schedule(s), to the assets of the Portfolio. The fee shall be based on the
average daily net assets for the month involved. The Adviser may, in its
discretion and from time to time, waive a portion of its fee.
All rights of compensation under this Agreement for services performed as of the
termination date shall survive the termination of this Agreement.
5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year
(including fees and other amounts payable to the Adviser, but excluding
interest, taxes, brokerage costs, litigation, and other extraordinary costs) as
calculated every business day would exceed the expense limitations imposed on
investment companies by any applicable statute or regulatory authority of any
jurisdiction in which Shares are qualified for offer and sale, the Adviser shall
bear such excess cost.
However, the Adviser will not bear expenses of the Trust or any Portfolio which
would result in the Trust's inability to qualify as a regulated investment
company under provisions of the Internal Revenue Code. Payment of expenses by
the Adviser pursuant to this Section 5 shall be settled on a monthly basis
(subject to fiscal year end reconciliation) by a waiver of the Adviser's fees
provided for hereunder, and such waiver shall be treated as a reduction in the
purchase price of the Adviser's services.
6. 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. The Adviser further
agrees to furnish to the Trust, if applicable, the same such documents and
information pertaining to any sub-adviser as the Trust may reasonably request.
7. 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. To
the extent that the purchase or sale of securities or other investments of any
issuer may be deemed by the Adviser to be suitable for two or more accounts
managed by the Adviser, the available securities or investments may be allocated
in a manner believed by the Adviser to be equitable to each account. It is
recognized that
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in some cases this may adversely affect the price paid or received by the Trust
or the size or position obtainable for or disposed by the Trust or any
Portfolio.
8. 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 (or any sub-adviser) on
behalf of the Trust are the property of the Trust and will be surrendered
promptly to the Trust on request. The Adviser further agrees to preserve for
the periods prescribed in Rule 31a-2 under the 1940 Act the records required to
be maintained under Rule 31a-1 under the 1940 Act.
9. 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 9, the term "Adviser" shall include directors,
officers, employees and other corporate agents of the Adviser as well as that
corporation itself).
10. 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, officers, shareholders or otherwise; and the Adviser (or
any successor) is or may be interested in the Trust as a shareholder or
otherwise subject to the provisions of applicable law. All such interests shall
be fully disclosed between the parties on an ongoing basis and in the Trust's
Prospectus as required by law. In addition, brokerage transactions for the
Trust may be effected through affiliates of the Adviser or any sub-adviser if
approved by the Board of Trustees, subject to the rules and regulations of the
Securities and Exchange Commission.
11. 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
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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.
As used in this Section 11, 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
Ex-change Commission.
12. 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.
13. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management
Corporation
One Freedom Valley Drive
Oaks, PA 19456
Attn: Legal Department
To the Trust at:
SEI Investments Management Corporation
One Freedom Valley Drive
Oaks, PA 19456
Attn: Legal Department
14. 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.
15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but such counter-parts shall, together, constitute only one
instrument.
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
is 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.
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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 a particular Portfolio for payment of
fees for services rendered to that Portfolio.
Where the effect of a requirement of the 1940 Act reflected in any provision of
this Agreement is altered by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
SEI Index Funds SEI Investments Management Corporation
By: By:
Attest: Attest:
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<PAGE>
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SEI INDEX FUNDS
AND
SEI INVESTMENTS MANAGEMENT CORPORATION
Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual
rate as follows:
<TABLE>
<S> <C>
S&P 500 Index Portfolio .03%
</TABLE>
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<PAGE>
EXHIBIT C
INVESTMENT SUB-ADVISORY AGREEMENT
WORLD ASSET MANAGEMENT
AGREEMENT made this __th day of ____, ____, between SEI Investments Management
Corporation, (the "Adviser") and World Asset Management, (the "Sub-Adviser").
WHEREAS, SEI Index Funds, a Massachusetts business trust (the "Trust"), is
registered as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated
[_________________] (the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the [_________________________]
Portfolio (the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the securities
and other assets of the Portfolio entrusted to it hereunder (the "Assets"),
including the purchase, retention and disposition of the Assets, in accordance
with the Portfolio's investment objectives, policies and restrictions as stated
in the Portfolio's prospectus and statement of additional information, as
currently in effect and as amended or supplemented from time to time (referred
to collectively as the "Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction of
the Adviser, determine from time to time what Assets will be purchased, retained
or sold by the Portfolio, and what portion of the Assets will be invested or
held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust (as
defined herein) and the Prospectus and with the instructions and directions of
the Adviser and of the Board of Trustees of the Trust and will conform to and
comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986,
and all other applicable federal and state laws and regulations, as each is
amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or through
such persons, brokers or dealers to carry out the policy with respect to
brokerage set forth in the Portfolio's Registration Statement (as defined
herein) and Prospectus or as the Board of Trustees or the Adviser may direct
from time
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to time, in conformity with federal securities laws. In executing Portfolio
transactions and selecting brokers or dealers, the Sub-Adviser will use its best
efforts to seek on behalf of the Portfolio the best overall terms available. In
assessing the best overall terms available for any transaction, the Sub-Adviser
shall consider all factors that it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition and
execution capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing basis.
In evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Sub-Adviser may also
consider the brokerage and research services provided (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934). Consistent
with any guidelines established by the Board of Trustees of the Trust, the
Sub-Adviser is authorized to pay to a broker or dealer who provides such
brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if,
but only if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer - - viewed in terms of that particular
transaction or terms of the overall responsibilities of the Sub-Adviser to the
Portfolio. In addition, the Sub-Adviser is authorized to allocate purchase and
sale orders for securities to brokers or dealers (including brokers and dealers
that are affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) to take into account the sale of shares of the Trust if the
Sub-Adviser believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no instance,
however, will the Portfolio's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated person of
either the Trust, Adviser, the Sub-Adviser or the principal underwriter, acting
as principal in the transaction, except to the extent permitted by the
Securities and Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6), (7),
(9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act. The
Sub-Adviser shall provide to the Adviser or the Board of Trustees such periodic
and special reports, balance sheets or financial information, and such other
information with regard to its affairs as the Adviser or Board of Trustees may
reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets required
to be maintained by the Sub-Adviser under this Agreement and shall timely
furnish to the Adviser all information relating to the Sub-Adviser's services
under this Agreement needed by the Adviser to keep the other books and records
of the Portfolio required by Rule 31a-1 under the 1940 Act. The Sub-Adviser
shall also furnish to the Adviser any other information relating to the Assets
that is required to be filed by the Adviser or the Trust with the SEC or sent to
shareholders under the 1940 Act (including the rules adopted thereunder) or any
exemptive or other relief that the Adviser or the Trust obtains from the SEC.
The Sub-Adviser agrees that all records that it maintains on behalf of the
Portfolio are property of the Portfolio and the Sub-Adviser will surrender
promptly to the Portfolio any of such records upon the Portfolio's request;
provided, however, that the Sub-Adviser may retain a copy of such records. In
addition, for the duration of this Agreement, the Sub-Adviser shall preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act any such records as
are required to be maintained by it pursuant to this Agreement, and shall
transfer said records to any successor sub-
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adviser upon the termination of this Agreement (or, if there is no successor
sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the Portfolio's
Assets and shall provide the Adviser with such information upon request of the
Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free to
render similar services to others, as long as such services do not impair the
services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the securities
held in the Portfolio. The Adviser shall instruct the custodian and other
parties providing services to the Portfolio to promptly forward misdirected
proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers or
employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration of
Trust (as defined herein), the Prospectus, the instructions and directions of
the Board of Trustees of the Trust, the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state laws
and regulations, as each is amended from time to time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and Declaration of
Trust, as in effect on the date of this Agreement and as amended from time to
time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the "By-Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser,
and the Sub-Adviser agrees to
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accept as full compensation therefor, a sub-advisory fee at the rate specified
in the Schedule(s) which is attached hereto and made part of this Agreement.
The fee will be calculated based on the average monthly market value of the
Assets under the Sub-Adviser's management and will be paid to the Sub-Adviser
monthly. Except as may otherwise be prohibited by law or regulation (including
any then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the claim
against, or the loss, liability or damage experienced by the Adviser, is caused
by or is otherwise directly related to the Adviser's own willful misfeasance,
bad faith or negligence, or to the reckless disregard of its duties under this
Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees, without need for a vote of a majority
of the outstanding voting securities of the Portfolio, pursuant to an exemptive
order issued by the Securities and Exchange Commission. This Agreement shall
continue in effect for a period of more than two years from the date hereof only
so long as continuance is specifically approved at least annually in conformance
with the 1940 Act; provided, however, that this Agreement may be terminated with
respect to the Portfolio (a) by the Portfolio at any time, without the payment
of any penalty, by the vote of a majority of Trustees of the Trust or by the
vote of a majority of the outstanding voting securities of the Portfolio, (b) by
the Adviser at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days' written
notice to the Adviser. This Agreement shall terminate automatically and
immediately in the event of its assignment, or in the event of a termination of
the Adviser's agreement with the Trust. As used in this Section 6, the terms
"assignment" and "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 exceptions as may be granted by the SEC
under the 1940 Act.
7. 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.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall not
be affected thereby. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
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<PAGE>
To the Adviser at:
SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: World Asset Management
[__________________]
[__________________]
Attention: [__________]
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but such counterparts shall, together, constitute only one
instrument.
A copy of the Declaration of Trust is on file with the Secretary of State of the
Commonwealth of Massachusetts, and notice is hereby given that the obligations
of this instrument are not binding upon any of the Trustees, officers or
shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any provision of
this Agreement is altered by a rule, regulation or order of the SEC, whether of
special or general application, such provision shall be deemed to incorporate
the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below as of the day and year first written above.
SEI INVESTMENTS MANAGEMENT CORPORATION WORLD ASSET MANAGEMENT
By: By:
------------------------------------- --------------------------------
Name: Name:
---------------------------------- ------------------------------
Title: Title:
---------------------------------- -----------------------------
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<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
[______________________________________]
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate of up to as follows:
[_____________________] .__%
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<PAGE>
EXHIBIT D
INFORMATION REGARDING THE MANAGING DIRECTORS OF WORLD
<TABLE>
<CAPTION>
Name* Position(s) with World*
---- -----------------------
<S> <C>
[Name] [Position]
</TABLE>
____________
* The principal business address of each Managing Director of World is 255 E.
Brown Street, Suite 250, Birmingham, Michigan 48009.
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<PAGE>
EXHIBIT E [UPDATE]
OTHER SIMILAR INVESTMENT COMPANIES FOR WHICH
WORLD SERVES AS ADVISER OR SUB-ADVISER
<TABLE>
<CAPTION>
Investment Company Net Assets (as of 6/30/98) Advisory Fee Rate
------------------ -------------------------- -----------------
<S> <C> <C>
Select Assets Fund Series 1, Inc. $325.3 million [0.01% assets under $100 million
0.05% next $100 million
0.03% over $200 million
Select Assets Fund Series 2, Inc. $322 million 0.075% assets less than $150
million
0.05% next $350 million
0.04% next $500 million
0.03% over $1 billion
Great Lakes Fund, Inc. $1.589 billion 0.50% of net assets up to $500
million
0.45% of net assets from $500
million to $1 billion
0.40% of net assets from $1
billion to $1.5 billion
0.35% of net assets in excess of
$1.5 billion
Huron Investment Fund, Inc. $936 million 0.00% of average daily net assets
while net assets are less than
$17 million
0.50% of average daily net assets
while net assets are $17 million
or more]
<CAPTION>
<S> <C>
Central Asset Fund, Inc. $461 million
Central Investment Fund, Inc. $461 million
Lernoult Investment Fund, Inc. $577 million
Invesco Specialty Fund, Inc. $____ million
</TABLE>
E-1
<PAGE>
SEI INDEX FUNDS
S&P 500 INDEX PORTFOLIO
SPECIAL MEETING OF THE SHAREHOLDERS
PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
THE SPECIAL MEETING OF SHAREHOLDERS, NOVEMBER 18, 1998
The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints Edward D. Loughlin, Kevin P. Robins and Todd Cipperman
as proxies and each of them, each with full power of substitution, to vote at
the Special Meeting of Shareholders of the S&P 500 Index Portfolio of SEI Index
Funds (the "Trust") to be held in the offices of SEI Investments Company
("SEI"), Oaks, Pennsylvania 19456, on November 18, 1998, at 3:30 p.m., and any
adjournments or postponements thereof (the "Meeting") all shares of beneficial
interest of said Trust that the undersigned would be entitled to vote if
personally present at the Meeting ("Shares") on the proposals set forth
below,and in accordance with their own discretion, any other matters properly
brought before the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSAL TO:
PROPOSAL 1. Approval of World as the Investment Adviser to the Portfolio and
approval of an interim Investment Advisory Agreement between the
Trust, on behalf of the Portfolio, and World, for the period from
July 2, 1998 through the date on which shareholders approve the
agreement.
____For ____Against ____Abstain
PROPOSAL 2. Approval of SIMC as the Investment Adviser to the Portfolio, and
approval of an Investment Advisory Agreement between the Trust,
on behalf of the Portfolio, and SIMC.
____For ____Against ____Abstain
PROPOSAL 3. Authorization for the Board of Trustees to appoint investment
sub-advisers to the Portfolio without seeking approval by the
Portfolio's shareholders of the contracts pursuant to which such
sub-advisers serve.
____For ____Against ____Abstain
<PAGE>
PROPOSAL 4. Approval of World as Sub-Adviser to the Portfolio, and approval
of a Sub-Advisory Agreement between SIMC and World relating to
the Portfolio.
____For ____Against ____Abstain
THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER. IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL AND WILL
BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS AS MAY
PROPERLY COME BEFORE THE MEETING.
The undersigned acknowledges receipt with this Proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees. Your
signature(s) on this Proxy should be exactly as your name(s) appear on this
Proxy. If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.
Dated:___________, 1998
--------------------------------
Signature of Shareholder
--------------------------------
Signature (Joint owners)
PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.
