<PAGE>
As Filed with the Securities and Exchange Commission on [ ] November 30, 1995
File No. 33-9504
File No. 811-4878
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /___/
POST-EFFECTIVE AMENDMENT NO. [ ] 25 / X /
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /___/
AMENDMENT NO. [ ] 27 / X /
SEI INSTITUTIONAL MANAGED TRUST
(Exact Name of Registrant as Specified in Charter)
c/o CT Corporation
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (800) 342-5734
David G. Lee
c/o SEI Corporation
680 East Swedesford Road
Wayne, Pennsylvania 19087
(Name and Address of Agent for Service)
Copies to:
Richard W. Grant, Esq. John H. Grady, Jr., Esq.
Morgan Lewis & Bockius LLP Morgan Lewis & Bockius LLP
2000 One Logan Square 1800 M Street, N.W.
Philadelphia, Pennsylvania Washington, D.C. 20036
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It is proposed that this filing will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
---
on [date] pursuant to paragraph (b)
---
X 60 days after filing pursuant to paragraph (a)
---
75 days after filing pursuant to paragraph (a)
---
on [date] pursuant to paragraph (a) of Rule 485
---
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The Registrant has elected to register an indefinite number of securities
pursuant to Rule 24f-2 of the Investment Company Act of 1940. Registrant filed
a 24f-2 Notice on November [ ] 15, 1995 for its fiscal year ended September 30,
[ ] 1995.
<PAGE>
SEI INSTITUTIONAL MANAGED TRUST
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
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<C> <S> <C>
PART A- Core Fixed Income, Bond and High Yield Bond Portfolios - Institutional Class
Item 1. Cover Page Cover Page
Item 2. Synopsis Annual Operating Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives and
Policies; General Investment Policies;
Description of Permitted Investments and
Risk Factors
Item 5. Management of the Fund General Information-Trustees of the
Trust; Multi-Manager Diversification;
The Adviser; The Sub-Advisers; The
Manager and Shareholder Servicing
Agent
Item 5A. Management's Discussion of Fund Performance **
Item 6. Capital Stock & Other Securities General Information-Voting Rights,
Shareholder Inquiries, Dividends; Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
PART A - Large Cap Value, Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-Cap, Capital Appreciation, Equity Income,
Balanced, [ ] and Capital Growth [ ] Portfolios - Institutional Class
Item 1. Cover Page Cover Page
Item 2. Synopsis Annual Operating Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant The Trust; Investment Objectives and
Policies; General Investment Policies;
Description of Permitted Investments and
Risk Factors
Item 5. Management of the Fund General Information-Trustees of the
Trust; Multi-Manager Diversification;
The Advisers [ ]; The Sub-Advisers;
The Manager and Shareholder Servicing Agent
Item 5A. Management's Discussion of Fund Performance **
Item 6. Capital Stock & Other Securities General Information-Voting Rights,
Shareholder Inquiries, Dividends; Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of Shares
Item 8. Redemption or Repurchase Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings *
</TABLE>
(i)
<PAGE>
<TABLE>
<C> <S> <C>
PART A - Core Fixed Income, Bond and High Yield Bond Portfolios - Class D
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Highlights; Shareholder Transaction
Expenses; Annual Operating Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant General Information-The Trust;
Investment Objectives and Policies;
General Investment Policies; Description
of Permitted Investments and Risk Factors
Item 5. Management of the Fund General Information-Trustees of the
Trust; Multi-Manager Diversification;
The Adviser; The Sub-Advisers; The Manager
and Shareholder Servicing Agent
Item 5A. Management's Discussion of Fund Performance **
Item 6. Capital Stock & Other Securities General Information-Voting Rights,
Shareholder Inquiries, Dividends; Taxes
Item 7. Purchase of Securities Being Offered Your Account and Doing Business with US;
Additional Information About Doing Business with US
Item 8. Redemption or Repurchase Your Account and Doing Business with US; Additional
Information About Doing Business with US
Item 9. Pending Legal Proceedings *
PART A - Large Cap Value, Large Cap Growth, Small Cap Value, Small Cap Growth, [ ] Mid-Cap,
Capital Appreciation and Equity Income Portfolios - Class D
Item 1. Cover Page Cover Page
Item 2. Synopsis Fund Highlights; Shareholder Transaction
Expenses; Annual Operating Expenses
Item 3. Condensed Financial Information Financial Highlights
Item 4. General Description of Registrant General Information-The Trust;
Investment Objectives and Policies;
General Investment Policies; Description
of Permitted Investments and Risk
Factors
Item 5. Management of the Fund General Information-Trustees of the
Trust; [ ] Multi-Manager
Diversification; The Adviser; The Sub-
Advisers; The Manager and Shareholder
Servicing Agent
Item 5A. Management's Discussion of Fund Performance **
Item 6. Capital Stock & Other Securities General Information-Voting Rights,
Shareholder Inquiries, Dividends; Taxes
Item 7. Purchase of Securities Being Offered Your Account and Doing Business with
US; Additional Information About Doing Business
with US
</TABLE>
(ii)
<PAGE>
<TABLE>
<C> <S> <C>
Item 8. Redemption or Repurchase Your Account and Doing Business with US; Additional
Information About Doing Business with US
Item 9. Pending Legal Proceedings *
PART B - All Portfolios
Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information & History The Trust
Item 13. Investment Objectives & Policies Investment Objectives and Policies;
Investment Limitations; Securities
Lending
Item 14. Management of the Registrant Trustees and Officers of the Trust
(Prospectus); The Manager and
Shareholder Servicing Agent
Item 15. Control Persons & Principal Holders of Trustees and Officers of the Trust
Securities (Prospectus)
Item 16. Investment Advisory & Other Services The Advisers and Sub-Advisers; The
Manager and Shareholder Servicing
Agent; The Distributor; Counsel &
Independent Public Accountants
Item 17. Brokerage Allocation Portfolio Transactions
Item 18. Capital Stock & Other Securities Description of Shares
Item 19. Purchase, Redemption, & Pricing of Purchase and Redemption of Shares
Securities Being Offered (Prospectus); Determination of Net Asset
Value
Item 20. Tax Status Taxes (Prospectus); Taxes
Item 21. Underwriters The Distributor
Item 22. Calculation of Yield Quotation Performance
Item 23. Financial Statements Financial Statements
PART C
</TABLE>
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
* Not Applicable
** Information required by Item 5A is contained in the [ ] 1995 Annual Report
to the Shareholders.
(iii)
<PAGE>
SEI INSTITUTIONAL MANAGED TRUST
JANUARY 31, 1996
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CORE FIXED INCOME PORTFOLIO
BOND PORTFOLIO
HIGH YIELD BOND PORTFOLIO
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This Prospectus sets forth concisely the information about the above-referenced
portfolios. Please read this Prospectus carefully before investing, and keep it
on file for future reference.
A Statement of Additional Information dated January 31, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, PA 19087-1658, or by calling 1-800-342-5734. The
Statement of Additional Information is incorporated into this Prospectus by
reference.
SEI Institutional Managed Trust (the "Trust") is an open-end investment
management company, certain classes of which offer financial institutions a
convenient means of investing their own funds or funds for which they act in a
fiduciary, agency or custodial capacity in professionally managed diversified
and non-diversified portfolios of securities. A portfolio may offer separate
classes of shares that differ from each other primarily in the allocation of
certain distribution expenses, sales charges and minimum investment amounts.
This Prospectus offers the Class A shares of the fixed income portfolios (each,
a "Portfolio," and together, the "Portfolios") listed above.
THE HIGH YIELD BOND PORTFOLIO INVESTS PRIMARILY AND MAY INVEST ALL OF ITS
ASSETS IN LOWER RATED BONDS, COMMONLY REFERRED TO AS "JUNK BONDS." THESE
SECURITIES ARE SPECULATIVE AND ARE SUBJECT TO GREATER RISK OF LOSS OF PRINCIPAL
AND INTEREST THAN ARE INVESTMENTS IN HIGHER RATED BONDS. BECAUSE INVESTMENT IN
SUCH SECURITIES ENTAILS GREATER RISKS, INCLUDING RISK OF DEFAULT, AN INVESTMENT
IN THE HIGH YIELD BOND PORTFOLIO SHOULD NOT CONSTITUTE A COMPLETE INVESTMENT
PROGRAM AND MAY NOT BE APPROPRIATE FOR ALL INVESTORS. INVESTORS SHOULD
CAREFULLY CONSIDER THE RISKS POSED BY AN INVESTMENT IN THE HIGH YIELD BOND
PORTFOLIO BEFORE INVESTING. SEE "INVESTMENT OBJECTIVES AND POLICIES," "RISK
FACTORS" AND THE "APPENDIX."
TO THE EXTENT THAT OHIO LAW REQUIRES SUCH A LIMITATION, THE HIGH YIELD BOND
PORTFOLIO WILL NOT INVEST MORE THAN FIFTY PERCENT OF ITS TOTAL ASSETS IN THE
SECURITIES OF ISSUERS WHICH, TOGETHER WITH ANY PREDECESSORS, HAVE A RECORD OF
LESS THAN THREE YEARS CONTINUOUS OPERATION OR ISSUERS WHICH ARE RESTRICTED AS
TO DISPOSITION, INCLUDING RULE 144A SECURITIES. THE HIGH YIELD PORTFOLIO MAY
INVEST IN THESE SECURITIES TO A GREATER EXTENT THAN INVESTMENT COMPANIES THAT
MEET ALL OF THE REQUIREMENTS OF SECTION 1301:6-3-09(E)(12) OF THE OHIO
ADMINISTRATIVE CODE.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE
SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) Class A
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<TABLE>
<CAPTION>
CORE FIXED HIGH YIELD
INCOME BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ----------
<S> <C> <C> <C>
Management Fee/Advisory Fees (after fee waiv-
er) (1) 0.43% 0.41% 0.65%
12b-1 Fees (2) 0.08% 0.10% 0.10%
Other Expenses 0.04% 0.04% 0.10%
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Total Operating Expenses (after fee waiver)
(3) 0.55% 0.55% 0.85%
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</TABLE>
(1) SEI Financial Management Corporation ("SFM") has agreed to waive, on a
voluntary basis, a portion of its management fee, and the
management/advisory fees shown reflect this voluntary waiver. SFM reserves
the right to terminate its waiver at any time in its sole discretion.
Absent such fee waiver, management/advisory fees would be: Core Fixed
Income Portfolio, .555%; Bond Portfolio, .555%; and High Yield Bond
Portfolio, .8375%. Management/Advisory fees, and therefore Total Operating
Expenses, have been restated to reflect current expenses.
(2) The 12b-1 fees shown include each Portfolio's current 12b-1 budget. The
maximum 12b-1 fees payable by Class A shares of each Portfolio are .30%.
(3) Absent the voluntary fee waivers described above, total operating expenses
for Class A shares of the Portfolios would be: Core Fixed Income Portfolio
.68%; Bond Portfolio, .70%; and High Yield Bond Portfolio, 1.04%.
Additional information may be found under "The Adviser," "The Sub-Advisers"
and "The Manager and Shareholder Servicing Agent."
EXAMPLE Class A
<TABLE>
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<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor in a Portfolio would pay the following
expenses on a $1,000
investment assuming (1) 5% annual return and (2)
redemption at the end
of each time period:
Core Fixed Income Portfolio $6.00 $18.00 $31.00 $69.00
Bond Portfolio $6.00 $18.00 $31.00 $69.00
High Yield Bond Portfolio $9.00 $27.00 $47.00 $105.00
- -------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of the expense table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in Class A shares of the Portfolios. The information set
forth in the foregoing table and example relates only to each Portfolio's Class
A shares. The Core Fixed Income, Bond and High Yield Bond Portfolios also offer
Class D shares, which are subject to the same expenses except that Class D
shares bear different distribution costs and additional transfer agent costs
and sales loads. A person who purchases shares through a financial institution
may be charged separate fees by that institution. Additional information may be
found under "The Manager and Shareholder Servicing Agent," "The Adviser," "The
Sub-Advisers" and "Distribution."
Long-term shareholders may eventually pay more than the economic equivalent of
the maximum front-end sales charges otherwise permitted by the Rules of Fair
Practice (the "Rules") of the National Association of Securities Dealers, Inc.
("NASD").
2
<PAGE>
FINANCIAL HIGHLIGHTS ___________________________________________________________
The following information has been audited by Price Waterhouse LLP, the Trust's
independent accountants, as indicated in their report dated November 10, 1995
on the Trust's financial statements as of September 30, 1995 included in the
Trust's Statement of Additional Information under "Financial Statements."
Additional performance information is set forth in the 1995 Annual Report to
Shareholders and is available upon request and without charge by calling 1-800-
342-5734. This table should be read in conjunction with the Trust's financial
statements and notes thereto.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Distributions Ratio of Net
Net Asset Net Realized and Dividends from Ratio of Investment
Value Net Unrealized from Net Realized Net Asset Net Assets Expenses Income
Beginning Investment Gains (Losses) Investment Capital Value End Total End of to Average to Average
of Period Income on Securities Income Gains of Period Return Period (000) Net Assets Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CORE FIXED INCOME PORTFOLIO(A)
- -------------------------------------
CLASS A
1995 $ 9.65 $0.65 $ 0.82 $(0.66) $ -- $10.46 15.87% $419,959 0.55% 6.60%
1994 10.87 0.56 (1.12) (0.55) (0.11) 9.65 (5.36)% 311,955 0.55% 5.57%
1993 10.77 0.60 0.23 (0.60) (0.18) 10.87 8.58% 295,798 0.55% 5.63%
1992 10.30 0.69 0.49 (0.69) (0.02) 10.77 11.91% 213,632 0.55% 6.71%
1991 9.79 0.73 0.52 (0.74) -- 10.30 13.31% 153,356 0.55% 7.41%
1990 9.95 0.75 (0.12) (0.76) (0.03) 9.79 6.58% 83,876 0.55% 7.79%
1989 9.89 0.82 0.06 (0.82) -- 9.95 9.39% 42,707 0.55% 8.57%
1988 9.84 0.82 0.07 (0.84) -- 9.89 9.34% 25,661 0.47% 8.57%
1987(1) 10.00 0.34 (0.25) (0.25) -- 9.84 2.26% 11,201 0.33% 8.59%
- -----------------
BOND PORTFOLIO
- -----------------
CLASS A
1995 $ 9.95 $0.70 $ 0.97 $(0.69) $(0.07) $10.86 17.53% $ 54,286 0.55% 6.46%
1994 12.25 0.59 (1.62) (0.59) (0.68) 9.95 (9.12)% 123,329 0.55% 5.61%
1993 11.09 0.66 1.19 (0.67) (0.02) 12.25 17.36% 97,163 0.55% 5.87%
1992 10.47 0.73 0.62 (0.73) -- 11.09 13.52% 65,061 0.55% 6.98%
1991 9.39 0.76 1.10 (0.77) (0.01) 10.47 20.56% 40,683 0.55% 7.77%
1990 10.38 0.81 (0.69) (0.82) (0.29) 9.39 0.97% 20,339 0.55% 8.06%
1989 9.83 0.81 0.74 (0.79) (0.21) 10.38 16.60% 27,580 0.55% 8.21%
1988 9.16 0.81 0.71 (0.84) (0.01) 9.83 17.22% 12,194 0.45% 8.54%
1987(2) 10.00 0.29 (0.93) (0.20) -- 9.16 (15.67)% 5,762 0.35% 8.38%
- ------------------------------
HIGH YIELD BOND PORTFOLIO
- ------------------------------
1995(3) $10.00 $0.67 $0.55 $(0.58) $ -- $10.64 17.72% $23,724 0.67% 10.02%
<CAPTION>
Ratio of Net
Ratio of Investment
Expense Income
to Average to Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
- ------------------------------------------
- -------------------------------------
<S> <C> <C> <C>
CORE FIXED INCOME PORTFOLIO(A)
- -------------------------------------
CLASS A
1995 0.68% 6.47% 294%
1994 0.62% 5.50% 370%
1993 0.66% 5.52% 35%
1992 0.68% 6.58% 39%
1991 0.73% 7.23% 44%
1990 0.76% 7.58% 40%
1989 0.87% 8.25% 42%
1988 1.12% 7.92% 34%
1987(1) 1.08% 7.84% 7%
- -----------------
BOND PORTFOLIO
- -----------------
CLASS A
1995 0.70% 6.31% 79%
1994 0.67% 5.49% 73%
1993 0.66% 5.76% 47%
1992 0.71% 6.82% 24%
1991 0.76% 7.56% 8%
1990 0.78% 7.83% 89%
1989 0.87% 7.89% 108%
1988 1.13% 7.86% 125%
1987(2) 1.69% 7.04% 48%
- ------------------------------
HIGH YIELD BOND PORTFOLIO
- ------------------------------
1995(3) 0.86% 9.83% 56%
</TABLE>
* Sales load is not reflected in total return.
(1) Core Fixed Income Class A shares were offered beginning May 1, 1987. All
ratios including total return for that period have been annualized.
(2) Bond Class A shares were offered beginning May 4, 1987. All ratios
including total return for that period have been annualized.
(3) High Yield Bond Class A shares were offered beginning January 11, 1995. All
ratios including total return for that period have been annualized.
(a) During the year ended September 30, 1995, the Intermediate Bond Portfolio
changed its name to the Core Fixed Income Portfolio.
3
<PAGE>
THE TRUST ______________________________________________________________________
SEI INSTITUTIONAL MANAGED TRUST (the "Trust") is an open-end investment
management company that offers units of beneficial interest ("shares") in
separate diversified and non-diversified portfolios. The Trust offers two
separate classes of shares, Class A and Class D, which provide for variations
in distribution and transfer agent costs, sales charges, voting rights and
dividends. This prospectus offers Class A shares of the Trust's Core Fixed
Income, Bond and High Yield Bond Portfolios (each, a "Portfolio," and together,
the "Portfolios"). The investment advisers and investment sub-advisers to the
Portfolio are referred to collectively as the "advisers." Additional
information pertaining to the Trust may be obtained in writing from SEI
Financial Services Company, 680 East Swedesford Road, Wayne, PA 19087-1658, or
by calling 1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES ______________________________________________________________________
CORE FIXED The investment objective of the Core Fixed Income Portfolio
INCOME (formerly the Intermediate Bond Portfolio) is current income
PORTFOLIO consistent with the preservation of capital. There can be no
assurance that the Portfolio will achieve its investment
objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in fixed income securities
that are rated investment grade or better, i.e., rated in
one of the four highest rating categories by a nationally
recognized statistical rating organization ("NRSRO") at the
time of purchase, or, if not rated, determined to be of
comparable quality by the advisers. Fixed income securities
rated in the fourth highest rating category lack outstanding
investment characteristics, and have speculative
characteristics as well. Fixed income securities in which
the Portfolio may invest consist of: (i) corporate bonds and
debentures, (ii) obligations issued by the United States
Government, its agencies and instrumentalities, (iii)
municipal securities of issuers located in all fifty states,
the District of Columbia, Puerto Rico and other U.S.
territories and possessions, consisting of municipal bonds,
municipal notes, tax-exempt commercial paper and municipal
lease obligations, (iv) receipts involving U.S. Treasury
obligations, (v) mortgage-backed securities, (vi) asset-
backed securities, and (vii) zero coupon, pay-in-kind or
deferred payment securities.
Any remaining assets may be invested in (i) interest-only
and principal-only components of mortgage-backed securities,
(ii) mortgage dollar rolls, (iii) securities issued on a
when-issued and delayed-delivery basis, including TBA
mortgage-backed securities, (iv) warrants, (v) money market
securities, and (vi) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures (including
futures on U.S. Treasury obligations and Eurodollar
instruments) and options on futures.
Duration is a measure of the expected life of a fixed
income security on a cash flow basis. Most debt obligations
provide interest payments and a final payment at maturity.
Some also have put or call provisions that allow the
security to be redeemed at specified dates prior to
maturity. Duration incorporates yield, coupon interest
payments, final
4
<PAGE>
maturity and call features into a single measure. The
advisers therefore consider it a more accurate measure of a
security's expected life and sensitivity to interest rate
changes than is the security's term to maturity.
The Core Fixed Income Portfolio invests in a portfolio
with a dollar-weighted average duration that will, under
normal market conditions, stay within plus or minus 20% of
what the advisers believe to be the average duration of the
domestic bond market as a whole. The advisers base their
analysis of the average duration of the domestic bond market
on bond market indices which they believe to be
representative. The advisers currently use the Lehman
Aggregate Bond Index for this purpose.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may lead to higher transaction costs
and may result in higher taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
BlackRock Financial Management, Inc., Firstar Investment
Research & Management Company and Western Asset Management
Company.
BOND PORTFOLIO The investment objective of the Bond Portfolio is current
income consistent with preservation of capital. There can be
no assurance that the Portfolio will achieve its investment
objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in fixed income securities
that are rated investment grade or better, i.e., rated in
one of the four highest rating categories by an NRSRO at the
time of purchase, or, if not rated, determined to be of
comparable quality by the advisers. Fixed income securities
rated in the fourth highest rating category lack outstanding
investment characteristics, and have speculative
characteristics as well. Fixed income securities in which
the Portfolio may invest consist of: (i) corporate bonds and
debentures, (ii) obligations issued by the United States
Government, its agencies and instrumentalities, (iii)
receipts involving U.S. Treasury obligations, (iv) mortgage-
backed securities, (v) asset-backed securities, and (vi)
zero coupon, pay-in-kind or deferred payment securities.
Any remaining assets may be invested in (i) convertible
securities, (ii) securities issued on a when-issued and
delayed-delivery basis, including TBA mortgage-backed
securities, and (iii) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures and options
on futures.
There are no restrictions on the Portfolio's maturity.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is
Boatmen's Trust Company.
HIGH YIELD BOND The investment objective of the High Yield Bond Portfolio is
PORTFOLIO to maximize total return. There can be no assurance that the
Portfolio will achieve its investment objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in fixed income securities
that are rated below investment grade, i.e., rated below the
top four rating categories by an NRSRO at the time of
purchase, or, if not rated,
5
<PAGE>
determined to be of comparable quality by the advisers.
Below investment grade securities are commonly referred to
as "junk bonds," and generally entail increased credit and
market risk. Securities rated in the lowest rating
categories may have predominantly speculative
characteristics or may be in default. The achievement of the
Portfolio's investment objective may be more dependent on
the advisers' own credit analysis than would be the case if
the Portfolio invested in higher rated securities. There is
no bottom limit on the ratings of high yield securities that
may be purchased or held by the Portfolio.
The Portfolio may invest in all types of fixed income
securities issued by domestic and foreign issuers,
including: (i) mortgage-backed securities, (ii) asset-backed
securities, (iii) zero coupon, pay-in-kind or deferred
payment securities, and (iv) variable and floating rate
instruments.
Any assets of the Portfolio not invested in the fixed
income securities described above may be invested in (i)
convertible securities, (ii) preferred stocks, (iii) equity
securities, (iv) investment grade fixed income securities,
(v) money market securities, (vi) securities issued on a
when-issued and delayed-delivery basis, including TBA
mortgage-backed securities, (vii) forward foreign currency
contracts, and (viii) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures and options
on futures.
The advisers may vary the average maturity of the
securities in the Portfolio without limit and there is no
restriction on the maturity of any individual security.
The "Appendix" to this Prospectus sets forth a
description of the bond rating categories of several NRSROs.
Ratings of each NRSRO represents its opinion of the safety
of principal and interest payments (and not the market risk)
of bonds and other fixed income securities it undertakes to
rate at the time of issuance. Ratings are not absolute
standards of quality and may not reflect changes in an
issuer's creditworthiness. Accordingly, although the
advisers will consider ratings, they will perform their own
analyses and will not rely principally on ratings. The
advisers will consider, among other things, the price of the
security and the financial history and condition, the
prospects and the management of an issuer in selecting
securities for the Portfolio.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is BEA
Associates.
GENERAL INVESTMENT
POLICIES ______________________________________________________________________
Borrowing Each Portfolio may borrow money to meet redemptions for
temporary, emergency purposes. A Portfolio will not purchase
securities while its borrowings exceed 5% of its total
assets.
Illiquid Each Portfolio's investment in illiquid securities will be
Securities limited to 15% of its net assets.
Investment Each Portfolio may purchase investment company securities,
Company which will result in the layering of expenses. There are
Securities legal limits on the amount of such securities that may be
acquired by a Portfolio.
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Securities Each Portfolio may lend its securities in order to realize
Lending additional income.
Temporary In order to meet liquidity needs or for temporary defensive
Defensive purposes, each Portfolio may invest up to 100% of its assets
Investments in cash and money market securities. Money market securities
must be rated in one of the top two categories by an NRSRO
or, if not rated, be of comparable quality as determined by
the Portfolio's advisers. To the extent a Portfolio is
engaged in temporary defensive investing, the Portfolio will
not be pursuing its investment objective.
For additional information regarding the Portfolios'
permitted investments, see "Risk Factors", "Description of
Permitted Investments and Risk Factors" in this Prospectus
and "Description of Permitted Investments" in the Statement
of Additional Information. For a description of the above
ratings, see "Description of Ratings" in the "Appendix" to
this Prospectus and the Statement of Additional Information.
RISK FACTORS_______________________________________________________________
Equity Investments in equity securities in general are subject to
Securities market risks that may cause their prices to fluctuate over
time. The value of convertible equity securities is also
affected by prevailing interest rates, the credit quality of
the issuer and any call provision. Fluctuations in the value
of equity securities in which a Portfolio invests will cause
the net asset value of the Portfolio to fluctuate.
Fixed Income The market value of a Portfolio's fixed income investments
Securities will change in response to interest rate changes and other
factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally
rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Securities
with longer maturities are subject to greater fluctuations
in value than securities with shorter maturities. Changes by
an NRSRO in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and
principal also affect the value of these investments.
Changes in the value of a Portfolio's securities will not
affect cash income derived from these securities but will
affect the Portfolio's net asset value.
Securities held by a Portfolio that are guaranteed by the
U.S. Government, its agencies or instrumentalities guarantee
only the payment of principal and interest, and do not
guarantee the securities' yield or value or the yield or
value of a Portfolio's shares.
There is a risk that the current interest rate on
floating and variable rate instruments may not accurately
reflect existing market interest rates.
Foreign Investing in the securities of foreign companies and the
Securities and utilization of forward foreign currency contracts involve
Foreign special risks and considerations not typically associated
Currency with investing in U.S. companies. These risks and
Contracts considerations include differences in accounting, auditing
and financial reporting standards, generally higher
commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation,
adverse changes in investment or exchange control
regulations, political instability that
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could affect U.S. investment in foreign countries and
potential restrictions of the flow of international capital
and currencies. Foreign companies may also be subject to
less government regulation than U.S. companies. Moreover,
the dividends payable on the foreign securities may be
subject to foreign withholding taxes, thus reducing the net
amount of income available for distribution to the
Portfolio's shareholders. Further, foreign securities often
trade with less frequency and volume than domestic
securities and, therefore, may exhibit greater price
volatility. Changes in foreign exchange rates will affect,
favorably or unfavorably, the value of those securities
which are denominated or quoted in currencies other than the
U.S. dollar.
By entering into forward foreign currency contracts, a
Portfolio will seek to protect the value of its investment
securities against a decline in the value of a currency.
However, these forward foreign currency contracts will not
eliminate fluctuations in the underlying prices of the
securities. Rather, they simply establish a rate of exchange
which one can obtain at some future point in time. Although
such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, they also tend
to limit any potential gain which might result should the
value of such currency increase.
High Yield, The High Yield Bond Portfolio may invest in lower rated
Lower Rated securities. Fixed income securities are subject to the risk
Bonds of an issuer's ability to meet principal and interest
payments on the obligation (credit risk), and may also be
subject to price volatility due to such factors as interest
rate sensitivity, market perception of the creditworthiness
of the issuer and general market liquidity (market risk).
Lower rate or unrated (i.e., high yield) securities are more
likely to react to developments affecting market and credit
risk than are more highly rated securities, which primarily
react to movements in the general level of interest rates.
The market values of fixed-income securities tend to vary
inversely with the level of interest rates. Yields and
market values of high yield securities will fluctuate over
time, reflecting not only changing interest rates but the
market's perception of credit quality and the outlook for
economic growth. When economic conditions appear to be
deteriorating, medium to lower rated securities may decline
in value due to heightened concern over credit quality,
regardless of prevailing interest rates. Investors should
carefully consider the relative risks of investing in high
yield securities and understand that such securities are not
generally meant for short-term investing.
The high yield market is relatively new and its growth
has paralleled a long period of economic expansion and an
increase in merger, acquisition and leveraged buyout
activity. Adverse economic developments can disrupt the
market for high yield securities, and severely affect the
ability of issuers, especially highly leveraged issuers, to
service their debt obligations or to repay their obligations
upon maturity which may lead to a higher incidence of
default on such securities. In addition, the secondary
market for high yield securities, which is concentrated in
relatively few market makers, may not be as liquid as the
secondary market for more highly rated securities. As a
result, the Portfolio's advisers could find it more
difficult to sell these securities or may be able to sell
the securities only
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at prices lower than if such securities were widely traded.
Furthermore the Trust may experience difficulty in valuing
certain securities at certain times. Prices realized upon
the sale of such lower rated or unrated securities, under
these circumstances, may be less than the prices used in
calculating the Portfolio's net asset value.
Prices for high yield securities may be affected by
legislative and regulatory developments. These laws could
adversely affect the Portfolio's net asset value and
investment practices, the secondary market value for high
yield securities, the financial condition of issuers of
these securities and the value of outstanding high yield
securities.
For example, federal legislation requiring the
divestiture by federally insured savings and loan
associations of their investments in high yield bonds and
limiting the deductibility of interest by certain corporate
issuers of high yield bonds adversely affected the market in
recent years. Lower rated or unrated debt obligations also
present risks based on payment expectations. If an issuer
calls the obligations for redemption, the Portfolio may have
to replace the security with a lower yielding security,
resulting in a decreased return for investors. If the
Portfolio experiences unexpected net redemptions, it may be
forced to sell its higher rated securities, resulting in a
decline in the overall credit quality of the Portfolio's
investment portfolio and increasing the exposure of the
Portfolio to the risks of high yield securities.
Mortgage-Backed Mortgage-backed securities are subject to prepayment of the
Securities underlying mortgages. During periods of declining interest
rates, prepayment of mortgages underlying these securities
can be expected to accelerate. When the mortgaged-backed
securities held by a Portfolio are prepaid, the Portfolio
must reinvest the proceeds in securities the yield of which
reflects prevailing interest rates, which may be lower than
the yield of the prepaid security.
Zero Coupon Zero coupon obligations may be subject to greater
Obligations fluctuations in value due to interest rate changes than
interest bearing obligations. A Portfolio will be required
to include the imputed interest in zero coupon obligations
in its current income. Because a Portfolio distributes all
of its net investment income to shareholders, a Portfolio
may have to sell portfolio securities to distribute the
income attributable to these obligations and securities at a
time when the advisers would not have chosen to sell such
obligations or securities and which may result in a taxable
gain or loss.
INVESTMENT LIMITATIONS _________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolios. Fundamental policies
cannot be changed with respect to the Trust or a Portfolio
without the consent of the holders of a majority of the
Trust's or that Portfolio's outstanding shares.
No Portfolio may:
1. With respect to 75% of its assets, (i) purchase
securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies
or instrumentalities)
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if, as a result, more than 5% of its total assets would be
invested in the securities of such issuer; or (ii) acquire
more than 10% of the outstanding voting securities of any
one issuer.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
United States Government, its agencies or
instrumentalities.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER AND SHAREHOLDER SERVICING AGENT ____________________________________
SEI Financial Management Corporation ("SFM") provides the
Trust with overall management services, regulatory
reporting, all necessary office space, equipment, personnel
and facilities, and acts as dividend disbursing agent and
shareholder servicing agent. In addition, SFM also serves as
transfer agent (the "Transfer Agent") to the Class A shares
of the Trust.
For its management services, SFM is entitled to a fee
which is calculated daily and paid monthly at an annual rate
of .28% of the average daily net assets of the Core Fixed
Income Portfolio, .28% of the average daily net assets of
the Bond Portfolio and .35% of the average daily net assets
of the High Yield Bond Portfolio. SFM has voluntarily agreed
to waive a portion of its fees in order to limit the
operating expenses of each Portfolio. SFM reserves the
right, in its sole discretion, to terminate this voluntary
fee waiver at any time.
For the fiscal year ended September 30, 1995, the
Portfolios paid SFM the following management fees (based on
each Portfolio's average daily net assets after fee
waivers): Core Fixed Income Portfolio, .30%; Bond Portfolio,
.26%; and High Yield Bond Portfolio, .16%.
MULTI-MANAGER DIVERSIFICATION _________________________________________________
SFM serves as investment adviser (the "Adviser") to each
Portfolio. Within each Portfolio one or more investment sub-
advisers (each, a "Sub-Adviser," and together, the "Sub-
Advisers") are utilized to select that Portfolio's
investments. These Sub-Advisers specialize in the distinct
investment style or styles that each Portfolio is designated
to capture.
The Adviser has general oversight responsibility for the
investment advisory services provided to the Portfolios,
including formulating the Portfolios' investment policies
and analyzing economic trends affecting the Portfolio. In
addition, SFM, where it is the Adviser
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to a Portfolio, is responsible for (i) managing the
allocation of assets among the Portfolio's Sub-Advisers,
(ii) directing and evaluating the investment services
provided by the Sub-Advisers, including their adherence to
each Portfolio's respective investment objective and
policies and the Portfolio's investment performance, and
(iii) managing the cash portion of the Portfolio's assets.
In accordance with the Portfolio's investment objective and
policies, and under the supervision of the Adviser and the
Trust's Board of Trustees, each Sub-Adviser is responsible
for the day-to-day investment management of all or a
discrete portion of the assets of a Portfolio. The Adviser
and Sub-Advisers are authorized to make investment decisions
for the Portfolios and place orders on behalf of the
Portfolios to effect the investment decisions made.
SFM monitors the compliance of the advisers of each
Portfolio with regulatory and tax regulations, such as
portfolio concentration and diversification. For the most
part compliance with these requirements by each adviser with
respect to its portion of a Portfolio will assure compliance
by that Portfolio as a whole. In addition, SFM monitors
positions taken by each of a Portfolio's advisers and will
notify the advisers of any developing situations to help
ensure that investments do not run afoul of the short-term
test or the wash sale rules. To the extent that having
multiple advisers responsible for investing separate
portions of the Portfolio's assets creates the need for
coordination among the advisers, there is an increased risk
that the Portfolio will not comply with these regulatory and
tax requirements.
It is possible that different advisers of a Portfolio
could take opposite actions within a short period of time
with respect to a particular security. For example, one
adviser could buy a security for the Portfolio and shortly
thereafter another adviser could sell the same security from
the portion of the Portfolio allocated to it. If in these
circumstances the securities could be transferred from one
adviser's portion of the Portfolio to another, the Portfolio
could avoid transaction costs and could avoid creating
possible wash sales and short-short gains under the Internal
Revenue Code of 1986, as amended (the "Code"). Such
transfers are not practicable but the advisers 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 a Portfolio by the various advisers. Moreover, the
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 or have
significant tax consequences. With respect to the latter,
the advisers have established procedures with respect to the
short-short test which are designed to prevent realization
of short-short gains in excess of Code limits. It is true
that wash sales could occur in spite of the efforts of SFM,
but the Board of Trustees believes that the benefit of using
multiple advisers outweighs the consequences of any wash
sales.
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SFM is currently seeking an exemptive order from the
Securities and Exchange Commission (the "SEC") that would
permit SFM, with the approval of the Trust's Board of
Trustees, to retain sub-advisers for a Portfolio without
submitting the sub-advisory agreement to a vote of the
Portfolio's shareholders. If granted, the exemptive relief
will permit the non-disclosure of amounts payable by SFM
under such sub-advisory agreements. The Trust will notify
shareholders in the event of any change in the identity of
the sub-adviser for a Portfolio. Until or unless this
exemptive order is granted, if one of the advisers is
terminated or departs from a Portfolio with multiple
advisers, the Portfolio will handle such termination or
departure in one of two ways. First, the Portfolio may
propose that a new adviser be appointed to manage that
portion of the Portfolio's assets managed by the departing
adviser. In this case, the Portfolio would be required to
submit to the vote of the Portfolio's shareholders the
approval of a investment advisory contract with the new
adviser. In the alternative, the Portfolio may decide to
allocate the departing adviser's assets among the remaining
advisers. This allocation would not require new investment
advisory contracts with the remaining advisers, and
consequently no shareholder approval would be necessary.
THE ADVISER _______________________________________________________________
SEI FINANCIAL SFM serves as investment adviser to the Core Fixed Income,
MANAGEMENT Bond and High Yield Bond Portfolios. SFM is a wholly-owned
CORPORATION subsidiary of SEI Corporation ("SEI"), a financial services
company located in Wayne, PA. The principal business address
of SFM is 680 East Swedesford Road, Wayne, PA 19087-1658.
SEI was founded in 1968 and is a leading provider of
investment solutions to banks, institutional investors,
investment advisers and insurance companies. Affiliates of
SFM have provided consulting advice to institutional
investors for more than 20 years, including advice regarding
the selection and evaluation of investment advisers. SFM
currently serves as manager or administrator to more than 26
investment companies, including more than 220 portfolios,
which investment companies have more than $ billion in
assets as of September 30, 1995.
For these advisory services, SFM is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .275% of the Core Fixed Income Portfolio's average
daily net assets, .275% of the Bond Portfolio's average
daily net assets and .4875% of the High Yield Bond
Porfolio's average daily net assets.
THE SUB-ADVISERS __________________________________________________________
BEA ASSOCIATES BEA Associates ("BEA") serves as Sub-Adviser for the High
Yield Bond Portfolio. BEA is a general partnership organized
under the laws of the State of New York and, together with
its predecessor firms, has been engaged in the investment
advisory business for over 50 years. BEA's principal offices
are located at One Citicorp Center, 153 East 53rd Street,
New York, NY 10022. Credit Suisse Capital Corporation ("CS
Capital") is an 80% partner in BEA and Basic Appraisals,
Inc. is a 20% partner in BEA. CS Capital is a wholly-owned
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subsidiary of Credit Suisse Investment Corporation, which is
a wholly-owned subsidiary of Credit Suisse, the second
largest Swiss bank, which in turn is a subsidiary of CS
Holding, a Swiss Corporation. No one person or entity
possesses a controlling interest in Basic Appraisals, Inc.
BEA is registered as an investment adviser under the
Investment Act of 1940, as amended (the "1940 Act").
BEA is a diversified asset manager, handling global
equity, balanced, fixed income and derivative securities
accounts for private individuals, as well as corporate
pension and profit-sharing plans, state pension funds, union
funds, endowments and other charitable institutions. As of
September 30, 1995, BEA managed approximately $28.6 billion
in assets.
The Portfolio's assets have been managed by Richard J.
Lindquist, C.F.A., since its inception. Mr. Lindquist joined
BEA in 1995 as a result of BEA's acquisition of CS First
Boston Investment Management, and has had 11 years of
investment management experience, including 6 years of
experience working with high yield bonds. Prior to joining
BEA, Mr. Lindquist was with Prudential Insurance Company of
America where he managed high yield portfolios totalling
approximately $1.3 billion.
SFM pays BEA a fee, which is calculated and paid monthly,
based on an annual rate of .3375% of the average monthly
market value of the assets of the High Yield Portfolio
managed by BEA. For the fiscal year ended September 30,
1995, BEA received a sub-advisory fee of .3375%.
BLACKROCK BlackRock Financial Management Inc. ("BlackRock") serves as
FINANCIAL Sub-Adviser to a portion of the assets of the Core Fixed
MANAGEMENT, Income Portfolio. BlackRock, a registered investment
INC. adviser, is a Delaware corporation with its principal
business address at 345 Park Avenue, 30th Floor, New York,
NY 10154. BlackRock's predecessor was founded in 1988, and
as of September 30, 1995, BlackRock had $33 billion in
assets under management. BlackRock is wholly-owned by PNC
Asset Management Group, Inc., a wholly-owned subsidiary of
PNC Bank, N.A. PNC Bank, N.A.'s ultimate parent is PNC Bank
Corp., One PNC Plaza, Pittsburgh, PA 15265. BlackRock
provides investment advice to investment companies, trusts,
charitable organizations, pension and profit sharing plans
and government entities.
BlackRock employs a team approach in managing the
Portfolio, however, the portfolio manager who has day-to-day
responsibility for the Portfolio is Keith Anderson. Mr.
Anderson is a Managing Director and Co-Head of Portfolio
Management at BlackRock, and has 12 years experience
investing in fixed income securities. Prior to founding
BlackRock in 1988, Mr. Anderson was a Vice President in
Fixed Income Research at The First Boston Corporation.
SFM pays BlackRock a fee, which is calculated and paid
monthly, based on an annual rate of .15% of the average
monthly market value of the assets of the Core Fixed Income
Portfolio managed by BlackRock. During the fiscal year ended
September 30, 1995, BlackRock did not serve as Sub-Adviser
to the Portfolio and therefore did not receive a sub-
advisory fee.
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BOATMEN'S TRUST Boatmen's Trust Company ("Boatmen's") serves as Sub-Adviser
COMPANY for the Bond Portfolio. Boatmen's is a subsidiary of
Boatmen's Bancshares, Inc., a multi-bank holding company.
Boatmen's provides trust and investment advisory services to
a broad array of individual and institutional clients. As of
September 30, 1995, Boatmen's total assets under management
were approximately $40 billion for a broad spectrum of
taxable and tax-exempt clients. The principal business
address of Boatmen's is 100 N. Broadway, St. Louis, MO
63102.
The Portfolio has been managed by a committee since its
inception.
SFM pays Boatmen's a fee, which is calculated and paid
monthly, based on an annual rate of .125% of the average
monthly market value of the assets of the Bond Portfolio
managed by Boatmen's. For the fiscal year ended September
30, 1995, Boatmen's received a sub-advisory fee of .125%.
The Glass-Steagall Act restricts the securities
activities of banks such as Boatmen's Bancshares, Inc., but
federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
FIRSTAR Firstar Investment Research & Management Company ("FIRMCO")
INVESTMENT serves as Sub-Adviser to a portion of the assets of the Core
RESEARCH & Fixed Income Portfolio. FIRMCO is a registered investment
MANAGEMENT adviser with its principal business address at 777 East
COMPANY Wisconsin Avenue, Suite 800, Milwaukee, WI 53202. FIRMCO was
founded in 1986, and as of September 30, 1995, it had
approximately $15.4 billion in assets under management.
FIRMCO is a wholly-owned subsidiary of Firstar Corporation,
a bank holding company located at 777 East Wisconsin Avenue,
Milwaukee, WI 53202. FIRMCO's clients include pension and
profit sharing plans, trusts and estates and one other
investment company.
Mr. Charles Groeschell, a Senior Vice President of
FIRMCO, has been employed by FIRMCO or its affiliates since
1983, and has had 13 years experience in fixed income
investing.
SFM pays FIRMCO a fee, which is calculated and paid
monthly, based on an annual rate of .10% of the average
monthly market value of the assets of the Core Fixed Income
Portfolio managed by FIRMCO. During the fiscal year ended
September 30, 1995, FIRMCO did not serve as Sub-Adviser to
the Portfolio and therefore did not receive a sub-advisory
fee.
WESTERN ASSET Western Asset Management Company ("Western") serves as Sub-
MANAGEMENT Adviser to a portion of the assets of the Core Fixed Income
COMPANY Portfolio. Western is located at 117 East Colorado
Boulevard, Pasadena, CA 91105, and is a wholly owned
subsidiary of Legg Mason, Inc., a financial services company
located in Baltimore, MD. Western was founded in 1971, and
specializes in the management of fixed income portfolios. As
of September 30, 1995, Western managed approximately $17
billion in client assets, including $3 billion of investment
company assets.
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Kent S. Engel, Director and Chief Investment Officer of
Western, is primarily responsible for the day-to-day
management of the Portfolio since January 19, 1994. Mr.
Engel has been with Western and its predecessor since 1969.
SFM pays Western a fee, which is calculated and paid
monthly, based on an annual rate of .125% of the average
monthly market value of assets of the Core Fixed Income
Portfolio managed by Western.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan" or
"Class D," and collectively, the "Plans") pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended
(the "1940 Act").
The Class A Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio, on an
annualized basis, provided those expenses are permissible as
to both type and amount under a budget adopted by the Board
of Trustees, including those who are not interested persons
and have no financial interest in the Plan or any related
agreement ("Qualified Trustees"). Currently, the budget
(shown here as a percentage of average daily net assets) for
each Portfolio is set at an annual rate of .08% for the Core
Fixed Income Portfolio, .10% for the Bond Portfolio and .10%
for the High Yield Bond Portfolio.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the distribution
of the Trust's shares, advertising expenses and promotional
and sales expenses including expenses for travel,
communication and compensation and benefits for sales
personnel. Distribution expenses not attributable to a
specific Portfolio are allocated among each of the
Portfolios of the Trust on the basis of their average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling
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shares of the Portfolios. Such promotional incentives will
be offered uniformly to all shares of the Portfolios, and
also will be offered uniformly to all dealers, predicated
upon the amount of shares of the Portfolios sold by such
dealer.
PURCHASE AND REDEMPTION OF SHARES ______________________________________________
Financial institutions may acquire Class A shares of the
Portfolios for their own accounts or as record owner on
behalf of fiduciary, agency or custody accounts by placing
orders with SFM. Institutions that use certain SEI
proprietary systems may place orders electronically through
those systems. State securities laws may require banks and
financial institutions purchasing shares for their customers
to register as dealers pursuant to state laws. Financial
institutions may impose an earlier cut-off time for receipt
of purchase orders directed through them to allow for
processing and transmittal of these orders to SFM for
effectiveness the same day. Financial institutions that
purchase shares for the accounts of their customers may
impose separate charges on these customers for account
services. Shares of the Portfolios are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of each Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days").
Shareholders who desire to purchase shares for cash must
place their orders with SFM prior to 4:00 p.m. Eastern time
on any Business Day for the order to be accepted on that
Business Day. Cash investments must be transmitted or
delivered in federal funds to the wire agent on the next
Business Day following the day the order is placed. The
Trust reserves the right to reject a purchase order when the
Distributor determines that it is not in the best interest
of the Trust or its shareholders to accept such purchase
order. In addition, because excessive trading (including
short-term "market timing" trading) can hurt a Portfolio's
performance, each Portfolio may refuse purchase orders from
any shareholder account if the accountholder has been
advised that previous purchase and redemption transactions
were considered excessive in number or amount. Accounts
under common control or ownership, including those with the
same taxpayer identification number and those administered
so as to redeem or purchase shares based upon certain
predetermined market indicators, will be considered one
account for this purpose.
Purchases will be made in full and fractional shares of
the Portfolios calculated to three decimal places. The Trust
will send shareholders a statement of shares owned after
each transaction. The purchase price of shares is the net
asset value next determined after a purchase order is
received and accepted by the Trust. The net asset value per
share of each Portfolio is determined by dividing the total
market value of a Portfolio's investment and other assets,
less any liabilities, by the total outstanding shares of
that Portfolio. Net asset value per share is determined as
of the close of business of the New York Stock Exchange
(currently 4:00 p.m. Eastern time) on any Business Day.
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The market value of each portfolio security is obtained
by SFM from an independent pricing service. Securities
having maturities of 60 days or less at the time of purchase
will be valued using the amortized cost method (described in
the Statement of Additional Information). The pricing
service relies primarily on prices of actual market
transactions as well as trader quotations. However, the
pricing service may use a matrix system to determine
valuations of equity and fixed income securities. This
system considers such factors as security prices, yields,
maturities, call features, ratings and developments relating
to specific securities in arriving at valuations. The
procedures used by the pricing service and its valuations
are reviewed by the officers of the Trust under the general
supervision of the Trustees.
Shareholders who desire to redeem shares of the
Portfolios must place their redemption orders with SFM prior
to 4:00 p.m. Eastern time on any Business Day. The
redemption price is the net asset value per share of the
Portfolio next determined after receipt by SFM of the
redemption order. Payment on redemption will be made as
promptly as possible and, in any event, within seven days
after the redemption order is received.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor SFM will be responsible for
any loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and SFM will
each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine,
including requiring a form of personal identification prior
to acting upon instructions received by telephone and
recording telephone instructions.
If market conditions are extraordinarily active, or other
extraordinary circumstances exist, and shareholders
experience difficulties placing redemption orders by
telephone, shareholders may wish to consider placing their
order by other means.
PERFORMANCE ____________________________________________________________________
From time to time, a Portfolio may advertise yield and total
return. These figures will be based on historical earnings
and are not intended to indicate future performance. The
yield of a Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified
30-day period. The yield is calculated by assuming that the
same amount of income generated by the investment during
that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.
The total return of a Portfolio refers to the average
compounded rate of return to a hypothetical investment, net
of any sales charge imposed on Class A shares redeemed at
the end of the specified period covered by the total return
figure, for designated time periods (including but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at
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the end of each period and assuming the reinvestment of all
dividend and capital gain distributions. The total return of
a Portfolio may also be quoted as a dollar amount or on an
aggregate basis, an actual basis, without inclusion of any
front-end or contingent sales charges, or with a reduced
sales charge in advertisements distributed to investors
entitled to a reduced sales charge.
A Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. A Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. A Portfolio may quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. A
Portfolio may use long term performance of these capital
markets to demonstrate general long-term risk versus reward
scenarios and could include the value of a hypothetical
investment in any of the capital markets. A Portfolio may
also quote financial and business publications and
periodicals as they relate to fund management, investment
philosophy, and investment techniques.
A Portfolio may quote various measures of volatility and
benchmark correlation in advertising and may compare these
measures to those of other funds. Measures of volatility
attempt to compare historical share price fluctuations or
total returns to a benchmark while measures of benchmark
correlation indicate how valid a comparative benchmark might
be. Measures of volatility and correlation are calculated
using averages of historical data and cannot be calculated
precisely.
For each Portfolio, the performance of Class A shares
will normally be higher than the performance of the Class D
shares of that Portfolio because of the additional
distribution and transfer agent expenses charged to Class D
shares.
Additional performance information is set forth in the
1995 Annual Report to Shareholders and is available upon
request and without charge by calling 1-800-342-5734.
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state or local income tax treatment of a
Portfolio or its shareholders. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state and local taxes. State and
local tax consequences of an investment in a Portfolio may
differ from the federal income tax consequences described
below. Additional information concerning taxes is set forth
in the Statement of Additional Information.
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Tax Status of A Portfolio is treated as a separate entity for federal
the Portfolios income tax purposes and is not combined with the Trust's
other portfolios. Each Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies ("RICs") under Subchapter M of the
Code, so as to be relieved of federal income tax on net
investment company taxable income (including the excess, if
any, of net short-term capital gains over net long-term
capital losses) and net capital gains (the excess of net
long-term capital gains over net short-term capital losses)
distributed to shareholders.
Tax Status of Each Portfolio distributes substantially all of its net
Distributions investment company taxable income to shareholders. Dividends
from a Portfolio's net investment company taxable income are
taxable to its shareholders as ordinary income (whether
received in cash or in additional shares). Distributions of
net capital gains are taxable to shareholders as long-term
capital gains regardless of how long a shareholder has held
shares. Dividends and distributions received from a
Portfolio will not qualify for the corporate dividends
received deduction. Each Portfolio will make annual reports
to shareholders of the federal income tax status of all
distributions.
Dividends declared by a Portfolio in October, November or
December of any year and payable to shareholders of record
on a date in such a month will be deemed to have been paid
by the Portfolio and received by the shareholders on
December 31 of the year declared if paid by a Portfolio at
any time during the following January.
Each Portfolio intends to make sufficient distributions
to avoid liability for federal excise tax.
Each sale, exchange or redemption of a Portfolio's shares
generally is a taxable transaction to the shareholder.
GENERAL INFORMATION ____________________________________________________________
The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated October 20, 1986. The
Declaration of Trust permits the Trust to offer separate
series ("portfolios") of shares and different classes of
each portfolio. All consideration received by the Trust for
shares of any class of any portfolio and all assets of such
portfolio or class belong to that portfolio or class,
respectively, and would be subject to the liabilities
related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Certain shareholders in one or more of the Portfolios may
obtain asset allocation services with respect to their
investments in such Portfolios. If a sufficient amount of a
Portfolio's assets are subject to such asset allocation
services, a Portfolio may incur higher
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transaction costs and a higher portfolio turnover rate than
would otherwise be anticipated as a result of redemptions
and purchases of Portfolio shares pursuant to such services.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each Portfolio or class will vote
separately on matters pertaining solely to that Portfolio or
class, such as any distribution plan. As a Massachusetts
business trust, the Trust is not required to hold annual
meetings of shareholders but approval will be sought for
certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining Trustees
or by shareholders at a special meeting called upon written
request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a
meeting is requested, the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager, SEI
Inquiries Financial Management Corporation, 680 East Swedesford Road,
Wayne, PA 19087.
Dividends Substantially all of the net investment income (exclusive of
capital gains) of each Portfolio is periodically declared
and paid as a dividend. Dividends currently are paid on a
daily basis for each Portfolio. Currently, net capital gains
(the excess of net long-term capital gain over net short-
term capital loss) realized, if any, will be distributed at
least annually.
Shareholders automatically receive all income dividends
and capital gain distributions in additional shares at the
net asset value next determined following the record date,
unless the shareholder has elected to take such payment in
cash. Shareholders may change their election by providing
written notice to the SFM at least 15 days prior to the
distribution.
Dividends and capital gains of each Portfolio are paid on
a per-share basis. The value of each share will be reduced
by the amount of any such payment. If shares are purchased
shortly before the record date for a dividend or capital
gains distributions, a shareholder will pay the full price
for the share and receive some portion of the price back as
a taxable dividend or distribution.
The dividends on Class D shares of the Portfolios will
normally be lower than those on Class A shares because of
the additional distribution and transfer agent expenses
charged to Class D shares.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Price Waterhouse LLP serves as the independent accountants
Accountants of the Trust.
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Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, PA 19101 (the "Custodian"), acts as
custodian of the Trust's assets. The Custodian holds cash,
securities and other assets of the Trust as required by the
1940 Act.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS __________________________
The following is a description of the permitted investment
practices for the Portfolios, and the associated risk
factors:
Asset-Backed Asset-backed securities are securities secured by non-
Securities mortgage assets such as company receivables, truck and auto
loans, leases and credit card receivables. Such securities
are generally issued as pass-through certificates, which
represent undivided fractional ownership interests in the
underlying pools of assets. Such securities also may be debt
instruments, which are also known as collateralized
obligations and are generally issued as the debt of a
special purpose entity, such as a trust, organized solely
for the purpose of owning such assets and issuing such debt.
Asset-backed securities are not issued or guaranteed by
the United States Government or its agencies or
instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain
amounts and for a certain period by a letter of credit
issued by a financial institution (such as a bank or
insurance company) unaffiliated with the issuers of such
securities. The purchase of asset-backed securities raises
risk considerations peculiar to the financing of the
instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in
the obligations superior to that of the holders of the
asset-backed securities. There also is the possibility that
recoveries on repossessed collateral may not, in some cases,
be available to support payments on those securities. Asset-
backed securities entail prepayment risk, which may vary
depending on the type of asset, but is generally less than
the prepayment risk associated with mortgage-backed
securities. In addition, credit card receivables are
unsecured obligations of the card holders.
The market for asset-backed securities is at a relatively
early stage of development. Accordingly, there may be a
limited secondary market for such securities.
Convertible Convertible securities are corporate securities that are
Securities exchangeable for a set number of another security at a
prestated price. Convertible securities typically have
characteristics similar to both fixed-income and equity
securities. Because of the conversion feature, the market
value of a convertible security tends to move with the
market value of the underlying stock. The value of a
convertible security is also affected by prevailing interest
rates, the credit quality of the issuer, and any call
provisions.
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Derivatives Derivatives are securities that derive their value from
other securities. The following are considered derivative
securities: options on futures, futures, options (e.g., puts
and calls), swap agreements, mortgage-backed securities
(e.g., CMOs, REMICs, IOs and POs), when-issued securities
and forward commitments, floating and variable rate
securities, convertible securities, "stripped" U.S. Treasury
securities (e.g., receipts and STRIPs) and privately issued
stripped securities (e.g., TGRs, TRs and CATS). See
elsewhere in this "Description of Permitted Investments and
Risk Factors" for discussions of these various instruments,
and see "Investment Objectives and Policies" for more
information about any investment policies and limitations
applicable to their use.
Equity Equity securities represent ownership interests in a company
Securities or corporation and include common stock, preferred stock and
warrants and other rights to acquire such instruments.
Changes in the value of portfolio securities will not
necessarily affect cash income derived from these securities
but will affect a Portfolio's net asset value.
Fixed Income Fixed income securities are debt obligations issued by
Securities corporations, municipalities and other borrowers. Moreover,
while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are
also subject to greater market fluctuations as a result of
changes in interest rates.
Forward Foreign A forward contract involves an obligation to purchase or
Currency sell a specific currency amount at a future date, agreed
Contracts upon by the parties, at a price set at the time of the
contract. A Portfolio may also enter into a contract to
sell, for a fixed amount of U.S. dollars or other
appropriate currency, the amount of foreign currency
approximating the value of some or all of a Portfolio's
securities denominated in such foreign currency.
At the maturity of a forward contract, a Portfolio may
either sell a portfolio security and make delivery of the
foreign currency, or it may retain the security and
terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the
same currency trader, obligating it to purchase, on the same
maturity date, the same amount of the foreign currency. A
Portfolio may realize a gain or loss from currency
transactions.
Futures and Futures contracts provide for the future sale by one party
Options on and purchase by another party of a specified amount of a
Futures specific security at a specified future time and at a
specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise price
during the term of the option. A Portfolio may use futures
contracts and related options for bona fide
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hedging purposes, to offset changes in the value of
securities held or expected to be acquired or be disposed
of, to minimize fluctuations in foreign currencies, or to
gain exposure to a particular market or instrument. A
Portfolio will minimize the risk that it will be unable to
close out a futures contract by only entering into futures
contracts that are traded on national futures exchanges.
A bond index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery
of an amount of cash equal to a specified dollar amount
times the difference between the bond index value at the
close of trading of the contract and the price at which the
futures contract is originally struck. No physical delivery
of the stocks comprising the index is made. A bond futures
contract is a bilateral agreement pursuant to which parties
agree to take or make delivery of the underlying security at
the close of trading of the contract.
Generally, future contracts are closed out prior to the
expiration date of the contract. No price is paid upon
entering into futures contracts. Instead, a Portfolio would
be required to deposit an amount of cash or U.S. Treasury
securities known as "initial margin." Subsequent payments,
called "variation margin," to and from the broker, would be
made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin
is in the nature of a performance bond or good-faith deposit
on a futures contract.
Eurodollar instruments are U.S. dollar-denominated
futures contracts or options thereon which are linked to the
London Interbank Offered Rate (LIBOR), although foreign
currency denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to
obtain a fixed rate for the lending of funds and sellers to
obtain a fixed rate for borrowings.
In order to avoid leveraging and related risks, when a
Portfolio purchases futures contracts, it will collateralize
its position by depositing an amount of cash or liquid, high
grade debt securities, equal to the market value of the
futures positions held, less margin deposits, in a
segregated account with the Trust's custodian. Collateral
equal to the current market value of the futures position
will be marked to market on a daily basis.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets
and movements in interest rates, (2) there may be an
imperfect or no correlation between the changes in market
value of the securities held by the Portfolio and the prices
of futures and options on futures, (3) there may not be a
liquid secondary market for a futures contract or option,
(4) trading restrictions or limitations may be imposed by an
exchange, and (5) government regulations may restrict
trading in futures contracts and options on futures.
A Portfolio may enter into futures contracts and options
on futures contracts traded on an exchange regulated by the
Commodities Futures Trading Commission ("CFTC"), so long as,
to the extent that such transactions are not for "bona fide
hedging purposes," the aggregate initial margin and premiums
on such positions (excluding the amount by which such
options are in the money) do not exceed 5% of the
Portfolio's net assets. The Portfolio may buy and sell
futures contracts and related options to manage its
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exposure to changing interest rates and securities prices.
Some strategies reduce the Portfolio's exposure to price
fluctuations, while others tend to increase its market
exposure. Futures and options on futures can be volatile
instruments and involve certain risks that could negatively
impact the Portfolio's return.
Illiquid Illiquid securities are securities that cannot be disposed
Securities of within seven business days at approximately the price at
which they are being carried on a Portfolio's books. An
illiquid security includes a demand instrument with a demand
notice period exceeding seven days, where there is no
secondary market for such security, and repurchase
agreements with durations (or maturities) over 7 days in
length.
Junk Bonds Bonds rated below investment grade are often referred to as
"junk bonds." Such securities involve greater risk of
default or price declines than investment grade securities
due to changes in the issuer's creditworthiness and the
outlook for economic growth. The market for these securities
may be less active, causing market price volatility and
limited liquidity in the secondary market. This may limit a
Portfolio's ability to sell such securities at their market
value. In addition, the market for these securities may also
be adversely affected by legislative and regulatory
developments. Credit quality in the junk bond market can
change suddenly and unexpectedly, and even recently issued
credit ratings may not fully reflect the actual risks
imposed by a particular security. See also the "Risk
Factors" section.
Money Market Money market securities are high-quality, dollar-
Securities denominated, short-term debt instruments. They consist of:
(i) bankers' acceptances, certificates of deposits, notes
and time deposits of highly-rated U.S. banks and U.S.
branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and
instrumentalities of the U.S. Government; (iii) high-quality
commercial paper issued by U.S. and foreign corporations;
(iv) debt obligations with a maturity of one year of less
issued by corporations with outstanding high-quality
commercial paper; and (v) repurchase agreements involving
any of the foregoing obligations entered into with highly-
rated banks and broker-dealers.
Mortgage-Backed Mortgage-backed securities are instruments that entitle the
Securities holder to a share of all interest and principal payments
from mortgages underlying the security. The mortgages
backing these securities include conventional fifteen and
thirty-year fixed-rate mortgages, graduated payment
mortgages, adjustable rate mortgages and balloon mortgages.
Prepayment of mortgages which underlie securities purchased
at a premium often results in capital losses, while
prepayment of mortgages purchased at a discount often
results in capital gains. Because of these unpredictable
prepayment characteristics, it is often not possible to
predict accurately the average life or realized yield of a
particular issue.
Government Pass-Through Securities: These are securities
that are issued or guaranteed by a U.S. Government agency
representing an interest in a pool of mortgage loans. The
primary issuers or guarantors of these mortgage-backed
securities are GNMA,
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FNMA and FHLMC. FNMA and FHLMC obligations are not backed by
the full faith and credit of the U.S. Government as GNMA
certificates are, but FNMA and FHLMC securities are
supported by the instrumentalities' right to borrow from the
U.S. Treasury. GNMA, FNMA and FHLMC each guarantees timely
distributions of interest to certificate holders. GNMA and
FNMA also each guarantees timely distributions of scheduled
principal. FHLMC has in the past guaranteed only the
ultimate collection of principal of the underlying mortgage
loan; however, FHLMC now issues mortgage-backed securities
(FHLMC Gold PCs) which also guarantee timely payment of
monthly principal reductions. Government and private
guarantees do not extend to the securities' value, which is
likely to vary inversely with fluctuations in interest
rates.
Private Pass-Through Securities: These are mortgage-
backed securities issued by a non-governmental entity, such
as a trust or corporate entity. These securities include
collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs"). While they are
generally structured with one or more types of credit
enhancement, private pass-through securities typically lack
a guarantee by an entity having the credit status of a
governmental agency or instrumentality.
Collateralized Mortgage Obligations ("CMOs"): CMOs are
debt obligations or multiclass pass-through certificates
issued by agencies or instrumentalities of the U.S.
Government or by private originators or investors in
mortgage loans. In a CMO, series of bonds or certificates
are usually issued in multiple classes. Principal and
interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in
a variety of ways. Each class of a CMO, often referred to as
a "tranche," is issued with a specific fixed or floating
coupon rate and has a stated maturity or final distribution
date. Principal payments on the underlying mortgage assets
may cause CMOs to be retired substantially earlier then
their stated maturities or final distribution dates,
resulting in a loss of all or part of any premium paid.
REMICs: A REMIC is a CMO that qualifies for special tax
treatment under the Internal Revenue Code and invests in
certain mortgages principally secured by interests in real
property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or
"residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC
represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or FNMA, FHLMC or
GNMA-guaranteed mortgage pass-through certificates. For
FHLMC REMIC Certificates, FHLMC guarantees the timely
payment of interest, and also guarantees the payment of
principal as payments are required to be made on the
underlying mortgage participation certificates. FNMA REMIC
Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA.
Parallel Pay Securities; PAC Bonds: Parallel pay CMOs and
REMICS are structured to provide payments of principal on
each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated
maturity date or
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final distribution date of each class, which must be retired
by its stated maturity date or final distribution date, but
may be retired earlier. Planned Amortization Class CMOs
("PAC Bonds") generally require payments of a specified
amount of principal on each payment date. PAC Bonds are
always parallel pay CMOs with the required principal payment
on such securities having the highest priority after
interest has been paid to all classes.
REITs: REITs are trusts that invest primarily in
commercial real estate or real estate-related loans. The
value of interests in REITs may be affected by the value of
the property owned or the quality of the mortgages held by
the trust.
Stripped Mortgage-Backed Securities ("SMBs"): SMBs are
usually structured with two classes that receive specified
proportions of the monthly interest and principal payments
from a pool of mortgage securities. One class may receive
all of the interest payments and is thus termed an interest-
only class ("IO"), while the other class may receive all of
the principal payments and is thus termed the principal-only
class ("PO"). The value of IOs tends to increase as rates
rise and decrease as rates fall; the opposite is true of
POs. SMBs are extremely sensitive to changes in interest
rates because of the impact thereon of prepayment of
principal on the underlying mortgage securities can
experience wide swings in value in response to changes in
interest rates and associated mortgage prepayment rates.
During times when interest rates are experiencing
fluctuations, such securities can be difficult to price on a
consistent basis. The market for SMBs is not as fully
developed as other markets; SMBs therefore may be illiquid.
Risk Factors: Due to the possibility of prepayments of
the underlying mortgage instruments, mortgage-backed
securities generally do not have a known maturity. In the
absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate
is a function of an assumption regarding anticipated
prepayment patterns, based upon current interest rates,
current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus
different market participants can produce different average
life estimates with regard to the same security. There can
be no assurance that estimated average life will be a
security's actual average life.
Mortgage Dollar Mortgage "dollar rolls" are transactions in which mortgage-
Rolls backed securities are sold for delivery in the current month
and the seller simultaneously contracts to repurchase
substantially similar securities on a specified future date.
Any difference between the sale price and the purchase price
is netted against the interest income foregone on the
securities sold to arrive at an implied borrowing rate.
Alternatively, the sale and purchase transactions can be
executed at the same price, with the Portfolio being paid a
fee as consideration for entering into the commitment to
purchase. Mortgage dollar rolls may be renewed prior to cash
settlement and initially may involve only a firm commitment
agreement by the Portfolio to buy a security. If the broker-
dealer to whom the Portfolio sells the security becomes
insolvent, the Portfolio's right to repurchase the security
may be restricted. Other risks involved in entering into
mortgage dollar rolls include the risk that
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the value of the security may change adversely over the term
of the mortgage dollar roll and that the security the
Portfolio is required to repurchase may be worth less than
the security that the Portfolio originally held.
To avoid any leveraging concerns, the Portfolio will
place U.S. Government or other liquid, high grade debt
securities in a segregated account in an amount sufficient
to cover its repurchase obligation.
Municipal Municipal securities consist of (i) debt obligations issued
Securities by or on behalf of public authorities to obtain funds to be
used for various public facilities, for refunding
outstanding obligations, for general operating expenses, and
for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial
development bonds issued by or on behalf of public
authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated
facilities.
General obligation bonds are backed by the taxing power
of the issuing municipality. Revenue bonds are backed by the
revenues of a project or facility (tolls from a bridge, for
example). Certificates of participation represent an
interest in an underlying obligation or commitment, such as
an obligation issued in connection with a leasing
arrangement. The payment of principal and interest on
private activity and industrial development bonds generally
is dependent solely on the ability of a facility's user to
meet its financial obligations and the pledge, if any, of
real and personal property as security for such payment.
Municipal securities include both municipal notes and
municipal bonds. Municipal notes include general obligation
notes, tax anticipation notes, revenue anticipation notes,
bond anticipation notes, certificates of indebtedness,
demand notes and construction loan notes and participation
interests in municipal notes. Municipal bonds include
general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds and
participation interests in municipal bonds.
Options A put option gives the purchaser of the option the right to
sell, and the writer of the option the obligation to buy,
the underlying security at any time during the option
period. A call option gives the purchaser of the option the
right to buy, and the writer of the option the obligation to
sell, the underlying security at any time during the option
period. The premium paid to the writer is the consideration
for undertaking the obligations under the option contract.
The initial purchase (sale) of an option contract is an
"opening transaction." In order to close out an option
position, a Portfolio may enter into a "closing
transaction," which is simply the sale (purchase) of an
option contract on the same security with the same exercise
price and expiration date as the option contract originally
opened.
A Portfolio may purchase put and call options to protect
against a decline in the market value of the securities in
its portfolio or to anticipate an increase in the market
value of securities that the Portfolio may seek to purchase
in the future. A Portfolio purchasing put and call options
pays a premium therefor. If price movements in the
underlying securities are such that exercise of the options
would not be profitable for the Portfolio, loss of the
premium paid may be offset by an increase in the value of
the
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Portfolio's securities or by a decrease in the cost of
acquisition of securities by the Portfolio.
A Portfolio may write covered call options as a means of
increasing the yield on its portfolio and as a means of
providing limited protection against decreases in its market
value. When a Portfolio sells an option, if the underlying
securities do not increase or decrease to a price level that
would make the exercise of the option profitable to the
holder thereof, the option generally will expire without
being exercised and the Portfolio will realize as profit the
premium received for such option. When a call option of
which a Portfolio is the writer is exercised, the Portfolio
will be required to sell the underlying securities to the
option holder at the strike price, and will not participate
in any increase in the price of such securities above the
strike price. When a put option of which a Portfolio is the
writer is exercised, the Portfolio will be required to
purchase the underlying securities at the strike price,
which may be in excess of the market value of such
securities.
A Portfolio may purchase and write options on an exchange
or over-the-counter. Over-the-counter options ("OTC
options") differ from exchange-traded options in several
respects. They are transacted directly with dealers and not
with a clearing corporation, and therefore entail the risk
of non-performance by the dealer. OTC options are available
for a greater variety of securities and for a wider range of
expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded
on an exchange, pricing is done normally by reference to
information from a market maker. It is the position of the
Securities and Exchange Commission that OTC options are
generally illiquid.
A Portfolio may purchase and write put and call options
on foreign currencies (traded on U.S. and foreign exchanges
or over-the-counter markets) to manage its exposure to
exchange rates. Call options on foreign currency written by
a Portfolio will be "covered," which means that the
Portfolio will own an equal amount of the underlying foreign
currency. With respect to put options on foreign currency
written by a Portfolio, the Portfolio will establish a
segregated account with its custodian bank consisting of
cash or liquid, high grade debt securities in an amount
equal to the amount the Portfolio would be required to pay
upon exercise of the put.
A Portfolio may purchase and write put and call options
on indices and enter into related closing transactions. Put
and call options on indices are similar to options on
securities except that options on an index give the holder
the right to receive, upon exercise of the option, an amount
of cash if the closing level of the underlying index is
greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal
to the difference between the closing price of the index and
the exercise price of the option, expressed in dollars
multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain
or loss depends on price movements in the particular market
represented by the index generally, rather
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than the price movements in individual securities. A
Portfolio may choose to terminate an option position by
entering into a closing transaction. The ability of a
Portfolio to enter into closing transactions depends upon
the existence of a liquid secondary market for such
transactions.
A Portfolio may engage in writing covered call options.
Under a call option, the purchaser has the right to purchase
and the writer (the Portfolio) the obligation to sell the
underlying security at the exercise price during the option
period. Options purchased by the Portfolio will be listed on
a national securities exchange. In order to close out an
option position, the Portfolio may enter into a "closing
purchase transaction," which involves the purchase of an
option on the same security at the same exercise price and
expiration date. If the Portfolio is unable to effect a
closing purchase transaction with respect to an option it
has written, it will not be able to sell the underlying
security until the option expires or the Portfolio delivers
the security upon exercise. Permissible options include
options on stock indices.
All options written on indices must be covered. When a
Portfolio writes an option on an index, it will establish a
segregated account containing cash or liquid high grade debt
securities with its custodian in an amount at least equal to
the market value of the option and will maintain the account
while the option is open or will otherwise cover the
transaction.
Risk Factors. Risks associated with options transactions
include: (1) the success of a hedging strategy may depend on
an ability to predict movements in the prices of individual
securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation
between the movement in prices of options and the securities
underlying them; (3) there may not be a liquid secondary
market for options; and (4) while a Portfolio will receive a
premium when it writes covered call options, it may not
participate fully in a rise in the market value of the
underlying security.
Receipts Receipts are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments
of interest or principal. This discount is accreted over the
life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax
purposes. Because of these features, such securities may be
subject to greater interest rate volatility than interest
paying Permitted Investments. See also "Taxes."
Repurchase Agreements by which a Portfolio obtains a security and
Agreements simultaneously commits to return the security to the seller
at an agreed upon price (including principal and interest)
on an agreed upon date within a number of days from the date
of purchase. The Custodian or its agent will hold the
security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to
102% of the purchase price. The Portfolio bears a risk of
loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral securities
or if the Portfolio realizes a loss on the sale of the
collateral securities. An adviser will enter
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into repurchase agreements on behalf of the Portfolio only
with financial institutions deemed to present minimal risk
of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the
Trustees. Repurchase agreements are considered loans under
the 1940 Act.
Securities In order to generate additional income, a Portfolio may lend
Lending securities which it owns pursuant to agreements requiring
that the loan be continuously secured by collateral
consisting of cash, securities of the U.S. Government or its
agencies equal to at least 100% of the market value of the
securities lent. A Portfolio continues to receive interest
on the securities lent while simultaneously earning interest
on the investment of cash collateral. Collateral is marked
to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral
should the borrower of the securities fall financially or
become insolvent.
Securities of There are certain risks connected with investing in foreign
Foreign Issuers securities. These include risks of adverse political and
economic developments (including possible governmental
seizure or nationalization of assets), the possible
imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting
requirements, the possibility that there will be less
information on such securities and their issuers available
to the public, the difficulty of obtaining or enforcing
court judgments abroad, restrictions on foreign investments
in other jurisdictions, difficulties in effecting
repatriation of capital invested abroad, and difficulties in
transaction settlements and the effect of delay on
shareholder equity. Foreign securities may be subject to
foreign taxes, and may be less marketable than comparable
U.S. securities. The value of a Portfolio's investments
denominated in foreign currencies will depend on the
relative strengths of those currencies and the U.S. dollar,
and a Portfolio may be affected favorably or unfavorably by
changes in the exchange rates or exchange control
regulations between foreign currencies and the U.S. dollar.
Changes in foreign currency exchange rates also may affect
the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income
and gains, if any, to be distributed to shareholders by a
Portfolio.
U.S. Government Obligations issued or guaranteed by agencies of the U.S.
Agency Government, including, among others, the Federal Farm Credit
Obligations Bank, the Federal Housing Administration and the Small
Business Administration, and obligations issued or
guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full
faith and credit of the U.S. Treasury (e.g., Government
National Mortgage Association), others are supported by the
right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank), while still others are supported
only by the credit of the instrumentality (e.g., Federal
National Mortgage Association). Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be
a guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might
not be a market and thus no means of realizing on the
obligation prior to maturity.
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Guarantees as to the timely payment of principal and
interest do not extend to the value or yield of these
securities nor to the value of the Portfolio's shares.
U.S. Treasury U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury and separately traded interest
and principal component parts of such obligations that are
transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal
Securities ("STRIPS").
U.S. Treasury U.S. Treasury receipts are interests in separately traded
Receipts interest and principal component parts of U.S. Treasury
obligations that are issued by banks or brokerage firms and
are created by depositing U.S. Treasury obligations into a
special account at a custodian bank. The custodian holds the
interest and principal payments for the benefit of the
registered owners of the certificates of receipts. The
custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register.
Receipts include "Treasury Receipts" ("TRs"), "Treasury
Investment Growth Receipts" ("TIGRs"), "Liquid Yield Option
Notes" ("LYONs") and "Certificates of Accrual on Treasury
Securities" ("CATS"). TIGRs and CATS are interests in
private proprietary accounts while TRs are interests in
accounts sponsored by the U.S. Treasury.
Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest, and may involve a conditional or unconditional
Instruments demand feature. Such instruments bear interest at rates
which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on
interest rate changes. There is a risk that the current
interest rate on such obligations may not accurately reflect
existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.
Warrants Warrants are instruments giving holders the right, but not
the obligation, to buy shares of a company at a given price
during a specified period.
When-Issued and When-issued or delayed delivery basis transactions involve
Delayed the purchase of an instrument with payment and delivery
Delivery taking place in the future. Delivery of and payment for
Securities these securities may occur a month or more after the date of
including TBA the purchase commitment. The Portfolio will maintain with
Mortgage-Backed the Custodian a separate account with liquid, high grade
Securities debt securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date, and no interest accrues to
the Portfolio before settlement. These securities are
subject to market fluctuation due to changes in market
interest rates, and it is possible that the market value at
the time of settlement could be higher or lower than the
purchase price if the general level of interest rates has
changed. Although a Portfolio generally purchases securities
on a when-issued or forward commitment basis with the
intention of actually acquiring securities, a Portfolio may
dispose of a when-issued security or forward commitment
prior to settlement if the advisers deem it appropriate to
do so.
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One form of when-issued or delayed-delivery security that
a Portfolio may purchase is a "to be announced" ("TBA")
mortgage-backed security. A TBA mortgaged-backed security
transaction arises when a mortgage-backed security, such as
a GNMA pass-through security, is purchased or sold with
specific pools that will constitute that GNMA pass-through
security to be announced on a future settlement date.
Yankee Yankee obligations ("Yankees") are U.S. dollar-denominated
Obligations instruments of foreign issuers who either register with the
Securities and Exchange Commission or issue under Rule 144A
of the Securities Exchange Act of 1933, as amended. These
consist of debt securities (including preferred or
preference stock of non-governmental issuers), certificates
of deposit, fixed time deposits and bankers' acceptances
issued by foreign banks, and debt obligations of foreign
governments or their subdivisions, agencies and
instrumentalities, international agencies and supranational
entities. Some securities issued by foreign governments or
their subdivisions, agencies and instrumentalities may not
be backed by the full faith and credit of the foreign
government.
Investing in the securities of issuers based in any
foreign country involves special risks and considerations
not typically associated with investing in U.S. companies.
These include risks resulting from differences in
accounting, auditing and financial reporting standards,
lower liquidity than U.S. fixed income or debt securities,
the possibility of nationalization, expropriation or
confiscatory taxation; adverse changes in investment or
exchange control regulations and political instability.
There may be less publicly available information concerning
foreign issuers of securities held by the Portfolio than is
available concerning U.S. issuers. Purchases and sales of
foreign securities and dividends and interest payable on
those securities may be subject to foreign taxes and taxes
may be withheld from dividend and interest payments on those
securities. Foreign securities often trade with less
frequency and volume than domestic securities and therefore
may exhibit greater price volatility and a greater risk of
liquidity.
The yankee obligations selected for the Portfolio will
adhere to the same quality standards as those utilized for
the selection of domestic debt obligations.
Zero Coupon, Zero coupon securities are securities that are sold at a
Pay-In-Kind and discount to par value and securities on which interest
Deferred payments are not made during the life of the security. Upon
Payment maturity, the holder is entitled to receive the par value of
Securities the security. While interest payments are not made on such
securities, holders of such securities are deemed to have
received "phantom income" annually. Because a Portfolio will
distribute its "phantom income" to shareholders, to the
extent that shareholders elect to receive dividends in cash
rather than reinvesting such dividends in additional shares,
a Portfolio will have fewer assets with which to purchase
income producing securities. Alternatively, shareholders may
have to redeem shares to pay tax on this "phantom income."
In either case, the Portfolio may have to dispose of its
portfolio securities under disadvantageous circumstances to
generate cash, or may have to leverage itself by borrowing
cash to satisfy distribution requirements. A Portfolio
accrues income with respect to the securities prior to the
receipt of cash
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payments. Pay-in-kind securities are securities that have
interest payable by delivery of additional securities.
Deferred payment securities are securities that remain zero
coupon securities until a predetermined date, at which time
the stated coupon rate becomes effective and interest
becomes payable at regular intervals. Zero coupon, pay-in-
kind and deferred payment securities may be subject to
greater fluctuation in value and lesser liquidity in the
event of adverse market conditions that comparably rated
securities paying cash interest at regular interest payment
periods.
Additional information on permitted investments and risk
factors can be found in the Statement of Additional
Information.
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APPENDIX--DESCRIPTION OF CORPORATE BOND RATINGS ________________________________
MOODY'S RATING DEFINITIONS
LONG TERM
AAA Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edged". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
the Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the
future.
BAA Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
BA Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
A-1
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Moody's bond ratings, where specified, are applied to senior bank obligations
and insurance company senior policyholder and claims obligations with an
original maturity in excess of one year. Obligations relying upon support
mechanisms such as letters-of-credit and bonds of indemnity are excluded unless
explicitly rated.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located
in countries which carry a Moody's sovereign rating. Such branch obligations
are rated at the lower of the bank's rating or Moody's sovereign rating for the
bank deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings
do not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance
company obligations are exempt from registration under the U.S. Securities Act
of 1933 or issued in conformity with any other applicable law or regulation.
Nor does Moody's represent that any specific bank or insurance company
obligation is legally enforceable or is a valid senior obligation of a rated
issuer.
Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
STANDARD & POOR'S RATINGS DEFINITIONS
A Standard & Poor's corporate or municipal debt rating is a current assessment
of creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees.
The debt rating is not a recommendation to purchase, sell or hold a security,
as it does not comment on market price or suitability for a particular
investor.
The ratings are based, in varying degrees, on the following considerations:
(1) Likelihood of default. The rating assesses the obligor's capacity and
willingness as to timely payment of interest and repayment of principal in
accordance with the terms of the obligation.
A-2
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(2) The obligation's nature and provisions.
(3) Protection afforded to, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under bankruptcy
laws and other laws affecting creditor's rights.
Likelihood of default is indicated by an issuer's senior debt rating. If senior
debt is not rated, an implied senior debt rating is determined. Subordinated
debt usually is rated lower than senior debt to better reflect relative
position of the obligation in bankruptcy. Unsecured debt, where significant
secured debt exists, is treated similarly to subordinated debt.
LONG-TERM
Investment Grade
AAA Debt rated "AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated "AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.
A Debt rated "A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB Debt rated "BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Speculative Grade
Debt rated "BB', "B', "CCC', "CC', and "C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. "BB' indicates the least degree of speculation and "C' the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposure to adverse conditions.
BB Debt rated "BB' has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could
lead to inadequate capacity to meet timely interest and principal payments.
The "BB' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BBB-' rating.
B Debt rate "B' has greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions would likely impair capacity or
willingness to pay interest and repay principal. The "B' rating category
also is used for debt subordinated to senior debt that is assigned an
actual or implied "BB' or "BB-' rating.
CCC Debt rated "CCC' has a current identifiable vulnerability to default, and
is dependent on favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event
of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal.
A-3
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The "CCC' rating category also is used for debt subordinated to senior debt
that is assigned an actual or implied "B' or "B-' rating.
CC The rating "CC' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC' rating.
C The rating "C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-' debt rating. The "C' rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payment are continued.
CI Debt rated "CI' is reserved for income bonds on which no interest is being
paid.
D Debt is rated "D' when the issue is in payment default, or the obligor has
filed for bankruptcy. The "D' rating is used when interest or principal
payments are not made on the date due, even if the applicable grace period
has not expired, unless S&P believes that such payments will be made during
such grace period.
Plus (+) or minus (-): The ratings from "AA' to "CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
C The letter "c' indicates that the holder's option to tender the security for
purchase may be canceled under certain prestated conditions enumerated in
the tender option documents.
P The letter "p' indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project financed by the debt
being rated and indicates that payment of the debt service requirements is
largely or entirely dependent upon the successful timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of, or the
risk of default upon failure of such completion. The investor should
exercise his own judgement with respect to such likelihood and risk.
L The letter "L' indicates that the rating pertains to the principal amount of
those bonds to the extent that the underlying deposit collateral is
federally insured, and interest is adequately collateralized. In the case of
certificates of deposit, the letter "L' indicates that the deposit, combined
with other deposits being held in the same right and capacity, will be
honored for principal and pre-default interest up to federal insurance
limits within 30 days after closing of the insured institution or, in the
event that the deposit is assumed by a successor insured institution, upon
maturity.
- -------
* Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments
and cash flows.
N.R. Not rated.
Debt obligations of issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
If an issuer's actual or implied senior debt rating is "AAA', its subordinated
or junior debt is rated "AAA' or "AA+'. If an issuer's actual or implied senior
debt rating is lower than "AAA' but higher than "BB+', its junior debt is
typically rated one
A-4
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designation lower than the senior debt ratings. For example, if the senior debt
rating is "A', subordinated debt normally would be rated "A-'. If an issuer's
actual or implied senior debt rating is "BB+' or lower, its subordinated debt
is typically rated two designations lower than the senior debt rating.
NOTE: The term "investment grade" was originally used by various regulatory
bodies to connote obligations eligible for investment by institutions such as
banks, insurance companies, and savings and loan associations. Over time, this
term gained widespread usage throughout the investment community. Issues rated
in the four highest categories, "AAA', "AA', "A', "BBB', generally are
recognized as being investment grade. Debt "BB' or below generally is referred
to as speculative grade. The term "junk bond" is merely a more irreverent
expression for this category of more risky debt. Neither term indicates which
securities S&P deems worthy of investment, as an investor with a particular
risk preference may appropriately invest in securities that are not investment
grade.
FITCH INVESTOR SERVICES INC. RATING DEFINITIONS
LONG-TERM
AAA Bonds rated AAA are judged to be strictly high grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions liable to
slight market fluctuation other than through changes in the money rate.
The prime feature of an AAA bond is a showing of earnings several times or
many times greater than interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever
changes occur in conditions.
AA Bonds rated AA are judged to be of safety virtually beyond question and
are readily salable, whose merits are not unlike those of the AAA class,
but whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to
rating by the lesser financial power of the enterprise and more local type
market.
A Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
BB Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.
B Bonds rated B are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
A-5
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CCC Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C Bonds are in imminent default in payment of interest or principal.
DDD Bonds are in default on interest and/or principal payments. Such bonds are
DD extremely speculative and should be valued on the basis of their ultimate
D recovery value in liquidation or reorganization of the obligor. "DDD'
represents the lowest potential for recovery on these bonds, and "D'
represents the lowest potential for recovery.
PLUS (+) MINUS (-) Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "AAA', "DDD', "DD', or "D'
categories.
DUFF AND PHELPS, INC. RATING DEFINITIONS
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong. Risk is modest but may
AA- vary slightly from time to time because of economic conditions.
A+ Protection factors are average but adequate. However, risk factors are
A- more variable and greater in periods of economic stress.
BBB+ Below average protection factors but still considered sufficient for
BBB- prudent investment. Considerable variability in risk during economic
cycles.
BB+ Below investment grade but deemed likely to meet obligations when due.
BB Present or prospective financial protection factors fluctuate according to
BB- industry conditions or company fortunes. Overall quality may move up or
down frequently within this category.
B+ Below investment grade and possessing risk that obligations will not be
B met when due. Financial protection factors will fluctuate widely according
B- to economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in the rating within this category or into a
higher or lower rating grade.
CCC Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company
developments.
DD Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP Preferred stock with dividend arrearages.
A-6
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IBCA LIMITED RATING DEFINITIONS
AAA Obligations rated AAA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions
are unlikely to increase investment risk significantly.
AA Obligations for which there is a very low expectation of investment risk
are rated AA. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions
may increase investment risk albeit not very significantly.
A Bonds rated A are obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest
is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.
BBB Bonds rated BBB are obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal
and interest is adequate, although adverse changes in business, economic
or financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.
BB Bonds rated BB are obligations for which there is a possibility of
investment risk developing. Capacity for timely repayment of principal and
interest exists, but is susceptible over time to adverse changes in
business, economic or financial conditions. Bonds rated B are obligations
for which investment risk exists. Timely repayment of principal and
interest is not sufficiently protected against adverse changes in
business, economic or financial conditions.
B Obligations for which investment risk exists. Timely repayment of
principal and interest is not sufficiently protected against adverse
changes in business, economic or financial conditions.
CCC Obligations for which there is a current perceived possibility of default.
Timely repayment of principal and interest is dependent on favorable
business, economic or financial conditions.
CC Obligations which are highly speculative or which have a high risk of
default.
C Obligations which are currently in default.
NOTES: "+" or "-" may be appended to a rating to denote relative status within
major rating categories.
Ratings of BB and below are assigned where it is considered that
speculative characteristics are present.
THOMSON BANKWATCH RATING DEFINITIONS
AAA Bonds rated AAA indicate that the ability to repay principal and interest
on a timely basis is very high.
AA Bonds rated AA indicate a superior ability to repay principal and interest
on a timely basis, with limited incremental risk compared to issues rated
in the highest category.
A-7
<PAGE>
A Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse developments
(both internal and external) than obligations with higher ratings.
BBB Bonds rated BBB indicate an acceptable capacity to repay principal and
interest. Issues rated BBB are, however, more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.
BB While not investment grade, the BB rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there
are significant uncertainties that could affect the ability to adequately
service debt obligations.
B Issues rated B show a higher degree of uncertainty and therefore greater
likelihood of default than higher-rated issues. Adverse developments could
well negatively affect the payment of interest and principal on a timely
basis.
CCC Issues rated "CCC" clearly have a high likelihood of default, with little
capacity to address further adverse changes in financial circumstances.
CC "CC" is applied to issues that are subordinate to other obligations rated
"CCC" and are afforded less protection in the event of bankruptcy or
reorganization.
D Default
Ratings in the Long-Term Debt categories may include a plus (+) or minus (-)
designation, which indicates where within the respective category the issue is
placed.
A-8
<PAGE>
TABLE OF CONTENTS ______________________________________________________________
<TABLE>
<S> <C>
The Trust................................................... 4
Investment Objectives and Policies.......................... 4
General Investment Policies................................. 6
Risk Factors................................................ 7
Investment Limitations...................................... 9
The Manager and Shareholder Servicing Agent................. 10
Multi-Manager Diversification............................... 10
The Adviser................................................. 12
The Sub-Advisers............................................ 12
Distribution................................................ 15
Purchase and Redemption of Shares........................... 16
Performance................................................. 17
Taxes....................................................... 18
General Information......................................... 19
Description of Permitted Investments and Risk Factors....... 21
Appendix.................................................... A-1
</TABLE>
<PAGE>
SEI INSTITUTIONAL MANAGED TRUST
JANUARY 31, 1996
- --------------------------------------------------------------------------------
LARGE CAP VALUE PORTFOLIO
LARGE CAP GROWTH PORTFOLIO
SMALL CAP VALUE PORTFOLIO
SMALL CAP GROWTH PORTFOLIO
MID-CAP PORTFOLIO
CAPITAL APPRECIATION PORTFOLIO
EQUITY INCOME PORTFOLIO
BALANCED PORTFOLIO
CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely the information about the above-referenced
portfolios. Please read this Prospectus carefully before investing, and keep it
on file for future reference.
A Statement of Additional Information dated January 31, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, PA 19087-1658, or by calling 1-800-342-5734. The
Statement of Additional Information is incorporated into this Prospectus by
reference.
SEI Institutional Managed Trust (the "Trust") is an open-end investment
management company, certain classes of which offer financial institutions a
convenient means of investing their own funds or funds for which they act in a
fiduciary, agency or custodial capacity in professionally managed diversified
and non-diversified portfolios of securities. A portfolio may offer separate
classes of shares that differ from each other primarily in the allocation of
certain distribution expenses, sales charges and minimum investment amounts.
This Prospectus offers the Class A shares of one balanced (fixed income and
equity) and eight equity portfolios (each, a "Portfolio," and together, the
"Portfolios") listed above.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- ------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE
SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
- ------------------------------------------------------------------------
<PAGE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) Class A
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP LARGE CAP SMALL CAP SMALL CAP CAPITAL EQUITY
VALUE GROWTH VALUE GROWTH MID-CAP APPRECIATION INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee/Advisory
Fees (after fee waiver)
(1) 0.70% 0.70% 0.98% 0.97% 0.60% 0.70% 0.69%
12b-1 Fees (2) 0.07% 0.06% 0.05% 0.08% 0.12% 0.09% 0.09%
Other Expenses (after
reimbursements) 0.05% 0.09% 0.07% 0.05% 0.05% 0.05% 0.04%
- --------------------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waiver) (4) 0.82% 0.85% 1.10% 1.10% 0.77% 0.84% 0.82%
- --------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES (as a percentage of average net assets) Class A
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED CAPITAL GROWTH
PORTFOLIO PORTFOLIO
--------- --------------
<S> <C> <C>
Management Fee/Advisory Fees (after fee waiver) (1) 0.60% 0.00%
12b-1 Fees (after reimbursements) (2) 0.10% 0.00%
Other Expenses (after reimbursements) (3) 0.05% 0.00%
- -----------------------------------------------------------------------------
Total Operating Expenses (after fee waiver) (4) 0.75% 0.00%
- -----------------------------------------------------------------------------
</TABLE>
(1) SEI Financial Management Corporation ("SFM") and certain of the sub-
advisers (collectively, "advisers") have agreed to waive, on a voluntary
basis, a portion of their fees, and the management/advisory fees shown
reflect these voluntary waivers. Such fee waivers are voluntary and may be
terminated at any time in the sole discretion of each entity that has
agreed to waive a portion of its fee. Absent such fee waivers,
management/advisory fees would be: Large Cap Value Portfolio, .70%; Large
Cap Growth Portfolio, .75%; Small Cap Value Portfolio, 1.00%; Small Cap
Growth Portfolio, 1.00%; Mid-Cap Portfolio, .75%; Capital Appreciation
Portfolio, .75%; Equity Income Portfolio, .75%; Balanced Portfolio, .75%;
and Capital Growth Portfolio, .50%. Management/Advisory fees, and therefore
Total Operating Expenses, have been restated to reflect current expenses.
(2) The 12b-1 fee shown refers to each Portfolio's current 12b-1 budget for
reimbursement of expenses and, with respect to the Capital Growth
Portfolio, after reimbursement by SFM. SFM reserves the right to terminate
its reimbursement at any time in its sole discretion. Absent such
reimbursement, the 12b-1 fee would be .02% for the Capital Growth
Portfolio. The maximum 12b-1 fees payable by Class A shares of each
Portfolio is .30%.
(3) Absent SFM's reimbursement, other expenses for the Capital Growth Portfolio
would be .04%. SFM reserves the right to terminate its reimbursement at any
time in its sole discretion.
(4) Absent the voluntary fee waivers described above, total operating expenses
for the Class A shares of the Portfolios would be: Large Cap Value
Portfolio, .82%; Large Cap Growth Portfolio, .90%; Small Cap Value
Portfolio, 1.12%; Small Cap Growth Portfolio, 1.13%; Mid-Cap Portfolio,
.92%; Capital Appreciation Portfolio, .89%; Equity Income Portfolio, .88%;
Balanced Portfolio, .90%; and Capital Growth Portfolio, .56%. Additional
information may be found under "The Advisers," "The Sub-Advisers" and "The
Manager and Shareholder Servicing Agent."
EXAMPLE Class A
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
------ ------ ------ -------
<S> <C> <C> <C> <C>
An investor in a Portfolio would pay the follow-
ing expenses on a $1,000 investment assuming
(1) 5% annual return and (2) redemption at the
end of each time period:
Large Cap Value Portfolio $ 4.00 $26.00 $46.00 $101.00
Large Cap Growth Portfolio $ 9.00 $27.00 $47.00 $105.00
Small Cap Value Portfolio $11.00 $35.00 $61.00 $134.00
Small Cap Growth Portfolio $11.00 $35.00 $61.00 $134.00
Mid-Cap Portfolio $ 8.00 $25.00 $43.00 $ 95.00
Capital Appreciation Portfolio $ 9.00 $27.00 $47.00 $104.00
Equity Income Portfolio $ 8.00 $26.00 $46.00 $101.00
Balanced Portfolio $ 8.00 $24.00 $42.00 $ 93.00
Capital Growth Portfolio $ 0.00 $ 0.00 $ 0.00 $ 0.00
- ------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of the expense table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in Class A shares of the Portfolios. The information set
forth in the foregoing table and example relates only to each Portfolio's Class
A shares. Certain Portfolios also offer Class D shares, which are subject to
the same expenses except that Class D shares bear different distribution costs
and additional transfer agent costs and sales loads. A person who purchases
shares through a financial institution may be charged separate fees by that
institution. Additional information may be found under "The Manager and
Shareholder Servicing Agent," "The Advisers," "The Sub-Advisers" and
"Distribution."
Long-term shareholders may eventually pay more than the economic equivalent of
the maximum front-end sales charges otherwise permitted by the Rules of Fair
Practice (the "Rules") of the National Association of Securities Dealers, Inc.
("NASD").
2
<PAGE>
FINANCIAL HIGHLIGHTS ___________________________________________________________
The following information has been audited by Price Waterhouse LLP, the Trust's
independent accountants, as indicated in their report dated November 10, 1995
on the Trust's financial statements as of September 30, 1995 included in the
Trust's Statement of Additional Information under "Financial Statements."
Additional performance information is set forth in the 1995 Annual Report to
Shareholders and is available upon request and without charge by calling 1-800-
342-5734. This table should be read in conjunction with the Trust's financial
statements and notes thereto.
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Ratio of Net
Distributions Investment
Net Asset Net Net Realized and Dividends from Ratio of Income
Value Investment Unrealized from Net Realized Net Asset Net Assets Expenses (Loss)
Beginning Income Gains (Losses) Investment Capital Value End Total End of to Average to Average
of Period (Loss) on Securities Income Gains of Period Return Period (000) Net Assets Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------
LARGE CAP VALUE PORTFOLIO(A)
- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1995 $10.71 $ 0.33 $ 2.44 $(0.33) $(0.15) $13.00 26.83% $331,692 0.76% 2.92%
1994 11.54 0.28 (0.46) (0.27) (0.38) 10.71 (1.64)% 133,178 0.75% 2.51%
1993 12.49 0.31 0.22 (0.33) (1.15) 11.54 4.35% 205,157 0.75% 2.64%
1992 12.05 0.34 0.71 (0.33) (0.28) 12.49 9.17% 242,065 0.75% 2.79%
1991 9.30 0.35 2.92 (0.35) (0.17) 12.05 35.95% 187,876 0.75% 3.11%
1990 11.75 0.33 (2.16) (0.38) (0.24) 9.30 (16.42)% 119,763 0.75% 3.05%
1989 9.45 0.33 2.24 (0.27) -- 11.75 (27.58)% 111,810 0.76% 3.31%
1988 10.99 0.30 (1.52) (0.31) (0.01) 9.45 (10.88)% 44,841 0.75% 3.37%
1987(1) 10.00 0.12 0.96 (0.09) -- 10.99 24.28% 39,234 0.74% 2.82%
- --------------------------------
LARGE CAP GROWTH PORTFOLIO
- --------------------------------
1995(2) $10.00 $ 0.11 $ 2.72 $(0.08) $ -- $12.75 37.90% $297,377 0.85% 1.15%
- --------------------------------
SMALL CAP VALUE PORTFOLIO
- --------------------------------
1995(3) $10.00 $ 0.03 $ 2.19 $(0.03) $ -- $12.19 29.38% $102,975 1.10% 0.26%
- --------------------------------
SMALL CAP GROWTH PORTFOLIO
- --------------------------------
CLASS A
1995 $14.04 $(0.14) $ 5.98 $ -- $ -- $19.88 41.65% $310,238 1.10% (0.60)%
1994 14.67 (0.05) 0.07 -- (0.65) 14.04 0.23% 300,296 1.01% (0.51)%
1993 10.65 (0.02) 4.05 (0.01) -- 14.67 37.81% 193,816 0.97% (0.25)%
1992(4) 10.00 0.02 0.65 (0.02) -- 10.65 15.07% 36,191 0.97% 0.49%
- --------------------
MID-CAP PORTFOLIO
- --------------------
CLASS A
1995 $10.89 $ 0.01 $ 2.14 $ -- $ -- $13.04 19.78% $ 27,898 0.94% 0.04%
1994 12.10 0.01 (0.98) (0.01) (0.23) $10.89 (8.10)% 108,002 0.93% 0.03%
1993(5) 10.00 0.01 2.10 (0.01) -- 12.10 34.06% 57,669 0.90% 0.26%
- -----------------------------------
CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------
CLASS A
1995 $15.18 $ 0.22 $ 2.42 $(0.23) $(0.89) $16.70 19.03% $310,693 0.84% 1.39%
1994 16.36 0.24 (0.22) (0.25) (0.95) 15.18 (0.11)% 729,100 0.79% 1.45%
1993 15.09 0.32 1.68 (0.30) (0.43) 16.36 13.50% 776,745 0.75% 2.06%
1992 14.15 0.30 1.23 (0.30) (0.29) 15.09 11.03% 536,028 0.75% 2.12%
1991 11.21 0.41 3.06 (0.40) (0.13) 14.15 31.69% 248,440 0.75% 3.10%
1990 13.29 0.35 (1.01) (0.39) (1.03) 11.21 (5.75)% 47,250 0.75% 2.95%
1989 10.06 0.31 3.34 (0.28) (0.14) 13.29 37.43% 47,250 0.76% 2.98%
1988(6) 10.00 0.16 0.03 (0.13) -- 10.06 3.34% 17,848 0.76% 3.17%
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
to Average to Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
- -----------------------------------------------
- ---------------------------------
LARGE CAP VALUE PORTFOLIO(A)
- ---------------------------------
<S> <C> <C> <C>
CLASS A
1995 0.82% 2.86% 99%
1994 0.75% 2.51% 67%
1993 0.76% 2.63% 96%
1992 0.80% 2.74% 17%
1991 0.83% 3.03% 25%
1990 0.98% 2.82% 28%
1989 1.26% 2.81% 29%
1988 1.33% 2.79% 44%
1987(1) 1.14% 2.42% 7%
- ---------------------------------
- --------------------------------
LARGE CAP GROWTH PORTFOLIO
- --------------------------------
1995(2) 0.89% 1.11% 44%
- ---------------------------------
SMALL CAP VALUE PORTFOLIO
- --------------------------------
1995(3) 1.12% 0.24% 64%
- -------------------------------
SMALL CAP GROWTH PORTFOLIO
- -------------------------------
CLASS A
1995 1.13% (0.63)% 113%
1994 1.11% (0.61)% 97%
1993 1.14% (0.42)% 85%
1992(4) 1.29% 0.17% 33%
- --------------------
MID-CAP PORTFOLIO
- --------------------
CLASS A
1995 1.09% (0.11)% 108%
1994 1.06% (0.10)% 89%
1993(5) 1.12% 0.04% 87%
- -----------------------------------
CAPITAL APPRECIATION PORTFOLIO
- -----------------------------------
CLASS A
1995 0.89% 1.34% 107%
1994 0.84% 1.40% 109%
1993 0.84% 1.97% 119%
1992 0.88% 1.99% 84%
1991 0.94% 2.91% 83%
1990 1.04% 2.66% 96%
1989 1.50% 2.24% 122%
1988(6) 1.14% 2.79% 87%
</TABLE>
3
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED) _______________________________________________
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Distributions Ratio of Net
Net Asset Net Net Realized and Dividends from Ratio of Investment
Value Investment Unrealized from Net Realized Net Asset Net Assets Expenses Income (Loss)
Beginning Income Gains (Losses) Investment Capital Value End Total End of to Average to Average
of Period (Loss) on Securities Income Gains of Period Return Period (000) Net Assets Net Assets
- --------------------------------------------------------------------------------------------------------------------------------
- ----------------------------
EQUITY INCOME PORTFOLIO
- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
1995 $14.06 $0.55 $2.48 $(0.55) $(0.47) $16.07 23.00% $250,609 0.82% 3.72%
1994 15.00 0.51 (0.38) (0.50) (0.57) 14.06 1.05% 418,207 0.78% 3.68%
1993 13.33 0.54 1.75 (0.51) (0.08) 15.00 17.34% 337,939 0.75% 3.73%
1992 12.36 0.52 1.05 (0.52) (0.08) 13.33 13.03% 178,756 0.75% 4.15%
1991 10.09 0.57 2.54 (0.60) (0.24) 12.36 32.05% 93,552 0.75% 4.99%
1990 12.82 0.62 (2.41) (0.66) (0.28) 10.09 (15.02)% 54,193 0.75% 5.63%
1989 10.37 0.49 2.40 (0.42) (0.02) 12.82 28.53% 30,865 0.76% 5.03%
1988(7) 10.00 0.10 0.34 (0.07) -- 10.37 13.49% 2,910 1.04% 4.74%
- ----------------------
BALANCED PORTFOLIO
- ----------------------
CLASS A
1995 $11.52 $0.34 $1.34 $(0.34) $(0.10) $12.76 15.05% $ 70,464 0.75% 2.92%
1994 12.24 0.23 (0.62) (0.22) (0.11) 11.52 (3.25)% 65,480 0.75% 2.05%
1993 11.35 0.25 1.29 (0.26) (0.39) 12.24 14.49% 33,807 0.75% 2.24%
1992 10.70 0.52 0.73 (0.53) (0.07) 11.35 11.64% 5,974 0.75% 4.83%
1991 9.77 0.65 0.96 (0.68) -- 10.70 15.96% 2,174 0.75% 5.68%
1990(8) 10.00 0.07 (0.30) -- -- 9.77 (15.56)% 459 0.76% 5.66%
- ----------------------------
CAPITAL GROWTH PORTFOLIO
- ----------------------------
CLASS A
1995 $11.55 $0.22 $2.05 $(0.21) $(1.53) $12.08 23.96% $111,272 0.00% 1.97%
1994 13.94 0.20 (0.04) (0.20) (2.35) 11.55 1.51% 132,962 0.00% 1.61%
1993 12.50 0.21 2.66 (0.21) (1.22) 13.94 24.40% 203,001 0.00% 1.63%
1992 11.51 0.55 1.81 (0.57) (0.80) 12.50 18.87% 170,829 0.00% 1.78%
1991 8.38 0.26 3.16 (0.25) (0.04) 11.51 43.00% 123,057 0.00% 2.60%
1990(9) 10.00 0.26 (1.65) (0.23) -- 8.38 (19.27)% 76,876 0.00% 3.73%
<CAPTION>
Ratio of Net
Ratio of Investment
Expenses Income (Loss)
to Average to Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
- -----------------------------------------------
- ----------------------------
EQUITY INCOME PORTFOLIO
- ----------------------------
<S> <C> <C> <C>
CLASS A
1995 0.88% 3.66% 47%
1994 0.84% 3.62% 28%
1993 0.85% 3.63% 39%
1992 0.87% 4.03% 18%
1991 0.86% 4.88% 42%
1990 1.02% 5.36% 33%
1989 2.62% 3.17% 11%
1988(7) 1.18% 4.60% 5%
- ----------------------
BALANCED PORTFOLIO
- ----------------------
CLASS A
1995 0.90% 2.77% 159%
1994 0.91% 1.89% 149%
1993 0.94% 2.05% 109%
1992 1.12% 4.46% 101%
1991 2.54% 3.89% 19%
1990(8) 3.23% 3.19% 0%
- ----------------------------
CAPITAL GROWTH PORTFOLIO
- ----------------------------
CLASS A
1995 0.56% 1.41% 40%
1994 0.54% 1.07% 81%
1993 0.54% 1.09% 120%
1992 0.55% 1.23% 111%
1991 0.59% 2.01% 135%
1990(9) 0.48% 3.25% 99%
</TABLE>
* Sales load is not reflected in total return.
(1) Large Cap Value Class A shares were offered beginning April 20, 1987. All
ratios including total return for that period have been annualized.
(2) Large Cap Growth Class A shares were offered beginning December 20, 1994.
All ratios including total return for that period have been annualized.
(3) Small Cap Value Class A shares were offered beginning December 20, 1994.
All ratios including total return for that period have been annualized.
(4) Small Cap Growth Class A shares were offered beginning April 20, 1992. All
ratios including total return for that period have been annualized.
(5) Mid-Cap Portfolio Class A shares were offered beginning February 16, 1993.
All ratios including total return for that period have been annualized.
(6) Capital Appreciation Class A shares were offered beginning March 1, 1988.
All ratios including total return for that period have been annualized.
(7) Equity Income Class A shares were offered beginning June 2, 1988. All
ratios including total return for that period have been annualized.
(8) Balanced Class A shares were offered beginning September 6, 1992. All
ratios including total return for that period have been annualized.
(9) Capital Growth Class A shares were offered beginning January 4, 1990. All
ratios including total return for that period have been annualized.
(a) During the year ended September 30, 1995, the Value Portfolio changed its
name to the Large Cap Value Portfolio.
4
<PAGE>
THE TRUST ______________________________________________________________________
SEI INSTITUTIONAL MANAGED TRUST (the "Trust") is an open-end investment
management company that offers units of beneficial interest ("shares") in
separate diversified and non-diversified portfolios. Certain portfolios have
two separate classes of shares, Class A and Class D, which provide for
variations in distribution and transfer agent costs, sales charges, voting
rights and dividends. This prospectus offers Class A shares of the Trust's
Large Cap Value, Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-Cap,
Capital Appreciation, Equity Income, Balanced and Capital Growth Portfolios
(each, a "Portfolio," and together, the "Portfolios"). The investment advisers
and investment sub-advisers to the Portfolios are referred to collectively as
the "advisers." Additional information pertaining to the Trust may be obtained
in writing from SEI Financial Services Company, 680 East Swedesford Road,
Wayne, PA 19087-1658, or by calling 1-800-342-5734.
INVESTMENT
OBJECTIVES AND
POLICIES _______________________________________________________________________
LARGE CAP VALUE The investment objective of the Large Cap Value Portfolio is
PORTFOLIO long-term growth of capital and income. There can be no
assurance that the Portfolio will achieve its investment
objective.
Under normal conditions, the Portfolio will invest at
least 65% of its total assets in a diversified portfolio of
high quality, income producing common stocks of large
companies (i.e., companies with market capitalizations of at
least $1 billion) which, in the advisers' opinion, are
undervalued in the marketplace at the time of purchase. In
general, the advisers characterize high quality securities
as those that have above-average reinvestment rates. The
advisers also consider other factors, such as earnings and
dividend growth prospects as well as industry outlook and
market share. Any remaining assets may be invested in
investment grade bonds. Debt securities rated BBB by
Standard & Poor's Corporation ("S&P") or Baa by Moody's
Investors Service, Inc. ("Moody's") lack outstanding
investment characteristics, and have speculative
characteristics as well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by a nationally recognized statistical rating
organization ("NRSRO"), or if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
LSV Asset Management, Mellon Equity Associates and Merus
Capital Management.
LARGE CAP The investment objective of the Large Cap Growth Portfolio
GROWTH is capital appreciation. There can be no assurance that the
PORTFOLIO Portfolio will achieve its investment objective.
Under normal conditions, the Portfolio will invest at
least 65% of its total assets in equity securities of large
companies (i.e., companies with market capitalizations of
more
5
<PAGE>
than $1 billion) which, in the advisers' opinion, possess
significant growth potential. Any remaining assets may be
invested in fixed income securities or in equity securities
of smaller companies that the Portfolio's advisers believe
are appropriate in light of the Portfolio's objective.
Equity securities include common stock, preferred stock,
warrants or rights to subscribe to common stock and, in
general, any security that is convertible into or
exchangeable for common stock. Fixed income securities must
be rated investment grade or better, i.e., rated at least
BBB by S&P or Baa by Moody's. Debt securities rated BBB or
Baa lack outstanding investment characteristics, and have
speculative characteristics as well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by an NRSRO or, if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
Alliance Capital Management L.P. and IDS Advisory Group Inc.
SMALL CAP VALUE The investment objective of the Small Cap Value Portfolio is
PORTFOLIO capital appreciation. There can be no assurance that the
Portfolio will achieve its investment objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in the equity securities of
smaller companies (i.e., companies with market
capitalizations of less than $1 billion) which, in the
advisers' opinion, have prices that appear low relative to
certain fundamental characteristics such as earnings, book
value, or return on equity. Any remaining assets may be
invested in fixed income securities or equity securities of
larger, more established companies that the Portfolio's
advisers believe are appropriate in light of the Portfolio's
objective. Equity securities include common stock, preferred
stock, warrants and rights to subscribe to common stock and,
in general, any security that is convertible into or
exchangeable for common stock. Fixed income securities must
be rated investment grade or better, i.e., rated at least
BBB by S&P or Baa by Moody's. Debt securities rated BBB or
Baa lack outstanding investment characteristics, and have
speculative characteristics as well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the two top rating
categories by an NRSRO or, if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
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The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
1838 Investment Advisors, L.P. and Boston Partners Asset
Management, L.P.
SMALL CAP The investment objective of the Small Cap Growth Portfolio
GROWTH is to provide long-term capital appreciation by investing
PORTFOLIO primarily in equity securities of smaller companies. There
can be no assurance that the Portfolio will achieve its
investment objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in the equity securities of
smaller growth companies (i.e., companies with market
capitalizations less than $1 billion) which, in the
advisers' opinion, are in an early stage or transitional
point in their development and have demonstrated or have the
potential for above average capital growth. The advisers
will select companies that have the potential to gain market
share in their industry, achieve and maintain high and
consistent profitability or produce increases in earnings.
The advisers also seek companies with strong company
management and superior fundamental strength. Small
capitalization companies have the potential to show earnings
growth over time that is well above the growth rate of the
overall economy. Any remaining assets may be invested in the
equity securities of more established companies that the
advisers believe may offer strong capital appreciation
potential due to their relative market position, anticipated
earnings growth, changes in management or other similar
opportunities. Equity securities include common stock,
preferred stock, warrants and rights to subscribe to common
stock and, in general, any security that is convertible into
or exchangeable for common stock.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest all or a
portion of its assets in common stocks of larger, more
established companies, fixed income securities, cash or
money market securities. Fixed income securities will only
be purchased if they are rated investment grade or better.
Investment grade bonds include securities rated at least BBB
by S&P or Baa by Moody's. Debt securities rated BBB or Baa
lack outstanding investment characteristics, and have
speculative characteristics as well. Money market securities
will only be purchased if they have been given one of the
two top ratings by an NRSRO, or if not rated, determined to
be of comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
Nicholas-Applegate Capital Management, Inc. (a Limited
Partnership), Pilgrim Baxter & Associates, Ltd., Apodaca-
Johnston Capital Management, Inc. and Wall Street
Associates.
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MID-CAP The investment objective of the Mid-Cap Portfolio (formerly,
PORTFOLIO the Mid-Cap Growth Portfolio) is to provide long-term
capital appreciation by investing primarily in equity
securities of medium-sized companies. There can be no
assurance that the Portfolio will achieve its investment
objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in equity securities of
medium-sized companies (i.e., companies with market
capitalizations of $500 million to $5 billion). Such
companies are typically well established but have not
reached full maturity and may offer significant growth
potential. The advisers will seek to identify companies
which, in their opinion, will experience accelerating
earnings, increased institutional ownership or strong price
appreciation relative to their industries and broad market
averages.
All of the equity securities in which the Portfolio
invests are traded on registered exchanges or on the over-
the-counter market in the United States. Equity securities
include common stock, warrants and rights to subscribe to
common stock and, in general, any security that is
convertible into or exchangeable for common stock.
Any remaining assets may be invested in equity securities
of larger, more established companies, fixed income
securities or money market securities. Fixed income
securities will only be purchased if they are rated
investment grade or better at time of purchase. Investment
grade bonds include securities rated at least BBB by S&P or
Baa by Moody's. Debt securities rated BBB or Baa lack
outstanding investment characteristics, and have speculative
characteristics as well. Money market securities,
certificates of deposit, banker's acceptances and commercial
paper will only be purchased if they have been given one of
the two top ratings by an NRSRO, or if not rated, determined
to be of comparable quality by the advisers. For temporary
defensive purposes, when the advisers determine that market
conditions warrant, the Portfolio may invest all or a
portion of its assets in equity securities of larger
companies, fixed income securities, cash or money market
instruments. To the extent the Portfolio is engaged in
temporary defensive investments, the Portfolio will not be
pursing its investment objective.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is
Martingale Asset Management, L.P.
CAPITAL The investment objective of the Capital Appreciation
APPRECIATION Portfolio is capital appreciation. There can be no assurance
PORTFOLIO that the Portfolio will achieve its investment objective.
Under normal conditions, at least 65% of the Portfolio
will be invested in a diversified portfolio of common stocks
(and securities convertible into common stock) which, in the
advisers' opinion, are undervalued in the marketplace at the
time of purchase. Dividend income is an incidental
consideration compared to growth of capital. In
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selecting securities for the Portfolio, the advisers will
evaluate factors they believe are likely to affect long-term
capital appreciation such as the issuer's background,
industry position, historical returns on equity and
experience and qualifications of the management team. The
advisers will rotate the Portfolio holdings between various
market sectors based on economic analysis of the overall
business cycle.
Any remaining assets may be invested in investment grade
bonds. Debt securities
rated BBB or Baa lack outstanding investment
characteristics, and have speculative characteristics as
well.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is STI
Capital Management, N.A.
EQUITY INCOME The investment objective of the Equity Income Portfolio is
PORTFOLIO to provide current income and, as a secondary objective,
moderate capital appreciation. There can be no assurance
that the Portfolio will achieve its investment objective.
Under normal conditions, at least 65% of the Portfolio
will be invested in a diversified portfolio of common
stocks. The investment approach employed by the advisers
emphasizes income producing common stocks which, in general,
have above-average dividend yields relative to the stock
market as measured by the Standard and Poor's 500 Index
("S&P 500 Index").
Any remaining assets may be invested in investment grade
bonds. Debt securities rated BBB or Baa lack outstanding
investment characteristics, and have speculative
characteristics as well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by an NRSRO, or if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is
Merus Capital Management.
BALANCED The investment objective of the Balanced Portfolio is total
PORTFOLIO return consistent with the preservation of capital. There
can be no assurance that the Portfolio will achieve its
investment objective.
The Portfolio invests in a combination of undervalued
common stocks and fixed income securities. The Portfolio
seeks strong total return in all market conditions, with a
special emphasis on minimizing interim declines during
falling equity markets. The Portfolio primarily invests in
large capitalization equity securities, intermediate-
maturity fixed income securities and money market
instruments.
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<PAGE>
The average maturity of the fixed income securities in
the Portfolio will, under normal circumstances, be
approximately five years, although this will vary with
changing market conditions.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by an NRSRO, or if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is STI
Capital Management, N.A.
CAPITAL GROWTH The investment objective of the Capital Growth Portfolio is
PORTFOLIO capital appreciation. As a secondary investment objective,
the Portfolio will also seek to realize current income.
There can be no assurance that the Portfolio will achieve
its investment objective.
Under normal market conditions the Portfolio will invest
at least 65% of its total assets in a diversified portfolio
of common stocks of small companies and securities that are
convertible into common stocks that are deemed by the
adviser to offer favorable prospects for growth in market
value. These companies will generally have a market
capitalization of no higher than $1.5 billion.
Convertible bonds and convertible preferred stock are
securities that have characteristics similar to both fixed
income and equity securities. Because of the conversion
feature, the market value of convertible securities tends to
move together with the market value of the underlying common
stocks. As a result, the selection of a convertible security
is based to a greater extent on the potential for capital
appreciation which may exist in the underlying common
stocks. The Portfolio will invest in convertible securities
that are rated at least CCC by S&P or Caa by Moody's or, if
not rated, determined by the advisers to be of comparable
quality. However, the Portfolio may invest only up to 5% of
its net assets in convertible securities that are rated, at
time of purchase, below BBB by S&P or Baa by Moody's or, if
unrated, determined by the advisers to be of comparable
quality. Such securities are considered by S&P and Moody's
to be of poor standing and they may be in default or present
elements of danger to the repayment of principal and
interest. Securities rated BBB may have speculative
characteristics and changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity
to make principal and interest payments than is the case
with higher grade bonds.
Any remaining assets may be invested for income purposes
in bonds rated, at time of purchase, A or better by S&P or
Moody's or, if not rated, determined by the advisers to be
of equal quality.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by an NRSRO, or if not
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rated, determined to be of comparable quality by the
Portfolio's advisers. To the extent the Portfolio is engaged
in temporary defensive investments, the Portfolio will not
be pursuing its investment objective.
As a result of its investment strategies, the Portfolio's
annual portfolio turnover rate is expected to be over 100%.
A high turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is STI Capital
Management, N.A.
GENERAL INVESTMENT
POLICIES _______________________________________________________________________
Borrowing Each Portfolio may borrow money. Interest paid on such
borrowings will reduce a Portfolio's income. A Portfolio
will not purchase securities while its borrowings exceed 5%
of its total assets.
Common Stocks Each Portfolio will invest in common stocks; provided
however, that the Large Cap Value, Small Cap Growth, Capital
Appreciation, Equity Income and Capital Growth Portfolios
may only invest in such securities if they are listed on
registered exchanges or actively traded in the over-the-
counter market.
Investment Each Portfolio may purchase investment company securities,
Company which will result in the layering of expenses. There are
Securities legal limits on the amount of such securities that may be
acquired by a Portfolio.
Options and Each Portfolio may purchase or write options, futures and
Futures options on futures. Risks associated with investing in
options and futures may include lack of a liquid secondary
market, trading restrictions which may be imposed by an
exchange and government regulations which may restrict
trading.
Securities Each Portfolio may lend assets to qualified investors for
Lending the purpose of realizing additional income.
U.S. Dollar The Large Cap Value, Large Cap Growth, Small Cap Value,
Denominated Capital Appreciation, Equity Income, Balanced and Capital
Securities of Growth Portfolios may invest in U.S. dollar denominated
Foreign Issuers securities of foreign issuers, including American Depositary
Receipts, that are traded on registered exchanges or listed
on NASDAQ.
U.S. Treasury The Large Cap Value, Capital Appreciation, Equity Income,
Receipts Capital Growth Portfolios may invest in receipts involving
U.S. Treasury obligations.
When-Issued and Each Portfolio may invest in when-issued and delayed
Delayed- delivery securities.
Delivery
Securities
For additional information regarding the Portfolios'
permitted investments, see "Risk Factors" and "Description
of Permitted Investments and Risk Factors" in this
Prospectus and "Description of Permitted Investments" in the
Statement of Additional Information. For a description of
the above ratings, see "Description of Ratings" in the
Statement of Additional Information.
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RISK FACTORS_______________________________________________________________
Equity Investments in equity securities in general are subject to
Securities market risks that may cause their prices to fluctuate over
time. The value of convertible equity securities is also
affected by prevailing interest rates, the credit quality of
the issuer and any call provision. Fluctuations in the value
of equity securities in which a Portfolio invests will cause
the net asset value of the Portfolio to fluctuate.
Fixed Income The market value of a Portfolio's fixed income investments
Securities will change in response to interest rate changes and other
factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally
rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Securities
with longer maturities are subject to greater fluctuations
in value than securities with shorter maturities. Changes by
an NRSRO in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and
principal also affect the value of these investments.
Changes in the value of a Portfolio's securities will not
affect cash income derived from these securities but will
affect the Portfolio's net asset value.
Securities rated BBB or Baa by an NRSRO (investment grade
bonds) are deemed by these rating services to have
speculative characteristics.
Securities held by a Portfolio that are guaranteed by the
U.S. Government, its agencies or instrumentalities guarantee
only the payment of principal and interest on the guaranteed
securities, and do not guarantee the securities' yield or
value or the yield or value of a Portfolio's shares.
Mortgage- Mortgage-backed securities are subject to prepayment of the
BackedSecurities underlying mortgages. During periods of declining interest
rates, prepayment of mortgages underlying these securities
can be expected to accelerate. When the mortgaged-backed
securities held by a Portfolio are prepaid, the Portfolio
must reinvest the proceeds in securities the yield of which
reflects prevailing interest rates, which may be lower than
the prepaid security.
INVESTMENT
LIMITATIONS ____________________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolios. Fundamental policies
cannot be changed with respect to the Trust or a Portfolio
without the consent of the holders of a majority of the
Trust's or that Portfolio's outstanding shares.
No Portfolio may:
1. With respect to 75% of its assets, (i) purchase the
securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies
or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of
such issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer.
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2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
United States Government, its agencies or
instrumentalities.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Trust's Statement of
Additional Information.
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT _____________________________________________________________
SEI Financial Management Corporation ("SFM") provides the
Trust with overall management services, regulatory
reporting, all necessary office space, equipment, personnel
and facilities, and acts as dividend disbursing agent and
shareholder servicing agent. In addition, SFM also serves as
transfer agent (the "Transfer Agent") to the Class A shares
of the Trust.
For its management services, SFM is entitled to a fee
which is calculated daily and paid monthly at an annual rate
of (i) .50% of the average daily net assets of the Capital
Growth Portfolio; and (ii) of .35% of the average daily net
assets of the Large Cap Value, Large Cap Growth, Small Cap
Value, Small Cap Growth, Mid-Cap, Capital Appreciation,
Equity Income and Balanced Portfolios. SFM may waive all or
a portion of its fee in order to limit the operating
expenses of a Portfolio. Any such waivers are voluntary and
may be terminated at any time in SFM's sole discretion.
For the fiscal year ended September 30, 1995, the
Portfolios paid SFM the following management fees (based on
each Portfolio's average daily net assets after fee
waivers): Large Cap Value Portfolio, .32%; Large Cap Growth,
.35%; Small Cap Value, .34%; Small Cap Growth Portfolio,
.44%; Capital Appreciation Portfolio, .43%; Equity Income
Portfolio, .41%; Balanced Portfolio, .31%; Mid-Cap
Portfolio, .35%; and Capital Growth Portfolio, .00%.
MULTI-MANAGER DIVERSIFICATION _____________________________________________
SFM and STI Capital Management, N.A. serve as investment
advisers (each, an "Adviser," and together, the "Advisers")
to the Portfolios. Within each Portfolio for which SFM acts
as the Adviser, one or more investment sub-advisers (each, a
"Sub-Adviser," and together, the "Sub-Advisers") are
utilized to select that Portfolio's investments. These Sub-
Advisers specialize in the distinct investment style or
styles that each Portfolio is designed to capture.
The Advisers have general oversight responsibility for
the investment advisory services provided to their
respective Portfolios, including formulating the Portfolio's
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investment policies and analyzing economic trends affecting
the Portfolio. In addition, SFM, where it is the Adviser to
a Portfolio, is responsible for (i) managing the allocation
of assets among the Portfolio's Sub-Advisers, (ii) 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 (iii) managing the cash portion
of the Portfolio's assets. In accordance with each
Portfolio's investment objective and policies, and under the
supervision of the Adviser and the Trust's Board of
Trustees, each Sub-Adviser and certain Advisers are
responsible for the day-to-day investment management of all
or a discrete portion of the assets of a Portfolio. The
Advisers and Sub-Advisers are authorized to make investment
decisions for the Portfolios and place orders on behalf of
the Portfolios to effect the investment decisions made. The
Board of Trustees will retain, in its discretion, the
authority to increase or decrease the assets assigned to
each adviser.
In addition, SFM monitors the compliance of each adviser
with regulatory and tax regulations, such as portfolio
concentration and diversification. For the most part
compliance with these requirements by each adviser with
respect to its portion of a Portfolio will assure compliance
by the Portfolio as a whole. In addition, SFM monitors
positions taken by each adviser and will notify advisers of
any developing situations to help ensure that investments do
not run afoul of the short-short test or the wash sale
rules. To the extent that having multiple advisers
responsible for investing separate portions of a Portfolio's
assets creates the need for coordination among the advisers,
there is an increased risk that the Portfolio will not
comply with these regulatory and tax requirements.
It is possible that different advisers for the same
Portfolio could take opposite actions within a short period
of time with respect to a particular security. For example,
one adviser could buy a security for the Portfolio and
shortly thereafter another adviser could sell the same
security from the portion of the Portfolio allocated to it.
If in these circumstances the securities could be
transferred from one adviser's portion of the Portfolio to
another, the Portfolio could avoid transaction costs and
could avoid creating possible wash sales and short-short
gains under the Internal Revenue Code of 1986, as amended
(the "Code"). Such transfers are not practicable but the
advisers and SFM do not believe that there will be material
adverse effects on a Portfolio as a result. First, it does
not appear likely that there will be substantial overlap in
the securities acquired for a Portfolio by the various
advisers. Moreover, the 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 or have significant tax consequences. With respect to
the latter, SFM and the advisers have established procedures
with respect to the short-short test which are designed to
prevent realization of short-short gains in excess of Code
limits. It is true that wash sales could occur in spite of
the efforts of SFM,
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but the Board of Trustees believes that the benefits of
using multi-managers outweighs the consequences of any wash
sales.
SFM is currently seeking an exemptive order from the
Securities and Exchange Commission (the "SEC") that would
permit SFM, with the approval of the Trust's Board of
Trustees, to retain sub-advisers for a Portfolio without
submitting the sub-advisory agreement to a vote of the
Portfolio's shareholders. If granted, the exemptive relief
will permit the non-disclosure of amounts payable by SFM
under such sub-advisory agreements. The Trust will notify
shareholders in the event of any change in the identity of
the sub-adviser for a Portfolio. Until or unless this
exemptive order is granted, if one of the advisers is
terminated or departs from a Portfolio with multiple
advisers, the Portfolio will handle such termination or
departure in one of two ways. First, the Portfolio may
propose that a new adviser be appointed to manage that
portion of the Portfolio's assets managed by the departing
adviser. In this case, the Portfolio would be required to
submit to the vote of the Portfolio's shareholders the
approval of a investment advisory contract with the new
adviser. In the alternative, the Portfolio may decide to
allocate the departing adviser's assets among the remaining
advisers. This allocation would not require new investment
advisory contracts with the remaining advisers, and
consequently no shareholder approval would be necessary.
THE ADVISERS_______________________________________________________________
SEI FINANCIAL SFM serves as investment adviser for the Large Cap Value,
MANAGEMENT Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-
CORPORATION Cap, Capital Appreciation, Equity Income and Balanced
Portfolios. SFM is a wholly-owned subsidiary of SEI
Corporation ("SEI"), a financial services company located in
Wayne, PA. The principal business address of SFM is 680 East
Swedesford Road, Wayne, PA 19087-1658. SEI was founded in
1968 and is a leading provider of investment solutions to
banks, institutional investors, investment advisers, and
insurance companies. Affiliates of SFM have provided
consulting advice to institutional investors for more than
20 years, including advice regarding selection and
evaluation of investment advisers. SFM currently serves as
manager or administrator to more than 26 investment
companies, including more than 220 portfolios, which
investment companies have more than $ billion in assets as
of September 30, 1995.
For these advisory services, SFM is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of.35% of the Large Cap Value Portfolio's average daily
net assets, at an annual rate of .40% of the Large Cap
Growth, Mid-Cap, Capital Appreciation, Equity Income and
Balanced Portfolios' average daily net assets and annual
rate of .65% of Small Cap Value and Small Cap Growth
Portfolios' average daily net assets.
STI CAPITAL STI Capital Management, N.A. ("STI") (formerly, SunBank
MANAGEMENT, Capital Management, N.A.) serves as investment adviser for
N.A. the Capital Growth Portfolio. STI was established in 1934
and is owned by SunBank, Inc., a wholly-owned subsidiary of
Sun Trust Banks, Inc., a
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bank holding company. As of September 30, 1995, STI had
discretionary management authority with respect to
approximately $11.4 billion of assets. The principal
business address of STI is P.O. Box 3786, Orlando, Florida
32802.
Thomas Edgar is Senior Vice President of STI since 1990,
and has managed the Capital Growth Portfolio since its
inception. Prior to joining SunBank, Mr. Edgar served as
Senior Vice President of First Union Bank from 1988 to 1990.
STI is not paid a fee for providing advisory services to
the Capital Growth Portfolio.
The Glass-Steagall Act restricts the securities
activities of banks such as Sun Trust Banks, Inc., but
federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
THE SUB-ADVISERS __________________________________________________________
1838 INVESTMENT 1838 Investment Advisors, L.P. ("1838") serves as Sub-
ADVISORS, L.P. Adviser to a portion of the assets of the Small Cap Value
Portfolio. 1838 is a Delaware limited partnership located at
100 Matsonford Road, Radnor, PA. As of September 30, 1995,
1838 managed $4.3 billion in assets in large and small
capitalization equity, fixed income and balanced account
portfolios. Clients include corporate employee benefit
plans, municipalities, endowments, foundations, jointly
trusteed plans, insurance companies and wealthy individuals.
Edwin B. Powell, Holly L. Guthrie and Joseph T. Doyle,
have served as the portfolio managers to the Small Cap Value
Portfolio since its inception, and since 1995, Cynthia R.
Axlrod also serves as a portfolio manager to the Portfolio.
These individuals work as a team and share responsibility.
Mr. Doyle has been with 1838 since 1988. Mr. Powell and Ms.
Guthrie joined 1838 in 1994. Mr. Powell managed small cap
equity portfolios for Provident Capital Management from 1987
to 1994. Ms. Guthrie managed small cap equity portfolios for
Provident Capital Management from 1992 to 1994. Prior to
that she was employed by CoreStates Investment Advisers from
1987 to 1992 as an equity analyst and portfolio manager.
Prior to joining 1838, Ms. Axlrod was with Friess Associates
from 1992 to 1995. Prior to 1992, Ms. Axlrod was with
Provident Capital Management from 1987 to 1992.
SFM pays 1838 a fee, which is calculated and paid
monthly, based on an annual rate of .50% of the average
monthly market value of the assets of the Small Cap Value
Portfolio managed by 1838. 1838 may waive all or a portion
of its fee in order to limit the operating expenses of the
Portfolio. 1838 reserves the right, in its sole discretion,
to terminate any such voluntary fee waiver at any time.
During the last fiscal year, 1838 received a sub-advisory
fee of .50%.
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ALLIANCE Alliance Capital Management L.P. ("Alliance") serves as Sub-
CAPITAL Adviser to a portion of the assets of the Large Cap Growth
MANAGEMENT L.P. Portfolio. Alliance is a registered investment adviser
organized as a Delaware limited partnership which originated
as Alliance Capital Management Corporation in 1971. Alliance
Capital Management Corporation, an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the
United States, is the general partner of Alliance. As of
September 30, 1995, Alliance managed over $143 billion in
assets. The principal business address of Alliance is 1345
Avenue of the Americas, New York, NY 10105.
The Portfolio has been managed by a committee since its
inception.
SFM pays Alliance the greater of $125,000 or a fee, which
is calculated and paid monthly, based on an annual rate of
.25% of the average monthly market value of the assets of
the Large Cap Growth Portfolio managed by Alliance. Alliance
may waive all or a portion of its fee in order to limit the
operating expenses of the Portfolio. Alliance reserves the
right, in its sole discretion, to terminate any such
voluntary fee waiver at any time. For the fiscal year ended
September 30, 1995, Alliance received a sub-advisory fee of
.20%.
APODACA- Apodaca-Johnston Capital Management, Inc. ("Apodaca") serves
JOHNSTONCAPITAL as Sub-Adviser to a portion of the assets of the Small Cap
MANAGEMENT, Growth Portfolio. Apodaca is a California corporation with
INC. its principal address at 50 California Street, Suite 3315,
San Francisco, CA 94111. Apodaca's predecessor was founded
in 1985, and as of September 30, 1995, Apodaca has
approximately $205 million in assets under management.
Apodaca's clients include individuals, pension and profit
sharing plans, an endowment fund and an investment company
portfolio.
The portion of the Portfolio's assets allocated to
Apodaca has been managed since August, 1995 by Scott
Johnston and Jerry C. Apodaca, Jr. Mr. Johnston, a principal
and 1/3 owner of Apodaca, founded Apodaca's predecessor in
1985, and has 23 years of investment experience. Jerry C.
Apodaca, Jr. joined the firm as a principal and 1/3 owner in
1991, and has 12 years investment management experience.
Before joining Apodaca, Mr. Apodaca was a Vice President of
Marketing at Newport First Investments, Inc.
SFM pays Apodaca a fee, which is calculated and paid
monthly, based on an annual rate of .50% of the average
monthly market value of the assets of the Small Cap Growth
Portfolio managed by Apodaca. For the fiscal year ended
September 30, 1995, Apodaca received a sub-advisory fee of
.50%.
BOSTON PARTNERS Boston Partners Asset Management, L.P. ("Boston") serves as
ASSET Sub-Adviser to a portion of the assets of the Small Cap
MANAGEMENT, Value Portfolio. Boston, a Delaware limited partnership, is
L.P. a registered investment adviser with its principal business
address at One Financial Center, 43rd Floor, Boston, MA
02111. Boston's general partner, Boston Partners, Inc., One
Financial Center, 43rd Floor, Boston, MA 02111, whose sole
shareholder is Desmond J. Heathwood, Chief Investment
Officer of Boston, owns approximately 20% of Boston's
partnership interests. Boston was founded in April, 1995,
and as of September 30, 1995,
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it had approximately $4.2 billion in assets under
management. Boston's clients include corporations,
endowments, foundations, pension and profit sharing plans
and one other investment company.
Boston, along with its general partner and several of its
limited partners, is a defendant in a civil action filed in
April 1995 in Suffolk County (Massachusetts) Superior Court
brought by The Boston Company Asset Management, Inc.
("TBCAM"), the former employer of certain partners of
Boston, captioned, The Boston Company Asset Management, Inc.
v. Desmond J. Heathwood, et. al., Civil Action No. 95-2202.
TBCAM alleges various causes of action arising from the
unsuccessful effort by Desmond J. Heathwood, the sole
shareholder of Boston's general partner, and other former
TBCAM officers, to purchase the assets of TBCAM, and the
resulting formation of Boston. The defendants have filed an
answer which denies all of TBCAM's allegations, and have
asserted counterclaims against TBCAM. The parties are
currently engaged in discovery proceedings, and no trial
date has been set. Boston believes that TBCAM's action is
without merit, and will not have a material adverse effect
on Boston.
The portion of the Small Cap Value Portfolio's assets
allocated to Boston has been managed since November, 1995 by
Wayne J. Archambo, C.F.A. Mr. Archambo has been employed by
Boston since its organization, and has 10 years experience
investing in small capitalization stocks. Prior to joining
Boston, Mr. Archambo was a Senior Vice President and member
of the Equity Policy Committee at The Boston Company Asset
Management, Inc., where he created that firm's Small
Capitalization Value Product and Mid Capitalization Product.
Prior to joining The Boston Company Asset Management, Inc.
in 1989, Mr. Archambo spent six years as a portfolio
manager/analyst for Boston-based Systematic Investors.
SFM pays Boston a fee, which is calculated and paid
monthly, based on an annual rate of .50% of the average
monthly market value of the assets of the Small Cap Value
Portfolio managed by Boston. During the last fiscal year,
Boston did not serve as Sub-Adviser and therefore did not
receive a sub-advisory fee.
IDS ADVISORY IDS Advisory Group Inc. ("IDS") serves as Sub-Adviser to a
GROUP INC. portion of the assets of the Large Cap Growth Portfolio. IDS
is a registered investment adviser and wholly-owned
subsidiary of American Express Financial Corporation. As of
September 30, 1995, IDS managed over $24.9 billion in assets
with $6.3 billion of this total in large capitalization
growth domestic equities. IDS was founded in 1972 to manage
tax-exempt assets for institutional clients. The principal
business address of IDS is IDS Tower 10, Minneapolis, MN
55440.
The day-to-day management of IDS' portion of the Large
Cap Growth Portfolio's investments is the responsibility of
a committee composed of the eight investment portfolio
managers of the equity investment team. No individual person
is primarily responsible for making recommendations to that
committee. IDS has served as sub-adviser to the Large Cap
Growth Portfolio since its inception.
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SFM pays IDS the greater of $125,000 or a fee, which is
calculated and paid monthly, based on an annual rate of .25%
of the average monthly market value of the assets of the
Large Cap Growth Portfolio managed by IDS. IDS may waive all
or a portion of its fee in order to limit the operating
expenses of the Portfolio. IDS reserves the right, in its
sole discretion, to terminate any such voluntary fee waiver
at any time. For the fiscal year ended September 30, 1995,
IDS received a sub-advisory fee of .20%.
LSV ASSET LSV Asset Management ("LSV") serves as Sub-Adviser to a
MANAGEMENT portion of the assets of the Large Cap Value Portfolio. LSV
is a registered investment adviser organized as a Delaware
general partnership in which an affiliate of SFM owns a
majority interest. The general partners of LSV have
developed quantitative value analysis methodology and
software which has been used to manage assets over the past
5 years. The portfolio identified by the model has been
implemented by three institutional clients with aggregate
assets invested of approximately $515 million, including $75
million in a portfolio of U.S. securities. The principal
business address of LSV is 181 W. Madison Avenue, Chicago,
IL 60602.
Investment decisions have been made by the quantitative
computer model since March, 1995. Josef Lakonishok, Andrei
Shleifer and Robert Vishny, officers of LSV, will on a
continuous basis monitor the quantitative analysis model and
based on their ongoing research and statistical analysis
make adjustments to the model. Securities are identified for
purchase or sale for the Portfolio based upon the computer
model and defined variance tolerances. Purchases and sales
are effected by LSV based upon the output from the model.
SFM pays LSV a fee, which is calculated and paid monthly,
based on an annual rate of .20% of the average monthly
market value of the assets of the Large Cap Value Portfolio
managed by LSV. For the fiscal year ended September 30,
1995, LSV received a sub-advisory fee of .20%.
MARTINGALE Martingale Asset Management, L.P. ("Martingale") serves as
ASSET Sub-Adviser to the Mid-Cap Portfolio. Martingale is a
MANAGEMENT, Delaware limited partnership with its principal address at
L.P. 222 Berkeley Street, Boston, MA 02116. Commerz Asset
Management USA Corporation ("CAM") is the general partner
with a controlling interest in Martingale. CAM is an
affiliate of Commerz International Capital Management GmbH
("CICM"), headquartered in Frankfurt, Germany. CICM is the
asset management subsidiary of Commerzbank AG. Martingale
was established in 1987, and as of September 30, 1995, had
assets of approximately $266 million under management.
The assets of the Portfolio have been managed by John
Freeman since June, 1995. Mr. Freeman has 10 years of
investment management experience, including three years
experience investing in mid cap companies. Prior to joining
Martingale in 1992, he worked at BARRA, Inc. as a Manager of
Consulting Services.
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SFM pays Martingale a fee, which is calculated and paid
monthly, based on an annual rate of .25% of the average
monthly market value of the assets of the Mid-Cap Portfolio
managed by Martingale. For the fiscal year ended September
30, 1995, Martingale received a sub-advisory fee of .25%.
MELLON EQUITY Mellon Equity Associates ("Mellon") serves as Sub-Adviser to
ASSOCIATES a portion of the assets of the Large Cap Value Portfolio.
Mellon is a Pennsylvania business trust founded in 1987,
whose sole beneficiary is MBC Investments Corporation, a
wholly-owned subsidiary of the Mellon Bank Corporation.
Mellon is a professional investment counseling firm that
provides investment management services to the equity and
balanced pension, public fund and profit-sharing investment
management markets, and is a registered investment adviser
under the Investment Advisers Act of 1940, as amended (the
"1940 Act"). Mellon had discretionary management authority
with respect to approximately $7.6 billion of assets as of
September 30, 1995. Mellon's predecessor organization had
managed domestic equity tax-exempt institutional accounts
since 1947. The business address for Mellon is 500 Grant
Street, Suite 3700, Pittsburgh, PA 15258.
William P. Rydell and Robert A. Wilk have been the
Portfolio Managers for Mellon's portion of the assets of the
Large Cap Value Portfolio since 1994. Mr. Rydell is the
President and Chief Executive Officer of Mellon, and has
been managing individual and collectivized portfolios at
Mellon since 1982. Mr. Wilk is a Senior Vice President and
Portfolio Manager of Mellon, and has been involved with
securities analysis, quantitative research, asset
allocation, trading and client services at Mellon since
April 1990. Prior to joining Mellon, Mr. Wilk was in charge
of portfolio management and conducted quantitative research
for another investment subsidiary of Mellon Bank
Corporation, Triangle Portfolio Associates.
SFM pays Mellon a fee, which is calculated and paid
monthly, based on an annual rate of .20% of the average
monthly market value of the assets of the Large Cap Value
Portfolio managed by Mellon. For the fiscal year ended
September 30, 1995, Mellon received a sub-advisory fee of
.20%.
The Glass-Steagall Act restricts the securities
activities of banks such as Mellon Bank Corporation, but
federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
MERUS CAPITAL Merus Capital Management ("Merus") serves as Sub-Adviser for
MANAGEMENT the Equity Income Portfolio and also serves as Sub-Adviser
to a portion of the assets of the Large Cap Value Portfolio.
Merus is a division of the Bank of California and provides
equity and fixed-income management services to a broad array
of corporate and municipal clients. As of September 30,
1995, Merus had discretionary management authority with
respect to approximately $6.6 billion of assets. The
principal business address of Merus is 475 Sansome Street,
San Francisco, CA 94111.
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The Equity Income Portfolio has been managed by a
committee since its inception. The Large Cap Value Portfolio
has been managed by a committee since December, 1994.
SFM pays Merus a fee, which is calculated and paid
monthly, based on an annual rate of .25% of the average
monthly market value of the assets of the Equity Income
Portfolio managed by Merus and an annual rate of .20% of the
average monthly market value of assets of the Large Cap
Value Portfolio managed by Merus.
For the fiscal year ended September 30, 1995, Merus
received a sub-advisory fee of .25% for the Equity Income
Portfolio and .20% for the Large Cap Value Portfolio.
The Glass-Steagall Act restricts the securities
activities of banks such as the Bank of California, but
federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
NICHOLAS- Nicholas-Applegate Capital Management, Inc. ("Nicholas-
APPLEGATE Applegate") serves as Sub-Adviser to a portion of the assets
CAPITAL of the Small Cap Growth Portfolio. Nicholas-Applegate also
MANAGEMENT, served as the Mid-Cap Portfolio's adviser until June, 1995.
INC.
Nicholas-Applegate has operated as an investment adviser
which provides investment services to employee benefit
plans, endowments, foundations, other institutions and since
April 20, 1987, investment companies. As of September 30,
1995, Nicholas-Applegate had discretionary management
authority with respect to approximately $27 billion of
assets. The principal business address of Nicholas-Applegate
is 600 West Broadway, 29th Floor, San Diego, CA 92101.
Nicholas-Applegate, pursuant to a partnership agreement, is
controlled by its general partner Nicholas-Applegate Capital
Management Holdings, L.P., a California Limited Partnership
controlled by Arthur E. Nicholas.
Nicholas-Applegate manages its portion of the Small Cap
Growth Portfolio through its systematic-driven management
team under the supervision of Mr. Nicholas, founder and
Chief Investment Officer of the firm. Nicholas-Applegate's
systems driven investment team, headed by Lawrence S.
Speidell, has been primarily responsible for the day-to-day
management of the Portfolio since March 1994. Mr. Speidell
has been a Portfolio Manager and investment team leader with
Nicholas-Applegate since March 1994. Prior to joining
Nicholas-Applegate, he was an institutional portfolio
manager with Batterymarch Financial Management.
SFM pays Nicholas-Applegate a fee, which is calculated
and paid monthly, based on an annual rate of .50% of the
average monthly market value of the assets of the Small Cap
Growth Portfolio managed by Nicholas-Applegate. For the
fiscal year ended September 30, 1995, Nicholas-Applegate
received a sub-advisory fee of .50%.
For the fiscal year ended September 30, 1995, the Mid-Cap
Portfolio paid Nicholas Applegate an advisory fee of .45% of
its average daily net assets.
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PILGRIM BAXTER
& ASSOCIATES, Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") serves
LTD. as Sub-Adviser to a portion of the assets of the Small Cap
Growth Portfolio.
Pilgrim Baxter is a professional investment management
firm and registered investment adviser that, along with its
predecessors, has been in business since 1982. The
controlling shareholder of Pilgrim Baxter is United Asset
Management ("UAM"), a New York Stock Exchange listed holding
company principally engaged, through affiliated firms, in
providing institutional investment management firms. UAM's
corporate office is located at One International Place,
Boston, MA 02110. As of September 30, 1995, Pilgrim Baxter
had discretionary management with respect to approximately
$6.5 billion in assets. In addition to advising the
Portfolio, Pilgrim Baxter provides advisory services to
pension and profit-sharing plans, charitable institutions,
corporations, individual investors, trusts and estates, and
other investment companies. The principal address of Pilgrim
Baxter is 1255 Drummers Lane, Suite 300, Wayne, PA 19087.
Michael D. Jones, CFA, joined Pilgrim Baxter in February,
1995 as a portfolio manager. Mr. Jones has been managing the
Small Cap Growth Portfolio since April 15, 1995. Prior to
joining Pilgrim Baxter, Mr. Jones was a portfolio manager
with The Bank of New York from June 1990 to January 1995.
SFM pays Pilgrim Baxter a fee, which is calculated and
paid monthly, based on an annual rate of .50% of the average
monthly market value of the assets of the Small Cap Growth
Portfolio managed by Pilgrim Baxter. For the fiscal year
ended September 30, 1995, Pilgrim Baxter received a sub-
advisory fee of .50%.
STI CAPITAL STI Capital Management, N.A. ("STI") serves as Sub-Adviser
MANAGEMENT, to the Capital Appreciation and Balanced Portfolios. For a
N.A. description of STI, please see "The Advisers" section.
Anthony R. Gray is Chairman and Chief Investment Officer
of STI since 1987, and has managed the Capital Appreciation
and Balanced Portfolios since their inception. Mr. Gray
joined SunBank in 1979 as Director of Research of the Trust
Investment Division.
SFM pays STI a fee, which is calculated and paid monthly,
based on an annual rate of .25% of the average monthly
market value of the assets of the Capital Appreciation and
Balanced Portfolios managed by STI. For the fiscal year
ended September 30, 1995, STI received a sub-advisory fee of
.25% for the Capital Appreciation Portfolio and .25% for the
Balanced Portfolio.
WALL STREET Wall Street Associates ("WSA") serves as Sub-Adviser to a
ASSOCIATES portion of the assets of the Small Cap Growth Portfolio. WSA
is organized as a corporation with its principal business
address at 1200 Prospect Street, Suite 100, La Jolla, CA
92037. WSA was founded in 1987, and as of September 30,
1995, had approximately $925 million in assets under
management. WSA provides investment advisory services for
institutional clients, an investment partnership for which
it serves as general partner, a group trust, for which it
serves as sole investment manager, and an offshore fund for
foreign investors for which it serves as the sole investment
manager.
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William Jeffrey III, Kenneth F. McCain, and Richard S.
Coons, each of whom own 1/3 of WSA, serve as Portfolio
Managers for the portion of the Portfolio's assets allocated
to WSA since August, 1995. Each is a principal of WSA and,
together, they have 73 years of investment management
experience.
WSA has served as an investment sub-adviser to only one
registered investment company (since June 28, 1995), and, as
such, does not have extensive experience advising a highly
regulated entity such as an investment company. This may
present additional risks for the Portfolio.
SFM pays WSA a fee, which is calculated and paid monthly,
based on an annual rate of .50% of the average monthly
market value of the assets of the Small Cap Growth Portfolio
managed by WSA. For the fiscal year ended September 30,
1995, WSA received a sub-advisory fee of .50%.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan" or
the "Class D Plan," and collectively, the "Plans") pursuant
to Rule 12b-1 under 1940 Act.
The Class A Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio, on an
annualized basis, provided those expenses are permissible as
to both type and amount under a budget adopted by the Board
of Trustees, including those who are not interested persons
and have no financial interest in the Plan or any related
agreement ("Qualified Trustees"). Pursuant to state law, the
Distributor has voluntarily agreed to limit the
distribution-related expenses of the Class A shares of each
Portfolio to .30%. Currently, the budget (shown here as a
percentage of average daily net assets) for each Portfolio
is set at an annual rate as follows: Large Cap Value
Portfolio, 0.07%; Large Cap Growth Portfolio, 0.06%, Small
Cap Value Portfolio, 0.05%; Small Cap Growth Portfolio,
0.08%; Mid-Cap Portfolio, 0.12%; Capital Appreciation
Portfolio, 0.09%; Equity Income Portfolio, 0.09%; and
Balanced Portfolio, 0.10%. SFM has voluntarily agreed to
waive its fee and to reimburse the Capital Growth Portfolio
for its expenses in order to limit the operating expenses of
the Portfolio to not more than 0.00% on an annualized basis.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the distribution
of the Trust's shares, advertising expenses and promotional
and sales expenses including expenses for travel,
communication and compensation and benefits for sales
personnel. Distribution expenses not attributable to a
specific Portfolio are allocated among each of the
Portfolios
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of the Trust on the basis of their average net assets. The
Trust is not obligated to reimburse the Distributor for any
expenditures in excess of the approved budget.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
PURCHASE AND REDEMPTION OF SHARES ______________________________________________
Financial institutions may acquire Class A shares of the
Portfolios for their own accounts or as record owner on
behalf of fiduciary, agency or custody accounts by placing
orders with SFM. Institutions that use certain SEI
proprietary systems may place orders electronically through
those systems. State securities laws may require banks and
financial institutions purchasing shares for their customers
to register as dealers pursuant to state laws. Financial
institutions may impose an earlier cut-off time for receipt
of purchase orders directed through them to allow for
processing and transmittal of these orders to SFM for
effectiveness the same day. Financial institutions that
purchase shares for the accounts of their customers may
impose separate charges on these customers for account
services. Shares of the Portfolios are offered only to
residents of states in which the shares are eligible for
purchase.
Shares of each Portfolio may be purchased or redeemed on
days on which the New York Stock Exchange is open for
business ("Business Days").
Shareholders who desire to purchase shares for cash must
place their orders with SFM prior to 4:00 p.m. Eastern time
on any Business Day for the order to be accepted on that
Business Day. Cash investments must be transmitted or
delivered in federal funds to the wire agent on the next
Business Day following the day the order is placed. The
Trust reserves the right to reject a purchase order when the
Distributor determines that it is not in the best interest
of the Trust or its shareholders to accept such purchase
order. In addition, because excessive trading (including
short-term "market timing" trading) can hurt a Portfolio's
performance, each Portfolio may refuse purchase orders from
any shareholder account if the accountholder has been
advised that previous purchase and redemption transactions
were considered excessive in number or amount. Accounts
under
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common control or ownership, including those with the same
taxpayer identification number and those administered so as
to redeem or purchase shares based upon certain
predetermined market indicators, will be considered one
account for this purpose.
Purchases will be made in full and fractional shares of
the Portfolios calculated to three decimal places. The Trust
will send shareholders a statement of shares owned after
each transaction. The purchase price of shares is the net
asset value next determined after a purchase order is
received and accepted by the Trust. The net asset value per
share of each Portfolio is determined by dividing the total
market value of a Portfolio's investment and other assets,
less any liabilities, by the total outstanding shares of
that Portfolio. Net asset value per share is determined
daily at the close of business of the New York Stock
Exchange (currently, 4:00 p.m. Eastern time) on any Business
Day.
The market value of each portfolio security is obtained
by SFM from an independent pricing service. Securities
having maturities of 60 days or less at the time of purchase
will be valued using the amortized cost method (described in
the Statement of Additional Information). The pricing
service relies primarily on prices of actual market
transactions as well as trader quotations. However, the
pricing service may use a matrix system to determine
valuations of equity and fixed income securities. This
system considers such factors as security prices, yields,
maturities, call features, ratings and developments relating
to specific securities in arriving at valuations. The
procedures used by the pricing service and its valuations
are reviewed by the officers of the Trust under the general
supervision of the Trustees.
Shareholders who desire to redeem shares of the
Portfolios must place their redemption orders with SFM prior
to 4:00 p.m. Eastern time on any Business Day. The
redemption price is the net asset value per share of the
Portfolio next determined after receipt by SFM of the
redemption order. Payment on redemption will be made as
promptly as possible and, in any event, within seven days
after the redemption order is received.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor SFM will be responsible for
any loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and SFM will
each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine,
including requiring a form of personal identification prior
to acting upon instructions received by telephone and
recording telephone instructions.
If market conditions are extraordinarily active, or other
extraordinary circumstances exist, and shareholders
experience difficulties placing redemption orders by
telephone, shareholders may wish to consider placing their
order by other means.
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PERFORMANCE ____________________________________________________________________
From time to time, a Portfolio may advertise yield and total
return. These figures will be based on historical earnings
and are not intended to indicate future performance. The
yield of a Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified
30-day period. The yield is calculated by assuming that the
same amount of income generated by the investment during
that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.
The total return of a Portfolio refers to the average
compounded rate of return to a hypothetical investment, net
of any sales charge imposed on Class A shares redeemed at
the end of the specified period covered by the total return
figure, for designated time periods (including but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions. The total return of a Portfolio may also be
quoted as a dollar amount or on an aggregate basis, an
actual basis, without inclusion of any front-end or
contingent sales charges, or with a reduced sales charge in
advertisements distributed to investors entitled to a
reduced sales charge.
A Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. A Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. A Portfolio may quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. A
Portfolio may use long term performance of these capital
markets to demonstrate general long-term risk versus reward
scenarios and could include the value of a hypothetical
investment in any of the capital markets. A Portfolio may
also quote financial and business publications and
periodicals as they relate to fund management, investment
philosophy, and investment techniques.
A Portfolio may quote various measures of volatility and
benchmark correlation in advertising and may compare these
measures to those of other funds. Measures of volatility
attempt to compare historical share price fluctuations or
total returns to a benchmark while measures of benchmark
correlation indicate how valid a comparative benchmark might
be. Measures of volatility and correlation are calculated
using averages of historical data and cannot be calculated
precisely.
For each Portfolio, the performance of Class A shares
will normally be higher than the performance of the Class D
shares of that Portfolio because of the additional
distribution and transfer agent expenses charged to Class D
shares.
Additional performance information is set forth in the
1995 Annual Report to Shareholders and is available upon
request and without charge by calling 1-800-342-5734.
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TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state or local income tax treatment of a
Portfolio or its shareholders. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state and local taxes. State and
local tax consequences of an investment in a Portfolio may
differ from the federal income tax consequences described
below. Additional information concerning taxes is set forth
in the Statement of Additional Information.
Tax Status of A Portfolio is treated as a separate entity for federal
the Portfolios income tax purposes and is not combined with the Trust's
other portfolios. Each Portfolio intends to continue to
qualify for the special tax treatment afforded regulated
investment companies ("RICs") under Subchapter M of the
Code, so as to be relieved of federal income tax on net
investment company taxable income (including the excess, if
any, of net short-term capital gains over net long-term
capital losses) and net capital gains (the excess of net
long-term capital gains over net short-term capital losses)
distributed to shareholders.
Tax Status of Each Portfolio distributes substantially all of its net
Distributions investment company taxable income to shareholders. Dividends
from a Portfolio's net investment company taxable income are
taxable to its shareholders as ordinary income (whether
received in cash or in additional shares), and generally
will qualify for the dividends-received deduction for
corporate shareholders to the extent that such dividends are
derived from dividends paid on domestic and equity
securities owned by the Portfolio. Distributions of net
capital gains are also not eligible for the corporate
dividends-received deduction and are taxable to shareholders
as long-term capital gains, regardless of how long a
shareholder has held shares. Each Portfolio will make annual
reports to shareholders of the federal income tax status of
all distributions.
Dividends declared by a Portfolio in October, November or
December of any year and payable to shareholders of record
on a date in such a month will be deemed to have been paid
by the Portfolio and received by the shareholders on
December 31 of the year declared if paid by a Portfolio at
any time during the following January.
Each Portfolio intends to make sufficient distributions
to avoid liability for the federal excise tax applicable to
RICs.
Each sale, exchange or redemption of a Portfolio's shares
generally is a taxable transaction to the shareholder.
GENERAL INFORMATION ____________________________________________________________
The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated October 20, 1986. The
Declaration of Trust permits the Trust to offer separate
series ("portfolios") of shares and different classes of
each portfolio. All consideration received by the Trust for
shares of any class of any portfolio and all assets of such
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portfolio or class belong to that portfolio or class,
respectively, and would be subject to the liabilities
related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organization expenses.
Certain shareholders in one or more of the Portfolios may
obtain asset allocation services with respect to their
investments in such Portfolios. If a sufficient amount of a
Portfolio's assets are subject to such asset allocation
services, a Portfolio may incur higher transaction costs and
a higher portfolio turnover rate than would otherwise be
anticipated as a result of redemptions and purchases of
Portfolio shares pursuant to such services.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholders of each Portfolio or class will vote
separately on matters pertaining solely to that Portfolio or
class, such as any distribution plan. As a Massachusetts
business trust, the Trust is not required to hold annual
meetings of shareholders, but approval will be sought for
certain changes in the operation of the Trust and for the
election of Trustees under certain circumstances. In
addition, a Trustee may be removed by the remaining Trustees
or by shareholders at a special meeting called upon written
request of shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a
meeting is requested, the Trust will provide appropriate
assistance and information to the shareholders requesting
the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to the Manager, SEI
Inquiries Financial Management Corporation, 680 East Swedesford Road,
Wayne, PA 19087-1658.
Dividends Substantially all of the net investment income (exclusive of
capital gains) of each Portfolio is periodically declared
and paid as a dividend. Dividends currently are paid on a
quarterly basis for each Portfolio. Currently, net capital
gains (the excess of net long-term capital gain over net
short-term capital loss) realized, if any, will be
distributed at least annually.
Shareholders automatically receive all income dividends
and capital gain distributions in additional shares at the
net asset value next determined following the record date,
unless the shareholder has elected to take such payment in
cash. Shareholders may change their election by providing
written notice to SFM at least 15 days prior to the
distribution.
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Dividends and capital gains of each Portfolio are paid on
a per-share basis. The value of each share will be reduced
by the amount of any such payment. If shares are purchased
shortly before the record date for a dividend or capital
gains distribution, a shareholder will pay the full price
for the share and receive some portion of the price back as
a taxable dividend or distribution.
The dividends on Class D shares of each Portfolio that
offers Class D shares will normally be lower than those on
Class A shares because of the additional distribution and
transfer agent expenses charged to Class D shares.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Price Waterhouse LLP serves as the independent accountants
Accountants of the Trust.
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, PA 19101 (the "Custodian"), acts as
custodian of the Trust's assets. The Custodian holds cash,
securities and other assets of the Trust as required by the
1940 Act.
DESCRIPTION
OF PERMITTED
INVESTMENTS
AND RISK FACTORS ____________________________________________________________
The following is a description of the permitted investment
practices for the Portfolios, and the associated risk
factors:
American ADRs are securities, typically issued by a U.S. financial
Depositary institution (a "depositary"), that evidence ownership
Receipts interests in a security or a pool of securities issued by a
("ADRs") foreign issuer and deposited with the depositary. ADRs may
be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by
the issuer of the security underlying the receipt and a
depositary, whereas an unsponsored facility may be
established by a depositary without participation by the
issuer of the underlying security.
Holders of unsponsored depositary receipts generally bear
all the costs of the unsponsored facility. The depositary of
an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the
issuer of the deposited security or to pass through, to the
holders of the receipts, voting rights with respect to the
deposited securities. ADRs that are not listed or traded on
an exchange can be purchased over the counter. Prices for
such ADRs are determined by market makers.
Convertible Convertible securities are corporate securities that are
Securities exchangeable for a set number of another security at a
prestated price. Convertible securities typically have
characteristics similar to both fixed-income and equity
securities. Because of the conversion feature, the market
value of a convertible security tends to move with the
market value of the underlying stock. The value of a
convertible security is also affected by prevailing interest
rates, the credit quality of the issuer, and any call
provisions.
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Derivatives Derivatives are securities that derive their value from
other securities. The following are considered derivative
securities: options on futures, futures, options (i.e., puts
and calls), swap agreements, mortgage-backed securities
(e.g., CMOs, REMICs, IOs and POs), when-issued securities
and forward commitments, floating and variable rate
securities, convertible securities, "stripped" U.S. Treasury
securities (e.g., Receipts and STRIPs), privately issued
stripped securities (e.g., TGRs, TRs and CATS). See
elsewhere in this "Description of Permitted Investments and
Risk Factors" for discussions of these various instruments,
and see "Investment Objectives and Policies" for more
information about any investment policies and limitations
applicable to their use.
Equity Equity securities represent ownership interests in a company
Securities or corporation and include common stock, preferred stock,
and warrants and other rights to acquire such instruments.
Changes in the value of portfolio securities will not
necessarily affect cash income derived from these securities
but will affect a Portfolio's net asset value.
Investments in small capitalization companies involves
greater risk than is customarily associated with larger,
more established companies due to the greater business risks
of small size, limited markets and financial resources,
narrow product lines and the frequent lack of depth of
management. The securities of small companies are often
traded over-the-counter and may not be traded in volumes
typical on a national securities exchange. Consequently, the
securities of smaller companies may have limited market
stability and may be subject to more abrupt or erratic
market movements than securities of larger, more established
growth companies or the market averages in general.
Fixed Income Fixed income securities are debt obligations issued by
Securities corporations, municipalities and other borrowers. Moreover,
while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are
also subject to greater market fluctuations as a result of
changes in interest rates.
Futures and Futures contracts provide for the future sale by one party
Options on and purchase by another party of a specified amount of a
Futures specific security at a specified future time and at a
specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise price
during the term of the option. A Portfolio may use futures
contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to a
particular market or instrument. A Portfolio will minimize
the risk that it will be unable to close out a futures
contract by only entering into futures contracts that are
traded on national futures exchanges.
A stock index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery
of an amount of cash equal to a specified dollar amount
times the difference between the stock index value at the
close of trading of the contract and the price at which the
futures contract is originally struck. No physical delivery
of the stocks comprising the index is made; generally
contracts are closed out
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prior to the expiration date of the contract. No price is
paid upon entering into futures contracts. Instead, a
Portfolio would be required to deposit an amount of cash or
U.S. Treasury securities known as "initial margin."
Subsequent payments, called "variation margin," to and from
the broker, would be made on a daily basis as the value of
the futures position varies (a process known as "marking to
market"). The margin is in the nature of a performance bond
or good-faith deposit on a futures contract.
In order to avoid leveraging and related risks, when a
Portfolio purchases futures contracts, it will collateralize
its position by depositing an amount of cash or liquid, high
grade debt securities, equal to the market value of the
futures positions held, less margin deposits, in a
segregated account with the Trust's custodian. Collateral
equal to the current market value of the futures position
will be marked to market on a daily basis.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets
and movements in interest rates, (2) there may be an
imperfect or no correlation between the changes in market
value of the securities held by the Portfolio and the prices
of futures and options on futures, (3) there may not be a
liquid secondary market for a futures contract or option,
(4) trading restrictions or limitations may be imposed by an
exchange, and (5) government regulations may restrict
trading in futures contracts and options on futures.
Illiquid Illiquid securities are securities that cannot be disposed
Securities of within seven business days at approximately the price at
which they are being carried on the Portfolio's books. An
illiquid security includes a demand instrument with a demand
notice period exceeding seven days, where there is no
secondary market for such security, and repurchase
agreements with durations over 7 days in length.
Money Market Money market securities are high-quality, dollar-
Instruments denominated, short-term debt instruments. They consist of:
(i) bankers' acceptances, certificates of deposits, notes
and time deposits of highly-rated U.S. banks and U.S.
branches of foreign banks; (ii) U.S. Treasury obligations
and instrumentalities of the U.S. Government; (iii) high-
quality commercial paper issued by U.S. and foreign
corporations; (iv) debt obligations with a maturity of one
year or less issued by corporations with outstanding high-
quality commercial papers; and (v) repurchase agreements
involving any of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Mortgage-Backed Mortgage-backed securities are instruments that entitle the
Securities holder to a share of all interest and principal payments
from mortgages underlying the security. The mortgages
backing these securities include conventional thirty-year
fixed-rate mortgages, graduated payment mortgages, and
adjustable rate mortgages. Prepayment of mortgages which
underlie securities purchased at a premium often results in
capital losses, while prepayment of mortgages purchased at a
discount often results in capital gains. Because of these
unpredictable prepayment characteristics, it is often not
possible to predict accurately the average life or realized
yield of a particular issue.
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Government Pass-Through Securities: These are securities
that are issued or guaranteed by a U.S. Government agency
representing an interest in a pool of mortgage loans. The
primary issuers or guarantors of these mortgage-backed
securities are GNMA, FNMA and FHLMC. FNMA and FHLMC
obligations are not backed by the full faith and credit of
the U.S. Government as GNMA certificates are, but FNMA and
FHLMC securities are supported by the instrumentalities'
right to borrow from the U.S. Treasury. GNMA, FNMA and FHLMC
each guarantees timely distributions of interest to
certificate holders. GNMA and FNMA also each guarantees
timely distributions of scheduled principal. FHLMC has in
the past guaranteed only the ultimate collection of
principal of the underlying mortgage loan; however, FHLMC
now issues mortgage-backed securities (FHLMC Gold PCs) which
also guarantee timely payment of monthly principal
reductions. Government and private guarantees do not extend
to the securities' value, which is likely to vary inversely
with fluctuations in interest rates.
Private Pass-Through Securities: These are mortgage-
backed securities issued by a non-governmental entity, such
as a trust. These securities include collateralized mortgage
obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs") that are rated in one of the top two
rating categories. While they are generally structured with
one or more types of credit enhancement, private pass-
through securities typically lack a guarantee by an entity
having the credit status of a governmental agency or
instrumentality.
Collateralized Mortgage Obligations ("CMOs"): CMOs are
debt obligations or multiclass pass-through certificates
issued by agencies or instrumentalities of the U.S.
Government or by private originators or investors in
mortgage loans. In a CMO, series of bonds or certificates
are usually issued in multiple classes. Principal and
interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in
a variety of ways. Each class of a CMO, often referred to as
a "tranche," is issued with a specific fixed or floating
coupon rate and has a stated maturity or final distribution
date. Principal payments on the underlying mortgage assets
may cause CMOs to be retired substantially earlier then
their stated maturities or final distribution dates,
resulting in a loss of all or part of any premium paid.
REMICs: A REMIC is a CMO that qualifies for special tax
treatment under the Internal Revenue Code and invests in
certain mortgages principally secured by interests in real
property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or
"residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC
represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or FNMA, FHLMC or
GNMA-guaranteed mortgage pass-through certificates. For
FHLMC REMIC Certificates, FHLMC guarantees the timely
payment of interest, and also guarantees the payment of
principal as payments are required to be made on the
underlying mortgage participation certificates. FNMA REMIC
Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA.
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Parallel Pay Securities; PAC Bonds: Parallel pay CMOs and
REMICS are structured to provide payments of principal on
each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated
maturity date or final distribution date of each class,
which must be retired by its stated maturity date or final
distribution date, but may be retired earlier. Planned
Amortization Class CMOs ("PAC Bonds") generally require
payments of a specified amount of principal on each payment
date. PAC Bonds are always parallel pay CMOs with the
required principal payment on such securities having the
highest priority after interest has been paid to all
classes.
REITs: REITs are trusts that invest primarily in
commercial real estate or real estate-related loans. The
value of interests in REITs may be affected by the value of
the property owned or the quality of the mortgages held by
the trust. See also, "Real Estate Securities."
Stripped Mortgage-Backed Securities ("SMBs"): SMBs are
usually structured with two classes that receive specified
proportions of the monthly interest and principal payments
from a pool of mortgage securities. One class may receive
all of the interest payments and is thus termed an interest-
only class ("IO"), while the other class may receive all of
the principal payments and is thus termed the principal-only
class ("PO"). The value of IOs tends to increase as rates
rise and decrease as rates fall; the opposite is true of
POs. SMBs are extremely sensitive to changes in interest
rates because of the impact thereon of prepayment of
principal on the underlying mortgage securities can
experience wide swings in value in response to changes in
interest rates and associated mortgage prepayment rates.
During times when interest rates are experiencing
fluctuations, such securities can be difficult to price on a
consistent basis. The market for SMBs is not as fully
developed as other markets; SMBs therefore may be illiquid.
Risk Factors: Due to the possibility of prepayments of
the underlying mortgage instruments, mortgage-backed
securities generally do not have a known maturity. In the
absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate
is a function of an assumption regarding anticipated
prepayment patterns, based upon current interest rates,
current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus
different market participants can produce different average
life estimates with regard to the same security. There can
be no assurance that estimated average life will be a
security's actual average life.
Options A put option gives the purchaser of the option the right to
sell, and the writer of the option the obligation to buy,
the underlying security at any time during the option
period. A call option gives the purchaser of the option the
right to buy, and the writer of the option the obligation to
sell, the underlying security at any time during the option
period. The premium paid to the writer is the consideration
for undertaking the obligations under the option contract.
The initial purchase (sale) of an option contract is an
"opening transaction." In order to close out an option
position, a portfolio may enter into a "closing
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transaction," which is simply the sale (purchase) of an
option contract on the same security with the same exercise
price and expiration date as the option contract originally
opened.
A Portfolio may purchase put and call options to protect
against a decline in the market value of the securities in
its portfolio or to anticipate an increase in the market
value of securities that a Portfolio may seek to purchase in
the future. A Portfolio purchasing put and call options pays
a premium therefor. If price movements in the underlying
securities are such that exercise of the options would not
be profitable for the Portfolio, loss of the premium paid
may be offset by an increase in the value of the Portfolio's
securities or by a decrease in the cost of acquisition of
securities by the Portfolio.
A Portfolio may write covered call options as a means of
increasing the yield on its portfolio and as a means of
providing limited protection against decreases in its market
value. When a portfolio sells an option, if the underlying
securities do not increase or decrease to a price level that
would make the exercise of the option profitable to the
holder thereof, the option generally will expire without
being exercised and the Portfolio will realize as profit the
premium received for such option. When a call option of
which a portfolio is the writer is exercised, the Portfolio
will be required to sell the underlying securities to the
option holder at the strike price, and will not participate
in any increase in the price of such securities above the
strike price. When a put option of which the Portfolio is
the writer is exercised, the Portfolio will be requited to
purchase the underlying securities at the strike price,
which may be in excess of the market value of such
securities.
A Portfolio may purchase and write options on an exchange
or over-the-counter. Over-the-counter options ("OTC
options") differ from exchange-traded options in several
respects. They are transacted directly with dealers and not
with a clearing corporation, and therefore entail the risk
of non-performance by the dealer. OTC options are available
for a greater variety of securities and for a wider range of
expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded
on an exchange, pricing is done normally by reference to
information from a market maker. It is the position of the
Securities and Exchange Commission that OTC options are
generally illiquid.
A Portfolio may purchase and write put and call options
on indices and enter into related closing transactions. Put
and call options on indices are similar to options on
securities except that options on an index give the holder
the right to receive, upon exercise of the option, an amount
of cash if the closing level of the underlying index is
greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal
to the difference between the closing price of the index and
the exercise price of the option, expressed in dollars
multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain
or loss depends on price movements in the particular market
represented by the index generally, rather than the price
movements in individual securities. A Portfolio may choose
to terminate an
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option position by entering into a closing transaction. The
ability of a Portfolio to enter into closing transactions
depends upon the existence of a liquid secondary market for
such transactions.
All options written on indices must be covered. When a
Portfolio writes an option on an index, it will establish a
segregated account containing cash or liquid high grade debt
securities with its custodian in an amount at least equal to
the market value of the option and will maintain the account
while the option is open or will otherwise cover the
transaction.
Risk Factors: Risks associated with options transactions
include: (1) the success of a hedging strategy may depend on
an ability to predict movements in the prices of individual
securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation
between the movement in prices of options and the securities
underlying them; (3) there may not be a liquid secondary
market for options; and (4) while a Portfolio will receive a
premium when it writes covered call options, it may not
participate fully in a rise in the market value of the
underlying security.
Receipts Receipts are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments
of interest or principal. This discount is accreted over the
life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax
purposes. Because of these features, such securities may be
subject to greater interest rate volatility than interest
paying Permitted Investments. See also "Taxes."
Repurchase Arrangements by which a Portfolio obtains a security and
Agreements simultaneously commits to return the security to the seller
at an agreed upon price (including principal and interest)
on an agreed upon date within a number of days from the date
of purchase. The Custodian or its agent will hold the
security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to
102% of the purchase price. The Portfolio bears a risk of
loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral securities
or if the Portfolio realizes a loss on the sale of the
collateral securities. The advisers will enter into
repurchase agreements on behalf of the Portfolio only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the
Trustees. Repurchase agreements are considered loans under
the 1940 Act.
Securities In order to generate additional income, a Portfolio may lend
Lending securities which it owns pursuant to agreements requiring
that the loan be continuously secured by collateral
consisting of cash, securities of the U.S. Government or its
agencies equal to at least 100% of the market value of the
securities lent. A Portfolio continues to receive interest
on the securities lent while simultaneously earning interest
on the investment of cash collateral. Collateral is marked
to market daily. There may be risks of delay in recovery of
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the securities or even loss of rights in the collateral
should the borrower of the securities fail financially or
become insolvent.
Securities of There are certain risks connected with investing in foreign
Foreign Issuers securities. These include risks of adverse political and
economic developments (including possible governmental
seizure or nationalization of assets), the possible
imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting
requirements, the possibility that there will be less
information on such securities and their issuers available
to the public, the difficulty of obtaining or enforcing
court judgments abroad, restrictions on foreign investments
in other jurisdictions, difficulties in effecting
repatriation of capital invested abroad, and difficulties in
transaction settlements and the effect of delay on
shareholder equity. Foreign securities may be subject to
foreign taxes, and may be less marketable than comparable
U.S. securities. The value of a Portfolio's investments
denominated in foreign currencies will depend on the
relative strengths of those currencies and the U.S. dollars,
and a Portfolio may be affected favorably or unfavorably by
changes in the exchange rates or exchange control
regulations between foreign currencies and the U.S. dollar.
Changes in foreign currency exchange rates also may affect
the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income
and gains if any, to be distributed to shareholders by a
Portfolio.
Time Deposits Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Like a certificate of
deposit, it earns a specified rate of interest over a
definite period of time; however, it cannot be traded in the
secondary market. Time deposits are considered to be
illiquid securities.
U.S. Government Obligations issued or guaranteed by agencies of the U.S.
Agency Government, including, among others, the Federal Farm Credit
Obligations Bank, the Federal Housing Administration and the Small
Business Administration, and obligations issued or
guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full
faith and credit of the U.S. Treasury (e.g., Government
National Mortgage Association), others are supported by the
right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank), while still others are supported
only by the credit of the instrumentality (e.g., Federal
National Mortgage Association). Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be
a guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might
not be a market and thus no means of realizing on the
obligation prior to maturity. Guarantees as to the timely
payment of principal and interest do not extend to the value
or yield of these securities nor to the value of the Fund's
shares.
U.S. Treasury U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury and separately traded interest
and principal component parts of such obligations that are
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transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal
Securities ("STRIPS").
U.S. Treasury U. S. Treasury receipts are interests in separately traded
Receipts interest and principal component parts of U.S. Treasury
obligations that are issued by banks or brokerage firms and
are created by depositing U.S. Treasury notes and
obligations into a special account at a custodian bank. The
custodian holds the interest and principal payments for the
benefit of the registered owners of the certificates of
receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains
the register. Receipts include "Treasury Receipts" ("TRs"),
"Treasury Investment Growth Receipts" ("TIGRs") "Liquid
Yield Option Notes" ("LYONs") and "Certificates of Accrual
on Treasury Securities" ("CATS"). TIGRs and CATS are
interests in private proprietary accounts while TRs and
STRIPS are interest in accounts sponsored by the U.S.
Treasury.
Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest, and may involve a conditional or unconditional
Instruments demand feature. Such instruments bear interest at rates
which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on
interest rate changes. There is a risk that the current
interest rate on such obligations may not accurately reflect
existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.
Warrants Warrants are instruments giving holders the right, but not
the obligation, to buy shares of a company at a given price
during a specified period.
When-Issued and When-issued or delayed delivery basis transactions involve
Delayed the purchase of an instrument with payment and delivery
Delivery taking place in the future. Delivery of and payment for
Securities these securities may occur a month or more after the date of
the purchase commitment. A Portfolio will maintain with the
custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date, and no interest accrues to
a Portfolio before settlement. These securities are subject
to market fluctuation due to changes in market interest
rates, and it is possible that the market value at the time
of settlement could be higher or lower than the purchase
price if the general level of interest rates has changed.
Although a Portfolio generally purchases securities on a
when-issued or forward commitment basis with the intention
of actually acquiring securities, a Portfolio may dispose of
a when-issued security or forward commitment prior to
settlement if the advisers deem it appropriate to do so.
Additional information on permitted investments and risk
factors can be found in the Statement of Additional
Information.
37
<PAGE>
TABLE OF CONTENTS ______________________________________________________________
<TABLE>
<S> <C>
The Trust................................................................. 5
Investment Objectives and Policies........................................ 5
General Investment Policies............................................... 11
Risk Factors.............................................................. 12
Investment Limitations.................................................... 12
The Manager and Shareholder Servicing Agent................................ 13
Multi-Manager Diversification.............................................. 13
The Advisers............................................................... 15
The Sub-Advisers........................................................... 16
Distribution............................................................... 23
Purchase and Redemption of Shares.......................................... 24
Performance................................................................ 26
Taxes...................................................................... 27
General Information........................................................ 27
Description of Permitted Investments and Risk Factors...................... 29
</TABLE>
<PAGE>
PROSPECTUS
JANUARY 31, 1996
- --------------------------------------------------------------------------------
CORE FIXED INCOME PORTFOLIO
BOND PORTFOLIO
HIGH YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely the information about the above-referenced
portfolios. Please read this Prospectus carefully before investing, and keep it
on file for future reference. It contains information that can help you decide
if a Portfolio's investment goals match your own.
A Statement of Additional Information dated January 31, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, PA 19087-1658, or by calling 1-800-437-6016. The
Statement of Additional Information is incorporated into this Prospectus by
reference.
SEI Institutional Managed Trust (the "Trust") is an open-end investment
management company, certain classes of which offer shareholders a convenient
means of investing their funds in one or more professionally managed
diversified and non-diversified portfolios of securities. The Core Fixed
Income, Bond and High Yield Bond Portfolios, investment portfolios of the
Trust, offer two classes of shares, Class A shares and Class D shares. Class D
shares differ from Class A shares primarily in the imposition of sales charges
and the allocation of certain distribution expenses and transfer agent fees.
Class D shares are available through SEI Financial Services Company (the
Trust's distributor) and through participating broker-dealers, financial
institutions and other organizations. This Prospectus offers the Class D shares
of the fixed income portfolios (each, a "Portfolio," and together, the
"Portfolios") listed above.
THE HIGH YIELD BOND PORTFOLIO INVESTS PRIMARILY AND MAY INVEST ALL OF ITS
ASSETS IN LOWER RATED BONDS, COMMONLY REFERRED TO AS "JUNK BONDS." THESE
SECURITIES ARE SPECULATIVE AND ARE SUBJECT TO GREATER RISK OF LOSS OF PRINCIPAL
AND INTEREST THAN ARE INVESTMENTS IN HIGHER RATED BONDS. BECAUSE INVESTMENT IN
SUCH SECURITIES ENTAILS GREATER RISKS, INCLUDING RISK OF DEFAULT, AN INVESTMENT
IN THE HIGH YIELD BOND PORTFOLIO SHOULD NOT CONSTITUTE A COMPLETE INVESTMENT
PROGRAM AND MAY NOT BE APPROPRIATE FOR ALL INVESTORS. INVESTORS SHOULD
CAREFULLY CONSIDER THE RISKS POSED BY AN INVESTMENT IN THE HIGH YIELD BOND
PORTFOLIO BEFORE INVESTING. SEE "INVESTMENT OBJECTIVES AND POLICIES," "RISK
FACTORS" AND THE "APPENDIX."
TO THE EXTENT THAT OHIO LAW REQUIRES SUCH A LIMITATION, THE HIGH YIELD BOND
PORTFOLIO WILL NOT INVEST MORE THAN FIFTY PERCENT OF ITS TOTAL ASSETS IN THE
SECURITIES OF ISSUERS WHICH, TOGETHER WITH ANY PREDECESSORS, HAVE A RECORD OF
LESS THAN THREE YEARS CONTINUOUS OPERATION OR ISSUERS WHICH ARE RESTRICTED AS
TO DISPOSITION, INCLUDING RULE 144A SECURITIES. THE HIGH YIELD PORTFOLIO MAY
INVEST IN THESE SECURITIES TO A GREATER EXTENT THAN INVESTMENT COMPANIES THAT
MEET ALL OF THE REQUIREMENTS OF SECTION 1301:6-3-09(E)(12) OF THE OHIO
ADMINISTRATIVE CODE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE
SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
- --------------------------------------------------------------------------------
<PAGE>
..........................
TABLE OF
CONTENTS
<TABLE>
................................................................................
<S> <C>
Fund Highlights........................................................ 2
Shareholder
Transaction
Expenses.............................................................. 4
Annual Operating
Expenses.............................................................. 4
Your Account and
Doing Business
with Us............................................................... 6
Investment
Objectives and
Policies.............................................................. 9
General
Investment
Policies.............................................................. 12
Risk Factors........................................................... 12
Investment
Limitations........................................................... 15
The Manager and
Shareholder
Servicing Agent....................................................... 15
Multi-Manager
Diversification....................................................... 16
The Adviser............................................................ 18
The Sub-Advisers....................................................... 18
Distribution........................................................... 20
Performance............................................................ 22
Taxes.................................................................. 23
Additional
Information
About Doing
Business With Us...................................................... 24
General
Information........................................................... 28
Description of
Permitted
Investments and
Risk Factors.......................................................... 30
Appendix............................................................... A-1
</TABLE>
...............................................................................
................................................................................
HOW TO READ THIS PROSPECTUS ____________________________________________________
This Prospectus gives you information that you should know about the Portfolios
before investing. Brief descriptions are also provided throughout the
Prospectus to better explain certain key points. To find these helpful guides,
look for this symbol. [SYMBOL APPEARS HERE]
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the Class D shares of
the Trust's Core Fixed Income, Bond and High Yield Bond Portfolios. This
summary is qualified in its entirety by reference to the more detailed
information provided elsewhere in this Prospectus and in the Statement of
Additional Information.
INVESTMENT Below are the investment objectives and policies for each
OBJECTIVES AND Portfolio. For more information, see "Investment Objectives
POLICIES and Policies," "Risk Factors" and "Description of Permitted
Investments and Risk Factors."
CORE FIXED The Core Fixed Income Portfolio seeks to provide current
INCOME income consistent with the preservation of capital by
PORTFOLIO investing primarily in fixed income securities that are
rated investment grade or better.
BOND PORTFOLIO The Bond Portfolio seeks to provide current income con-
sistent with the preservation of capital by investing
primarily in fixed income securities that are rated invest-
ment grade or better.
HIGH YIELD The High Yield Bond Portfolio seeks to maximize total return
BOND PORTFOLIO by investing primarily in a diversified portfolio of
high yield, lower rated fixed income securities.
UNDERSTANDING Shares of the Portfolios, like shares of any mutual fund, will
RISK fluctuate in value and when you sell your shares, they may be
worth more or less than what you paid for them. The value of
fixed income funds and the fixed income securities in which
they invest tend to vary inversely with interest rates and may
be affected by other market and economic factors as well. The
High Yield Bond Portfolio invests primarily in lower
rated bonds which are considered speculative and are subject
to greater loss of principal and interest than investments in
higher rated bonds. There can be no assurance that the Port-
folios will achieve their investment objectives.
2
<PAGE>
..........................
INVESTMENT
PHILOSOPHY
[SYMBOL APPEARS HERE]
Believing that
no single in-
vestment manager
can deliver out-
standing perfor-
mance in every
investment cate-
gory, only those
advisers who
have distin-
guished them-
selves within
their areas of
specialization
are selected to
advise our mu-
tual funds.
..........................
MANAGEMENT SEI FINANCIAL MANAGEMENT CORPORATION ("SFM") serves as the
PROFILE investment adviser to the Core Fixed Income, Bond and High
Yield Bond Portfolios. BEA ASSOCIATES serves as investment
sub-adviser to the High Yield Bond Portfolio. BLACK ROCK FI-
NANCIAL MANAGEMENT, INC., FIRSTAR INVESTMENT RESEARCH & MAN-
AGEMENT COMPANY and WESTERN ASSET MANAGEMENT each serve as
investment sub-adviser to a portion of the assets of Core
Fixed Income Portfolio. BOATMEN'S TRUST COMPANY
serves as the investment sub-
adviser to the Bond Portfo-
lio. SFM serves as the man-
ager and shareholder servic-
ing agent of the Trust. DST
Systems, Inc. acts as the
transfer agent (the "Transfer
Agent") of the Class D shares
of the Trust. SEI Financial
Services Company acts as dis-
tributor of the Trust's
shares. See "The Manager and
Shareholder Servicing Agent,"
"The Advisers," and "The Sub-
Advisers" and "Distribution."
YOUR ACCOUNT You may open an account with just $1,000, and make additional
AND DOING investments with as little as $100. Class D shares of the
BUSINESS WITH Portfolios are offered at net asset value per share plus a
US maximum sales charge at the time of purchase of 4.50%.
Shareholders who purchase higher amounts may qualify for a
reduced sales charge. Redemptions of a Portfolio's shares are
made at net asset value per share. See "Your Account and
Doing Business with Us" and "Additional Information About
Doing Business with Us."
DIVIDENDS Substantially all of the net investment income (exclusive of
capital gains) of each Portfolio is distributed in the form
of dividends that will be paid daily. Any realized net
capital gain is distributed at least annually. Distributions
are paid in additional shares unless the shareholder elects
to take the payment in cash. See "Dividends."
INFORMATION/ For more information about Class D shares, call 1-800-437-
SERVICE 6016.
CONTACTS
3
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price)_____Class D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH
CORE FIXED YIELD
INCOME BOND BOND
PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------- ---------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on Purchases 4.50% 4.50% 4.50%
Maximum Sales Charge Imposed on Reinvested Div-
idends None None None
Redemption Fees (1) None None None
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- -------------------------------------------------------------------------------
Management/Advisory Fees (after fee waiver) (2) .43% .41% .65%
12b-1 Fees (after fee waiver) (3) .33% .35% .35%
Other Expenses .19% .19% .25%
- -------------------------------------------------------------------------------
Total Operating Expenses (after fee waiver) (4) .95% .95% 1.25%
- -------------------------------------------------------------------------------
</TABLE>
(1) A charge, currently $10.00, is imposed on wires of redemption proceeds of
the Portfolios' Class D shares.
(2) SEI Financial Management Corporation ("SFM") has agreed to waive, on a
voluntary basis, a portion of its management fee, and the
management/advisory fee shown reflect this voluntary waiver. SFM reserves
the right to terminate this waiver at any time in its sole discretion.
Absent such fee waiver, management/advisory fees would be: Core Fixed
Income Portfolio, .555%; Bond Portfolio, .555%; and High Yield Bond
Portfolio, .8375%. Management/Advisory fees, and therefore Total Operating
Expenses, have been restated to reflect current expenses.
(3) The 12b-1 fees shown include both the Portfolio's current 12b-1 budget for
reimbursement of expenses and the Distributor's voluntary waiver of a
portion of its compensatory fee. The Distributor reserves the right to
terminate its waiver at any time in its sole discretion. The maximum 12b-1
fees payable by the Class D shares of each Portfolio are .60%.
(4) Absent the voluntary fee waivers described above, total operating expenses
for Class D shares would be: Core Fixed Income Portfolio, 1.13%; Bond
Portfolio, 1.15%; and High Yield Bond Portfolio, 1.49%. Additional
information may be found under "The Adviser," "The Sub-Advisers" and "The
Manager and Shareholder Servicing Agent."
EXAMPLE
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
------ ------ ------- -------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on
a $1000 investment assuming
(1) imposition of the maximum sales load, (2)
5% annual return and (3) redemption at the end
of each time period:
Core Fixed Income Portfolio $54.00 $74.00 $ 95.00 $156.00
Bond Portfolio $54.00 $74.00 $ 95.00 $156.00
High Yield Bond Portfolio $57.00 $83.00 $111.00 $189.00
- -------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of the expense table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in Class D shares of each Portfolio. A person who purchases
shares through an account with a financial institution may be charged separate
fees by that institution. The information set forth in the foregoing table and
example relates only to the Class D shares. Each Portfolio also offers Class A
shares, which are subject to the same expenses, except that there are no sales
loads, different distribution costs and no transfer agent costs. Additional
information may be found under "The Manager and Shareholder Servicing Agent,"
"The Adviser," "The Sub-Advisers" and "Distribution."
The rules of the Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for reduced sales charges. See "Your Account and Doing Business with
Us" and "Additional Information About Doing Business with Us."
Long-term shareholders may pay more than the economic equivalent of the maximum
front-end sales charges otherwise permitted by the Rules of Fair Practice (the
"Rules") of the National Association of Securities Dealers, Inc. ("NASD").
4
<PAGE>
FINANCIAL HIGHLIGHTS ___________________________________________________________
The following information has been audited by Price Waterhouse LLP, the Trust's
independent accountants, as indicated in their report dated November 10, 1995
on the Trust's financial statements as of September 30, 1995 included in the
Trust's Statement of Additional Information under "Financial Statements."
Additional performance information is set forth in the 1995 Annual Report to
Shareholders and is available upon request and without charge by calling 1-800-
437-6016. This table should be read in conjunction with the Trust's financial
statements and notes thereto.
FOR A CLASS D SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Distributions Ratio of Net
Net Asset Net Realized and Dividends from Ratio of Investment
Value Net Unrealized from Net Realized Net Asset Net Assets Expenses Income
Beginning Investment Gains (Losses) Investment Capital Value End Total End of to Average to Average
of Period Income on Securities Income Gains of Period Return Period (000) Net Assets Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
- ------------------------------
CORE FIXED INCOME PORTFOLIO(A)
- ------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS D
1995 $ 9.65 $0.62 $ 0.79 $(0.62) $ -- $10.44 15.24%* $209 0.95% 6.17%
1994(1) 9.77 0.21 (0.15) (0.18) -- 9.65 3.29%* 44 0.92% 5.91%
<CAPTION>
Ratio of
Net
Ratio of Investment
Expenses Income
to Average to Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
- ----------------------------------------------------------
- ------------------------------
CORE FIXED INCOME PORTFOLIO(A)
- ------------------------------
<S> <C> <C> <C>
CLASS D
1995 1.09% 6.03% 294%
1994(1) 1.00% 5.83% 370%
<CAPTION>
Distributions Ratio of Net
Net Asset Net Realized and Dividends from Ratio of Investment
Value Net Unrealized from Net Realized Net Asset Net Assets Expenses Income
Beginning Investment Gains (Losses) Investment Capital Value End Total End of to Average to Average
of Period Income on Securities Income Gains of Period Return Period (000) Net Assets Net Assets
- -------------------------------------------------------------------------------------------------------------------------------
- --------------
BOND PORTFOLIO
- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS D
1995 $ 9.94 $0.62 $ 1.00 $(0.65) $(0.07) $10.84 16.97% $121 0.95% 5.96%
1994 12.24 0.58 (1.64) (0.56) (0.68) 9.94 (9.37)%* 106 0.95% 5.38%
1993(2) 12.07 0.07 0.15 (0.05) -- 12.24 14.75% 2 0.95% 4.66%
<CAPTION>
Ratio of
Net
Ratio of Investment
Expenses Income
to Average to Average
Net Assets Net Assets Portfolio
(Excluding (Excluding Turnover
Waivers) Waivers) Rate
- ----------------------------------------------------------
- --------------
BOND PORTFOLIO
- --------------
<S> <C> <C> <C>
CLASS D
1995 1.10% 5.81% 79%
1994 1.86% 4.47% 73%
1993(2) 1.06% 4.55% 47%
</TABLE>
* Sales load is not reflected in total return.
(1) Core Fixed Income Class D shares were offered beginning May 9, 1994. All
ratios including total return for that period have been annualized.
(2) Bond Class D shares were offered beginning August 16, 1993. All ratios
including total return for that period have been annualized.
5
<PAGE>
...............................................................................
[SYMBOL APPEARS HERE]
WHAT IS AN
INTERMEDIARY?
Any entity, such as a bank, broker-dealer, other financial institution, as-
sociation or organization which has entered into an arrangement with the Dis-
tributor to sell Class D shares to its custom-ers.
................................................................................
YOUR ACCOUNT AND DOING BUSINESS WITH US____________________________________
Class D shares of the Portfolios are sold on a continuous basis and may be
purchased directly from the Trust's Distributor, SEI Financial Services
Company. Shares may also be purchased through financial institutions, broker-
dealers, or other organizations which have established a dealer agreement or
other arrangement with SEI Financial Services Company ("Intermediaries"). For
more information about the following topics, see "Additional Information About
Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY, Class D shares of the Portfolios may be purchased through
SELL Intermediaries which provide various levels of shareholder
AND EXCHANGE services to their customers. Contact your Intermediary for
SHARES THROUGH information about the services available to you and for
INTERMEDIARIES specific instructions on how to buy, sell and exchange shares.
To allow for processing and transmittal of orders to the
Distributor on the same day, Intermediaries may impose
earlier cut-off times for receipt of purchase orders.
Certain Intermediaries may charge customer account fees.
Information concerning shareholder services and any
charges will be provided to the customer by the
Intermediary. Certain of these Intermediaries may be required
to register as broker/dealers under state law.
The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should call
the Intermediary to request this change.
HOW TO BUY Application forms can be obtained by calling 1-800-437-6016.
SHARES FROM Class D shares of the Portfolios are offered only to
THE residents of states in which the shares are eligible for
DISTRIBUTOR purchase.
Opening an
Account
By Check
You may buy Class D shares by mailing a completed application
and a check (or other negotiable bank instrument or money
order) payable to "Class D shares (Portfolio Name)." If you
send a check that does not clear, the purchase will be
canceled and you could be liable for any losses or fees
incurred.
By Fed Wire To buy shares by Fed Wire, call toll-free 1-800-
437-6016.
Automatic You may systematically buy Class D shares through deductions
Investment from your checking or savings accounts, provided these
Plan ("AIP") accounts are maintained through banks which are part of the
Automated Clearing House ("ACH") system. You may purchase
shares on a fixed schedule (semi-monthly or monthly) with
amounts as low as $25, or as high as $100,000. Upon notice,
the amount you commit to AIP may be changed or canceled at
any time. The AIP is subject to account minimum initial
puchase amounts and minimum maintained balance requirements
discussed under "Additional Information About Doing Business
With Us."
6
<PAGE>
OTHER
INFORMATION Your purchase is subject to a sales charge which varies
ABOUT BUYING depending on the size of your purchase. The following table
SHARES shows the regular sales charges on Class D shares of the
Portfolios to a "single purchaser," together with the
Sales Charges reallowance paid to dealers and the agency commission paid
to brokers (collectively the "commission"):
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
SALES CHARGE REALLOWANCE AND
SALES CHARGE AS AS APPROPRIATE BROKERAGE COMMISSION
A PERCENTAGE OF PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE NET AMOUNT INVESTED OFFERING PRICE
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
less than $50,000 4.50% 4.71% 4.00%
$50,000 but less than $100,000 4.00% 4.17% 3.50%
$100,000 but less than $250,000 3.50% 3.63% 3.00%
$250,000 but less than $500,000 2.50% 2.56% 2.00%
$500,000 but less than $1,000,000 2.00% 2.04% 1.75%
$1,000,000 but less than $2,000,000 1.00% 1.01% 1.00%
$2,000,000 but less than $4,000,000 .50% .50% .50%
Over $4,000,000 none none none
------------------------------------------------------------------------------------------
</TABLE>
The commissions shown in the table above apply to sales
through Intermediaries. Under certain circumstances,
commissions up to the amount of the entire sales charge may
be re-allowed to certain Intermediaries, who might then be
deemed to be "underwriters" under the Securities Act of
1933, as amended.
Right of A Right of Accumulation allows you, under certain
Accumulation circumstances, to combine your current purchase with the
current market value of previously purchased shares of each
Portfolio and Class D shares of other portfolios ("Eligible
Portfolios") in order to obtain a reduced sales charge.
Letter of A Letter of Intent allows you, under certain circumstances,
Intent to aggregate anticipated purchases over a 13-month period to
obtain a reduced sales charge.
Sales Charge Certain shareholders may qualify for a sales charge waiver.
Waiver To determine whether or not you qualify for a sales charge
waiver see "Additional Information About Doing Business with
Us." Shareholders who qualify for a sales charge waiver must
notify the Transfer Agent before purchasing shares.
7
<PAGE>
................................................................................
[SYMBOL APPEARS HERE]
HOW DOES AN
EXCHANGE
TAKE PLACE?
When making an exchange, you authorize the sale of your shares of one or more
Portfolios in order to purchase the shares of another Portfolio. In other
words, you are executing a sell order and then a buy order. This sale of your
shares is a taxable event which could result in a taxable gain or loss.
................................................................................
................................................................................
EXCHANGING Once good payment for your shares has been received and
SHARES accepted (i.e., an account has been established), you may
When Can You exchange some or all of your shares for Class D shares of
Exchange other portfolios. Exchanges are made at net asset value plus
Shares? any applicable sales charge.
When Do Sales Portfolios that are not money market portfolios currently
Charges Apply impose a sales charge on Class D shares. If you exchange
to an into one of these "non-money market" portfolios, you will
Exchange? have to pay a sales charge on any portion of your exchanged
Class D shares for which you have not previously paid a
sales charge.
If you previously paid a sales charge on your Class D
shares, no additional sales charge will be assessed when you
exchange those Class D shares for other Class D shares.
If you buy Class D shares of a "non-money market" portfolio
and you receive a sales charge waiver, you will be deemed to
have paid the sales charge for purposes of this exchange
privilege. In calculating any sales charge payable on your
exchange, the Trust will assume that the first shares you
exchange are those on which you have already paid a sales
charge. Sales charge waivers may also be available under
certain circumstances described in the SEI Funds' prospectuses.
The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice. The
Trust also reserves the right to deny an exchange request
made within 60 days of the purchase of a "non-money market"
portfolio.
Requesting an To request an exchange, you must provide proper instructions
Exchange of in writing to the Transfer Agent. Telephone exchanges will
Shares also be accepted if you previously elected this option on
your account application.
In the case of shares held "of record" by an Intermediary
but beneficially owned by you, you should contact the
Intermediary who will contact the Transfer Agent and effect
the exchange on your behalf.
8
<PAGE>
...............................................................................
[SYMBOL APPEARS HERE]
WHAT IS A
SIGNATURE
GUARANTEE?
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities ex-change or asso-ciation, clear-ing agency or savings
associa-tion. A notary public cannot provide a signa-ture guarantee.
................................................................................
................................................................................
[SYMBOL APPEARS HERE]
WHAT ARE
INVESTMENT
OBJECTIVES AND
POLICIES?
A Portfolio's investment ob-jective is a statement of what it seeks to achieve.
It is important to make sure that the investment objective matches your own
financial needs and circumstanc-es. The invest-ment policies section spells out
the types of securities in which each Port-folio invests.
...............................................................................
................................................................................
HOW TO SELL To sell your shares, a written request for redemption in good
SHARES THROUGH order must be received by the Transfer Agent. Valid written
THE DISTRIBUTOR redemption requests will be effective on receipt. All
shareholders of record must sign the redemption request.
By Mail For information about the proper form of redemption
requests, call 1-800-437-6016. You may also have the proceeds
mailed to an address of record or mailed (or sent by ACH) to a
commercial bank account previously designated on the Account
Application or specified by written instruction to the Transfer
Agent. There is no charge for having redemption requests mailed
to a designated bank account.
By Telephone You may sell your shares by telephone if you previously
elected that option on the Account Application. You may have
the proceeds mailed to the address of record, wired or sent by
ACH to a commercial bank account previously designated on the
Account Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of a
valid telephone request for redemption. Wire redemption
requests may be made by calling 1-800-437-6016. A wire
redemption charge (presently $10.00) will be deducted from the
amount of the redemption.
Systematic You may establish a systematic withdrawal plan for an account
Withdrawal with a $10,000 minimum balance. Under the plan, redemptions
Plan ("SWP") can be automatically processed from accounts (monthly,
quarterly, semi-annually or annually) by check or by ACH with
a minimum redemption amount of $50.
INVESTMENT OBJECTIVES ANDPOLICIES ______________________________________________
CORE FIXED The investment objective of the Core Fixed Income
INCOME Portfolio (formerly the Intermediate Bond Portfolio)
PORTFOLIO is current income consistent with the preservation of
capital. There can be no assurance that the Portfolio
will achieve its investment objective.
Under normal market conditions, the Portfolio will invest at
least 65% of its total assets in fixed income securities that
are rated investment grade or better, i.e., rated in one of the
four highest rating categories by a nationally recognized
statistical rating organization ("NRSRO") at the time of
purchase, or, if
9
<PAGE>
not rated, determined to be of comparable quality by the
advisers. Fixed income securities rated in the fourth
highest rating category lack outstanding investment
characteristics, and have speculative characteristics as
well. Fixed income securities in which the Portfolio may
invest consist of: (i) corporate bonds and debentures, (ii)
obligations issued by the United States Government, its
agencies and instrumentalities, (iii) municipal securities
of issuers located in all fifty states, the District of
Columbia, Puerto Rico and other U.S. territories and
possessions, consisting of municipal bonds, municipal notes,
tax-exempt commercial paper and municipal lease obligations,
(iv) receipts involving U.S. Treasury obligations, (v)
mortgage-backed securities, (vi) asset-backed securities,
and (vii) zero coupon, pay-in-kind or deferred payment
securities.
Any remaining assets may be invested in (i) interest-only
and principal-only components of mortgage-backed securities,
(ii) mortgage dollar rolls, (iii) securities issued on a
when-issued and delayed-delivery basis, including TBA
mortgage-backed securities, (iv) warrants, (v) money market
securities, and (vi) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures (including
futures on U.S. Treasury obligations and Eurodollar
instruments) and options on futures.
Duration is a measure of the expected life of a fixed
income security on a cash flow basis. Most debt obligations
provide interest payments and a final payment at maturity.
Some also have put or call provisions that allow the
security to be redeemed at specified dates prior to
maturity. Duration incorporates yield, coupon interest
payments, final maturity and call features into a single
measure. The advisers therefore consider it a more accurate
measure of a security's expected life and sensitivity to
interest rate changes than is the security's term to
maturity.
The Core Fixed Income Portfolio invests in a portfolio
with a dollar-weighted average duration that will, under
normal market conditions, stay within plus or minus 20% of
what the advisers believe to be the average duration of the
domestic bond market as a whole. The advisers base their
analysis of the average duration of the domestic bond market
on bond market indices which they believe to be
representative. The advisers currently use the Lehman
Aggregate Bond Index for this purpose.
The Portfolio's portfolio turnover rate may exceed 100%.
Such a turnover rate may lead to higher transaction costs
and may result in higher taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
BlackRock Financial Management, Inc., Firstar Investment
Research & Management Company and Western Asset Management
Company.
BOND PORTFOLIO The investment objective of the Bond Portfolio is current
income consistent with preservation of capital. There can be
no assurance that the Portfolio will achieve its investment
objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in fixed income securities
that are rated investment grade or better, i.e., rated in
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one of the four highest rating categories by an NRSRO at the
time of purchase, or, if not rated, determined to be of
comparable quality by the advisers. Fixed income securities
rated in the fourth highest rating category lack outstanding
investment characteristics, and have speculative
characteristics as well. Fixed income securities in which
the Portfolio may invest consist of: (i) corporate bonds and
debentures, (ii) obligations issued by the United States
Government, its agencies and instrumentalities, (iii)
receipts involving U.S. Treasury obligations, (iv) mortgage-
backed securities, (v) asset-backed securities, and (vi)
zero coupon, pay-in-kind or deferred payment securities.
Any remaining assets may be invested in (i) convertible
securities, (ii) securities issued on a when-issued and
delayed-delivery basis, including TBA mortgage-backed
securities, and (iii) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures and
options, on futures.
There are no restrictions on the Portfolio's maturity.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is
Boatmen's Trust Company.
HIGH YIELD BOND The investment objective of the High Yield Bond Portfolio is
PORTFOLIO to maximize total return. There can be no assurance that the
Portfolio will achieve its investment objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in fixed income securities
that are rated below investment grade, i.e., rated below the
top four rating categories by an NRSRO at the time of
purchase, or, if not rated, determined to be of comparable
quality by the advisers. Below investment grade securities
are commonly referred to as "junk bonds," and generally
entail increased credit and market risk. Securities rated in
the lowest rating categories may have predominantly
speculative characteristics or may be in default. The
achievement of the Portfolio's investment objective may be
more dependent on the advisers' own credit analysis than
would be the case if the Portfolio invested in higher rated
securities. There is no bottom limit on the ratings of high
yield securities that may be purchased or held by the
Portfolio.
The Portfolio may invest in all types of fixed income
securities issued by domestic and foreign issuers,
including: (i) mortgage-backed securities, (ii) asset-backed
securities, (iii) zero coupon, pay-in-kind or deferred
payment securities and (iv) variable and floating rate
instruments.
Any assets of the Portfolio not invested in the fixed
income securities described above may be invested in (i)
convertible securities, (ii) preferred stocks, (iii) equity
securities, (iv) investment grade fixed income securities,
(v) money market securities, (vi) securities issued on a
when-issued and delayed-delivery basis, including TBA
mortgage-backed securities, (vii) forward foreign currency
contracts, and (viii) Yankee obligations. In addition, the
Portfolio may purchase or write options, futures and options
on futures.
The advisers may vary the average maturity of the
securities in the Portfolio without limit and there is no
restriction on the maturity of any individual security.
The "Appendix" to this Prospectus sets forth a
description of the bond rating categories of several NRSROs.
Ratings of each NRSRO represents its opinion of the safety
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of principal and interest payments (and not the market risk)
of bonds and other fixed income securities it undertakes to
rate at the time of issuance. Ratings are not absolute
standards of quality and may not reflect changes in an
issuer's creditworthiness. Accordingly, although the
advisers will consider ratings, they will perform their own
analyses and will not rely principally on ratings. The
advisers will consider, among other things, the price of the
security and the financial history and condition, the
prospects and the management of an issuer in selecting
securities for the Portfolio.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is BEA
Associates.
GENERAL INVESTMENT POLICIES ____________________________________________________
Borrowing Each Portfolio may borrow money to meet redemptions for
temporary, emergency purposes. A Portfolio will not purchase
securities while its borrowings exceed 5% of its total
assets.
Illiquid Each Portfolio 's investment in illiquid securities will be
Securities limited to 15% of its net assets.
Investment Each Portfolio may purchase investment company securities,
Company which will result in the layering of expenses. There are
Securities legal limits on the amount of such securities that may be
acquired by a Portfolio.
Securities Each Portfolio may lend its securities in order to realize
Lending additional income.
Temporary In order to meet liquidity needs or for temporary defensive
Defensive purposes, each Portfolio may invest up to 100% of its assets
Investments in cash and money market securities. Money market securities
must be rated in one of the top two categories by an NRSRO
or, if unrated, be of comparable quality as determined by
the Portfolio's advisers. To the extent a Portfolio is
engaged in temporary defensive investing, the Portfolio will
not be pursuing its investment objective.
For additional information regarding the Portfolios'
permitted investments, see "Risk Factors," "Description of
Permitted Investments and Risk Factors" in this Prospectus
and "Description of Permitted Investments" in the Statement
of Additional Information. For a description of the above
ratings, see "Description of Ratings" in the "Appendix" to
this Prospectus and the Statement of Additional Information.
RISK FACTORS ______________________________________________________________
Equity Investments in equity securities in general are subject to
Securities market risks that may cause their prices to fluctuate over
time. The value of convertible equity securities is also
affected by prevailing interest rates, the credit quality of
the Issuer and any call provision. Fluctuations in the value
of equity securities in which a Portfolio invests will cause
the net asset value of the Portfolio to fluctuate.
Fixed Income The market value of a Portfolio's fixed income investments
Securities will change in response to interest rate changes and other
factors. During periods of falling interest rates, the
values
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<PAGE>
of outstanding fixed income securities generally rise.
Conversely, during periods of rising interest rates, the
values of such securities generally decline. Securities with
longer maturities are subject to greater fluctuations in
value than securities with shorter maturities. Changes by an
NRSRO in the rating of any fixed income security and in the
ability of an issuer to make payments of interest and
principal also affect the value of these investments.
Changes in the value of a Portfolio's securities will not
affect cash income derived from these securities but will
affect the Portfolio's net asset value.
Securities held by a Portfolio that are guaranteed by the
U.S. Government, its agencies or instrumentalities guarantee
only the payment of principal and interest on the guaranteed
securities, and do not guarantee the securities' yield or
value or the yield or value of a Portfolio's shares.
There is a risk that the current interest rate on
floating and variable rate instruments may not accurately
reflect existing market interest rates.
Foreign Investing in the securities of foreign companies and the
Securities and utilization of forward foreign currency contracts involve
Foreign special risks and considerations not typically associated
Currency with investing in U.S. companies. These risks and
Contracts considerations include differences in accounting, auditing
and financial reporting standards, generally higher
commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation,
adverse changes in investment or exchange control
regulations, political instability that could affect U.S.
investment in foreign countries and potential restrictions
of the flow of international capital and currencies. Foreign
companies may also be subject to less government regulation
than U.S. companies. Moreover, the dividends payable on the
foreign securities may be subject to foreign withholding
taxes, thus reducing the net amount of income available for
distribution to the Portfolio's shareholders. Further,
foreign securities often trade with less frequency and
volume than domestic securities and, therefore, may exhibit
greater price volatility. Changes in foreign exchange rates
will affect, favorably or unfavorably, the value of those
securities which are denominated or quoted in currencies
other than the U.S. dollar.
By entering into forward foreign currency contracts, a
Portfolio will seek to protect the value of its investment
securities against a decline in the value of a currency.
However, these forward foreign currency contracts will not
eliminate fluctuations in the underlying prices of the
securities. Rather, they simply establish a rate of exchange
which one can obtain at some future point in time. Although
such contracts tend to minimize the risk of loss due to a
decline in the value of the hedged currency, they also tend
to limit any potential gain which might result should the
value of such currency increase.
High Yield, The High Yield Bond Portfolio may invest in lower rated
Lower Rated securities. Fixed income securities are subject to the risk
Bonds of an issuer's ability to meet principal and interest
payments on the obligation (credit risk), and may also be
subject to price volatility due to such factors as interest
rate sensitivity, market perception of the creditworthiness
of the issuer and
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<PAGE>
general market liquidity (market risk). Lower rate or
unrated (i.e., high yield) securities are more likely to
react to developments affecting market and credit risk than
are more highly rated securities, which primarily react to
movements in the general level of interest rates. The market
values of fixed-income securities tend to vary inversely
with the level of interest rates. Yields and market values
of high yield securities will fluctuate over time,
reflecting not only changing interest rates but the market's
perception of credit quality and the outlook for economic
growth. When economic conditions appear to be deteriorating,
medium to lower rated securities may decline in value due to
heightened concern over credit quality, regardless of
prevailing interest rates. Investors should carefully
consider the relative risks of investing in high yield
securities and understand that such securities are not
generally meant for short-term investing.
The high yield market is relatively new and its growth
has paralleled a long period of economic expansion and an
increase in merger, acquisition and leveraged buyout
activity. Adverse economic developments can disrupt the
market for high yield securities, and severely affect the
ability of issuers, especially highly leveraged issuers, to
service their debt obligations or to repay their obligations
upon maturity which may lead to a higher incidence of
default on such securities. In addition, the secondary
market for high yield securities, which is concentrated in
relatively few market makers, may not be as liquid as the
secondary market for more highly rated securities. As a
result, the Portfolio's advisers could find it more
difficult to sell these securities or may be able to sell
the securities only at prices lower than if such securities
were widely traded. Furthermore the Portfolio may experience
difficulty in valuing certain securities at certain times.
Prices realized upon the sale of such lower rated or unrated
securities, under these circumstances, may be less than the
prices used in calculating the Portfolio's net asset value.
Prices for high yield securities may be affected by
legislative and regulatory developments. These laws could
adversely affect the Portfolio's net asset value and
investment practices, the secondary market value for high
yield securities, the financial condition of issuers of
these securities and the value of outstanding high yield
securities.
For example, federal legislation requiring the
divestiture by federally insured savings and loan
associations of their investments in high yield bonds and
limiting the deductibility of interest by certain corporate
issuers of high yield bonds adversely affected the market in
recent years. Lower rated or unrated debt obligations also
present risks based on payment expectations. If an Issuer
calls the obligations for redemption, the Portfolio may have
to replace the security with a lower yielding security,
resulting in a decreased return for investors. If the
Portfolio experiences unexpected net redemptions, it may be
forced to sell its higher rated securities, resulting in a
decline in the overall credit quality of the Portfolio's
investment portfolio and increasing the exposure of the
Portfolio to the risks of high yield securities.
Mortgage-Backed Mortgage-backed securities are subject to prepayment of the
Securities underlying mortgages. During periods of declining interest
rates, prepayment of mortgages underlying these securities
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<PAGE>
can be expected to accelerate. When the mortgaged-backed
securities held by a Portfolio are prepaid, the Portfolio
must reinvest the proceeds in securities the yield of which
reflects prevailing interest rates, which may be lower than
the yield of the prepaid security.
Zero Coupon Zero coupon obligations may be subject to greater
Obligations fluctuations in value due to interest rate changes than
interest bearing obligations. A Portfolio will be required
to include the imputed interest in zero coupon obligations
in its current income. Because a Portfolio distributes all
of its net investment income to shareholders, a Portfolio
may have to sell portfolio securities to distribute the
income attributable to these obligations and securities at a
time when the advisers would not have chosen to sell such
obligations or securities and which may result in a taxable
gain or loss.
INVESTMENT LIMITATIONS _________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolios. Fundamental policies
cannot be changed with respect to the Trust or a Portfolio
without the consent of the holders of a majority of the
Trust's or that Portfolio's outstanding shares.
No Portfolio may:
1. With respect to 75% of its assets, (i) purchase
securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies
or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of
such issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
United States Government, its agencies or
instrumentalities.
The foregoing percentage limitations will apply at the
time of the purchase of a security. Additional investment
limitations are set forth in the Statement of Additional
Information.
THE MANAGER AND SHAREHOLDERSERVICING AGENT _____________________________________
SEI Financial Management Corporation ("SFM") provides the
Trust with overall management services, regulatory
reporting, all necessary office space, equipment, personnel
and facilities, and acts as shareholder servicing agent.
For its management services, SFM is entitled to a fee
which is calculated daily and paid monthly at an annual rate
of .28% of the average daily net assets of the Core Fixed
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<PAGE>
................................................................................
[SYMBOL APPEARS HERE]
INVESTMENT
ADVISER
A Portfolio's advisers manage the investment activities and are responsible for
the performance of the Portfolio. The advisers conduct investment research,
executes investment strategies based on an assessment of economic and market
conditions, and determine which securities to buy, hold or sell.
................................................................................
................................................................................
Income Portfolio, .28% of the average daily net assets of the
Bond Portfolio and .35% of the average daily net assets of
the High Yield Bond Portfolio. SFM has voluntarily agreed to
waive a portion of its fees in order to limit the operating
expenses of each Portfolio. SFM reserves the right, in its
sole discretion, to terminate this voluntary fee waiver at
any time.
For the fiscal year ended September 30, 1995 the
Portfolios paid SFM the following management fees (based on
each Portfolio's average daily net assets after fee waivers):
Core Fixed Income, .30%; Bond Portfolio, .26%; and High Yield
Bond Portfolio, .16%.
The Trust and DST Systems, Inc., 210 W. 10th Street,
Kansas City, MO 64105, have entered into a separate transfer
agent agreement with respect to the Class D shares of the
Trust. Under this agreement, DST acts as the transfer agent
and dividend disbursing agent (the "Transfer Agent") for the
Class D shares of the Trust.
MULTI-MANAGER DIVERSIFICATION _____________________________________________
SFM serves as investment adviser (the "Adviser") to each
Portfolio. Within each Portfolio one or more investment sub-
advisers (each, a "Sub-Adviser," and together, the "Sub-
Advisers") are utilized to select that Portfolio's investments.
These Sub-Advisers specialize in the distinct investment style
or styles that each Portfolio is designed to capture.
The Adviser has general oversight responsibility for the
investment advisory services provided to the Portfolios,
including formulating the Portfolios' investment policies and
analyzing economic trends affecting the Portfolios. In
addition, SFM, where it is the Adviser to a Portfolio, is
responsible for (i) managing the allocation of assets among the
Portfolio's Sub-Advisers, (ii) directing and evaluating the
investment services provided by the Sub-Advisers, including
their adherence to the Portfolio's respective investment
objective and policies and the Portfolio's investment
performance, and (iii) managing the cash portion of the
Portfolio's assets. In accordance with each Portfolio's
investment objective and policies, and under the supervision
of the Adviser and the Trust's Board of Trustees, each Sub-
Adviser is responsible for the day-to-day investment
management of all or a discrete portion of the assets of a
Portfolio. The Adviser and Sub-Advisers are authorized to
make investment decisions for the Portfolios and place orders
on behalf of the Portfolios to effect the investment
decisions made.
SFM monitors the compliance of the advisers of each
Portfolio with regulatory and tax regulations, such as
portfolio concentration and diversification. For the most
part compliance with these requirements by each adviser with
respect to its portion of a Portfolio will assure compliance
by that Portfolio as a whole. In addition, SFM monitors
positions taken by each of a Portfolio's advisers and will
notify the advisers of any
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<PAGE>
developing situations to help ensure that investments do not
run afoul of the short-short test or the wash sale rules. To
the extent that having multiple advisers responsible for
investing separate portions of the Portfolio's assets
creates the need for coordination among the advisers, there
is an increased risk that the Portfolio will not comply with
these regulatory and tax requirements.
It is possible that different advisers of a Portfolio
could take opposite actions within a short period of time
with respect to a particular security. For example, one
adviser could buy a security for the Portfolio and shortly
thereafter another adviser could sell the same security from
the portion of the Portfolio allocated to it. If in these
circumstances the securities could be transferred from one
adviser's portion of the Portfolio to another, the Portfolio
could avoid transaction costs and could avoid creating
possible wash sales and short-short gains under the Internal
Revenue Code of 1986, as amended (the "Code"). Such
transfers are not practicable but the advisers 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 a Portfolio by the various advisers. Moreover, the
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 or have
significant tax consequences. With respect to the latter,
the advisers have established procedures with respect to the
short-short test which are designed to prevent realization
of short-short gains in excess of Code limits. It is true
that wash sales could occur in spite of the efforts of SFM,
but the Board of Trustees believes that the benefit of using
multiple advisers outweighs the consequences of any wash
sales.
SFM is currently seeking an exemptive order from the
Securities and Exchange Commission (the "SEC") that would
permit SFM, with the approval of the Trust's Board of
Trustees, to retain sub-advisers for a Portfolio without
submitting the sub-advisory agreement to a vote of the
Portfolio's shareholders. If granted, the exemptive relief
will permit the non-disclosure of amounts payable by SFM
under such sub-advisory agreements. The Trust will notify
shareholders in the event of any change in the identity of
the sub-adviser for a Portfolio. Until or unless this
exemptive order is granted, if one of the advisers is
terminated or departs from a Portfolio with multiple
advisers, the Portfolio will handle such termination or
departure in one of two ways. First, the Portfolio may
propose that a new investment adviser be appointed to manage
that portion of the Portfolio's assets managed by the
departing adviser. In this case, the Portfolio would be
required to submit to the vote of the Portfolio's
shareholders the approval of a investment advisory contract
with the new adviser. In the alternative, the Portfolio may
decide to allocate the departing adviser's assets among the
remaining advisers. This allocation would not require new
investment advisory contracts with the remaining advisers,
and consequently no shareholder approval would be necessary.
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<PAGE>
THE ADVISER _______________________________________________________________
SEI FINANCIAL SEI Financial Management Corporation ("SFM") serves as
MANAGEMENT investment adviser to the Core Fixed Income, Bond and High
CORPORATION Yield Bond Portfolios. SFM is a wholly-owned subsidiary of
SEI Corporation ("SEI"), a financial services company
located in Wayne, PA. The principal business address of SFM
is 680 East Swedesford Road, Wayne, PA 19087-1658. SEI was
founded in 1968 and is a leading provider of investment
solutions to banks, institutional investors, investment
advisers and insurance companies. Affiliates of SFM have
provided consulting advice to institutional investors for
more than 20 years, including advice regarding the selection
and evaluation of investment advisers. SFM currently serves
as manager or administrator to more than 26 investment
companies, including more than 220 portfolios, which
investment companies have more than $ billion in assets as
of September 30, 1995.
For these advisory services, SFM is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .275% of the Core Fixed Income Portfolio's average
daily net assets, .275% of the Bond Portfolio's average
daily net assets and .4875% of the High Yield Bond
Portfolio's average daily net assets.
THE SUB-ADVISERS __________________________________________________________
BEA ASSOCIATES BEA Associates ("BEA") serves as Sub-Adviser for the High
Yield Bond Portfolio. BEA is a general partnership organized
under the laws of the State of New York and, together with
its predecessor firms, has been engaged in the investment
advisory business for over 50 years. BEA's principal offices
are located at One Citicorp Center, 153 East 53rd Street,
New York, NY 10022. Credit Suisse Capital Corporation
("CS Capital") is an 80% partner in BEA and Basic
Appraisals, Inc. is a 20% partner in BEA. CS Capital is a
wholly-owned subsidiary of Credit Suisse Investment
Corporation, which is a wholly-owned subsidiary of Credit
Suisse, the second largest Swiss bank, which in turn is a
subsidiary of CS Holding, a Swiss Corporation. No one person
or entity possesses a controlling interest in Basic
Appraisals, Inc. BEA is registered as an investment adviser
under the Investment Act of 1940, as amended (the "1940
Act").
BEA is a diversified asset manager, handling global
equity, balanced, fixed income and derivative securities
accounts for private individuals, as well as corporate
pension and profit-sharing plans, state pension funds, union
funds, endowments and other charitable institutions. As of
September 30, 1995, BEA managed approximately $28.6 billion
in assets.
The Portfolio's assets have been managed by Richard J.
Lindquist, C.F.A., since its inception. Mr. Lindquist joined
BEA in 1995 as a result of BEA's acquisition of CS First
Boston Investment Management, and has had 11 years of
investment management experience, including 6 years of
experience working with high yield bonds. Prior to joining
BEA, Mr. Lindquist was with Prudential Insurance Company of
America where he managed high yield portfolios totalling
approximately $1.3 billion.
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<PAGE>
SFM pays BEA a fee, which is calculated and paid monthly,
based on an annual rate of .3375% of the average monthly
market value of the assets of the High Yield Portfolio
managed by BEA. For the fiscal year ended September 30,
1995, BEA received a sub-advisory fee of .3375%.
BLACKROCK BlackRock Financial Management Inc. ("BlackRock") serves as
FINANCIAL Sub-Adviser to a portion of the assets of the Core Fixed
MANAGEMENT, Income Portfolio. BlackRock, a registered investment
INC. adviser, is a Delaware corporation with its principal
business address at 345 Park Avenue, 30th Floor, New York,
NY 10154. BlackRock's predecessor was founded in 1988, and
as of September 30, 1995, BlackRock had $33 billion in
assets under management. BlackRock is wholly-owned by PNC
Asset Management Group, Inc., a wholly-owned subsidiary of
PNC Bank, N.A. PNC Bank, N.A.'s ultimate parent is PNC Bank
Corp., One PNC Plaza, Pittsburgh, PA 15265. BlackRock
provides investment advice to investment companies, trusts,
charitable organizations, pension and profit sharing plans
and government entities.
BlackRock employs a team approach in managing the
Portfolio, however, the portfolio manager who has day-to-day
responsibility for the Portfolio is Keith Anderson. Mr.
Anderson is a Managing Director and Co-Head of Portfolio
Management at BlackRock, and has 12 years experience
investing in fixed income securities. Prior to founding
BlackRock in 1988, Mr. Anderson was a Vice President in
Fixed Income Research at The First Boston Corporation.
SFM pays BlackRock a fee, which is calculated and paid
monthly, based on an annual rate of .15% of the average
monthly market value of the assets of the Core Fixed Income
Portfolio managed by BlackRock. During the fiscal year ended
September 30, 1995, BlackRock did not serve as Sub-Adviser
to the Portfolio and therefore did not receive a sub-
advisory fee.
BOATMEN'S TRUST Boatmen's Trust Company ("Boatmen's") serves as Sub-Adviser
COMPANY for the Bond Portfolio. Boatmen's is a subsidiary of
Boatmen's Bancshares, Inc., a multi-bank holding company.
Boatmen's provides trust and investment advisory services to
a broad array of individual and institutional clients. As of
September 30, 1995, Boatmen's total assets under management
were approximately $40 billion for a broad spectrum of
taxable and tax-exempt clients. The principal business
address of Boatmen's is 100 N. Broadway, St. Louis, MO
63102.
The Portfolio has been managed by a committee since its
inception.
SFM pays Boatmen's a fee, which is calculated and paid
monthly, based on an annual rate of .125% of the average
monthly market value of the assets of the Bond Portfolio
managed by Boatmen's. For the fiscal year ended September
30, 1995, Boatmen's received a sub-advisory fee of .125%.
The Glass-Steagall Act restricts the securities
activities of banks such as Boatmen's Bancshares, Inc., but
federal regulatory authorities permit such banks to provide
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<PAGE>
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
FIRSTAR Firstar Investment Research & Management Company ("FIRMCO")
INVESTMENT serves as Sub-Adviser to a portion of the assets of the Core
RESEARCH & Fixed Income Portfolio. FIRMCO is a registered investment
MANAGEMENT adviser with its principal business address at 777 East
COMPANY Wisconsin Avenue, Suite 800, Milwaukee, WI 53202. FIRMCO was
founded in 1986, and as of September 30, 1995, it had
approximately $15.4 billion in assets under management.
FIRMCO is a wholly-owned subsidiary of Firstar Corporation,
a bank holding company located at 777 East Wisconsin Avenue,
Milwaukee, WI 53202. FIRMCO's clients include pension and
profit sharing plans, trusts and estates and one other
investment company.
Mr. Charles Groeschell, a Senior Vice President of
FIRMCO, has been employed by FIRMCO or its affiliates since
1983, and has had 13 years experience in fixed income
investing.
SFM pays FIRMCO a fee, which is calculated and paid
monthly, based on an annual rate of .10% of the average
monthly market value of the assets of the Core Fixed Income
Portfolio managed by FIRMCO. For the fiscal year ended
September 30, 1995, FIRMCO did not serve as Sub-Adviser to
the Portfolio and therefore did not receive a sub-advisory
fee.
WESTERN ASSET Western Asset Management Company ("Western") serves as Sub-
MANAGEMENT Adviser to a portion of the assets of the Core Fixed Income
COMPANY Portfolio. Western is located at 117 East Colorado
Boulevard, Pasadena, CA 91105, and is a wholly owned
subsidiary of Legg Mason, Inc., a financial services company
located in Baltimore, MD. Western was founded in 1971, and
specializes in the management of fixed income portfolios. As
of September 30, 1995, Western managed approximately $17
billion in client assets, including $3 billion of investment
company assets.
Kent S. Engel, Director and Chief Investment Officer of
Western, is primarily responsible for the day-to-day
management of the Portfolio since January 19, 1994. Mr.
Engel has been with Western and its predecessor since 1969.
SFM pays Western a fee, which is calculated and paid
monthly, based on an annual rate of .125% of the average
monthly market value of the assets of the Core Fixed Income
Portfolio managed by Western.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan" or
"Class D Plan," and collectively, "the Plans")
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pursuant to Rule 12b-1 under the Investment Company Act of
1940, as amended (the "1940 Act").
The Class D Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio, on an
annualized basis, provided those expenses are permissible as
to both type and amount under a budget adopted by the Board
of Trustees, including those who are not interested persons
and have no financial interest in the Plan or any related
agreement ("Qualified Trustees"). Currently, the budget
(shown here as a percentage of average daily net assets) for
each Portfolio is set at an annual rate of .08% for the Core
Fixed Income Portfolio, .10% for the Bond Portfolio and .10%
for the High Yield Bond Portfolio.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the distribution
of the Trust's shares, advertising expenses and promotional
and sales expenses including expenses for travel,
communication and compensation and benefits for sales
personnel. Distribution expenses not attributable to a
specific Portfolio are allocated among each of the
Portfolios of the Trust on the basis of their average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class D Plan, in addition to providing for the
reimbursement payments described above, provides for
payments to the Distributor at an annual rate of .30% of
each Portfolio's average daily net assets attributable to
Class D shares. This additional payment may be used to
compensate financial institutions that provide distribution-
related services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class D Plan, the Trust will still pay the full fee and the
Distributor will realize a profit, but the Trust will not be
obligated to pay in excess of the full fee, even if the
Distributor's actual expenses are higher.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
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The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
PERFORMANCE ____________________________________________________________________
From time to time, a Portfolio may advertise yield and total
return. These figures will be based on historical earnings
and are not intended to indicate future performance. The
yield of a Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified
30-day period. The yield is calculated by assuming that the
same amount of income generated by the investment during
that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.
The total return of a Portfolio refers to the average
compounded rate of return to a hypothetical investment, net
of any sales charge imposed on Class D shares redeemed at
the end of the specified period covered by the total return
figure, for designated time periods (including but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions. The total return of a Portfolio may also be
quoted as a dollar amount or on an aggregate basis, an
actual basis, without inclusion of any front-end or
contingent sales charges, or with a reduced sales charge in
advertisements distributed to investors entitled to a
reduced sales charge.
A Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. A Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. A Portfolio may quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. A
Portfolio may use long term performance of these capital
markets to demonstrate general long-term risk versus reward
scenarios and could include the value of a hypothetical
investment in any of the capital markets. A Portfolio may
also quote financial and business publications and
periodicals as they relate to fund management, investment
philosophy, and investment techniques.
A Portfolio may quote various measures of volatility and
benchmark correlation in advertising and may compare these
measures to those of other funds. Measures of
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................................................................................
[SYMBOL APPEARS HERE]
TAXES
You must pay taxes on your Portfolio's earnings, whether you take your payments
in cash or addi-tional shares.
................................................................................
................................................................................
[SYMBOL APPEARS HERE]
DISTRIBUTIONS
A Portfolio distributes income dividends and capital gains. Income dividends
represent the earnings from the Portfolio's investments; capital gains
distributions occur when a Portfolio sells investments for more than the
original purchase price.
...............................................................................
................................................................................
volatility attempt to compare historical share price
fluctuations or total returns to a benchmark while measures
of benchmark correlation indicate how valid a comparative
benchmark might be. Measures of volatility and correlation
are calculated using averages of historical data and cannot
be calculated precisely.
For each Portfolio, the performance of Class A shares will
normally be higher than the performance of the Class D shares
of that Portfolio because of the additional distribution and
transfer agent expenses charged to Class D shares.
Additional performance information is set forth in the
1995 Annual Report to Shareholders and is available upon
request and without charge by calling 1-800-437-6016.
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action. No
attempt has been made to present a detailed explanation of
the federal, state or local income tax treatment of a
Portfolio or its shareholders. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state, and local income taxes. State
and local tax consequences of an investment in a Portfolio
may differ from the federal income tax consequences described
below. Additional information concerning taxes is set forth
in the Statement of Additional Information.
Tax Status of A Portfolio is treated as a separate entity for federal
the Portfolios income tax purposes and is not combined with the Trust's
other portfolios. Each Portfolio intends to continue
to qualify for the special tax treatment afforded regulated
investment companies ("RICs") under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), so as
to be relieved of federal income tax on net investment company
taxable income (including the excess, if any, of net short-
term capital gains over net long-term capital losses) and net
capital gains (the excess of net long-term capital gains over
net short-term capital losses) distributed to shareholders.
Tax Status of Each Portfolio distributes substantially all of its net
Distributions investment company taxable income to shareholders. Dividends
from a Portfolio's net investment company taxable income are
taxable to its shareholders as ordinary income (whether
received in cash or in additional shares). Distributions of
net capital gains are taxable to shareholders as long-term
capital gains regardless of how long a shareholder has
held shares. Dividends and distributions received from a
Portfolio will not qualify for the corporate dividends-
received deduction. Each Portfolio will make annual
reports to shareholders of the federal income tax status
of all distributions.
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...............................................................................
[SYMBOL APPEARS HERE]
BUY, EXCHANGE AND
SELL REQUESTS ARE IN
"GOOD ORDER" WHEN:
. The account number and portfolio name are shown
. The amount of the transaction is specified in dollars or shares
. Signatures of all owners appear exactly as they are registered on the
account
. Any required signature guarantees (if applicable) are included
. Other supporting legal documents (as necessary) are present
................................................................................
................................................................................
Dividends declared by a Portfolio in October, November or
December of any year and payable to shareholders of record on
a date in such a month will be deemed to have been paid by
the Portfolio and received by the shareholders on December 31
of the year if paid by a Portfolio at any time during the
following January.
Each Portfolio intends to make sufficient distributions to
avoid liability for federal excise tax applicable to RICs.
Each sale, exchange, or redemption of a Portfolio's shares
generally is a taxable transaction to the shareholder.
ADDITIONAL INFORMATION ABOUT DOING BUSINESS WITH US ____________________________
Business Days You may buy, sell or exchange shares on days which the New
York Stock Exchange is open for business (a "Business Day").
All purchase, exchange and redemption requests received in
"good order" will be effective as of the Business Day received
by the Transfer Agent as long as the Transfer Agent receives
the order and, in the case of a purchase request, payment
before 4:00 p.m. Eastern time. Otherwise the purchase will be
effective when payment is received. Broker-dealers may have
separate arrangements with the Trust regarding the sale of
Class D shares.
If an exchange request is for shares of a portfolio whose
net asset value is calculated as of a time earlier than 4:00
p.m., Eastern time, the exchange request will not be effective
until the next Business Day. Anyone who wishes to make an
exchange must have received a current prospectus of the
portfolio into which the exchange is being made before the
exchange will be effected.
Minimum The minimum initial investment in a Portfolio's Class D
Investments shares is $1,000; however, the minimum investment may be
waived at the Distributor's discretion. All subsequent
purchases must be at least $100 ($25 for payroll deductions
authorized pursuant to pre-approved payroll deduction plans).
The Trust reserves the right to reject a purchase order when
the Distributor determines that it is not in the best
interest of the Trust or its shareholders to accept such
order. In addition, because excessive trading (including
short-term "market timing" trading) can hurt a Portfolio's
performance, each Portfolio may refuse purchase orders from
any shareholder account if the accountholder has been advised
that previous purchase and redemption transactions were
considered excessive in
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number or amount. Accounts under common control or
ownership, including those with the same taxpayer
identification number and those administered so as to redeem
or purchase shares based upon certain predetermined market
indicators, will be considered one account for this purpose.
Maintaining a Due to the relatively high cost of handling small
Minimum Account investments, a Portfolio reserves the right to redeem, at
Balance net asset value, the shares of any shareholder if, because
of redemptions of shares by or on behalf of the shareholder,
the account of such shareholder in a Portfolio has a value
of less than $1,000, the minimum initial purchase amount.
Accordingly, an investor purchasing shares of a Portfolio in
only the minimum investment amount may be subject to such
involuntary redemption if he or she thereafter redeems any
of these shares. Before a Portfolio exercises its right to
redeem such shares and to send the proceeds to the
shareholder, the shareholder will be given notice that the
value of the shares in his or her account is less than the
minimum amount and will be allowed 60 days to make an
additional investment in a Portfolio in an amount that will
increase the value of the account to at least $1,000. See
"Purchase and Redemption of Shares" in the Statement of
Additional Information for examples of when the right of
redemption may be suspended.
At various times, a Portfolio may receive a request to
redeem shares for which it has not yet received good
payment. In such circumstances, redemption proceeds will be
forwarded upon collection of payment for the shares;
collection of payment may take 10 or more days. A Portfolio
intends to pay cash for all shares redeemed, but under
abnormal conditions that make payment in cash unwise,
payment may be made wholly or partly in portfolio securities
with a market value equal to the redemption price. In such
cases, an investor may incur brokerage costs in converting
such securities to cash.
Net Asset Value An order to buy shares will be executed at a per share price
equal to the net asset value next determined after the
receipt of the purchase order by the Distributor plus any
applicable sales charge (the "offering price"). No
certificates representing shares will be issued. An order to
sell shares will be executed at the net asset value per
share next determined after receipt and effectiveness of a
request for redemption in good order. Net asset value per
share is determined as of the close of business of the New
York Stock Exchange (currently 4:00 p.m. Eastern time) on
each Business Day. Payment to shareholders for shares
redeemed will be made within seven days after receipt by the
Distributor of the redemption order.
How the Net The net asset value per share of a Portfolio is determined
Asset Value is by dividing the total market value of its investments and
Determined other assets, less any liabilities, by the total number of
outstanding shares of the Portfolio. A Portfolio may use a
pricing service to obtain the last sale price of each equity
or fixed income security held by a Portfolio. In addition,
portfolio securities are valued at the last quoted sales
price for such securities, or, if there is no such reported
sales price on the valuation date, at the most recent quoted
bid price. Unlisted securities for which market quotations
are readily available are valued at the most
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recent quoted bid price. Net asset value per share is
determined as of the close of business of the New York Stock
Exchange (currently 4:00 p.m. Eastern time) on each Business
Day. Purchases will be made in full and fractional shares of
a Portfolio calculated to three decimal places. Although the
methodology and procedures for determining net asset value
per share are identical for both classes of a Portfolio, the
net asset value per share of one class may differ from that
of another class because of the different distribution fees
charged to each class and the incremental transfer agent
fees charged to Class D shares.
Rights of In calculating the sales charge rates applicable to current
Accumulation purchases of a Portfolio's shares, a "single purchaser"
(defined below) is entitled to combine current purchases
with the current market value of previously purchased shares
of a Portfolio and Class D shares of other portfolios
("Eligible Portfolios") which are sold subject to a
comparable sales charge.
The term "single purchaser" refers to (i) an individual,
(ii) an individual and spouse purchasing shares of a
Portfolio for their own account or for trust or custodial
accounts of their minor children, or (iii) a fiduciary
purchasing for any one trust, estate or fiduciary account,
including employee benefit plans created under Sections 401
or 457 of the Code, including related plans of the same
employer. Furthermore, under this provision, purchases by a
single purchaser shall include purchases by an individual
for his/her own account in combination with (i) purchases of
that individual and spouse for their joint accounts or for
trust and custodial accounts for their minor children and
(ii) purchases of that individual's spouse for his/her own
account. To be entitled to a reduced sales charge based upon
shares already owned, the investor must ask the Transfer
Agent for such reduction at the time of purchase and provide
the account number(s) of the investor, the investor and
spouse, and their children (under age 21). A Portfolio may
amend or terminate this right of accumulation at any time as
to subsequent purchases.
Letter of By submitting a Letter of Intent (the "Letter") to the
Intent Transfer Agent, a single purchaser may purchase shares of a
Portfolio and the other Eligible Portfolios during a 13-
month period at the reduced sales charge rates applying to
the aggregate amount of the intended purchases stated in the
Letter. The Letter may apply to purchases made up to 90 days
before the date of the Letter. It is the shareholder's
responsibility to notify SFM at the time the Letter is
submitted that there are prior purchases that may apply.
Five percent (5%) of the total amount intended to be
purchased will be held in escrow by the Transfer Agent until
such purchase is completed within the 13-month period. The
13-month period begins on the date of the earliest purchase.
If the intended investment is not completed, SFM will
surrender an appropriate number of the escrowed shares for
redemption in order to realize the difference between the
sales charge on the shares purchased at the reduced rate and
the sales charge otherwise applicable to the total shares
purchased. Such purchasers may include the value of all
their shares of the Portfolio and of any of the other
Eligible Portfolios in the Trust towards the completion of
such Letter.
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Sales Charge No sales charge is imposed on shares of a Portfolio: (i)
Waivers issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Trust is a
party; (ii) sold to dealers or brokers that have a sales
agreement with the Distributor ("participating broker-
dealers"), for their own account or for retirement plans for
employees or sold to present employees of dealers or brokers
that certify to the Distributor at the time of purchase that
such purchase is for their own account; (iii) sold to
present employees of SEI or one of its affiliates, or of any
entity which is a current service provider to the Trust;
(iv) sold to tax-exempt organizations enumerated in Section
501(c) of the Code or qualified employee benefit plans
created under Sections 401, 403(b)(7) or 457 of the Code
(but not IRAs or SEPs); (v) sold to fee-based clients of
banks, financial planners and investment advisers; (vi) sold
to clients of trust companies and bank trust departments;
(vii) sold to trustees and officers of the Trust; (viii)
purchased with proceeds from the recent redemption of Class
D shares of another Portfolio of the Trusts or another class
of shares of a portfolio of the Trust, SEI Tax-Exempt Trust,
SEI International Trust, SEI Liquid Asset Trust, or SEI
Daily Income Trust; (ix) purchased with the proceeds from
the recent redemption of shares of a mutual fund with
similar investment objectives and policies (other than Class
D shares) for which a front-end sales charge was paid (this
offer will be extended, to cover shares on which a deferred
sales charge was paid, if permitted under regulatory
authorities' interpretation of applicable law); or (x) sold
to participants or members of certain affinity groups, such
as trade associations or membership organizations, which
have entered into arrangements with the Distributor. Members
of affinity groups should see the Statement of Additional
Information or call the Transfer Agent for further
information regarding sales charge waivers.
An investor relying upon any of the categories of waivers
of sales charges must qualify such waiver in advance of the
purchase with the Transfer Agent or the financial
institution or the intermediary through which shares are
purchased by the investor.
The waiver of the sales charge under circumstances (viii)
and (ix) above applies only if the following conditions are
met: the purchase must be made within 60 days of the
redemption; the Transfer Agent must be notified in writing
by the investor, or his or her agent, at the time a purchase
is made; and a copy of the investor's account statement
showing such redemption must accompany such notice. The
waiver policy with respect to the purchase of shares through
the use of proceeds from a recent redemption as described in
clauses (viii) and (ix) above will not be continued
indefinitely and may be discontinued at any time without
notice. Investors should call 1-800-437-6016 to confirm
availability prior to initiating the procedures described in
clauses (viii) and (ix) above.
The Distributor has also entered into arrangements with
certain affinity groups and broker-dealers wherein their
members or clients are entitled to percentage-based
discounts from the otherwise applicable sales charge for
purchase of Class D shares. Currently the percentage-based
discount is either 10% or 50%. Members of affinity groups
and clients
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of broker-dealers should see the Statement of Additional
Information or contact the Transfer Agent for further
information.
Signature The Transfer Agent may require that the signatures on the
Guarantees written request be guaranteed. You should be able to obtain
a signature guarantee from a bank, broker, dealer, certain
credit unions, securities exchange or association, clearing
agency or savings association. Notaries public cannot
guarantee signatures. The signature guarantee requirement
will be waived if all of the following conditions apply: (1)
the redemption is for not more than $5,000 worth of shares,
(2) the redemption check is payable to the shareholder(s) of
record, and (3) the redemption check is mailed to the
shareholder(s) at his or her address of record. The Trust
and the Transfer Agent reserve the right to amend these
requirements without notice.
Telephone/Wire Redemption orders may be placed by telephone. Neither the
Instructions Trust nor the Transfer Agent will be responsible for any
loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received by
telephone and recording telephone instructions. If market
conditions are extraordinarily active, or other
extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone, you may
wish to consider placing your order by other means.
Systematic Please note that if withdrawals exceed income dividends,
Withdrawal Plan your invested principal in the account will be depleted.
("SWP") Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net asset
value per share, your original investment could be exhausted
entirely. To participate in the SWP, you must have your
dividends automatically reinvested. You may change or cancel
the SWP at any time, upon written notice to the Transfer
Agent.
How to Close An account may be closed by providing written notice to the
your Account Transfer Agent. You may also close your account by telephone
if you have previously elected telephone options on your
account application.
GENERAL INFORMATION ____________________________________________________________
The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated October 20, 1986. The
Declaration of Trust permits the Trust to offer separate
series ("portfolios") of shares and different classes of
each portfolio. Shareholders may purchase shares in the
Portfolio through two separate classes: Class A and Class D
shares, which provide for variation in distribution and
transfer agent costs, voting rights, dividends, and the
imposition of a sales charge on the Class D shares. This
Prospectus offers the Class D shares of the Trust's Core
Fixed Income, Bond and High Yield Bond Portfolios.
Additional information pertaining to the Trust may be
obtained by writing to
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SEI Financial Management Corporation, 680 East Swedesford
Road, Wayne, PA 19087 or by calling 1-800-437-6016. All
consideration received by the Trust for shares of any
portfolio and all assets of such portfolio belong to that
portfolio and would be subject to liabilities related
thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, including litigation and
other extraordinary expenses, brokerage costs, interest
charges, taxes and organization expenses.
Certain shareholders in one or more of the Portfolios may
obtain asset allocation services with respect to their
investments in such Portfolios. If a sufficient amount of a
Portfolio's assets are subject to such asset allocation
services, a Portfolio may incur higher transaction costs and
a higher portfolio turnover rate than would otherwise be
anticipated as a result of redemptions and purchases of
Portfolio shares pursuant to such services.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholder of each Portfolio of the Trust will
vote separately on matters relating solely to that
Portfolio. The shareholder of each class will vote
separately on matters pertaining to its distribution plan.
As a Massachusetts business trust, the Trust is not required
to hold annual meetings of shareholders, but approval will
be sought for certain changes in the operation of the Trust
and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by the
remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least
10% of the outstanding shares of the Trust. In the event
that such a meeting is requested the Trust will provide
appropriate assistance and information to the shareholders
requesting the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to DST Systems,
Inquiries Inc., P.O. Box 419240, Kansas City, MO 64141-6240.
Dividends Substantially all of the net investment income (exclusive of
capital gains) of the Portfolios is periodically declared
and paid as a dividend. Dividends currently are paid on a
daily basis for each Portfolio. Currently, net capital gains
(the excess of net long-term capital gain over net short-
term capital loss) realized, if any, will be distributed at
least annually.
Shareholders automatically receive all income dividends
and capital gain distributions in additional shares at the
net asset value next determined following the record date,
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unless the shareholder has elected to take such payment in
cash. Shareholders may change their election by providing
written notice to SFM at least 15 days prior to the
distribution.
Dividends and capital gains of a Portfolio are paid on a
per-share basis. The value of each share will be reduced by
the amount of any such payment. If shares are purchased
shortly before the record date for dividend of capital gains
distributions, a shareholder will pay the full price for the
shares and receive some portion of the price back as a
taxable dividend or distribution.
The dividends on Class D shares will normally be lower
than on Class A shares of a Portfolio because of the
additional distribution and transfer agent expenses charged
to Class D shares.
Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Price Waterhouse LLP serves as the independent accountants
Accountants of the Trust.
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, PA 19101 (the "Custodian"), acts as
custodian of the Trust's assets. The Custodian holds cash,
securities and other assets of the Trust as required by the
1940 Act.
DESCRIPTION OF PERMITTED INVESTMENTS ANDRISK FACTORS ___________________________
The following is a description of the permitted investment
practices for the Portfolios, and the associated risk
factors:
Asset-Backed Asset-backed securities are securities secured by non-
Securities mortgage assets such as company receivables, truck and auto
loans, leases and credit card receivables. Such securities
are generally issued as pass-through certificates, which
represent undivided fractional ownership interests in the
underlying pools of assets. Such securities also may be debt
instruments, which are also known as collateralized
obligations and are generally issued as the debt of a
special purpose entity, such as a trust, organized solely
for the purpose of owning such assets and issuing such debt.
Asset-backed securities are not issued or guaranteed by
the United States Government or its agencies or
instrumentalities; however, the payment of principal and
interest on such obligations may be guaranteed up to certain
amounts and for a certain period by a letter of credit
issued by a financial institution (such as a bank or
insurance company) unaffiliated with the issuers of such
securities. The purchase of asset-backed securities raises
risk considerations peculiar to the financing of the
instruments underlying such securities. For example, there
is a risk that another party could acquire an interest in
the obligations superior to that of the holders of the
asset-backed securities. There also is the possibility that
recoveries on repossessed collateral may not, in some cases,
be available to support payments on those securities. Asset-
backed securities entail prepayment risk, which may vary
depending on the type of asset, but is generally less than
the prepayment
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risk associated with mortgage-backed securities. In
addition, credit card receivables are unsecured obligations
of the card holders.
The market for asset-backed securities is at a relatively
early stage of development. Accordingly, there may be a
limited secondary market for such securities.
Convertible Convertible securities are corporate securities that are
Securities exchangeable for a set number of another security at a
prestated price. Convertible securities typically have
characteristics similar to both fixed-income and equity
securities. Because of the conversion feature, the market
value of a convertible security tends to move with the
market value of the underlying stock. The value of a
convertible security is also affected by prevailing interest
rates, the credit quality of the issuer, and any call
provisions.
Derivatives Derivatives are securities that derive their value from
other securities. The following are considered derivative
securities: options on futures, futures, options (e.g., puts
and calls), swap agreements, mortgage-backed securities
(e.g., CMOs, REMICs, IOs and POs), when-issued securities
and forward commitments, floating and variable rate
securities, convertible securities, "stripped" U.S. Treasury
securities (e.g., receipts and STRIPs) and privately issued
stripped securities (e.g., TGRs, TRs and CATS). See
elsewhere in this "Description of Permitted Investments and
Risk Factors" for discussions of these various instruments,
and see "Investment Objectives and Policies" for more
information about any investment policies and limitations
applicable to their use.
Equity Equity securities represent ownership interests in a company
Securities or corporation and include common stock, preferred stock and
warrants and other rights to acquire such instruments.
Changes in the value of portfolio securities will not
necessarily affect cash income derived from these securities
but will affect a Portfolio's net asset value.
Fixed Income Fixed income securities are debt obligations issued by
Securities corporations, municipalities and other borrowers. Moreover,
while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are
also subject to greater market fluctuations as a result of
changes in interest rates.
Forward Foreign A forward contract involves an obligation to purchase or
Currency sell a specific currency amount at a future date, agreed
Contracts upon by the parties, at a price set at the time of the
contract. A Portfolio may also enter into a contract to
sell, for a fixed amount of U.S. dollars or other
appropriate currency, the amount of foreign currency
approximating the value of some or all of a Portfolio's
securities denominated in such foreign currency.
At the maturity of a forward contract, a Portfolio may
either sell a portfolio security and make delivery of the
foreign currency, or it may retain the security and
terminate its contractual obligation to deliver the foreign
currency by purchasing an "offsetting" contract with the
same currency trader, obligating it to purchase, on the same
maturity date, the same amount of the foreign currency. A
Portfolio may realize a gain or loss from currency
transactions.
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Futures and Futures contracts provide for the future sale by one party
Options on and purchase by another party of a specified amount of a
Futures specific security at a specified future time and at a
specified price. An option on a futures contract gives the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise price
during the term of the option. A Portfolio may use futures
contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to a
particular market or instrument. A Portfolio will minimize
the risk that it will be unable to close out a futures
contract by only entering into futures contracts that are
traded on national futures exchanges.
A bond index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery
of an amount of cash equal to a specified dollar amount
times the difference between the bond index value at the
close of trading of the contract and the price at which the
futures contract is originally struck. No physical delivery
of the stocks comprising the index is made. A bond futures
contract is a bilateral agreement pursuant to which parties
agree to take or make delivery of the underlying security at
the close of trading of the contract.
Generally, futures contracts are closed out prior to the
expiration date of the contract. No price is paid upon
entering into futures contracts. Instead, a Portfolio would
be required to deposit an amount of cash or U.S. Treasury
securities known as "initial margin." Subsequent payments,
called "variation margin," to and from the broker, would be
made on a daily basis as the value of the futures position
varies (a process known as "marking to market"). The margin
is in the nature of a performance bond or good-faith deposit
on a futures contract.
Eurodollar instruments are U.S. dollar-denominated
futures contracts or options thereon which are linked to the
London Interbank Offered Rate (LIBOR), although foreign
currency denominated instruments are available from time to
time. Eurodollar futures contracts enable purchasers to
obtain a fixed rate for the lending of funds and sellers to
obtain a fixed rate for borrowings.
In order to avoid leveraging and related risks, when a
Portfolio purchases futures contracts, it will collateralize
its position by depositing an amount of cash or liquid, high
grade debt securities, equal to the market value of the
futures positions held, less margin deposits, in a
segregated account with the Trust's custodian. Collateral
equal to the current market value of the futures position
will be marked to market on a daily basis.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets
and movements in interest rates, (2) there may be an
imperfect or no correlation between the changes in market
value of the securities held by the Portfolio and the prices
of futures and options on futures, (3) there may not be a
liquid secondary market for a futures contract or option,
(4) trading restrictions or limitations may be imposed by an
exchange, and (5) government regulations may restrict
trading in futures contracts and options on futures.
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A Portfolio may enter into futures contracts and options
on futures contracts traded on an exchange regulated by the
Commodities Futures Trading Commission ("CFTC"), so long as,
to the extent that such transactions are not for "bona fide
hedging purposes," the aggregate initial margin and premiums
on such positions (excluding the amount by which such
options are in the money) do not exceed 5% of the
Portfolio's net assets. The Portfolio may buy and sell
futures contracts and related options to manage its exposure
to changing interest rates and securities prices. Some
strategies reduce the Portfolio's exposure to price
fluctuations, while others tend to increase its market
exposure. Futures and options on futures can be volatile
instruments and involve certain risks that could negatively
impact the Portfolio's return.
Illiquid Illiquid securities are securities that cannot be disposed
Securities of within seven business days at approximately the price at
which they are being carried on a Portfolio's books. An
illiquid security includes a demand instrument with a demand
notice period exceeding seven days, where there is no
secondary market for such security, and repurchase
agreements with durations (or maturities) over 7 days in
length.
Junk Bonds Bonds rated below investment grade are often referred to as
"junk bonds." Such securities involve greater risk of
default or price declines than investment grade securities
due to changes in the issuer's creditworthiness and the
outlook for economic growth. The market for these securities
may be less active, causing market price volatility and
limited liquidity in the secondary market. This may limit a
Portfolio's ability to sell such securities at their market
value. In addition, the market for these securities may also
be adversely affected by legislative and regulatory
developments. Credit quality in the junk bond market can
change suddenly and unexpectedly, and even recently issued
credit ratings may not fully reflect the actual risks
imposed by a particular security. See also the "Risk
Factors" section.
Money Market Money market securities are high-quality, dollar-
Securities denominated, short-term debt instruments. They consist of:
(i) bankers' acceptances, certificates of deposits, notes
and time deposits of highly-rated U.S. banks and U.S.
branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and
instrumentalities of the U.S. Government; (iii) high-quality
commercial paper issued by U.S. and foreign corporations;
(iv) debt obligations with a maturity of one year of less
issued by corporations with outstanding high-quality
commercial paper; and (v) repurchase agreements involving
any of the foregoing obligations entered into with highly-
rated banks and broker-dealers.
Mortgage-Backed Mortgage-backed securities are instruments that entitle the
Securities holder to a share of all interest and principal payments
from mortgages underlying the security. The mortgages
backing these securities include conventional fifteen and
thirty-year fixed-rate mortgages, graduated payment
mortgages, and adjustable rate mortgages and balloon
mortgages. Prepayment of mortgages which underlie securities
purchased at a premium often results
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in capital losses, while prepayment of mortgages purchased
at a discount often results in capital gains. Because of
these unpredictable prepayment characteristics, it is often
not possible to predict accurately the average life or
realized yield of a particular issue.
Government Pass-Through Securities: These are securities
that are issued or guaranteed by a U.S. Government agency
representing an interest in a pool of mortgage loans. The
primary issuers or guarantors of these mortgage-backed
securities are GNMA, FNMA and FHLMC. FNMA and FHLMC
obligations are not backed by the full faith and credit of
the U.S. Government as GNMA certificates are, but FNMA and
FHLMC securities are supported by the instrumentalities'
right to borrow from the U.S. Treasury. GNMA, FNMA and FHLMC
each guarantees timely distributions of interest to
certificate holders. GNMA and FNMA also each guarantees
timely distributions of scheduled principal. FHLMC has in
the past guaranteed only the ultimate collection of
principal of the underlying mortgage loan; however, FHLMC
now issues mortgage-backed securities (FHLMC Gold PCs) which
also guarantee timely payment of monthly principal
reductions. Government and private guarantees do not extend
to the securities' value, which is likely to vary inversely
with fluctuations in interest rates.
Private Pass-Through Securities: These are mortgage-
backed securities issued by a non-governmental entity, such
as a trust or corporate entity. These securities include
collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs"). While they are
generally structured with one or more types of credit
enhancement, private pass-through securities typically lack
a guarantee by an entity having the credit status of a
governmental agency or instrumentality.
Collateralized Mortgage Obligations ("CMOs"): CMOs are
debt obligations or multiclass pass-through certificates
issued by agencies or instrumentalities of the U.S.
Government or by private originators or investors in
mortgage loans. In a CMO, series of bonds or certificates
are usually issued in multiple classes. Principal and
interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in
a variety of ways. Each class of a CMO, often referred to as
a "tranche," is issued with a specific fixed or floating
coupon rate and has a stated maturity or final distribution
date. Principal payments on the underlying mortgage assets
may cause CMOs to be retired substantially earlier then
their stated maturities or final distribution dates,
resulting in a loss of all or part of any premium paid.
REMICs: A REMIC is a CMO that qualifies for special tax
treatment under the Internal Revenue Code and invests in
certain mortgages principally secured by interests in real
property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or
"residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC
represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or FNMA, FHLMC or
GNMA-guaranteed mortgage pass-through certificates. For
FHLMC REMIC Certificates, FHLMC guarantees the timely
payment of interest, and also guarantees the payment of
principal as
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payments are required to be made on the underlying mortgage
participation certificates. FNMA REMIC Certificates are
issued and guaranteed as to timely distribution of principal
and interest by FNMA.
Parallel Pay Securities; PAC Bonds: Parallel pay CMOs and
REMICS are structured to provide payments of principal on
each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated
maturity date or final distribution date of each class,
which must be retired by its stated maturity date or final
distribution date, but may be retired earlier. Planned
Amortization Class CMOs ("PAC Bonds") generally require
payments of a specified amount of principal on each payment
date. PAC Bonds are always parallel pay CMOs with the
required principal payment on such securities having the
highest priority after interest has been paid to all
classes.
REITs: REITs are trusts that invest primarily in
commercial real estate or real estate-related loans. The
value of interests in REITs may be affected by the value of
the property owned or the quality of the mortgages held by
the trust.
Stripped Mortgage-Backed Securities ("SMBs"): SMBs are
usually structured with two classes that receive specified
proportions of the monthly interest and principal payments
from a pool of mortgage securities. One class may receive
all of the interest payments and is thus termed an interest-
only class ("IO"), while the other class may receive all of
the principal payments and is thus termed the principal-only
class ("PO"). The value of IOs tends to increase as rates
rise and decrease as rates fall; the opposite is true of
POs. SMBs are extremely sensitive to changes in interest
rates because of the impact thereon of prepayment of
principal on the underlying mortgage securities can
experience wide swings in value in response to changes in
interest rates and associated mortgage prepayment rates.
During times when interest rates are experiencing
fluctuations, such securities can be difficult to price on a
consistent basis. The market for SMBs is not as fully
developed as other markets; SMBs therefore may be illiquid.
Risk Factors: Due to the possibility of prepayments of
the underlying mortgage instruments, mortgage-backed
securities generally do not have a known maturity. In the
absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate
is a function of an assumption regarding anticipated
prepayment patterns, based upon current interest rates,
current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus
different market participants can produce different average
life estimates with regard to the same security. There can
be no assurance that estimated average life will be a
security's actual average life.
Mortgage Dollar Mortgage "dollar rolls" are transactions in which mortgage-
Rolls backed securities are sold for delivery in the current month
and the seller simultaneously contracts to repurchase
substantially similar securities on a specified future date.
Any difference between the sale price and the purchase price
is netted against the interest income foregone on the
securities sold to arrive at an implied borrowing rate.
Alternatively, the sale and purchase
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transactions can be executed at the same price, with the
Portfolio being paid a fee as consideration for entering
into the commitment to purchase. Mortgage dollar rolls may
be renewed prior to cash settlement and initially may
involve only a firm commitment agreement by the Portfolio to
buy a security. If the broker-dealer to whom the Portfolio
sells the security becomes insolvent, the Portfolio's right
to repurchase the security may be restricted. Other risks
involved in entering into mortgage dollar rolls include the
risk that the value of the security may change adversely
over the term of the mortgage dollar roll and that the
security the Portfolio is required to repurchase may be
worth less than the security that the Portfolio originally
held.
To avoid any leveraging concerns, the Portfolio will
place U.S. Government or other liquid, high grade debt
securities in a segregated account in an amount sufficient
to cover its repurchase obligation.
Municipal Municipal securities consist of (i) debt obligations issued
Securities by or on behalf of public authorities to obtain funds to be
used for various public facilities, for refunding
outstanding obligations, for general operating expenses, and
for lending such funds to other public institutions and
facilities, and (ii) certain private activity and industrial
development bonds issued by or on behalf of public
authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated
facilities.
General obligation bonds are backed by the taxing power
of the issuing municipality. Revenue bonds are backed by the
revenues of a project or facility (tolls from a bridge, for
example). Certificates of participation represent an
interest in an underlying obligation or commitment, such as
an obligation issued in connection with a leasing
arrangement. The payment of principal and interest on
private activity and industrial development bonds generally
is dependent solely on the ability of a facility's user to
meet its financial obligations and the pledge, if any, of
real and personal property as security for such payment.
Municipal securities include both municipal notes and
municipal bonds. Municipal notes include general obligation
notes, tax anticipation notes, revenue anticipation notes,
bond anticipation notes, certificates of indebtedness,
demand notes and construction loan notes and participation
interests in municipal notes. Municipal bonds include
general obligation bonds, revenue or special obligation
bonds, private activity and industrial development bonds and
participation interests in municipal bonds.
Options A put option gives the purchaser of the option the right to
sell, and the writer of the option the obligation to buy,
the underlying security at any time during the option
period. A call option gives the purchaser of the option the
right to buy, and the writer of the option the obligation to
sell, the underlying security at any time during the option
period. The premium paid to the writer is the consideration
for undertaking the obligations under the option contract.
The initial purchase (sale) of an option contract is an
"opening transaction." In order to close out an option
position, a Portfolio may enter into a "closing
transaction," which is simply the sale (purchase) of an
option contract on the same security with the same exercise
price and expiration date as the option contract originally
opened.
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A Portfolio may purchase put and call options to protect
against a decline in the market value of the securities in
its portfolio or to anticipate an increase in the market
value of securities that the Portfolio may seek to purchase
in the future. A Portfolio purchasing put and call options
pays a premium therefor. If price movements in the
underlying securities are such that exercise of the options
would not be profitable for the Portfolio, loss of the
premium paid may be offset by an increase in the value of
the Portfolio's securities or by a decrease in the cost of
acquisition of securities by the Portfolio.
A Portfolio may write covered call options as a means of
increasing the yield on its portfolio and as a means of
providing limited protection against decreases in its market
value. When a Portfolio sells an option, if the underlying
securities do not increase or decrease to a price level that
would make the exercise of the option profitable to the
holder thereof, the option generally will expire without
being exercised and the Portfolio will realize as profit the
premium received for such option. When a call option of
which a Portfolio is the writer is exercised, the Portfolio
will be required to sell the underlying securities to the
option holder at the strike price, and will not participate
in any increase in the price of such securities above the
strike price. When a put option of which a Portfolio is the
writer is exercised, the Portfolio will be required to
purchase the underlying securities at the strike price,
which may be in excess of the market value of such
securities.
A Portfolio may purchase and write options on an exchange
or over-the-counter. Over-the-counter options ("OTC
options") differ from exchange-traded options in several
respects. They are transacted directly with dealers and not
with a clearing corporation, and therefore entail the risk
of non-performance by the dealer. OTC options are available
for a greater variety of securities and for a wider range of
expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded
on an exchange, pricing is done normally by reference to
information from a market maker. It is the position of the
Securities and Exchange Commission that OTC options are
generally illiquid.
A Portfolio may purchase and write put and call options
on foreign currencies (traded on U.S. and foreign exchanges
or over-the-counter markets) to manage its exposure to
exchange rates. Call options on foreign currency written by
a Portfolio will be "covered," which means that the
Portfolio will own an equal amount of the underlying foreign
currency. With respect to put options on foreign currency
written by a Portfolio, the Portfolio will establish a
segregated account with its custodian bank consisting of
cash or liquid, high grade debt securities in an amount
equal to the amount the Portfolio would be required to pay
upon exercise of the put.
A Portfolio may purchase and write put and call options
on indices and enter into related closing transactions. Put
and call options on indices are similar to options on
securities except that options on an index give the holder
the right to receive, upon exercise of the option, an amount
of cash if the closing level of the underlying index is
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greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal
to the difference between the closing price of the index and
the exercise price of the option, expressed in dollars
multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain
or loss depends on price movements in the particular market
represented by the index generally, rather than the price
movements in individual securities. A Portfolio may choose
to terminate an option position by entering into a closing
transaction. The ability of a Portfolio to enter into
closing transactions depends upon the existence of a liquid
secondary market for such transactions.
A Portfolio may engage in writing covered call options.
Under a call option, the purchaser has the right to purchase
and the writer (the Portfolio) the obligation to sell the
underlying security at the exercise price during the option
period. Options purchased by the Portfolio will be listed on
a national securities exchange. In order to close out an
option position, the Portfolio may enter into a "closing
purchase transaction," which involves the purchase of an
option on the same security at the same exercise price and
expiration date. If the Portfolio is unable to effect a
closing purchase transaction with respect to an option it
has written, it will not be able to sell the underlying
security until the option expires or the Portfolio delivers
the security upon exercise.
All options written on indices must be covered. When a
Portfolio writes an option on an index, it will establish a
segregated account containing cash or liquid high grade debt
securities with its custodian in an amount at least equal to
the market value of the option and will maintain the account
while the option is open or will otherwise cover the
transaction.
Risk Factors. Risks associated with options transactions
include: (1) the success of a hedging strategy may depend on
an ability to predict movements in the prices of individual
securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation
between the movement in prices of options and the securities
underlying them; (3) there may not be a liquid secondary
market for options; and (4) while a Portfolio will receive a
premium when it writes covered call options, it may not
participate fully in a rise in the market value of the
underlying security.
Receipts Receipts are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments
of interest or principal. This discount is accreted over the
life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax
purposes. Because of these features, such securities may be
subject to greater interest rate volatility than interest
paying Permitted Investments. See also "Taxes."
Repurchase Agreements by which a Portfolio obtains a security and
Agreements simultaneously commits to return the security to the seller
at an agreed upon price (including principal and interest)
on an agreed upon date within a number of days from the date
of purchase. The Custodian or its
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agent will hold the security as collateral for the
repurchase agreement. Collateral must be maintained at a
value at least equal to 102% of the purchase price. The
Portfolio bears a risk of loss in the event the other party
defaults on its obligations and the Portfolio is delayed or
prevented from exercising its right to dispose of the
collateral securities or if the Portfolio realizes a loss on
the sale of the collateral securities. An adviser will enter
into repurchase agreements on behalf of the Portfolio only
with financial institutions deemed to present minimal risk
of bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the
Trustees. Repurchase agreements are considered loans under
the 1940 Act.
Securities In order to generate additional income, a Portfolio may lend
Lending securities which it owns pursuant to agreements requiring
that the loan be continuously secured by collateral
consisting of cash, securities of the U.S. Government or its
agencies equal to at least 100% of the market value of the
securities lent. A Portfolio continues to receive interest
on the securities lent while simultaneously earning interest
on the investment of cash collateral. Collateral is marked
to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral
should the borrower of the securities fall financially or
become insolvent.
Securities of There are certain risks connected with investing in foreign
Foreign Issuers securities. These include risks of adverse political and
economic developments (including possible governmental
seizure or nationalization of assets), the possible
imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting
requirements, the possibility that there will be less
information on such securities and their issuers available
to the public, the difficulty of obtaining or enforcing
court judgments abroad, restrictions on foreign investments
in other jurisdictions, difficulties in effecting
repatriation of capital invested abroad, and difficulties in
transaction settlements and the effect of delay on
shareholder equity. Foreign securities may be subject to
foreign taxes, and may be less marketable than comparable
U.S. securities. The value of a Portfolio's investments
denominated in foreign currencies will depend on the
relative strengths of those currencies and the U.S. dollar,
and a Portfolio may be affected favorably or unfavorably by
changes in the exchange rates or exchange control
regulations between foreign currencies and the U.S. dollar.
Changes in foreign currency exchange rates also may affect
the value of dividends and interest earned, gains and losses
realized on the sale of securities and net investment income
and gains, if any, to be distributed to shareholders by a
Portfolio.
U.S. Government Obligations issued or guaranteed by agencies of the U.S.
Agency Government, including, among others, the Federal Farm Credit
Obligations Bank, the Federal Housing Administration and the Small
Business Administration, and obligations issued or
guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full
faith and credit of the U.S. Treasury (e.g., Government
National Mortgage
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Association), others are supported by the right of the
issuer to borrow from the Treasury (e.g., Federal Farm
Credit Bank), while still others are supported only by the
credit of the instrumentality (e.g., Federal National
Mortgage Association). Guarantees of principal by agencies
or instrumentalities of the U.S. Government may be a
guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might
not be a market and thus no means of realizing on the
obligation prior to maturity. Guarantees as to the timely
payment of principal and interest do not extend to the value
or yield of these securities nor to the value of the
Portfolio's shares.
U.S. Treasury U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury and separately traded interest
and principal component parts of such obligations that are
transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal
Securities ("STRIPS").
U.S. Treasury U.S. Treasury receipts are interests in separately traded
Receipts interest and principal component parts of U.S. Treasury
obligations that are issued by banks or brokerage firms and
are created by depositing U.S. Treasury obligations into a
special account at a custodian bank. The custodian holds the
interest and principal payments for the benefit of the
registered owners of the certificates of receipts. The
custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register.
Receipts include "Treasury Receipts" ("TRs"), "Treasury
Investment Growth Receipts" ("TIGRs"), "Liquid Yield Option
Notes" ("LYONs") and "Certificates of Accrual on Treasury
Securities" ("CATS"). TIGRs and CATS are interests in
private proprietary accounts while TRs are interests in
accounts sponsored by the U.S. Treasury.
Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest, and may involve a conditional or unconditional
Instruments demand feature. Such instruments bear interest at rates
which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on
interest rate changes. There is a risk that the current
interest rate on such obligations may not accurately reflect
existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.
Each Portfolio may invest in variable and floating rate
instruments.
Warrants Warrants are instruments giving holders the right, but not
the obligation, to buy shares of a company at a given price
during a specified period.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
including TBA purchase commitment. The Portfolio will maintain with the
Mortgage-Backed Custodian a separate account with liquid, high grade debt
Securities securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date, and no interest accrues to
the
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Portfolio before settlement. These securities are subject to
market fluctuation due to changes in market interest rates,
and it is possible that the market value at the time of
settlement could be higher or lower than the purchase price
if the general level of interest rates has changed. Although
a Portfolio generally purchases securities on a when-issued
or forward commitment basis with the intention of actually
acquiring securities, a Portfolio may dispose of a when-
issued security or forward commitment prior to settlement if
the advisers deem it appropriate to do so.
One form of when-issued or delayed-delivery security that
a Portfolio may purchase is a "to be announced" ("TBA")
mortgage-backed security. A TBA mortgage-backed security
transaction arises when a mortgage-backed security, such as
a GNMA pass-through security, is purchased or sold with
specific pools that will constitute that GNMA pass-through
security to be announced on a future settlement date.
Yankee Yankee obligations ("Yankees") are U.S. dollar-denominated
Obligations instruments of foreign issuers who either register with the
Securities and Exchange Commission or issue under Rule 144A
of the Securities Exchange Act of 1933, as amended. These
consist of debt securities (including preferred or
preference stock of non-governmental issuers), certificates
of deposit, fixed time deposits and bankers' acceptances
issued by foreign banks, and debt obligations of foreign
governments or their subdivisions, agencies and
instrumentalities, international agencies and supranational
entities. Some securities issued by foreign governments or
their subdivisions, agencies and instrumentalities may not
be backed by the full faith and credit of the foreign
government.
Investing in the securities of issuers based in any
foreign country involves special risks and considerations
not typically associated with investing in U.S. companies.
These include risks resulting from differences in
accounting, auditing and financial reporting standards,
lower liquidity than U.S. fixed income or debt securities,
the possibility of nationalization, expropriation or
confiscatory taxation; adverse changes in investment or
exchange control regulations and political instability.
There may be less publicly available information concerning
foreign issuers of securities held by the Portfolio than is
available concerning U.S. issuers. Purchases and sales of
foreign securities and dividends and interest payable on
those securities may be subject to foreign taxes and taxes
may be withheld from dividend and interest payments on those
securities. Foreign securities often trade with less
frequency and volume than domestic securities and therefore
may exhibit greater price volatility and a greater risk of
liquidity.
The yankee obligations selected for the Portfolio will
adhere to the same quality standards as those utilized for
the selection of domestic debt obligations.
Zero Coupon, Zero coupon securities are securities that are sold at a
Pay-In-Kind and discount to par value and securities on which interest
Deferred payments are not made during the life of the security. Upon
Payment maturity, the holder is entitled to receive the par value of
Securities the security. While interest payments are not made on such
securities, holders of such securities are deemed to have
received "phantom income" annually. Because a Portfolio will
distribute its "phantom income" to
41
<PAGE>
shareholders, to the extent that shareholders elect to
receive dividends in cash rather than reinvesting such
dividends in additional shares, a Portfolio will have fewer
assets with which to purchase income producing securities.
Alternatively, shareholders may have to redeem shares to pay
tax on this "phantom income." In either case, the Portfolio
may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have
to leverage itself by borrowing cash to satisfy distribution
requirements. A Portfolio accrues income with respect to the
securities prior to the receipt of cash payments. Pay-in-
kind securities are securities that have interest payable by
delivery of additional securities. Deferred payment
securities are securities that remain zero coupon securities
until a predetermined date, at which time the stated coupon
rate becomes effective and interest becomes payable at
regular intervals. Zero coupon, pay-in-kind and deferred
payment securities may be subject to greater fluctuation in
value and lesser liquidity in the event of adverse market
conditions that comparably rated securities paying cash
interest at regular interest payment periods.
Additional information on permitted investments and risk
factors can be found in the Statement of Additional
Information.
42
<PAGE>
APPENDIX--DESCRIPTION OF CORPORATE BOND RATINGS ________________________________
MOODY'S RATING DEFINITIONS
LONG-TERM
AAA Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edged". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
AA Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
the Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment some time in the
future.
BAA Bonds which are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
BA Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
CAA Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
CA Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
A-1
<PAGE>
Moody's bond ratings, where specified, are applied to senior bank obligations
and insurance company senior policyholder and claims obligations with an
original maturity in excess of one year. Obligations relying upon support
mechanisms such as letters-of-credit and bonds of indemnity are excluded unless
explicitly rated.
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located
in countries which carry a Moody's sovereign rating. Such branch obligations
are rated at the lower of the bank's rating or Moody's sovereign rating for the
bank deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings
do not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance
company obligations are exempt from registration under the U.S. Securities Act
of 1933 or issued in conformity with any other applicable law or regulation.
Nor does Moody's represent that any specific bank or insurance company
obligation is legally enforceable or is a valid senior obligation of a rated
issuer.
Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
STANDARD & POOR'S RATING DEFINITIONS
A Standard & Poor's corporate or municipal debt rating is a current assessment
of creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligors such as guarantors, insurers,
or lessees.
The debt rating is not a recommendation to purchase, sell or hold a security,
as it does not comment on market price or suitability for a particular
investor.
The ratings are based, in varying degrees, on the following considerations:
(1) Likelihood of default. The rating assesses the obligor's capacity and
willingness as to timely payment of interest and repayment of principal in
accordance with the terms of the obligation.
A-2
<PAGE>
(2) The obligation's nature and provisions.
(3) Protection afforded to, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under bankruptcy
laws and other laws affecting creditor's rights.
Likelihood of default is indicated by an issuer's senior debt rating. If senior
debt is not rated, an implied senior debt rating is determined. Subordinated
debt usually is rated lower than senior debt to better reflect relative
position of the obligation in bankruptcy. Unsecured debt, where significant
secured debt exists, is treated similarly to subordinated debt.
LONG-TERM
Investment Grade
AAA Debt rated "AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated "AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.
A Debt rated "A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB Debt rated "BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
Speculative Grade
Debt rated "BB', "B', "CCC', "CC', and "C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. "BB' indicates the least degree of speculation and "C' the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposure to adverse conditions.
BB Debt rated "BB' has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could
lead to inadequate capacity to meet timely interest and principal payments.
The "BB' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BBB-' rating.
B Debt rate "B' has greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions would likely impair capacity or
willingness to pay interest and repay principal. The "B' rating category
also is used for debt subordinated to senior debt that is assigned an
actual or implied "BB' or "BB-' rating.
CCC Debt rated "CCC' has a current identifiable vulnerability to default, and
is dependent on favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event
of adverse business, financial, or economic conditions, it is not likely
to have the capacity to pay interest and repay principal.
A-3
<PAGE>
The "CCC' rating category also is used for debt subordinated to senior debt
that is assigned an actual or implied "B' or "B-' rating.
CC The rating "CC' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC' rating.
C The rating "C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-' debt rating. The "C' rating
may be used to cover a situation where a bankruptcy petition has been filed,
but debt service payment are continued.
CI Debt rated "CI' is reserved for income bonds on which no interest is being
paid.
D Debt is rated "D' when the issue is in payment default, or the obligor has
filed for bankruptcy. The "D' rating is used when interest or principal
payments are not made on the date due, even if the applicable grace period
has not expired, unless S&P believes that such payments will be made during
such grace period.
Plus (+) or minus (-): The ratings from "AA' to "CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
C The letter "c' indicates that the holder's option to tender the security for
purchase may be canceled under certain prestated conditions enumerated in
the tender option documents.
P The letter "p' indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project financed by the debt
being rated and indicates that payment of the debt service requirements is
largely or entirely dependent upon the successful timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of, or the
risk of default upon failure of such completion. The investor should
exercise his own judgement with respect to such likelihood and risk.
L The letter "L' indicates that the rating pertains to the principal amount of
those bonds to the extent that the underlying deposit collateral is
federally insured, and interest is adequately collateralized. In the case of
certificates of deposit, the letter "L' indicates that the deposit, combined
with other deposits being held in the same right and capacity, will be
honored for principal and pre-default interest up to federal insurance
limits within 30 days after closing of the insured institution or, in the
event that the deposit is assumed by a successor insured institution, upon
maturity.
- -------
* Continuance of the rating is contingent upon S&P's receipt of an executed
copy of the escrow agreement or closing documentation confirming investments
and cash flows.
N.R. Not rated.
Debt obligations of issuers outside the United States and its territories are
rated on the same basis as domestic corporate and municipal issues. The ratings
measure the creditworthiness of the obligor but do not take into account
currency exchange and related uncertainties.
If an issuer's actual or implied senior debt rating is "AAA', its subordinated
or junior debt is rated "AAA' or "AA+'. If an issuer's actual or implied senior
debt rating is lower than "AAA' but higher than "BB+', its junior debt is
typically rated
A-4
<PAGE>
once designation lower than the senior debt ratings. For example, if the senior
debt rating is "A', subordinated debt normally would be rated "A-'. If an
issuer's actual or implied senior debt rating is "BB+' or lower, its
subordinated debt is typically rated two designations lower than the senior
debt rating.
NOTE: The term "investment grade" was originally used by various regulatory
bodies to connote obligations eligible for investment by institutions such as
banks, insurance companies, and savings and loan associations. Over time, this
term gained widespread usage throughout the investment community. Issues rated
in the four highest categories, "AAA', "AA', "A', "BBB', generally are
recognized as being investment grade. Debt "BB' or below generally is referred
to as speculative grade. The term "junk bond" is merely a more irreverent
expression for this category of more risky debt. Neither term indicates which
securities S&P deems worthy of investment, as an investor with a particular
risk preference may appropriately invest in securities that are not investment
grade.
FITCH INVESTOR SERVICES INC. RATING DEFINITIONS
LONG-TERM
AAA
Bonds rated AAA are judged to be strictly high grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions liable to
slight market fluctuation other than through changes in the money rate.
The prime feature of an AAA bond is a showing of earnings several times or
many times greater than interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever
changes occur in conditions.
AA
Bonds rated AA are judged to be of safety virtually beyond question and
are readily salable, whose merits are not unlike those of the AAA class,
but whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to
rating by the lesser financial power of the enterprise and more local type
market.
A
Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB
Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
BB
Bonds rated BB are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.
B
Bonds rated B are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.
A-5
<PAGE>
CCC
Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.
CC
Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C
Bonds are in imminent default in payment of interest or principal.
DDD DD D
Bonds are in default on interest and/or principal payments. Such bonds are
extremely speculative and should be valued on the basis of their ultimate
recovery value in liquidation or reorganization of the obligor. "DDD'
represents the lowest potential for recovery on these bonds, and "D'
represents the lowest potential for recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "AAA', "DDD', "DD', or "D'
categories.
DUFF AND PHELPS, INC. RATING DEFINITIONS
AAA
Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ AA-
High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A+ A-
Protection factors are average but adequate. However, risk factors are
more variable and greater in periods of economic stress.
BBB+ BBB-
Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic
cycles.
BB+ BB BB-
Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or
down frequently within this category.
B+ B B-
Below investment grade and possessing risk that obligations will not be
met when due. Financial protection factors will fluctuate widely according
to economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in the rating within this category or into a
higher or lower rating grade.
CCC
Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends.
Protection factors are narrow and risk can be substantial with unfavorable
economic/industry conditions, and/or with unfavorable company
developments.
DD
Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP
Preferred stock with dividend arrearages.
A-6
<PAGE>
IBCA LIMITED RATING DEFINITIONS
AAA
Obligations rated AAA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions
are unlikely to increase investment risk significantly.
AA
Obligations for which there is a very low expectation of investment risk
are rated AA. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions
may increase investment risk albeit not very significantly.
A
Bonds rated A are obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest
is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.
BBB
Bonds rated BBB are obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal
and interest is adequate, although adverse changes in business, economic
or financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.
BB
Bonds rated BB are obligations for which there is a possibility of
investment risk developing. Capacity for timely repayment of principal and
interest exists, but is susceptible over time to adverse changes in
business, economic or financial conditions. Bonds rated B are obligations
for which investment risk exists. Timely repayment of principal and
interest is not sufficiently protected against adverse changes in
business, economic or financial conditions.
B
Obligations for which investment risk exists. Timely repayment of
principal and interest is not sufficiently protected against adverse
changes in business, economic or financial conditions.
CCC
Obligations for which there is a current perceived possibility of default.
Timely repayment of principal and interest is dependent on favorable
business, economic or financial conditions.
CC
Obligations which are highly speculative or which have a high risk of
default.
C
Obligations which are currently in default.
NOTES: "+" or "-" may be appended to a rating to denote relative status within
major rating categories.
Ratings of BB and below are assigned where it is considered that
speculative characteristics are present.
THOMSON BANKWATCH RATING DEFINITIONS
AAA
Bonds rated AAA indicate that the ability to repay principal and interest
on a timely basis is very high.
AA
Bonds rated AA indicate a superior ability to repay principal and interest
on a timely basis, with limited incremental risk compared to issues rated
in the highest category.
A-7
<PAGE>
A
Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse developments
(both internal and external) than obligations with higher ratings.
BBB
Bonds rated BBB indicate an acceptable capacity to repay principal and
interest. Issues rated BBB are, however, more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.
BB
While not investment grade, the BB rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there
are significant uncertainties that could affect the ability to adequately
service debt obligations.
B
Issues rated B show a higher degree of uncertainty and therefore greater
likelihood of default than higher-rated issues. Adverse developments could
well negatively affect the payment of interest and principal on a timely
basis.
CCC
Issues rated "CCC" clearly have a high likelihood of default, with little
capacity to address further adverse changes in financial circumstances.
CC
"CC" is applied to issues that are subordinate to other obligations rated
"CCC" and are afforded less protection in the event of bankruptcy or
reorganization.
D
Default
Ratings in the Long-Term Debt categories may include a plus (+) or minus (-)
designation, which indicates where within the respective category the issue is
placed.
A-8
<PAGE>
PROSPECTUS
JANUARY 31, 1996
- --------------------------------------------------------------------------------
LARGE CAP VALUE PORTFOLIO
LARGE CAP GROWTH PORTFOLIO
SMALL CAP VALUE PORTFOLIO
SMALL CAP GROWTH PORTFOLIO
MID-CAP PORTFOLIO
CAPITAL APPRECIATION PORTFOLIO
EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
This Prospectus sets forth concisely the information about the above-referenced
portfolios. Please read this Prospectus carefully before investing, and keep it
on file for future reference. It contains information that can help you decide
if a Portfolio's investment goals match your own.
A Statement of Additional Information dated January 31, 1996 has been filed
with the Securities and Exchange Commission and is available upon request and
without charge by writing the Distributor, SEI Financial Services Company, 680
East Swedesford Road, Wayne, PA 19087-1658, or by calling 1-800-437-6016. The
Statement of Additional Information is incorporated into this Prospectus by
reference.
SEI Institutional Managed Trust (the "Trust") is an open-end investment
management company, certain classes of which offer shareholders a convenient
means of investing their funds in one or more professionally managed
diversified and non-diversified portfolios of securities. The Large Cap Value,
Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-Cap, Capital
Appreciation and Equity Income Portfolios, investment portfolios of the Trust,
offer two classes of shares, Class A shares and Class D shares. Class D shares
differ from Class A shares primarily in the imposition of sales charges and the
allocation of certain distribution expenses and transfer agent fees. Class D
shares are available through SEI Financial Services Company (the Trust's
distributor) and through participating broker-dealers, financial institutions
and other organizations. This Prospectus offers the Class D shares of the seven
equity portfolios (each, a "Portfolio," and together, the "Portfolios" ) listed
above.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. INVESTMENT IN THE
SHARES INVOLVES RISK, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL
AMOUNT INVESTED.
<PAGE>
..........................
TABLE OF
CONTENTS
<TABLE>
<S> <C>
Fund Highlights.. 2
Shareholder
Transaction
Expenses........ 5
Annual Operating
Expenses........ 5
Your Account and
Doing Business
with Us......... 7
Investment
Objectives and
Policies........ 10
General
Investment
Policies........ 15
Risk Factors..... 16
Investment
Limitations..... 17
The Manager and
Shareholder
Servicing Agent. 17
Multi-Manager
Diversification. 18
The Adviser...... 20
The Sub-Advisers. 20
Distribution..... 27
Performance...... 29
Taxes............ 30
Additional
Information
About Doing
Business with
Us.............. 31
General
Information..... 35
Description of
Permitted
Investments and
Risk Factors.... 37
</TABLE>
..........................
HOW TO READ THIS PROSPECTUS ____________________________________________________
This Prospectus gives you information that you should know about the Portfolios
before investing. Brief descriptions are also provided throughout the
Prospectus to better explain certain key points. To find these helpful guides,
look for this symbol:
FUND HIGHLIGHTS ________________________________________________________________
The following summary provides basic information about the Class D Funds shares
of the Trust's Large Cap Value, Large Cap Growth, Small Cap Value, Small Cap
Growth, Mid-Cap, Capital Appreciation and Equity Income . This summary is
qualified in its entirety by reference to the more detailed information
provided elsewhere in this Prospectus and in the Statement of Additional
Information.
INVESTMENT Below are the investment objectives and policies for each
OBJECTIVES AND Portfolio. For more information, see "Investment Objectives
POLICIES and Policies," "General Investment Policies' " "Risk Factors"
and "Description of Permitted Investments and Risk Factors."
LARGE CAP The Large Cap Value Portfo-
VALUE lio seeks to provide long-
PORTFOLIO term growth of capital and
income by investing primar-
ily in a diversified portfo-
lio of high quality, income
producing common stocks
which in the advisers' opin-
ion is undervalued at the
time of purchase.
LARGE CAP The Large Cap Growth Portfo-
GROWTH lio seeks to provide capital
PORTFOLIO appreciation by investing
primarily in equity securi-
ties of large companies.
SMALL CAP The Small Cap Value Portfo-
VALUE lio seeks to provide capital
PORTFOLIO appreciation by investing
primarily in equity securi-
ties of small companies.
SMALL CAP The Small Cap Growth Portfo-
GROWTH lio seeks to provide long-
PORTFOLIO term capital appreciation by
investing primarily in eq-
uity securities of smaller
companies that the advisers
believe are in an early
stage or transitional point
in their development and
have demonstrated or have
the potential for above av-
erage capital growth.
MID-CAP The Mid-Cap Portfolio seeks
PORTFOLIO to provide long-term capital
appreciation by investing
primarily in eq-uity securi-
ties of medium sized compa-
nies that the ad
visers believe are well established but have not reached full
maturity, and may offer significant growth potential.
CAPITAL The Capital Appreciation Portfolio seeks to provide capital
APPRECIATION appreciation by investing primarily in a diversified portfo-
PORTFOLIO lio of common stocks (and securities convertible into common
stock) which, in the advisers' opinion, are undervalued in
the market place at the time of purchase.
EQUITY INCOME The Equity Income Portfolio seeks to provide current income
PORTFOLIO and moderate capital appreciation by investing primarily in a
diversified portfolio of common stocks.
2
<PAGE>
...........................
INVESTMENT
PHILOSOPHY
[SYMBOL APPEARS HERE]
Believing that no
single investment
manager can de-
liver outstanding
performance in
every investment
category, only
those advisers
who have distin-
guished them-
selves within
their areas of
specialization
are selected to
advise our mutual
funds.
...........................
UNDERSTANDING Shares of the Portfolios, like shares of any mutual fund,
RISK will fluctuate in value and when you sell your shares, they
may be worth more or less than what you paid for them. Each
Portfolio may invest in equity securities that are affected
by market and economic factors, and may invest in fixed in-
come securities that tend to vary inversely with interest
rates and may be affected by other market and economic fac-
tors as well, which may cause these securities to fluctuate
in value. In addition, the Small Cap Value and Small Cap
Growth Portfolios may invest in equity securities of smaller
companies, which involves greater risk than is customarily
associated with investments in larger, more established com-
panies. There is no assurance that the Portfolios will
achieve their investment objectives. See "Investment Objec-
tives and Policies," "Risk Factors" and "Description of Per-
mitted Investments and Risk Factors."
MANAGEMENT SEI FINANCIAL MANAGEMENT COR-
PROFILE PORATION ("SFM") serves as the
investment adviser to the
Large Cap Value, Large Cap
Growth, Small Cap Value, Mid-
Cap, Capital Appreciation, Eq-
uity Income and Balanced Port-
folios. LSV ASSET MANAGEMENT,
MELLON EQUITY ASSOCIATES and
MERUS CAPITAL MANAGEMENT each
serves as the investment sub-
adviser to a portion of the
assets of Large Cap Value
Portfolio. ALLIANCE CAPITAL
MANAGEMENT L.P. and IDS ADVI-
SORY GROUP INC. each serves as
the investment sub-adviser to
a portion of
the assets of Large Cap Growth Portfolio. 1838 INVESTMENT
ADVISORS, L.P. and BOSTON PARTNERS ASSET MANAGEMENT, L.P.
each serves as the investment sub-adviser to a portion of
the assets of Small Cap Value Portfolio. NICHOLAS-APPLEGATE
CAPITAL MANAGEMENT, INC., PILGRIM BAXTER & ASSOCIATES, LTD.,
APODACA-JOHNSTON CAPITAL MANAGEMENT, INC. and WALL STREET
ASSOCIATES each serves as the investment sub-adviser to a
portion of the assets Small Cap Growth Portfolio. STI CAPI-
TAL MANAGEMENT, N.A. serves as the investment sub-adviser to
the Capital Appreciation Portfolio. MERUS CAPITAL MANAGE-
MENT, a division of The Bank of California, also serves as
the investment sub-adviser to the Equity Income Portfolio.
MARTINGALE ASSET MANAGEMENT, L.P. serves as the investment
sub-adviser for the Mid-Cap Portfolio. SFM serves as the
manager, shareholder servicing agent of the Trust. DST Sys-
tems, Inc. acts as transfer agent (the "Transfer Agent") to
the Class D shares of the Trust. SEI Financial Services Com-
pany acts as distributor of the Trust's shares. See "The
Manager and Shareholder Servicing Agent," "The Adviser,"
"The Sub-Advisers" and "Distribution."
YOUR ACCOUNT You may open an account with just $1,000, and make
AND DOING additional investments with as little as $100. Class D
BUSINESS WITH shares of the Portfolios are offered at net asset value per
US share plus a maximum sales charge at the time of purchase of
5.00%. Shareholders who purchase higher amounts may qualify
for a reduced sales charge. Redemptions of a Portfolio's
shares are made at net asset value per share. See "Your
Account and Doing Business with Us" and "Additional
Information About Doing Business with Us."
3
<PAGE>
DIVIDENDS Substantially all of the net investment income (exclusive of
capital gains) is distributed in the form of dividends that
will be paid monthly for the Large Cap Value, Capital
Appreciation and Equity Income Portfolios, and quarterly for
the Large Cap Growth, Small Cap Value, Small Cap Growth and
Mid-Cap Portfolios. Any realized net capital gain is
distributed at least annually. Distributions are paid in
additional shares unless the shareholder elects to take the
payment in cash. See "Dividends."
INFORMATION/ For more information about Class D shares, call 1-800-437-
SERVICE 6016.
CONTACTS
4
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES (as a percentage of offering price) Class D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE LARGE SMALL SMALL
CAP CAP CAP CAP CAPITAL EQUITY
VALUE GROWTH VALUE GROWTH MID-CAP APPRECIATION INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Maximum Sales Charge Im-
posed on Purchases 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00%
Maximum Sales Charge Im-
posed on Reinvested Div-
idends None None None None None None None
Redemption Fees (1) None None None None None None None
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
Management/Advisory Fees
(after fee waiver) (2) .70% .70% .98% .97% .60% .70% .69%
12b-1 Fees (after fee
waiver) (3) .32% .31% .30% .33% .37% .34% .34%
Other Expenses .20% .24% .22% .20% .20% .20% .19%
- --------------------------------------------------------------------------------------------------
Total Operating Expenses
(after fee waiver) (4) 1.22% 1.25% 1.50% 1.50% 1.17% 1.24% 1.22%
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) A charge, currently $10.00, is imposed on wires of redemption proceeds of
the Portfolios' Class D shares.
(2) SEI Financial Management Corporation ("SFM") and certain of the sub-
advisers (collectively, "advisers") have agreed to waive, on a voluntary
basis, a portion of their fees, and the management/advisory fees shown
reflect this voluntary waiver. Such fee waivers are voluntary and may be
terminated at any time in the sole discretion of each entity that has
agreed to waive a portion of its fee. Absent such fee waiver,
management/advisory fees would be: Large Cap Value Portfolio, .70%; Large
Cap Growth Portfolio, .75%; Small Cap Value Portfolio, 1.00%; Small Cap
Growth Portfolio, 1.00%; Mid-Cap Portfolio, .75%; Capital Appreciation
Portfolio, .75%; and Equity Income Portfolio, .75%. Management/Advisory
fees, and therefore Total Operating Expenses, have been restated to reflect
current expenses.
(3) The 12b-1 fees shown include both the Portfolios' current 12b-1 budget for
reimbursement of expenses and the Distributor's voluntary waiver of a
portion of its compensatory fee. The Distributor reserves the right to
terminate its waiver at any time in its sole discretion. The maximum 12b-1
fees payable by the Class D shares of each Portfolio are .60%.
(4) Absent the voluntary fee waivers described above, total operating expenses
for Class D shares would be: Large Cap Value Portfolio, 1.27%; Large Cap
Growth Portfolio, 1.35%; Small Cap Value Portfolio, 1.57%; Small Cap Growth
Portfolio, 1.58%; Mid-Cap Portfolio 1.37%; Capital Appreciation Portfolio,
1.34%; and Equity Income Portfolio, 1.33%. Additional information may be
found under "The Adviser," "The Sub-Adviser" and "The Manager and
Shareholder Servicing Agent."
EXAMPLE
<TABLE>
- ------------------------------------------------------------------------------
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
------ ------ ------- -------
<S> <C> <C> <C> <C>
An investor in a Portfolio would pay the fol-
lowing expenses on a $1,000 investment assuming
(1) the imposition of the maximum sales load;
(2) 5% annual return and (3) redemption at the
end of each time period:
Large Cap Value Portfolio $62.00 $87.00 $114.00 $190.00
Large Cap Growth Portfolio $62.00 $88.00 $115.00 $194.00
Small Cap Value Portfolio $65.00 $95.00 $128.00 $220.00
Small Cap Growth Portfolio $65.00 $95.00 $128.00 $220.00
Mid-Cap Portfolio $61.00 $85.00 $111.00 $185.00
Capital Appreciation Portfolio $62.00 $87.00 $115.00 $193.00
Equity Income Portfolio $62.00 $87.00 $114.00 $190.00
- ------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The purpose of the expense table and example is to assist the investor in
understanding the various costs and expenses that may be directly or indirectly
borne by investors in Class D shares of each Portfolio. A person who purchases
shares through an account with a financial institution may be charged separate
fees by that institution. The information set forth in the foregoing table and
example relates only to the Class D shares. Each Portfolio also offers Class A
shares, which are subject to the same expenses, except that there are no sales
loads, different distribution costs and no transfer agent costs. Additional
information may be found under "The Manager and Shareholder Servicing Agent,"
"The Adviser," "The Sub-Advisers" and "Distribution."
The rules of the Securities and Exchange Commission require that the maximum
sales charge be reflected in the above table. However, certain investors may
qualify for reduced sales charges. See "Purchase of Shares." Long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales charges otherwise permitted by the Rules of Fair Practice (the "Rules")
of the National Association of Securities Dealers, Inc. ("NASD").
5
<PAGE>
FINANCIAL HIGHLIGHTS ___________________________________________________________
The following information has been audited by Price Waterhouse LLP, the Trust's
independent accountants, as indicated in their report dated November 10, 1995
on the Trust's financial statements as of September 30, 1995 included in the
Trust's Statement of Additional Information under "Financial Statements."
Additional performance information is set forth in the 1995 Annual Report to
Shareholders and is available upon request and without charge by calling 1-800-
437-6016. This table should be read in conjunction with the Trust's financial
statements and notes thereto.
FOR A CLASS D SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
Ratio
Net Realized of Net Ratio of
and Distributions Net Investment Expenses
Net Asset Net Unrealized Dividends From Assets Ratio of Income to Average
Value Investment Gains from Net Realized Net Asset End of Expenses (Loss) to Net Assets
Beginning Income (Losses) Investment Capital Value End Total Period to Average Average (Excluding
of Period (Loss) on Securities Income Gains of Period Return (000) Net Assets Net Assets Waivers)
- --------------------------------------------------------------------------------------------------------------------------------
- -----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SMALL CAP GROWTH PORTFOLIO
- -----------------------------
CLASS D
1995 $13.99 $(0.09) $ 5.88 $ -- $ -- $19.78 41.44%* $ 786 1.50% (1.03)% 1.55%
1994(1) 14.04 (0.02) (0.03) -- -- 13.99 (0.02)%* 171 1.49% (0.92)% 1.52%
- -------------------
MID-CAP PORTFOLIO
- -------------------
CLASS D
1995 $10.87 $(0.01) $ 2.10 $ -- $ -- $12.96 19.26%* $ 108 1.30% (0.06)% 1.48%
1994(2) 11.19 (0.01) (0.31) -- -- 10.87 (8.63)%* 60 1.36% (0.41)% 1.45%
- --------------------------------
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------
CLASS D
1995 $15.17 $ 0.12 $ 2.45 $(0.16) $(0.89) $16.69 18.52%* $1,000 1.24% 0.98% 1.29%
1994 16.36 0.18 (0.22) (0.20) (0.95) 15.17 (0.46)%* 2,182 1.24% 1.20% 1.27%
1993(3) 16.17 0.05 0.16 (0.02) -- 16.36 (10.65)%* 2 1.15% 2.54% 1.24%
- ------------------------
EQUITY INCOME PORTFOLIO
- ------------------------
CLASS D
1995 $14.04 $ 0.48 $ 2.50 $(0.50) $(0.47) $16.05 22.62%* $2,303 1.22% 3.21% 1.30%
1994 15.00 0.45 (0.38) (0.46) (0.57) 14.04 0.61%* 892 1.20% 3.36% 1.35%
1993(4) 14.82 0.02 0.16 -- -- 15.00 42.39%* 6 1.15% 5.39% 1.46%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Ratio
of Net
Investment
Income
(Loss)
to Average
Net Assets Portfolio
(Excluding Turnover
Waivers) Rate
- --------------------------------------------------------------------------------------------------------------------------------
- -----------------------------
<S> <C> <C>
SMALL CAP GROWTH PORTFOLIO
- -----------------------------
CLASS D
1995 (1.08)% 113%
1994(1) (0.95)% 97%
- -------------------
MID-CAP PORTFOLIO
- -------------------
CLASS D
1995 (0.24)% 108%
1994(2) (0.50)% 89%
- --------------------------------
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------
CLASS D
1995 0.93% 107%
1994 1.16% 109%
1993(3) 2.45% 119%
- ------------------------
EQUITY INCOME PORTFOLIO
- ------------------------
CLASS D
1995 3.13% 47%
1994 3.21% 28%
1993(4) 5.08% 39%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Sales load is not reflected in total return.
(1) Small Cap Growth Class D shares were offered beginning May 2, 1994. All
ratios including total return for that period have been annualized.
(2) Mid-Cap Class D shares were offered beginning May 2, 1994. All ratios
including total return for that period have been annualized.
(3) Capital Appreciation Class D shares were offered beginning August 16, 1993.
All ratios including total return for that period have been annualized.
(4) Equity Income Class D shares were offered beginning September 22, 1993. All
ratios including total return for that period have been annualized.
6
<PAGE>
................................................................................
[SYMBOL
APPEARS WHAT IS AN INTERMEDIARY?
HERE]
Any entity, such as a bank, broker-dealer, other financial institution,
association or organization which has entered into an arrangement with the
Distributor to sell Class D shares to its customers.
................................................................................
YOUR ACCOUNT AND DOING BUSINESS WITH US ___________________________________
Class D shares of the Portfolios are sold on a continuous basis and may be
purchased directly from the Trust's Distributor, SEI Financial Services
Company. Shares may also be purchased through financial institutions, broker-
dealers, or other organizations which have established a dealer agreement or
other arrangement with SEI Financial Services Company ("Intermediaries"). For
more information about the following topics, see "Additional Information About
Doing Business with Us."
- --------------------------------------------------------------------------------
HOW TO BUY, Class D shares of the Portfolios may be purchased through
SELL AND Intermediaries which provide various levels of shareholder
EXCHANGE services to their customers. Contact your Intermediary for
SHARES THROUGH information about the services available to you and for
INTERMEDIARIES specific instructions on how to buy,sell and exchange shares.
To allow for processing and transmittal of orders to the
Distributor on the same day, Intermediaries may impose earlier
cut-off times for receipt of purchase orders. Certain
Intermediaries may charge customer account fees. Information
concerning shareholder services and any charges will be
provided to the customer by the Intermediary. Certain of these
Intermediaries may be required to register as broker/dealers
under state law.
The shares you purchase through an Intermediary may be
held "of record" by that Intermediary. If you want to
transfer the registration of shares beneficially owned by
you, but held "of record" by an Intermediary, you should call
the Intermediary to request this change.
HOW TO BUY Application forms can be obtained by calling 1-800-437-6016.
SHARES FROM Class D shares of the Portfolios are offered only to
THE residents of states in which the shares are eligible for
DISTRIBUTOR purchase.
Opening an You may buy Class D shares by mailing a completed application
Account and a check (or other negotiable bank instrument or money
By Check order) payable to "Class D shares (Portfolio Name)." If you
send a check that does not clear, the purchase will be
canceled and you could be liable for any losses or fees
incurred.
By Fed Wire To buy shares by Fed Wire, call toll-free 1-800-437-6016.
Automatic You may systematically buy Class D shares through deductions
Investment from your checking or savings accounts, provided these
Plan ("AIP") accounts are maintained through banks which are part of the
Automated Clearing House ("ACH") system. You may purchase
shares on a fixed schedule (semi-monthly or monthly) with
amounts as low as $25, or as high as $100,000. Upon notice,
the amount you commit to the AIP may be changed or canceled
at any time. The AIP is subject to account minimum initial
purchase amounts and minimum maintained balance requirements
discussed under "Additional Information About Doing Business
With Us."
7
<PAGE>
OTHER Your purchase is subject to a sales charge which varies
INFORMATION depending on the size of your purchase. The following table
ABOUT BUYING shows the regular sales charges on Class D shares of the
SHARES Portfolios to a "single purchaser," together with the
reallowance paid to dealers and the agency commission paid
Sales Charges to brokers (collectively the "commission"):
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
SALES CHARGE REALLOWANCE AND
SALES CHARGE AS AS APPROPRIATE BROKERAGE COMMISSION
A PERCENTAGE OF PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE NET AMOUNT INVESTED OFFERING PRICE
---------------------------------------------------------------------------------
<S> <C> <C> <C>
(Less Than) $50,000 5.00% 5.26% 4.50%
$50,000 but (Less Than)
$100,000 4.50% 4.71% 4.00%
$100,000 but (Less Than)
$250,000 3.50% 3.63% 3.00%
$250,000 but (Less Than)
$500,000 2.50% 2.56% 2.00%
$500,000 but (Less Than)
$1,000,000 2.00% 2.04% 1.75%
$1,000,000 but (Less Than)
$2,000,000 1.00% 1.01% 1.00%
$2,000,000 but (Less Than)
$4,000,000 .50% .50% .50%
Over $4,000,000 none none none
---------------------------------------------------------------------------------
</TABLE>
The commissions shown in the table above apply to sales
through Intermediaries. Under certain circumstances,
commissions up to the amount of the entire sales charge may
be re-allowed to certain Intermediaries, who might then be
deemed to be "underwriters" under the Securities Act of
1933, as amended.
Right of A Right of Accumulation allows you, under certain
Accumulation circumstances, to combine your current purchase with the
current market value of previously purchased shares of each
Portfolio and Class D shares of other portfolios ("Eligible
Portfolios") in order to obtain a reduced sales charge.
Letter of A Letter of Intent allows you, under certain circumstances,
Intent to aggregate anticipated purchases over a 13-month period to
obtain a reduced sales charge.
Sales Charge Certain shareholders may qualify for a sales charge waiver.
Waiver To determine whether or not you qualify for a sales charge
waiver see "Additional Information About Doing Business with
Us." Shareholders who qualify for a sales charge waiver must
notify the Transfer Agent before purchasing shares.
8
<PAGE>
................................................................................
[SYMBOL HOW DOES AN
APPEARS EXCHANGE
HERE] TAKE PLACE?
When making an exchange, you authorize the sale of your shares of one or more
Portfolios in order to purchase the shares of another Portfolio. In other
words, you are executing a sell order and then a buy order. This sale of your
shares is a taxable event which could result in a taxable gain or loss.
................................................................................
EXCHANGING Once good payment for your shares has been received and
SHARES accepted (i.e., an account has been established), you may
When Can You exchange some or all of your shares for Class D shares of
Exchange other portfolios. Exchanges are made at net asset value plus
Shares? any applicable sales charge.
When Do Sales Portfolios that are not money market portfolios currently
Charges Apply impose a sales charge on Class D shares. If you exchange into
to an one of these "non-money market" portfolios, you will have to
Exchange? pay a sales charge on any portion of your exchanged Class D
shares for which you have not previously paid a sales charge.
If you previously paid a sales charge on your Class D
shares, no additional sales charge will be assessed when you
exchange those Class D shares for other Class D shares.
If you buy Class D shares of a "non-money market" portfolio
and you receive a sales charge waiver, you will be deemed to
have paid the sales charge for purposes of this exchange
privilege. In calculating any sales charge payable on your
exchange, the Trust will assume that the first shares you
exchange are those on which you have already paid a sales
charge. Sales charge waivers may also be available under
certain circumstances described in the SEI Funds' prospectuses.
The Trust reserves the right to change the terms and
conditions of the exchange privilege discussed herein, or to
terminate the exchange privilege, upon 60 days' notice. The
Trust also reserves the right to deny an exchange request
made within 60 days of the purchase of a "non-money market"
portfolio.
Requesting an To request an exchange, you must provide proper instructions
Exchange of in writing to the Transfer Agent. Telephone exchanges will
Shares also be accepted if you previously elected this option on
your account application.
In the case of shares held "of record" by an Intermediary
but beneficially owned by you, you should contact the
Intermediary who will contact the Transfer Agent and effect
the exchange on your behalf.
9
<PAGE>
................................................................................
[SYMBOL WHAT IS A
APPEARS SIGNATURE
HERE] GUARANTEE?
A signature guarantee verifies the authenticity of your signature and may be
obtained from any of the following: banks, brokers, dealers, certain credit
unions, securities exchange or association, clearing agency or savings
association. A notary public cannot provide a signature guarantee.
................................................................................
HOW TO SELL To sell your shares, a written request for redemption in good
SHARES THROUGH order must be received by the Transfer Agent. Valid written
THE redemption requests will be effective on receipt. All
DISTRIBUTOR shareholders of record must sign the redemption request.
By Mail For information about the proper form of redemption
requests, call 1-800-437-6016. You may also have the proceeds
mailed to an address of record or mailed (or sent by ACH) to a
commercial bank account previously designated on the Account
Application or specified by written instruction to the Transfer
Agent. There is no charge for having redemption requests mailed
to a designated bank account.
By Telephone You may sell your shares by telephone if you previously
elected that option on the Account Application. You may have
the proceeds mailed to the address of record, wired or sent by
ACH to a commercial bank account previously designated on the
Account Application. Under most circumstances, payments will be
transmitted on the next Business Day following receipt of a
valid telephone request for redemption. Wire redemption
requests may be made by calling 1-800-437-6016. A wire
redemption charge (presently $10.00) will be deducted from the
amount of the redemption.
Systematic You may establish a systematic withdrawal plan for an account
Withdrawal with a $10,000 minimum balance. Under the plan, redemptions
Plan ("SWP") can be automatically processed from accounts (monthly,
quarterly, semi-annually or annually) by check or by ACH with
a minimum redemption amount of $50.
...............................................................................
[SYMBOL WHAT ARE
APPEARS INVESTMENT
HERE] OBJECTIVES AND
POLICIES?
A Portfolio's investment objective is a statement of what it seeks to achieve.
It is important to make sure that the investment objective matches your own
financial needs and circumstances. The investment policies section spells out
the types of securities in which each Portfolio invests.
................................................................................
INVESTMENT OBJECTIVES AND POLICIES _____________________________________________
LARGE CAP The investment objective of the Large Cap Value Portfolio is
VALUE long-term growth of capital and income. There can be no
PORTFOLIO assurance that the Portfolio will achieve its investment
objective.
Under normal conditions, the Portfolio will invest at least
65% of its total assets in a diversified portfolio of high
quality, income producing common stocks of large companies
(i.e. companies with market capitalizations of at least $1
billion) which, in the advisers' opinion, are undervalued in
the marketplace at the time of purchase. In general, the
10
<PAGE>
advisers characterize high quality securities as those that
have above-average reinvestment rates. The advisers also
consider other factors, such as earnings and dividend growth
prospects as well as industry outlook and market share.
Any remaining assets may be invested in investment grade
bonds. Debt securities rated BBB by Standard & Poor's
Corporation ("S&P") or Baa by Moody's Investors Service,
Inc. ("Moody's") lack outstanding investment
characteristics, and have speculative characteristics as
well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by a nationally recognized statistical rating
organization ("NRSRO"), or if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary investments,
the Portfolio will not be pursuing its investment objective.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
LSV Asset Management, Mellon Equity Associates and Merus
Capital Management.
LARGE CAP The investment objectives of the Large Cap Growth Portfolio
GROWTH is capital appreciation. There can be no assurance that the
PORTFOLIO Portfolio will achieve its investment objective.
Under normal conditions, the Portfolio will invest at
least 65% of its total assets in equity securities of large
companies (i.e., companies with market capitalizations of
more than $1 billion) which, in the advisers' opinion,
possess significant growth potential. Any remaining assets
may be invested in fixed income securities or in equity
securities of smaller companies that the Portfolio's
advisers believe are appropriate in light of the Portfolio's
objective. Equity securities include common stock, preferred
stock, warrants or rights to subscribe to common stock and,
in general, any security that is convertible into or
exchangeable for common stock. Fixed-income securities must
be rated investment grade or better, i.e., rated at least
BBB by S&P or Baa by Moody's. Debt securities rated BBB or
Baa lack outstanding investment characteristics, and have
speculative characteristics as well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by an NRSRO or, if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's investment adviser is a SEI Financial
Management Corporation and its investment sub-advisers are
Alliance Capital Management L.P. and IDS Advisory Group Inc.
SMALL CAP VALUE The investment objective of the Small Cap Value Portfolio is
PORTFOLIO capital appreciation. There can be no assurance that the
Portfolio will achieve its investment objective.
11
<PAGE>
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in the equity securities of
smaller companies (i.e., companies with market
capitalizations of less than $1 billion) which, in the
advisers' opinion, have prices that appear low relative to
certain fundamental characteristics such as earnings, book
value, or return on equity. Any remaining assets may be
invested in fixed income securities or equity securities of
larger, more established companies that the Portfolio's
advisers believe are appropriate in light of the Portfolio's
objective. Equity securities include common stock, preferred
stock, warrants and rights to subscribe to common stock and,
in general, any security that is convertible into or
exchangeable for common stock. Fixed income securities must
be rated investment grade or better, i.e., rated at least
BBB by S&P or Baa by Moody's. Debt securities rated BBB or
Baa lack outstanding investment characteristics, and have
speculative characteristics as well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the two top rating
categories by an NRSRO or, if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary defensive
investments, the Portfolio will not be pursuing its
investment objective.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
1838 Investment Advisors, L.P. and Boston Partners Asset
Management, L.P.
SMALL CAP The investment objective of the Small Cap Growth Portfolio
GROWTH is to provide long-term capital appreciation by investing
PORTFOLIO primarily in equity securities of smaller companies. There
can be no assurance that the Portfolio will achieve its
investment objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in the equity securities of
smaller growth companies (i.e., companies with market
capitalizations less than $1 billion) which, in the
advisers' opinion, are in an early stage or transitional
point in their development and have demonstrated or have the
potential for above average capital growth. The advisers
will select companies that have the potential to gain market
share in their industry, achieve and maintain high and
consistent profitability or produce increases in earnings.
The advisers also seek companies with strong company
management and superior fundamental strength. Small
capitalization companies have the potential to show earnings
growth over time that is well above the growth rate of the
overall economy. Any remaining assets may be invested in the
equity securities of more established companies that the
advisers believe may offer strong capital appreciation
potential due to their relative market position, anticipated
earnings growth, changes in management or other similar
opportunities. Equity securities include common stock,
12
<PAGE>
preferred stock, warrants and rights to subscribe to common
stock and, in general, any security that is convertible into
or exchangeable for common stock.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest all or a
portion of its assets in common stocks of larger, more
established companies or in fixed income securities, cash or
money market securities. Fixed income securities will only
be purchased if they are rated investment grade or better.
Investment grade bonds include securities rated at least BBB
by S&P or Baa by Moody's. Debt securities rated BBB or Baa
lack outstanding investment characteristics, and have
speculative characteristics as well. Money market securities
will only be purchased if they have been given one of the
two top ratings by an NRSRO, or if not rated, determined to
be of comparable quality by the advisers. To the extent the
Portfolio is engaged in temporary defensive investments, the
Portfolio will not be pursuing its investment objective.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-advisers are
Nicholas-Applegate Capital Management, Inc. (a Limited
Partnership), Pilgrim Baxter & Associates, Ltd., Apodaca-
Johnston Capital Management, Inc. and Wall Street
Associates.
MID-CAP The investment objective of the Mid-Cap Portfolio (formerly,
PORTFOLIO the Mid-Cap Growth Portfolio) is to provide long-term
capital appreciation by investing primarily in equity
securities of medium-sized companies. There can be no
assurance that the Portfolio will achieve its investment
objective.
Under normal market conditions, the Portfolio will invest
at least 65% of its total assets in equity securities of
medium-sized companies (i.e., companies with market
capitalizations of $500 million to $5 billion). Such
companies are typically well established but have not
reached full maturity and may offer significant growth
potential. The advisers will seek to identify companies
which, in their opinion, will experience accelerating
earnings, increased institutional ownership or strong price
appreciation relative to their industries and broad market
averages.
All of the equity securities in which the Portfolio
invests are traded on registered exchanges or on the over-
the-counter market in the United States. Equity securities
include common stock, warrants and rights to subscribe to
common stock and, in general, any security that is
convertible into or exchangeable for common stock.
Any remaining assets may be invested in equity securities
of larger, more established companies, fixed income
securities or money market securities. Fixed income
securities will only be purchased if they are rated
investment grade or better at time of purchase. Investment
grade bonds include securities rated at least BBB by S&P or
Baa by Moody's. Debt securities rated BBB or Baa lack
outstanding investment characteristics, and
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have speculative characteristics as well. Money market
securities, certificates of deposit, banker's acceptances
and commercial paper will only be purchased if they have
been given one of the two top ratings by an NRSRO, or if not
rated, determined to be of comparable quality by the
advisers. For temporary defensive purposes, when the
advisers determine that market conditions warrant, the
Portfolio may invest all or a portion of its assets in
equity securities of larger companies, fixed income
securities, cash or money market instruments. the securities
or instruments described in this paragraph. To the extent
the Portfolio is engaged in temporary defensive investments,
the Portfolio will not be pursuing its investment objective.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is
Martingale Asset Management, L.P.
CAPITAL The investment objective of the Capital Appreciation
APPRECIATION Portfolio is capital appreciation. There can be no assurance
PORTFOLIO that the Portfolio will achieve its investment objective.
Under normal conditions, at least 65% of the Portfolio
will be invested in a diversified portfolio of common stocks
(and securities convertible into common stock) which, in the
advisers' opinion, are undervalued in the marketplace at the
time of purchase. Dividend income is an incidental
consideration compared to growth of capital. In selecting
securities for the Portfolio, the advisers will evaluate
factors they believe are likely to affect long-term capital
appreciation such as the issuer's background, industry
position, historical returns on equity and experience and
qualifications of the management team. The advisers will
rotate the Portfolio holdings between various market sectors
based on economic analysis of the overall business cycle.
Any remaining assets may be invested in investment grade
bonds. Debt securities rated BBB or Baa lack outstanding
investment characteristics and have speculative
characteristics as well.
The Portfolio's annual turnover rate may exceed 100%.
Such a turnover rate may result in higher transaction costs
and may result in additional taxes for shareholders. See
"Taxes."
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is STI
Capital Management, N.A.
EQUITY INCOME The investment objective of the Equity Income Portfolio (the
PORTFOLIO "Portfolio") is to provide current income and, as a
secondary objective, moderate capital appreciation. There is
no assurance that the Portfolio will achieve its investment
objective.
Under normal conditions, at least 65% of the Portfolio
will be invested in a diversified portfolio of common
stocks. The investment approach employed by the adviser
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<PAGE>
emphasizes income producing common stocks which, in general,
have above-average dividend yields relative to the stock
market as measured by the S&P 500 Index.
Any remaining assets may be invested in investment grade
bonds. Debt securities rated BBB or Baa lack outstanding
investment characteristics, and have speculative
characteristics as well.
In order to meet liquidity needs, or for temporary
defensive purposes, the Portfolio may invest up to 100% of
its assets in cash and money market securities. Money market
securities must be rated in one of the top two rating
categories by an NRSRO, or if not rated, determined to be of
comparable quality by the Portfolio's advisers. To the
extent the Portfolio is engaged in temporary investments,
the Portfolio will not be pursuing its investment objective.
The Portfolio's investment adviser is SEI Financial
Management Corporation and its investment sub-adviser is
Merus Capital Management.
GENERAL INVESTMENT
POLICIES _______________________________________________________________________
Borrowing Each Portfolio may borrow money. Interest paid on such
borrowings will reduce a Portfolio's income. A Portfolio
will not purchase securities while its borrowings exceed 5%
of its total assets.
Common Stocks Each Portfolio will invest in common stocks; provided
however, that the Large Cap Value, Small Cap Growth, Capital
Appreciation, Equity Income and Capital Growth Portfolio may
only invest in such securities if they are listed on
registered exchanges or actively traded in the over-the-
counter market.
Investment Each Portfolio may purchase investment company securities,
Company which will result in the layering of expenses. There are
Securities legal limits on the amount of such securities that may be
acquired by a Portfolio.
Options and Each Portfolio may purchase or write options, futures and
Futures options on futures. Risks associated with investing in
options and futures may include lack of a liquid secondary
market, trading restrictions which may be imposed by an
exchange and government regulations which may restrict
trading.
Securities Each Portfolio may lend its assets to qualified investors
Lending for the purpose of realizing additional income.
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<PAGE>
U.S. Dollar The Large Cap Value, Large Cap Growth, Small Cap Value,
Denominated Capital Appreciation and Equity Income Portfolios may also
Securities of invest in U.S. dollar denominated securities of foreign
Foreign Issuers issuers, including American Depositary Receipts, that are
traded on registered exchanges or listed on NASDAQ.
U.S. Treasury The Large Cap Value, Capital Appreciation and Equity Income
Receipts Portfolios may invest in receipts involving U.S. Treasury
obligations.
When-Issued and Each Portfolio may invest in when-issued and delayed
Delayed- delivery securities.
Delivery
Securities
For additional information regarding the Portfolios'
permitted investments, see "Risk Factors" and "Description
of Permitted Investments and Risk Factors" in this
Prospectus and "Description of Permitted Investments" in the
Statement of Additional Information. For a description of
the above ratings, see "Description of Ratings" in the
Statement of Additional Information.
RISK FACTORS ______________________________________________________________
Equity Investments in equity securities in general are subject to
Securities market risks that may cause their prices to fluctuate over
time. The value of convertible equity securities is also
affected by prevailing interest rates, the credit quality of
the issuer and any call provision. Fluctuations in the value
of equity securities in which a Portfolio invests will cause
the net asset value of the Portfolio to fluctuate.
Fixed Income The market value of a Portfolio's fixed income investments
Securities will change in response to interest rate changes and other
factors. During periods of falling interest rates, the
values of outstanding fixed income securities generally
rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Securities
with longer maturities are subject to greater fluctuations
in value than securities with shorter maturities. Changes by
an NRSRO in the rating of any fixed income security and in
the ability of an issuer to make payments of interest and
principal also affect the value of these investments.
Changes in the value of a Portfolio's securities will not
affect cash income derived from these securities but will
affect the Portfolio's net asset value.
Securities rated BBB or Baa by an NRSRO (investment grade
bonds) are deemed by these rating services to have
speculative characteristics.
Securities held by a Portfolio that are guaranteed by the
U.S. Government, its agencies or instrumentalities guarantee
only the payment of principal and interest on the guaranteed
securities, and do not guarantee the securities' yield or
value or the yield or value of a Portfolio's shares.
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<PAGE>
There is a risk that the current interest rate on
floating and variable rate instruments may not accurately
reflect existing market interest rates.
Mortgage-Backed Mortgage-backed securities are subject to prepayment of the
Securities underlying mortgages. During periods of declining interest
rates, prepayment of mortgages underlying these securities
can be expected to accelerate. When the mortgaged-backed
securities held by a Portfolio are prepaid, the Portfolio
must reinvest the proceeds in securities the yield of which
reflects prevailing interest rates, which may be lower than
the prepaid security.
INVESTMENT
LIMITATIONS ____________________________________________________________________
The investment objective and investment limitations are
fundamental policies of the Portfolios. Fundamental policies
cannot be changed with respect to the Trust or a Portfolio
without the consent of the holders of a majority of the
Trust's or that Portfolio's outstanding shares.
No Portfolio may:
1. With respect to 75% of its assets, (i) purchase the
securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies
or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of
such issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer.
2. Purchase any securities which would cause more than 25%
of the total assets of the Portfolio to be invested in
the securities of one or more issuers conducting their
principal business activities in the same industry,
provided that this limitation does not apply to
investments in obligations issued or guaranteed by the
United States Government, its agencies or
instrumentalities.
The foregoing percentage limitations will apply at the time
of the purchase of a security. Additional investment
limitations are set forth in the Trust's Statement of
Additional Information.
THE MANAGER
AND SHAREHOLDER
SERVICING AGENT ________________________________________________________________
SEI Financial Management Corporation ("SFM") provides the
Trust with overall management services, regulatory
reporting, all necessary office space, equipment, personnel
and facilities, and acts as shareholder servicing agent.
For its management services, SFM is entitled to a fee
which is calculated daily and paid monthly at an annual rate
of .35% of the average daily net assets of the Large Cap
Value, Large Cap Growth, Small Cap Value, Small Cap Growth,
Mid-Cap, Capital
17
<PAGE>
..........................
INVESTMENT
ADVISER
[SYMBOL APPEARS HERE]
A Portfolio's
advisers manage
the investment
activities and
are responsible
for the perfor-
mance of the
Portfolio. The
advisers conduct
investment re-
search, executes
investment
strategies based
on an assessment
of economic and
market condi-
tions, and de-
termine which
securities to
buy, hold or
sell.
..........................
Appreciation and Equity Portfolios. In addition, SFM has
voluntarily agreed to waive a portion of its fees in order to
limit the operating expenses of each Portfolio in order to
limit the operating expenses of a Portfolio's Class D shares
on an annualized basis. Any such waivers are voluntary and
may be terminated at any time in SFM's sole discretion.
For the fiscal year ended September 30, 1995, the
Portfolios paid SFM the following management fees (based on
their average daily net assets after fee waivers): Large Cap
Value Portfolio, .32%; Large Cap Growth Portfolio, .35%;
Small Cap Value Portfolio, .34%; Small Cap Growth Portfolio,
.44%; Capital Appreciation Portfolio, .43%; Equity Income
Portfolio, .41%; and Mid-Cap Portfolio, .35%.
The Trust and DST Systems, Inc., 210 W. 10th Street,
Kansas City, MO 64105, have entered into a separate transfer
agent agreement with respect to the Class D shares of the
Trust. Under this agreement, DST acts as the transfer agent
and dividend disbursing agent (the "Transfer Agent") for the
Class D shares of the Trust.
MULTI-MANAGER DIVERSIFICATION ____________________________________________
SFM serves as investment
adviser (the "Adviser") to
each Portfolio. Within each
portfolio one or more
investment sub-advisers
(each, a "Sub-Adviser," and
together, the "Sub-
Advisers") are utilized to
select that Portfolio's
investments. These Sub-
Advisers specialize in the
distinct investment style or
styles that each Portfolio
is designed to capture.
The Adviser has general
oversight responsibility for
the investment advisory
services provided to the
Portfolios, including
formulating the Portfolios'
investment policies and
analyzing economic trends
affecting the Portfolios. In
addition,
SFM, as the Adviser to a Portfolio, is responsible for (i)
managing the allocation of assets among the Portfolio's Sub-
Advisers, (ii) 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
(iii) managing the cash portion of the Portfolio's assets. In
accordance with each Portfolio's investment objective and
policies, and under the supervision of the Adviser and the
Trust's Board of Trustees, each Sub-Adviser is responsible
for the day-to-day investment management of all or a discrete
portion of the assets of a Portfolio. The Adviser and Sub-
Advisers are authorized to make investment decisions for the
Portfolios and place orders on behalf of the Portfolios to
effect the investment decisions made. The Board of Trustees
will retain, in its discretion, the authority to increase or
decrease the assets assigned to each adviser.
In addition, SFM monitors the compliance of each adviser
with regulatory and tax regulations, such as portfolio
concentration and diversification. For the most part
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<PAGE>
compliance with these requirements by each adviser with
respect to its portion of a Portfolio will assure compliance
by the Portfolio as a whole. In addition, SFM monitors
positions taken by each adviser and will notify advisers of
any developing situations to help ensure that investments do
not run afoul of the short-short test or the wash sale
rules. To the extent that having multiple advisers
responsible for investing separate portions of a Portfolio's
assets creates the need for coordination among the advisers,
there is an increased risk that the Portfolio will not
comply with these regulatory and tax requirements.
It is possible that different advisers for the same
Portfolio could take opposite actions within a short period
of time with respect to a particular security. For example,
one adviser could buy a security for the Portfolio and
shortly thereafter another adviser could sell the same
security from the portion of the Portfolio allocated to it.
If in these circumstances the securities could be
transferred from one adviser's portion of the Portfolio to
another, the Portfolio could avoid transaction costs and
could avoid creating possible wash sales and short-short
gains under the Internal Revenue Code of 1986, as amended
(the "Code"). Such transfers are not practicable but the
advisers do not believe that there will be material adverse
effects on a Portfolio as a result. First, it does not
appear likely that there will be substantial overlap in the
securities acquired for a Portfolio by the various advisers.
Moreover, the 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 or
have significant tax consequences. With respect to the
latter, the advisers have established procedures with
respect to the short-short test which are designed to
prevent realization of short-short gains in excess of Code
limits. It is true that wash sales could occur in spite of
the efforts of SFM, but the Board of Trustees believes that
the benefits of using multi-managers outweighs the
consequences of any wash sales.
SFM is currently seeking an exemptive order from the
Securities and Exchange Commission (the "SEC") that would
permit SFM, with the approval of the Trust's Board of
Trustees, to retain sub-advisers for a Portfolio without
submitting the sub-advisory agreement to a vote of the
Portfolio's shareholders. If granted, the exemptive relief
will permit the non-disclosure of amounts payable by SFM
under such sub-advisory agreements. The Trust will notify
shareholders in the event of any change in the identity of
the sub-adviser for a Portfolio. Until or unless this
exemptive order is granted, if one of the advisers is
terminated or departs from a Portfolio with multiple
advisers, the Portfolio will handle such termination or
departure in one of two ways. First, the Portfolio may
propose that a new adviser be appointed to manage that
portion of the Portfolio's assets managed by the departing
adviser. In this case, the Portfolio would be required to
submit to the vote of the Portfolio's shareholders the
approval of an investment advisory contract with the new
adviser. In the alternative, the Portfolio may decide to
allocate the departing
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<PAGE>
adviser's assets among the remaining advisers. This
allocation would not require new investment advisory
contracts with the remaining advisers, and consequently no
shareholder approval would be necessary.
THE ADVISER _______________________________________________________________
SEI FINANCIAL SFM serves as investment adviser for the Large Cap Value,
MANAGEMENT Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-
CORPORATION Cap, Capital Appreciation and Equity Income Portfolios. SFM
is a wholly-owned subsidiary of SEI Corporation ("SEI"), a
financial services company located in Wayne, PA. The
principal business address of SFM is 680 East Swedesford
Road, Wayne, PA 19087-1658. SEI was founded in 1968 and is a
leading provider of investment solutions to banks,
institutional investors, investment advisers and insurance
companies. Affiliates of SFM have provided consulting advice
to institutional investors for more than 20 years, including
advice regarding selection and evaluation of investment
advisers. SFM currently serves as manager or administrator
to more than 26 investment companies, including more than
220 portfolios, which investment companies have more than $
billion in assets as of September 30, 1995.
For these advisory services SFM is entitled to a fee,
which is calculated daily and paid monthly, at an annual
rate of .35% of the Large Cap Value Portfolio's average
daily net assets, at an annual rate of .40% of the Large Cap
Growth, Mid-Cap, Capital Appreciation and Equity Income
Portfolios' average daily net assets and at an annual rate
of .65% of the Small Cap Value and Small Cap Growth
Portfolios' average daily net assets.
THE SUB-ADVISERS __________________________________________________________
1838 INVESTMENT 1838 Investment Advisors, L.P. ("1838") serves as Sub-
ADVISORS, L.P. Adviser to a portion of the assets of the Small Cap Value
Portfolio. 1838 is a Delaware limited partnership located at
100 Matsonford Road, Radnor, PA. As of September 30, 1995,
1838 managed $4.3 billion in assets in large and small
capitalization equity, fixed income and balanced account
portfolios. Clients include corporate employee benefit
plans, municipalities, endowments, foundations, jointly
trusteed plans, insurance companies and wealthy individuals.
Edwin B. Powell, Holly. L. Guthrie and Joseph T. Doyle,
have served as the portfolio managers to the Small Cap Value
Portfolio since its inception, and since 1995, Cynthia R.
Axlrod also served as a portfolio manager to the Portfolio.
These individuals work as a team and share responsibility.
Mr. Doyle has been with 1838 since 1988. Mr. Powell and Ms.
Guthrie joined 1838 in 1994. Mr. Powell managed small cap
equity portfolios for Provident Capital Management from 1987
to 1994. Ms. Guthrie managed small cap equity portfolios for
Provident Capital Management from 1992 to 1994. Prior to
that she was employed by CoreStates Investment Advisers from
1987 to 1992 as an equity analyst and portfolio manager.
Prior to joining 1838, Ms. Axlrod was with Friess Associates
from 1992 to 1995. Prior to 1992, Ms. Axlrod was with
Provident Capital Management from 1987 to 1992.
20
<PAGE>
SFM pays 1838 a fee, which is calculated and paid
monthly, based on an annual rate of .50% of the average
monthly market value of the assets of the Small Cap Value
Portfolio managed by 1838. 1838 may waive all or a portion
of its fee in order to limit the operating expenses of the
Portfolio. 1838 reserves the right, in its sole discretion,
to terminate any such voluntary fee waiver at any time.
During the fiscal year ended September 30, 1994, 1838
received a sub-advisory fee of .50%.
ALLIANCE Alliance Capital Management L.P. ("Alliance") serves as Sub-
CAPITAL Adviser to a portion of the assets of the Large Cap Growth
MANAGEMENT L.P. Portfolio. Alliance is a registered investment adviser
organized as a Delaware limited partnership which originated
as Alliance Capital Management Corporation in 1971. Alliance
Capital Management Corporation ("ACML"), an indirect wholly-
owned subsidiary of The Equitable Life Assurance Society of
the United States, is the general partner of Alliance. As of
September 30, 1995, Alliance managed over $143 billion in
assets. The principal business address of Alliance is 1345
Avenue of the Americas, New York, NY 10105.
The Portfolio has been managed by a committee since its
inception.
SFM pays Alliance the greater of $125,000 or a fee, which
is calculated and paid monthly based on an annual rate of
.25% of the average monthly market value of the assets of
the Large Cap Growth Portfolio managed by Alliance. Alliance
may waive all or a portion of its fees in order to limit the
operating expenses of the Portfolio. Alliance reserves the
right, in its sole discretion, to terminate any such
voluntary fee waiver at any time. For the fiscal year ended
September 30, 1995, Alliance received a sub-advisory fee of
.20%.
APODACA- Apodaca-Johnston Capital Management, Inc. ("Apodaca") serves
JOHNSTON as Sub-Adviser to a portion of the assets of the Small Cap
CAPITAL Growth Portfolio. Apodaca is a California corporation with
MANAGEMENT, its principal address at 50 California Street, Suite 3315,
INC. San Francisco, CA 94111. Apodaca's predecessor was founded
in 1985, and as of September 30, 1995, Apodaca has
approximately $205 million in assets under management.
Apodaca's clients include individuals, pension and profit
sharing plans, an endowment fund and an investment company
portfolio.
The portion of the Portfolio's assets allocated to
Apodaca has been managed since August, 1995 by Scott
Johnston and Jerry C. Apodaca, Jr. Mr. Johnston, a principal
and 1/3 owner of Apodaca, founded Apodaca's predecessor in
1985, and has 23 years of investment experience. Jerry C.
Apodaca, Jr. joined the firm as a principal and 1/3 owner in
1991, and has 12 years investment management experience.
Before joining Apodaca, Mr. Apodaca was a Vice President of
Marketing at Newport First Investments, Inc.
SFM pays Apodaca a fee, which is calculated and paid
monthly, based on an annual rate of .50% of the average
monthly market value of the assets of the Small Cap Growth
Portfolio managed by Apodaca. For the fiscal year ended
September 30, 1995, Apodaca received a sub-advisory fee of
.50%.
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<PAGE>
BOSTON PARTNERS Boston Partners Asset Management, L.P. ("Boston") serves as
ASSET Sub-Adviser to a portion of the assets of the Small Cap
MANAGEMENT, Value Portfolio. Boston, a Delaware limited partnership, is
L.P. a registered investment adviser with its principal business
address at One Financial Center, 43rd Floor, Boston, MA
02111. Boston's general partner, Boston Partners, Inc., One
Financial Center, 43rd Floor, Boston, MA 02111, whose sole
shareholder is Desmond J. Heathwood, Chief Investment
Officer of Boston, owns approximately 20% of Boston's
partnership interests. Boston was founded in April, 1995,
and as of September 30, 1995, it had approximately $4.2
billion in assets under management. Boston's clients include
corporations, endowments, foundations, pension and profit
sharing plans and one other investment company.
Boston, along with its general partner and several of its
limited partners, is a defendant in a civil action filed in
April 1995 in Suffolk County (Massachusetts) Superior Court
brought by The Boston Company Asset Management, Inc.
("TBCAM"), the former employer of certain partners of
Boston, captioned, The Boston Company Asset Management, Inc.
v. Desmond J. Heathwood, et. al., Civil Action No. 95-2202.
TBCAM alleges various causes of action arising from the
unsuccessful effort by Desmond J. Heathwood, the sole
shareholder of Boston's general partner, and other former
TBCAM officers, to purchase the assets of TBCAM, and the
resulting formation of Boston. The defendants have filed an
answer which denies all of TBCAM's allegations, and have
asserted counterclaims against TBCAM. The parties are
currently engaged in discovery proceedings, and no trial
date has been set. Boston believes that TBCAM's action is
without merit, and will not have a material adverse effect
on Boston.
The portion of the Small Cap Value Portfolio's assets
allocated to Boston has been managed since November, 1995 by
Wayne J. Archambo, C.F.A. Mr. Archambo has been employed by
Boston since its organization, and has 10 years experience
investing in small capitalization stocks. Prior to joining
Boston, Mr. Archambo was a Senior Vice President and member
of the Equity Policy Committee at The Boston Company Asset
Management, Inc., where he created that firm's Small
Capitalization Value Product and Mid Capitalization Product.
Prior to joining The Boston Company Asset Management, Inc.
in 1989, Mr. Archambo spent six years as a portfolio
manager/analyst for Boston-based Systematic Investors.
SFM pays Boston a fee, which is calculated and paid
monthly, based on an annual rate of .50% of the average
monthly market value of the assets of the Small Cap Value
Portfolio managed by Boston. During the last fiscal year,
Boston did not serve as Sub-Adviser and therefore did not
receive a sub-advisory fee.
IDS ADVISORY IDS Advisory Group Inc. ("IDS") serves as Sub-Adviser to a
GROUP INC. portion of the assets of the Large Cap Growth Portfolio. IDS
is a registered investment adviser and wholly-owned
subsidiary of American Express Financial Corporation. As of
September 30, 1995, IDS managed over $24.9 billion in assets
with $6.3 billion of this total in large capitalization
growth domestic equities. IDS was founded in 1972 to manage
tax-exempt assets for
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<PAGE>
institutional clients. The principal business address of IDS
is IDS Tower 10, Minneapolis, MN 55440.
The day-to-day management of IDS' portion of the Large
Cap Growth Portfolio's investments is the responsibility of
a committee composed of the eight investment portfolio
managers of the equity investment team. No individual person
is primarily responsible for making recommendations to that
committee. IDS has served as sub-adviser to the Large Cap
Growth Portfolio since its inception.
SFM pays the greater of $125,000 or a fee, which is
calculated and paid monthly, based on an annual rate of .25%
of the average monthly market value of the assets of the
Large Cap Growth Portfolio managed by IDS. IDS may waive all
or a portion of its fee in order to limit the operating
expenses of the Portfolio. IDS reserves the right, in its
sole discretion, to terminate any such voluntary fee waiver
at any time. For the fiscal year ended September 30, 1995,
IDS received a sub-advisory fee of .20%.
LSV ASSET LSV Asset Management ("LSV") serves as Sub-Adviser to a
MANAGEMENT portion of the assets of the Large Cap Value Portfolio. LSV
is a registered investment adviser organized as a Delaware
general partnership in which an affiliate of SFM owns a
majority interest. The general partners of LSV have
developed quantitative value analysis methodology and
software which has been used to manage assets over the past
5 years. The portfolio identified by the model has been
implemented by three institutional clients with aggregate
assets invested of approximately $515 million including $75
million in a portfolio of U.S. securities. The principal
business address of LSV is 181 W. Madison Avenue, Chicago,
IL 60602.
Investment decisions have been made by the quantitative
computer model since March, 1995. Josef Lakonishok, Andrei
Shleifer and Robert Vishny, officers of LSV, will on a
continuous basis monitor the quantitative analysis model and
based on their ongoing research and statistical analysis
make adjustments to the model. Securities are identified for
purchase or sale for the Portfolio based upon the computer
model and defined variance tolerances. Purchases and sales
are effected by LSV based upon the output from the model.
SFM pays LSV a fee, which is calculated and paid monthly,
based on an annual rate of .20% of the average monthly
market value of the assets of the Large Cap Value Portfolio
managed by LSV. For the fiscal year ended September 30,
1995, LSV received a sub-advisory fee of .20%.
MARTINGALE Martingale Asset Management, L.P. ("Martingale") serves as
ASSET Sub-Adviser to the Mid-Cap Portfolio. Martingale is a
MANAGEMENT, Delaware limited partnership with its principal address at
L.P. 222 Berkeley Street, Boston, MA 02116. Commerz Asset
Management USA Corporation ("CAM") is the general partner
with a controlling interest in Martingale. CAM is an
affiliate of Commerz International Capital Management GmbH
("CICM"), headquartered in Frankfurt, Germany. CICM is the
asset management subsidiary of Commerzbank AG.
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<PAGE>
Martingale was established in 1987, and as of September 30,
1995, had assets of approximately $266 million under
management.
The assets of the Portfolio have been managed by John
Freeman since June, 1995. Mr. Freeman has 10 years of
investment management experience, including three years
experience investing in mid cap companies. Prior to joining
Martingale in 1992, he worked at BARRA, Inc. as a Manager of
Consulting Services.
SFM pays Martingale a fee, which is calculated and paid
monthly, based on an annual rate of .25% of the average
monthly market value of the assets of the Mid-Cap Portfolio
managed by Martingale. For the fiscal year ended September
30, 1995, Martingale received a sub-advisory fee of .25%.
MELLON EQUITY Mellon Equity Associates ("Mellon") serves as Sub-Adviser to
ASSOCIATES a portion of the assets of the Large Cap Value Portfolio.
Mellon is a Pennsylvania business trust founded in 1987,
whose sole beneficiary is MBC Investments Corporation, a
wholly-owned subsidiary of the Mellon Bank Corporation.
Mellon is a professional investment counseling firm that
provides investment management services to the equity and
balanced pension, public fund and profit-sharing investment
management markets, and is a registered investment adviser
under the Investment Advisers Act of 1940, as amended (the
"1940 Act"). Mellon had discretionary management authority
with respect to approximately $7.6 billion of assets as of
September 30, 1995. Mellon's predecessor organization had
managed domestic equity tax-exempt institutional accounts
since 1947. The business address for Mellon is 500 Grant
Street, Suite 3700, Pittsburgh, PA 15258.
William P. Rydell and Robert A. Wilk have been Portfolio
Managers for Mellon's portion of the Large Cap Value
Portfolio since 1994. Mr. Rydell is the President and Chief
Executive Officer of Mellon, and has been managing
individual and collectivized portfolios at Mellon since
1982. Mr. Wilk is a Senior Vice President and Portfolio
Manager of Mellon, and has been involved with securities
analysis, quantitative research, asset allocation, trading
and client services at Mellon since April 1990. Prior to
joining Mellon, Mr. Wilk was in charge of portfolio
management and conducted quantitative research for another
investment subsidiary of Mellon Bank Corporation, Triangle
Portfolio Associates.
SFM pays Mellon a fee, which is calculated and paid
monthly, based on an annual rate of .20% of the average
monthly market value of the assets of the Large Cap Value
Portfolio managed by Mellon. Mellon is entitled to a fee,
which is paid monthly by SFM, at an annual rate of .20% of
the market value of investments under its management. For
the fiscal year ended September 30, 1995, Mellon received a
sub-advisory fee of .20%.
The Glass-Steagall Act restricts the securities
activities of banks such as Mellon Bank Corporation, but
federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
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MERUS CAPITAL Merus Capital Management ("Merus") serves as Sub-Adviser for
MANAGEMENT the Equity Income Portfolio and also serves as Sub-Adviser
to a portion of the assets of the Large Cap Value Portfolio.
Merus is a division of the Bank of California and provides
equity and fixed-income management services to a broad array
of corporate and municipal clients. As of September 30,
1995, Merus had discretionary management authority with
respect to approximately $6.6 billion of assets. The
principal business address of Merus is 475 Sansome Street,
San Francisco, CA 94111.
The Equity Income Portfolio has been managed by a
committee since its inception. The Large Cap Value Portfolio
has been managed by a committee since December, 1994.
SFM pays Merus a fee, which is calculated and paid
monthly, based on an annual rate of .25% of the average
monthly market value of the assets of the Equity Income
Portfolio managed by Merus and an annual rate of .20% of the
average monthly market value of assets of the Large Cap
Value Portfolio managed by Merus. For the fiscal year ended
September 30, 1995, Merus received a sub-advisory fee of
.25% for the Equity Income Portfolio and .20% for the Large
Cap Value Portfolio.
The Glass-Steagall Act restricts the securities
activities of banks such as the Bank of California, but
federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
NICHOLAS- Nicholas-Applegate Capital Management, Inc. ("Nicholas-
APPLEGATE Applegate") serves as Sub-Adviser to the Small Cap Growth
CAPITAL Portfolio and is responsible for a portion of the assets of
MANAGEMENT, the Portfolio. Nicholas-Applegate also served as the Mid-Cap
INC. Portfolio's adviser until June, 1995.
Nicholas-Applegate has operated as an investment adviser
which provides investment services to employee benefit
plans, endowments, foundations, other institutions and,
since April 20, 1987, investment companies. As of September
30, 1995, Nicholas-Applegate had discretionary management
authority with respect to approximately $27 billion of
assets. The principal business address of Nicholas-Applegate
is 600 West Broadway, 29th Floor, San Diego, CA 92101.
Nicholas-Applegate, pursuant to a partnership agreement, is
controlled by its general partner Nicholas-Applegate Capital
Management, Holdings, L.P., a California Limited Partnership
controlled by Arthur E. Nicholas.
Nicholas-Applegate manages its portion of the Small Cap
Growth Portfolio through its systematic-driven management
team under the supervision of Mr. Nicholas, founder and
Chief Investment Officer of the firm. Nicholas-Applegate's
systems driven investment team, headed by Lawrence S.
Speidell, is primarily responsible for the day-to-day
management of the Portfolio since March 1994. Mr. Speidell
has been a Portfolio Manager and investment team leader with
Nicholas-Applegate since March 1994. Prior to joining
Nicholas-Applegate, he was an institutional portfolio
manager with Batterymarch Financial Management.
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SFM pays Nicholas-Applegate a fee, which is calculated
and paid monthly, based on an annual rate of .50% of the
average monthly market value of the assets of the Small Cap
Growth Portfolio managed by Nicholas-Applegate. For the
fiscal year ended September 30, 1995, Nicholas-Applegate
received a sub-advisory of .50%.
PILGRIM BAXTER Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") serves
& ASSOCIATES, as Sub-Adviser to a portion of the assets of the Small Cap
LTD. Growth Portfolio.
Pilgrim Baxter is a professional investment management
firm and registered investment adviser that, along with its
predecessors, has been in business since 1982. The
controlling shareholder of Pilgrim Baxter is United Asset
Management ("UAM"), a New York Stock Exchange listed holding
company principally engaged, through affiliated firms, in
providing institutional investment management firms. UAM's
corporate office is located at One International Place,
Boston, MA 02110. As of September 30, 1995, Pilgrim Baxter
had discretionary management with respect to approximately
$6.5 billion in assets. In addition to advising the
Portfolio, Pilgrim Baxter provides advisory services to
pension and profit-sharing plans, charitable institutions,
corporations, individual investors, trusts and estates, and
other investment companies. The principal address of Pilgrim
Baxter is 1255 Drummers Lane, Suite 300, Wayne, PA 19087.
Michael D. Jones, CFA, joined Pilgrim Baxter in February,
1995 as a portfolio manager. Mr. Jones has been managing the
Small Cap Growth Portfolio since April 15, 1995. Prior to
joining Pilgrim Baxter, Mr. Jones was a portfolio manager
with The Bank of New York from June 1990 to January 1995.
SFM pays Pilgrim Baxter a fee, which is calculated and
paid monthly, based on an annual rate of .50% of the average
monthly market value of assets of the Small Cap Growth
Portfolio managed by Pilgrim Baxter. For the fiscal year
ended September 30, 1994, Pilgrim Baxter received a sub-
advisory fee of .50%.
STI CAPITAL STI Capital Management, N.A. ("STI") (formerly, SunBank
MANAGEMENT, Capital Management N.A.) serves as Sub-Adviser to the
N.A. Capital Appreciation Portfolio. STI was established in 1934
and is owned by SunBank, Inc., a wholly-owned subsidiary of
Sun Trust Banks, Inc., a bank holding company. As of
September 30, 1995, STI had discretionary management
authority with respect to approximately $11.4 billion of
assets. The principal business address of STI is P.O. Box
3786, Orlando, Florida 32802.
Anthony R. Gray is Chairman and Chief Investment Officer
of STI since 1987, and has managed the Capital Appreciation
Portfolio since its inception. Mr. Gray joined SunBank in
1979 as Director of Research of the Trust Investment
Division.
SFM pays STI a fee, which is calculated and paid monthly,
based on an annual rate of .25% of the average monthly
market value of the assets of the Capital Appreciation
Portfolio managed by STI. For the fiscal year ended
September 30, 1995. STI received a sub-advisory fee of .25%.
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The Glass-Steagall Act restricts the securities
activities of banks such as Sun Trust Banks, Inc., but
federal regulatory authorities permit such banks to provide
investment advisory and other services to mutual funds.
Should this position be challenged successfully in court or
reversed by legislation, the Trust might have to make other
investment advisory arrangements.
WALL STREET Wall Street Associates ("WSA") serves as Sub-Adviser to a
ASSOCIATES portion of the assets of the Small Cap Growth Portfolio. WSA
is organized as a corporation with its principal business
address at 1200 Prospect Street, Suite 100, La Jolla, CA
92037. WSA was founded in 1987, and as of September 30,
1995, had approximately $925 million in assets under
management. WSA provides investment advisory services for
institutional clients, an investment partnership for which
it serves as general partner, a group trust, for which it
serves as sole investment manager, and an offshore fund for
foreign investors for which it serves as the sole investment
manager.
William Jeffrey III, Kenneth F. McCain, and Richard S.
Coons, each of whom own 1/3 of WSA, serve as Portfolio
Managers for the portion of the Portfolio's assets allocated
to WSA since August, 1995. Each is a principal of WSA and,
together, they have 73 years of investment management
experience.
WSA has served as an investment sub-adviser to only one
registered investment company (since June 28, 1995), and, as
such, does not have extensive experience advising a highly
regulated entity such as an investment company. This may
present additional risks for the Portfolio.
SFM pays WSA a fee, which is calculated and paid monthly,
based on an annual rate of .50% of the average monthly
market value of the assets of the Small Cap Growth Portfolio
managed by WSA. For the fiscal year ended September 30,
1995, WSA received a sub-advisory fee of .50%.
DISTRIBUTION ___________________________________________________________________
SEI Financial Services Company (the "Distributor"), a
wholly-owned subsidiary of SEI, serves as each Portfolio's
distributor pursuant to a distribution agreement (the
"Distribution Agreement") with the Trust. Each Class of the
Trust has adopted a distribution plan (the "Class A Plan" or
"Class D Plan," and collectively, the "Plans") pursuant to
Rule 12b-1 under the 1940 Act.
The Class D Plan provides for reimbursement for expenses
incurred by the Distributor, in an amount not to exceed .30%
of the average daily net assets of each Portfolio, on an
annualized basis, provided those expenses are permissible as
to both type and amount under a budget adopted by the Board
of Trustees, including those who are not interested persons
and have no financial interest in the Plan or any related
agreement ("Qualified Trustees"). Currently, the budget
(shown here as a percentage of average daily net assets) for
each Portfolio is set at an annual rate as follows: Large
Cap Value Portfolio,
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0.07%; Large Cap Growth Portfolio, 0.06%, Small Cap Value
Portfolio, 0.05%; Small Cap Growth Portfolio, 0.08%; Mid-Cap
Portfolio, 0.12%; Capital Appreciation Portfolio, 0.09%; and
Equity Income Portfolio, 0.09%.
Distribution-related expenses reimbursable to the
Distributor under the budget include those related to the
costs of the printing of reports, prospectuses, notices and
similar materials for persons other than current
shareholders, federal and state securities law registration
and the cost of complying with such laws in the distribution
of the Trust's shares, advertising expenses and promotional
and sales expenses including expenses for travel,
communication and compensation and benefits for sales
personnel. Distribution expenses not attributable to a
specific Portfolio are allocated among each of the
Portfolios of the Trust on the basis of their average net
assets. The Trust is not obligated to reimburse the
Distributor for any expenditures in excess of the approved
budget.
The Class D Plan, in addition to providing for the
reimbursement payments described above, provides for
payments to the Distributor at an annual rate of .30% of
each Portfolio's average daily net assets attributable to
Class D shares. This additional payment may be used to
compensate financial institutions that provide distribution-
related services to their customers. These payments are
characterized as "compensation," and are not directly tied
to expenses incurred by the Distributor; the payments the
Distributor receives during any year may therefore be higher
or lower than its actual expenses. These additional payments
compensate the Distributor for its services in connection
with distribution assistance or the provision of shareholder
services, and some or all of it may be used to pay financial
institutions and intermediaries such as banks, savings and
loan associations, insurance companies, and investment
counselors, broker-dealers (including the Distributor's
affiliates and subsidiaries) for services or reimbursement
of expenses incurred in connection with distribution
assistance or the provision of shareholder services. If the
Distributor's expenses are less than its fees under the
Class D Plan, the Trust will still pay the full fee and the
Distributor will realize a profit, but the Trust will not be
obligated to pay in excess of the full fee, even if the
Distributor's actual expenses are higher.
It is possible that an institution may offer different
classes of shares to its customers and thus receive
different compensation with respect to different classes.
These financial institutions may also charge separate fees
to their customers.
The Trust may execute brokerage or other agency
transactions through the Distributor for which the
Distributor may receive compensation.
The Distributor may, from time to time in its sole
discretion, institute one or more promotional incentive
programs, which will be paid for by the Distributor from the
sales charge it receives or from any other source available
to it. Under any such program, the Distributor will provide
promotional incentives, in the form of cash or other
compensation, including merchandise, airline vouchers, trips
and vacation packages, to all dealers selling shares of the
Portfolios. Such promotional incentives will be offered
uniformly to all shares of the Portfolios, and also will be
offered uniformly to all dealers, predicated upon the amount
of shares of the Portfolios sold by such dealer.
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PERFORMANCE ____________________________________________________________________
From time to time, a Portfolio may advertise yield and total
return. These figures will be based on historical earnings
and are not intended to indicate future performance. The
yield of a Portfolio refers to the annualized income
generated by an investment in the Portfolio over a specified
30-day period. The yield is calculated by assuming that the
same amount of income generated by the investment during
that period is generated in each 30-day period over one year
and is shown as a percentage of the investment.
The total return of a Portfolio refers to the average
compounded rate of return to a hypothetical investment, net
of any sales charge imposed on Class D Shares redeemed at
the end of the specified period covered by the total return
figure, for designated time periods (including but not
limited to, the period from which the Portfolio commenced
operations through the specified date), assuming that the
entire investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions. The total return of a Portfolio may also be
quoted as a dollar amount or on an aggregate basis, an
actual basis, without inclusion of any front-end or
contingent sales charges, or with a reduced sales charge in
advertisements distributed to investors entitled to a
reduced sales charge.
A Portfolio may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), financial and
business publications and periodicals; (ii) broad groups of
comparable mutual funds; (iii) unmanaged indices which may
assume investment of dividends but generally do not reflect
deductions for administrative and management costs; or (iv)
other investment alternatives. A Portfolio may quote
Morningstar, Inc., a service that ranks mutual funds on the
basis of risk-adjusted performance. A Portfolio may quote
Ibbotson Associates of Chicago, Illinois, which provides
historical returns of the capital markets in the U.S. A
Portfolio may use long term performance of these capital
markets to demonstrate general long-term risk versus reward
scenarios and could include the value of a hypothetical
investment in any of the capital markets. A Portfolio may
also quote financial and business publications and
periodicals as they relate to fund management, investment
philosophy, and investment techniques.
A Portfolio may quote various measures of volatility and
benchmark correlation in advertising and may compare these
measures to those of other funds. Measures of volatility
attempt to compare historical share price fluctuations or
total returns to a benchmark while measures of benchmark
correlation indicate how valid a comparative benchmark might
be. Measures of volatility and correlation are calculated
using averages of historical data and cannot be calculated
precisely.
For each Portfolio, the performance of Class A shares
will normally be higher than the performance of the Class D
shares of that Portfolio because of the additional
distribution and transfer agent expenses charged to Class D
shares.
Additional performance information is set forth in the
1995 Annual Report to Shareholders and is available upon
request and without charge by calling 1-800-437-6016.
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................................................................................
[SYMBOL APPEARS HERE] TAXES
You must pay taxes on your Portfolio's earnings, whether you take your payments
in cash or additional shares.
................................................................................
................................................................................
[SYMBOL APPEARS HERE] DISTRIBUTIONS
A Portfolio distributes income dividends and capital gains. Income dividends
represent the earnings from the Portfolio's investments; capital gains
distributions occur when a Portfolio sells investments for more than the
original purchase price.
................................................................................
TAXES __________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial, or administrative action.
No attempt has been made to present a detailed explanation of
the federal, state, or local income tax treatment of a
Portfolio or its shareholders. Accordingly, shareholders are
urged to consult their tax advisers regarding specific
questions as to federal, state, and local income taxes. State
and local tax consequences of an investment in a Portfolio
may differ from the federal income tax consequences described
below. Additional information concerning taxes is set forth
in the Statement of Additional Information.
Tax Status of A Portfolio is treated as a separate entity for federal
the Portfolios income tax purposes and is not combined with the Trust's other
portfolios. Each Portfolio intends to continue to qualify for
the special tax treatment afforded regulated investment
companies ("RICs") under Subchapter M of the Code, so as to be
relieved of federal income tax on net investment company
taxable income (including the excess, if any, of net short-term
capital gains over net long-term capital losses) and net
capital gains (the excess of net long-term capital gains over
net short-term capital losses) distributed to shareholders.
Tax Status of Each Portfolio distributes substantially all of its net
Distributions investment company taxable income to shareholders. Dividends
from a Portfolio's net investment company taxable income are
taxable to its shareholders as ordinary income (whether
received in cash or in additional shares), and generally will
qualify for the dividends-received deduction for corporate
shareholders to the extent that such dividends are derived from
dividends paid on domestic and equity securities owned by the
Portfolio. Distributions of net capital gains are taxable to
shareholders as long-term capital gains regardless of how long
a shareholder has held shares and are not eligible for the
corporate dividends-received deduction. Each Portfolio will
make annual reports to shareholders of the federal income tax
status of all distributions. Dividends declared by a Portfolio
in October, November or December of any year and payable to
shareholders of record on a date in such a month will be deemed
to have been paid by the Portfolio and received by the
shareholders on December 31 of the year declared if paid by a
Portfolio at any time during the following January.
Each Portfolio intends to make sufficient distributions to
avoid liability for the federal excise tax applicable to
RICs.
Each sale, exchange, or redemption of a Portfolio's shares
generally is a taxable transaction to the shareholder.
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................................................................................
[SYMBOL APPEARS HERE] BUY, EXCHANGE AND SELL
REQUESTS ARE IN "GOOD
ORDER" WHEN:
. The account number and portfolio name are shown
. The amount of the transaction is specified in dollars or shares
. Signatures of all owners appear exactly as they are registered on the account
. Any required signature guarantees (if applicable) are included
. Other supporting legal documents (as necessary) are present
................................................................................
ADDITIONAL
INFORMATION ABOUT
DOING BUSINESS
WITH US ________________________________________________________________________
Business Days You may buy, sell or exchange shares on days which the New York
Stock Exchange is open for business (a "Business Day"). All
purchase, exchange and redemption requests received in "good
order" will be effective as of the Business Day received by the
Transfer Agent as long as the Transfer Agent receives the order
and, in the case of a purchase request, payment before 4:00
p.m. Eastern time. Otherwise the purchase will be effective
when payment is received. Broker-dealers may have separate
arrangements with the Trust regarding the sale of its Class D
shares.
If an exchange request is for shares of a portfolio whose
net asset value is calculated as of a time earlier than 4:00
p.m. Eastern time, the exchange request will not be effective
until the next Business Day. Anyone who wishes to make an
exchange must have received a current prospectus of the
portfolio into which the exchange is being made before the
exchange will be effected.
Minimum The minimum initial investment in a Portfolio's Class D
Investments shares is $1,000; however, the minimum investment may be
waived at the Distributor's discretion. All subsequent
purchases must be at least $100 ($25 for payroll deductions
authorized pursuant to pre-approved payroll deduction plans).
The Trust reserves the right to reject a purchase order when
the Distributor determines that it is not in the best
interest of the Trust or its shareholders to accept such
order. In addition, because excessive trading (including
short-term "market timing" trading) can hurt a Portfolio's
performance, each Portfolio may refuse purchase orders from
any shareholder account if the accountholder has been advised
that previous purchase and redemption transactions were
considered excessive in number or amount. Accounts under
common control or ownership, including those with the same
taxpayer identification number and those administered so as
to redeem or purchase shares based upon certain predetermined
market indicators, will be considered one account for this
purpose.
Maintaining a Due to the relatively high cost of handling small
Minimum investments, a Portfolio reserves the right to redeem, at net
Account asset value, the shares of any shareholder if, because of
Balance redemptions of shares by or on behalf of the shareholder, the
account of such shareholder in a Portfolio has a value of
less than $1,000, the minimum initial purchase amount.
Accordingly, an investor purchasing shares of a Portfolio in
only the minimum investment amount may be
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subject to such involuntary redemption if he or she
thereafter redeems any of these shares. Before a Portfolio
exercises its right to redeem such shares and to send the
proceeds to the shareholder, the shareholder will be given
notice that the value of the shares in his or her account is
less than the minimum amount and will be allowed 60 days to
make an additional investment in a Portfolio in an amount
that will increase the value of the account to at least
$1,000. See "Purchase and Redemption of Shares" in the
Statement of Additional Information for examples of when the
right of redemption may be suspended.
At various times, a Portfolio may receive a request to
redeem shares for which it has not yet received good
payment. In such circumstances, redemption proceeds will be
forwarded upon collection of payment for the shares;
collection of payment may take 10 or more days. A Portfolio
intends to pay cash for all shares redeemed, but under
abnormal conditions that make payment in cash unwise,
payment may be made wholly or partly in portfolio securities
with a market value equal to the redemption price. In such
cases, an investor may incur brokerage costs in converting
such securities to cash.
Net Asset Value An order to buy shares will be executed at a per share price
equal to the net asset value next determined after the
receipt of the purchase order by the Distributor plus any
applicable sales charge (the "offering price"). No
certificates representing shares will be issued. An order to
sell shares will be executed at the net asset value per
share next determined after receipt and effectiveness of a
request for redemption in good order. Net asset value per
share is determined as of the close of business of the New
York Stock Exchange (currently, 4:00 p.m. Eastern time) on
each Business Day. Payment to shareholders for shares
redeemed will be made within seven days after receipt by the
Distributor of the redemption order.
How the Net The net asset value per share of a Portfolio is determined
Asset Value is by dividing the total market value of its investments and
Determined other assets, less any liabilities, by the total number of
outstanding shares of the Portfolio. A Portfolio may use a
pricing service to obtain the last sale price of each equity
or fixed income security held by a Portfolio. In addition,
portfolio securities are valued at the last quoted sales
price for such securities, or, if there is no such reported
sales price on the valuation date, at the most recent quoted
bid price. Unlisted securities for which market quotations
are readily available are valued at the most recent quoted
bid price. Net asset value per share is determined daily as
of the close of business of the New York Stock Exchange
(currently, 4:00 p.m. Eastern time) on each Business Day.
Purchases will be made in full and fractional shares of a
Portfolio calculated to three decimal places. Although the
methodology and procedures for determining net asset value
per share are identical for both classes of a Portfolio, the
net asset value per share of one class may differ from that
of another class because of the different distribution fees
charged to each class and the incremental transfer agent
fees charged to Class D shares.
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Rights of In calculating the sales charge rates applicable to current
Accumulation purchases of a Portfolio's shares, a "single purchaser"
(defined below) is entitled to combine current purchases
with the current market value of previously purchased shares
of a Portfolio and Class D shares of other portfolios
("Eligible Portfolios") which are sold subject to a
comparable sales charge.
The term "single purchaser" refers to (i) an individual,
(ii) an individual and spouse purchasing shares of a
Portfolio for their own account or for trust or custodial
accounts of their minor children, or (iii) a fiduciary
purchasing for any one trust, estate or fiduciary account,
including employee benefit plans created under Sections 401
or 457 of the Code, including related plans of the same
employer. Furthermore, under this provision, purchases by a
single purchaser shall include purchases by an individual
for his or her own account in combination with (i) purchases
of that individual and spouse for their joint accounts or
for trust and custodial accounts for their minor children
and (ii) purchases of that individual's spouse for his or
her own account. To be entitled to a reduced sales charge
based upon shares already owned, the investor must ask the
Transfer Agent for such reduction at the time of purchase
and provide the account number(s) of the investor, the
investor and spouse, and their children (under age 21). A
Portfolio may amend or terminate this right of accumulation
at any time as to subsequent purchases.
Letter of By submitting a Letter of Intent (the "Letter") to the
Intent Transfer Agent, a single purchaser may purchase shares of a
Portfolio and the other Eligible Portfolios during a 13-
month period at the reduced sales charge rates applying to
the aggregate amount of the intended purchases stated in the
Letter. The Letter may apply to purchases made up to 90 days
before the date of the Letter. It is the shareholder's
responsibility to notify SFM at the time the Letter is
submitted that there are prior purchases that may apply.
Five percent (5%) of the total amount intended to be
purchased will be held in escrow by the Transfer Agent until
such purchase is completed within the 13-month period. The
13-month period begins on the date of the earliest purchase.
If the intended investment is not completed, SFM will
surrender an appropriate number of the escrowed shares for
redemption in order to realize the difference between the
sales charge on the shares purchased at the reduced rate and
the sales charge otherwise applicable to the total shares
purchased. Such purchasers may include the value of all
their shares of the Portfolio and of any of the other
Eligible Portfolios in the Trust towards the completion of
such Letter.
Sales Charge No sales charge is imposed on shares of a Portfolio: (i)
Waivers issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Trust is a
party; (ii) sold to dealers or brokers that have a sales
agreement with the Distributor ("participating broker-
dealers"), for their own account or for retirement plans for
employees or sold to present employees of dealers or brokers
that certify to the Distributor at the time of purchase that
such purchase is for their own account; (iii) sold to
present employees of SEI or one of its affiliates, or of any
entity which is a current service provider to the Trust;
(iv) sold to tax-exempt organizations enumerated in
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<PAGE>
Section 501(c) of the Code or qualified employee benefit
plans created under Sections 401, 403(b)(7) or 457 of the
Code (but not IRAs or SEPs); (v) sold to fee-based clients
of banks, financial planners and investment advisers; (vi)
sold to clients of trust companies and bank trust
departments; (vii) sold to trustees and officers of the
Trust; (viii) purchased with proceeds from the recent
redemption of Class D shares of another Portfolio of the
Trust or another class of shares of a portfolio of the
Trust, SEI Tax-Exempt Trust, SEI International Trust, SEI
Liquid Asset Trust, or SEI Daily Income Trust; (ix)
purchased with the proceeds from the recent redemption of
shares of a mutual fund with similar investment objectives
and policies (other than Class D shares) for which a front-
end sales charge was paid (this offer will be extended, to
cover shares on which a deferred sales charge was paid, if
permitted under regulatory authorities' interpretation of
applicable law); or (x) sold to participants or members of
certain affinity groups, such as trade associations or
membership organizations, which have entered into
arrangements with the Distributor. Members of affinity
groups should see the Statement of Additional Information or
call the Transfer Agent for further information regarding
sales charge waivers.
An investor relying upon any of the categories of waivers
of sales charges must qualify such waiver in advance of the
purchase with the Transfer Agent or the financial
institution or the intermediary through which shares are
purchased by the investor.
The waiver of the sales charge under circumstances (viii)
and (ix) above applies only if the following conditions are
met: the purchase must be made within 60 days of the
redemption; the Transfer Agent must be notified in writing
by the investor, or his or her agent, at the time a purchase
is made; and a copy of the investor's account statement
showing such redemption must accompany such notice. The
waiver policy with respect to the purchase of shares through
the use of proceeds from a recent redemption as described in
clauses (viii) and (ix) above will not be continued
indefinitely and may be discontinued at any time without
notice. Investors should call 1-800-437-6016 to confirm
availability prior to initiating the procedures described in
clauses (viii) and (ix) above.
The Distributor has also entered into arrangements with
certain affinity groups and broker-dealers wherein their
members or clients are entitled to percentage-based
discounts from the otherwise applicable sales charge for
purchase of Class D shares. Currently the percentage-based
discount is either 10% or 50%. Members of affinity groups
and clients of broker-dealers should see the Statement of
Additional Information or contact the Transfer Agent for
further information.
Signature The Transfer Agent may require that the signatures on the
Guarantees written request be guaranteed. You should be able to obtain
a signature guarantee from a bank, broker, dealer, certain
credit unions, securities exchange or association, clearing
agency or savings association. Notaries public cannot
guarantee signatures. The signature guarantee requirement
will be waived if all of the following conditions apply: (1)
the redemption is for not more than $5,000 worth of shares,
(2) the redemption check is payable to the shareholder(s) of
record, and (3) the redemption check is mailed to the
shareholder(s) at his or her address
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of record. The Trust and SFM reserve the right to amend
these requirements without notice.
Telephone/Wire Redemption orders may be placed by telephone. Neither the
Instructions Trust nor the Transfer Agent will be responsible for any
loss, liability, cost or expense for acting upon wire
instructions or upon telephone instructions that it
reasonably believes to be genuine. The Trust and the
Transfer Agent will each employ reasonable procedures to
confirm that instructions communicated by telephone are
genuine, including requiring a form of personal
identification prior to acting upon instructions received by
telephone and recording telephone instructions. If market
conditions are extraordinarily active, or other
extraordinary circumstances exist, and you experience
difficulties placing redemption orders by telephone, you may
wish to consider placing your order by other means.
Systematic Please note that if withdrawals exceed income dividends,
Withdrawal Plan your invested principal in the account will be depleted.
("SWP") Thus, depending upon the frequency and amounts of the
withdrawal payments and/or any fluctuations in the net asset
value per share, your original investment could be exhausted
entirely. To participate in the SWP, you must have your
dividends automatically reinvested. You may change or cancel
the SWP at any time, upon written notice to the Transfer
Agent.
How to Close An account may be closed by providing written notice to the
your Account Transfer Agent. You may also close your account by telephone
if you have previously elected telephone options on your
account application.
GENERAL INFORMATION ____________________________________________________________
The Trust The Trust was organized as a Massachusetts business trust
under a Declaration of Trust dated October 20, 1986. The
Declaration of Trust permits the Trust to offer separate
series ("portfolios") of shares and different classes of
each portfolio. Shareholders may purchase shares in a
Portfolio through two separate classes: Class A and Class D
shares, which provide for variation in distribution and
transfer agent costs, voting rights, dividends, and the
imposition of a sales charge on the Class D shares. This
Prospectus offers the Class D shares of the Trust's Large
Cap Value, Large Cap Growth, Small Cap Value, Small Cap
Growth, Capital Appreciation, Mid-Cap, and Equity Income
Portfolios. Additional information pertaining to the Trust
may be obtained by writing to SEI Financial Management
Corporation, 680 East Swedesford Road, Wayne, PA 19087 or by
calling 1-800-437-6016. All consideration received by the
Trust for shares of any portfolio and all assets of such
portfolio belong to that portfolio and would be subject to
the liabilities related thereto.
The Trust pays its expenses, including fees of its
service providers, audit and legal expenses, expenses of
preparing prospectuses, proxy solicitation materials and
reports to shareholders, costs of custodial services and
registering the shares under federal and state securities
laws, pricing, insurance expenses, including litigation and
other extraordinary expenses, brokerage costs, interest
charges, taxes and organization expenses.
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Certain shareholders in one or more of the Portfolios may
obtain asset allocation services with respect to their
investments in such Portfolios. If a sufficient amount of a
Portfolio's assets are subject to such asset allocation
services, a Portfolio may incur higher transaction costs and
a higher portfolio turnover rate than would otherwise be
anticipated as a result of redemptions and purchases of
Portfolio shares pursuant to such services.
Trustees of the The management and affairs of the Trust are supervised by
Trust the Trustees under the laws of the Commonwealth of
Massachusetts. The Trustees have approved contracts under
which, as described above, certain companies provide
essential management services to the Trust.
Voting Rights Each share held entitles the shareholder of record to one
vote. The shareholder of each Portfolio of the Trust will
vote separately on matters relating solely to that
Portfolio. The shareholder of each class will vote
separately on matters pertaining to its distribution plan.
As a Massachusetts business trust, the Trust is not required
to hold annual meetings of shareholders, but approval will
be sought for certain changes in the operation of the Trust
and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by the
remaining Trustees or by shareholders at a special meeting
called upon written request of shareholders owning at least
10% of the outstanding shares of the Trust. In the event
that such a meeting is requested the Trust will provide
appropriate assistance and information to the shareholders
requesting the meeting.
Reporting The Trust issues unaudited financial statements semi-
annually and audited financial statements annually. The
Trust furnishes proxy statements and other reports to
shareholders of record.
Shareholder Shareholder inquiries should be directed to DST Systems,
Inquiries Inc., P.O. Box 419240, Kansas City, MO 64141-6240.
Dividends Substantially all of the net investment income (exclusive of
capital gains) of the Portfolios is periodically declared
and paid as a dividend. Dividends currently are paid on a
quarterly basis for each Portfolio. Currently, capital
gains, if any, are distributed at least annually.
Shareholders automatically receive all income dividends
and capital gain distributions in additional shares at the
net asset value next determined following the record date,
unless the shareholder has elected to take such payment in
cash. Shareholders may change their election by providing
written notice to SFM at least 15 days prior to the
distribution.
Dividends and capital gains of each Portfolio are paid on
a per-share basis. The value of each share will be reduced
by the amount of any such payment. If shares are purchased
shortly before the record date for a dividend or capital
gains distributions, a shareholder will pay the full price
for the share and receive some portion of the price back as
a taxable dividend or distribution.
The dividends on Class D shares will normally be lower
than on Class A shares of a Portfolio because of the
additional distribution and transfer agent expenses charged
to Class D shares.
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Counsel and Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
Independent Price Waterhouse LLP serves as the independent accountants
Accountants of the Trust.
Custodian and CoreStates Bank, N.A., Broad and Chestnut Streets, P.O. Box
Wire Agent 7618, Philadelphia, PA 19101 (the "Custodian"), acts as
custodian of the Trust's assets. The Custodian holds cash,
securities and other assets of the Trust as required by the
1940 Act.
DESCRIPTION OF
PERMITTED INVESTMENTS AND
RISK FACTORS ___________________________________________________________________
The following is a description of the permitted investment
practices for the Portfolios, and the associated risk
factors:
American ADRs are securities, typically issued by U.S. financial
Depositary institution (a "depositary"), that evidence ownership
Receipts interests in a security or a pool of securities issued by a
("ADRs") foreign issuer and deposited with the depositary. ADRs may
be available through "sponsored" or "unsponsored"
facilities. A sponsored facility is established jointly by
the issuer of the security underlying the receipt and a
depositary, whereas an unsponsored facility may be
established by a depositary without participation by the
issuer of the underlying security.
Holders of unsponsored depositary receipts generally bear
all the costs of the unsponsored facility. The depositary of
an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the
issuer of the deposited security or to pass through, to the
holders of the receipts, voting rights with respect to the
deposited securities. ADRs that are not listed or traded on
an exchange can be purchased over the counter. Prices for
such ADRs are determined by the market makers.
Convertible Convertible securities are corporate securities that are
Securities exchangeable for a set number of another security at a
prestated price. Convertible securities typically have
characteristics similar to both fixed-income and equity
securities. Because of the conversion feature, the market
value of a convertible security tends to move with the
market value of the underlying stock. The value of a
convertible security is also affected by prevailing interest
rates, the credit quality of the issuer, and any call
provisions.
Derivatives Derivatives are securities that derive their value from
other securities. The following are considered derivative
securities: options on futures, futures, options (e.g., puts
and calls), swap agreements, mortgage-backed securities
(e.g., CMOs, REMICs, IOs and POs), when-issued securities
and forward commitments, floating and variable rate
securities, convertible securities, "stripped" U.S. Treasury
securities (e.g., Receipts and STRIPs), privately issued
stripped securities (e.g., TGRs, TRs and CATS). See
elsewhere in this "Description of Permitted Investments and
Risk Factors" for discussions of these various instruments,
and see "Investment Objectives and Policies" for more
information about any investment policies and limitations
applicable to their use.
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Equity Equity securities represent ownership interests in a company
Securities or corporation and include common stock, preferred stock,
and warrants and other rights to acquire such instruments.
Changes in the value of portfolio securities will not
necessarily affect cash income derived from these securities
but will affect a Portfolio's net asset value.
Investments in small capitalization companies involves
greater risk than is customarily associated with larger,
more established companies due to the greater business risks
of small size, limited markets and financial resources,
narrow product lines and the frequent lack of depth of
management. The securities of small companies are often
traded over-the-counter and may not be traded in volumes
typical on a national securities exchange. Consequently, the
securities of smaller companies may have limited market
stability and may be subject to more abrupt or erratic
market movements than securities of larger, more established
growth companies or the market averages in general. All
Portfolios may invest in equity securities.
Fixed Income Fixed income securities are debt obligations issued by
Securities corporations, municipalities and other borrowers. Moreover,
while securities with longer maturities tend to produce
higher yields, the prices of longer maturity securities are
also subject to greater market fluctuations as a result of
changes in interest rates.
Futures and Futures contracts provide for the future sale by one party
Options on and purchase by another party of a specified amount of a
Futures specific security at a specified future time and at a
specified price. An option on a futures contract give the
purchaser the right, in exchange for a premium, to assume a
position in a futures contract at a specified exercise price
during the term of the option. A Portfolio may use futures
contracts and related options for bona fide hedging
purposes, to offset changes in the value of securities held
or expected to be acquired or be disposed of, to minimize
fluctuations in foreign currencies, or to gain exposure to a
particular market or instrument. A Portfolio will minimize
the risk that it will be unable to close out a futures
contract that are traded on national futures exchanges.
A stock index futures contract is a bilateral agreement
pursuant to which two parties agree to take or make delivery
of an amount of cash equal to a specified dollar amount
times the difference between the stock index value at the
close of trading of the contract and the price at which the
futures contract is originally struck. No physical delivery
of the stocks comprising the index is made; generally
contracts are closed out prior to the expiration date of the
contract. No price is paid upon entering into futures
contracts. Instead, a Portfolio would be required to deposit
an amount of cash or U.S. Treasury securities known as
"initial margin." Subsequent payments, called "variation
margin," to and from the broker, would be made on a daily
basis as the value of the futures position varies (a process
known as "marking to market"). The margin is in the nature
of a performance bond or good-faith deposit on a futures
contract.
In order to avoid leveraging and related risks, when a
Portfolio purchases futures contracts, it will collateralize
its position by depositing an amount of cash or liquid, high
grade debt securities, equal to the market value of the
futures positions held, less margin
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deposits, in a segregated account with the Trust's
custodian. Collateral equal to the current market value of
the futures position will be marked to market on a daily
basis.
There are risks associated with these activities,
including the following: (1) the success of a hedging
strategy may depend on an ability to predict movements in
the prices of individual securities, fluctuations in markets
and movements in interest rates, (2) there may be an
imperfect or no correlation between the changes in market
value of the securities held by the Portfolio and the prices
of futures and options on future, (3) there may not be a
liquid secondary market for a futures contract or option,
(4) trading restrictions or limitations may be imposed by an
exchange, and (5) government regulations may restrict
trading in futures contracts and option on futures.
Illiquid Illiquid securities are securities that cannot be disposed
Securities of within seven business days at approximately the price at
which they are being carried on the Portfolio's books. An
illiquid security includes a demand instrument with a demand
notice period exceeding seven days, where there is no
secondary market for such security, and repurchase
agreements with duration over 7 days in length. Each
Portfolio may invest in illiquid securities.
Money Market Money market securities are high-quality, dollar-
Instruments denominated, short-term debt instruments. They consist of:
(i) bankers' acceptances, certificates of deposits, notes
and time deposits of highly-rated U.S. banks and U.S.
branches of foreign banks; (ii) U.S. Treasury Obligations
and instrumentalities of the U.S. Government; (iii) high-
quality commercial paper issued by U.S. and foreign
corporation; (iv) debt obligations with a maturity of one
year or less issued by corporations with outstanding high-
quality commercial papers; and (v) repurchase agreements
involving any of the foregoing obligations entered into with
highly-rated banks and broker-dealers.
Mortgage-Backed Mortgage-backed securities are instruments that entitle the
Securities holder to a share of all interest and principal payments
from mortgages underlying the security. The mortgages
backing these securities include conventional thirty-year
fixed-rate mortgages, graduated payment mortgages, and
adjustable rate mortgages. Prepayment of mortgages which
underlie securities purchased at a premium often results in
capital losses, while prepayment of mortgages purchased at a
discount often results in capital gains. Because of these
unpredictable prepayment characteristics, it is often not
possible to predict accurately the average life or realized
yield of a particular issue.
Government Pass-Through Securities: These are securities
that are issued or guaranteed by a U.S. Government agency
representing an interest in a pool of mortgage loans. The
primary issuers or guarantors of these mortgage-backed
securities are GNMA, FNMA and FHLMC. FNMA and FHLMC
obligations are not backed by the full faith and credit of
the U.S. Government as GNMA certificates are, but FNMA and
FHLMC securities are supported by the instrumentalities'
right to borrow from the U.S. Treasury. GNMA, FNMA and FHLMC
each guarantees timely distributions of interest to
certificate holders. GNMA and FNMA also each guarantees
timely distributions of scheduled principal. FHLMC has in
the past guaranteed only the ultimate collection of
principal of the underlying
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mortgage loan; however, FHLMC now issues mortgage-backed
securities (FHLMC Gold PCs) which also guarantee timely
payment of monthly principal reductions. Government and
private guarantees do not extend to the securities' value,
which is likely to vary inversely with fluctuations in
interest rates.
Private Pass-Through Securities: These are mortgage-
backed securities issued by a non-governmental entity, such
as a trust. These securities include collateralized mortgage
obligations ("CMOs") and real estate mortgage investment
conduits ("REMICs") that are rated in one of the top two
rating categories. While they are generally structured with
one or more types of credit enhancement, private pass-
through securities typically lack a guarantee by an entity
having the credit status of a governmental agency or
instrumentality.
Collateralized Mortgage Obligations ("CMOs"): CMOs are
debt obligations or multiclass pass-through certificates
issued by agencies or instrumentalities of the U.S.
Government or by private originators or investors in
mortgage loans. In a CMO, series of bonds or certificates
are usually issued in multiple classes. Principal and
interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in
a variety of ways. Each class of a CMO, often referred to as
a "tranche," is issued with a specific fixed or floating
coupon rate and has a stated maturity or final distribution
date. Principal payments on the underlying mortgage assets
may cause CMOs to be retired substantially earlier than
their stated maturities or final distribution dates,
resulting in a loss of all or part of any premium paid.
REMICs: A REMIC is a CMO that qualifies for special tax
treatment under the Internal Revenue Code and invests in
certain mortgages principally secured by interests in real
property. Investors may purchase beneficial interests in
REMICs, which are known as "regular" interests, or
"residual" interests. Guaranteed REMIC pass-through
certificates ("REMIC Certificates") issued by FNMA or FHLMC
represent beneficial ownership interests in a REMIC trust
consisting principally of mortgage loans or FNMA, FHLMC or
GNMA-guaranteed mortgage pass-through certificates. For
FHLMC REMIC Certificates, FHLMC guarantees the timely
payment of interest, and also guarantees the payment of
principal as payments are required to be made on the
underlying mortgage participation certificates. FNMA REMIC
Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA.
Parallel Pay Securities; PAC Bonds: Parallel pay CMOs and
REMICS are structured to provide payments of principal on
each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated
maturity date or final distribution date of each class,
which must be retired by its stated maturity date or final
distribution date, but may be retired earlier. Planned
Amortization Class CMOs ("PAC Bonds") generally require
payments of a specified amount of principal on each payment
date. PAC Bonds are always parallel pay CMOs with the
required principal payment on such securities having the
highest priority after interest has been paid to all
classes.
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REITs: REITs are trusts that invest primarily in
commercial real estate or real estate-related loans. The
value of interests in REITs may be affected by the value of
the property owned or the quality of the mortgages held by
the trust.
Stripped Mortgage-Backed Securities ("SMBs"): SMBs are
usually structured with two classes that receive specified
proportions of the monthly interest and principal payments
from a pool of mortgage securities. One class may receive
all of the interest payments and is thus termed an interest-
only class ("IO"), while the other class may receive all of
the principal payments and is thus termed the principal-only
class ("PO"). The value of IOs tends to increase as rates
rise and decrease as rates fall; the opposite is true of
POs. SMBs are extremely sensitive to changes in interest
rates because of the impact thereon of prepayment of
principal on the underlying mortgage securities can
experience wide swings in value in response to changes in
interest rates and associated mortgage prepayment rates.
During times when interest rates are experiencing
fluctuations, such securities can be difficult to price on a
consistent basis. The market for SMBs is not as fully
developed as other markets; SMBs therefore may be illiquid.
Risk Factors: Due to the possibility of prepayments of
the underlying mortgage instruments, mortgage-backed
securities generally do not have a known maturity. In the
absence of a known maturity, market participants generally
refer to an estimated average life. An average life estimate
is a function of an assumption regarding anticipated
prepayment patterns, based upon current interest rates,
current conditions in the relevant housing markets and other
factors. The assumption is necessarily subjective, and thus
different market participants can produce different average
life estimates with regard to the same security. There can
be no assurance that estimated average life will be a
security's actual average life.
Options A put option gives the purchase of the option the right to
sell, and the writer of the option the obligation to buy,
the underlying security at any time during the option
period. A call option gives the purchaser of the option the
right to buy, and the writer of the option the obligation to
sell, the underlying security at any time during the option
period. The premium paid to the writer is the consideration
for undertaking the obligations under the option contract.
The initial purchase (sale) of an option contract is an
"opening transaction." In order to close out an option
position, a portfolio may enter into a "closing
transaction," which is simply the sale (purchase) of an
option contract on the same security with the same exercise
price and expiration date as the option contract originally
opened.
A Portfolio may purchase put and call options to protect
against a decline in the market value of the securities in
its portfolio or to anticipate an increase in the market
value of securities that a Portfolio may seek to purchase in
the future. A Portfolio purchasing put and call options pays
a premium therefore. If price movements in the underlying
securities are such that exercise of the options would not
be profitable for the Portfolio, loss of the premium paid
may be offset by an increase in the value of the Portfolio's
securities or by a decrease in the cost of acquisition of
securities by the Portfolio.
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A Portfolio may write covered call options as a means of
increasing the yield on its portfolio and as a means of
providing limited protection against decreases in its market
value. When a portfolio sells an option, if the underlying
securities do not increase or decrease to a price level that
would make the exercise of the option profitable to the
holder thereof, the option generally will expire without
being exercised and the Portfolio will realize as profit the
premium received for such option. When a call option of
which a portfolio is the writer is exercised, the Portfolio
will be required to sell the underlying securities to the
option holder at the strike price, and will not participate
in any increase in the price of such securities above the
strike pries. When a put option of which the Portfolio is
the writer is exercised, the Portfolio will be required to
purchase the underlying securities at the strike price,
which may be in excess of the market value of such
securities.
A Portfolio may purchase and write options on an exchange
or over-the-counter. Over-the-counter options ("OTC
options") differ from exchange-traded options in several
respects. They are transacted directly with dealers and not
with a clearing corporation, and therefore entail the risk
of non-performance by the dealer. OTC options are available
for a greater variety of securities and for a wider range of
expiration dates and exercise prices than are available for
exchange-traded options. Because OTC options are not traded
on an exchange, pricing is done normally by reference to
information from a market maker. It is the position of the
Securities and Exchange Commission that OTC options are
generally illiquid.
A Portfolio may purchase and write put and call options
on indices and enter into related closing transactions. Put
and call options on indices are similar to options on
securities except that options on an index give the holder
the right to receive, upon exercise of the option, an amount
of cash if the closing level of the underlying index is
greater than (or less than, in the case of puts) the
exercise price of the option. This amount of cash is equal
to the difference between the closing price of the index and
the exercise price of the option, expressed in dollars
multiplied by a specified number. Thus, unlike options on
individual securities, all settlements are in cash, and gain
or loss depends on price movements in the particular market
represented by the index generally, rather than the price
movements in individual securities. A Portfolio may choose
to terminate an option position by entering into a closing
transaction. The ability of a Portfolio to enter into
closing transactions depends upon the existence of a liquid
secondary market for such transactions.
All options written on indices must be covered. When a
Portfolio writes an option on an index, it will establish a
segregated account containing cash or liquid high grade debt
securities with its custodian in an amount at least equal to
the market value of the option and will maintain the account
while the option is open or will otherwise cover the
transaction.
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Risk Factors: Risks associated with options transactions
include: (1) the success of a hedging strategy may depend on
an ability to predict movements in the prices of individual
securities, fluctuations in markets and movements in
interest rates; (2) there may be an imperfect correlation
between the movement in prices of options and the securities
underlying them; (3) there may not be a liquid secondary
market for option; and (4) while a Portfolio will receive a
premium when it writes covered call options, it may not
participate fully in a rise in the market value of the
underlying security.
Receipts Receipts are sold as zero coupon securities which means that
they are sold at a substantial discount and redeemed at face
value at their maturity date without interim cash payments
of interest or principal. This discount is accreted over the
life of the security, and such accretion will constitute the
income earned on the security for both accounting and tax
purposes. Because of these features, such securities may be
subject to greater interest rate volatility than interest
paying Permitted Investments. See also "Taxes."
Repurchase Arrangements by which a Portfolio obtains a security and
Agreements simultaneously commits to return the security to the seller
at an agreed upon price (including principal and interest)
on an agreed upon date within a number of days from the date
of purchase. The Custodian or its agent will hold the
security as collateral for the repurchase agreement.
Collateral must be maintained at a value at least equal to
102% of the purchase price. The Portfolio bears a risk of
loss in the event the other party defaults on its
obligations and the Portfolio is delayed or prevented from
exercising its right to dispose of the collateral securities
or if the Portfolio realizes a loss on the sale of the
collateral securities. The advisers will enter into
repurchase agreements on behalf of the Portfolio only with
financial institutions deemed to present minimal risk of
bankruptcy during the term of the agreement based on
guidelines established and periodically reviewed by the
Trustees. Repurchase agreements are considered loans under
the 1940 Act.
Securities In order to generate additional income, a Portfolio may lend
Lending securities which it owns pursuant to agreement requiring
that the loan be continuously secured by collateral
consisting of cash, securities of the U.S. Government or its
agencies equal to at least 100% of the market value of the
securities lent. A Portfolio continues to receive interest
on the securities lent while simultaneously earning interest
on the investment of cash collateral. Collateral is marked
to market daily. There may be risks of delay in recovery of
the securities or even loss of rights in the collateral
should the borrower of the securities fail financially or
become insolvent.
Securities of There are certain risks connected with investing in foreign
Foreign Issuers securities. These include risks of adverse political and
economic developments (including possible governmental
seizure or nationalization of assets), the possible
imposition of exchange controls or other governmental
restrictions, less uniformity in accounting and reporting
requirements, the possibility that there will be less
information on such securities and their issuers available
to the public, the difficulty of obtaining or enforcing
court judgments abroad, restrictions
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on foreign investments in other jurisdictions, difficulties
in effecting repatriation of capital invested abroad, and
difficulties in transaction settlements and the effect of
delay on shareholder equity. Foreign securities may be
subject to foreign taxes, and may be less marketable than
comparable U.S. securities. The value of a Portfolio's
investments denominated in foreign currencies will depend on
the relative strengths of those currencies and the U.S.
dollars, and a Portfolio may be affected favorably or
unfavorably by changes in the exchange rates or exchange
control regulations between foreign currencies and the U.S.
dollar. Changes in foreign currency exchange rates also may
affect the value of dividends and interest earned, gains and
losses realized on the sale of securities and net investment
income and gains if any, to be distributed to shareholders
by a Portfolio.
Time Deposits Time deposits are non-negotiable receipts issued by a bank
in exchange for the deposit of funds. Like a certificate of
deposit, it earns a specified rate of interest over a
definite period of time; however, it cannot be traded in the
secondary market. Time deposits are considered to be
illiquid securities.
U.S. Government Obligations issued or guaranteed by agencies of the U.S.
Agency Government, including, among others, the Federal Farm Credit
Obligations Bank, the Federal Housing Administration and the Small
Business Administration, and obligations issued or
guaranteed by instrumentalities of the U.S. Government,
including, among others, the Federal Home Loan Mortgage
Corporation, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full
faith and credit of the U.S. Treasury (e.g., Government
National Mortgage Association), others are supported by the
right of the issuer to borrow from the Treasury (e.g.,
Federal Farm Credit Bank), while still others are supported
only by the credit of the instrumentality (e.g., Federal
National Mortgage Association). Guarantees of principal by
agencies or instrumentalities of the U.S. Government may be
a guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might
not be a market and thus no means of realizing on the
obligation prior to maturity. Guarantees as to the timely
payment of principal and interest do not extend to the value
or yield of these securities nor to the value of the Fund's
shares.
U.S. Treasury U.S. Treasury obligations consist of bills, notes and bonds
Obligations issued by the U.S. Treasury and separately traded interest
and principal component parts of such obligations that are
transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal
Securities ("STRIPS").
U.S. Treasury U.S. Treasury receipts are interests in separately traded
Receipts interest and principal component parts of U.S. Treasury
obligations that are issued by banks or brokerage firms and
are created by depositing U.S. Treasury notes and
obligations into a special account at a custodian bank. The
custodian holds the interest and principal payments for the
benefit of the registered owners of the certificates of
receipts. The custodian arranges for the issuance of the
certificates or receipts evidencing ownership and maintains
the register.
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<PAGE>
Receipts include "Treasury Receipts" ("TRs"), "Treasury
Investment Growth Receipts" ("TIGRs") "Liquid Yield Option
Notes" ("LYONs") and "Certificates of Accrual on Treasury
Securities" ("CATS"). TIGRs and CATS are interests in
private proprietary accounts while TRs and STRIPS are
interest in accounts sponsored by the U.S. Treasury.
Variable and Certain obligations may carry variable or floating rates of
Floating Rate interest, and may involve a conditional or unconditional
Instruments demand feature. Such instruments bear interest at rates
which are not fixed, but which vary with changes in
specified market rates or indices. The interest rates on
these securities may be reset daily, weekly, quarterly or
some other reset period, and may have a floor or ceiling on
interest rate changes. There is a risk that the current
interest rate on such obligations may not accurately reflect
existing market interest rates. A demand instrument with a
demand notice exceeding seven days may be considered
illiquid if there is no secondary market for such security.
Warrants Warrants are instruments giving holders the right, but not
the obligation, to buy shares of a company at a given price
during a specified period.
When-Issued and When-issued or delayed delivery transactions involve the
Delayed purchase of an instrument with payment and delivery taking
Delivery place in the future. Delivery of and payment for these
Securities securities may occur a month or more after the date of the
purchase commitment. A Portfolio will maintain with the
custodian a separate account with liquid, high grade debt
securities or cash in an amount at least equal to these
commitments. The interest rate realized on these securities
is fixed as of the purchase date, and no interest accrues to
a Portfolio before settlement. These securities are subject
to market fluctuation due to changes in market interest
rates, and it is possible that the market value at the time
of settlement could be higher or lower than the purchase
price if the general level of interest rates has changed.
Although a Portfolio generally purchases securities on a
when-issued or forward commitment basis with the intention
of actually acquiring securities, a Portfolio may dispose of
a when-issued security or forward commitment prior to
settlement if the advisers deem it appropriate to do so.
Additional information on permitted investments and risk
factors can be found in the Statement of Additional
Information.
45
<PAGE>
SEI INSTITUTIONAL MANAGED TRUST
Manager and Shareholder Servicing Agent:
SEI Financial Management Corporation
Distributor:
SEI Financial Services Company
Investment Advisers and Sub-Advisers:
<TABLE>
<S> <C>
1838 Investment Advisors, L.P. LSV Asset Management
Alliance Capital Management L.P. Martingale Asset Management, L.P.
Apodaca-Johnston Capital Management, Inc. Mellon Equity Associates
BEA Associates Merus Capital Management, a division of The Bank of California
BlackRock Financial Management, Inc. Nicholas-Applegate Capital Management, Inc.
Boatmen's Trust Company Pilgrim Baxter & Associates, Ltd.
Boston Partners Asset Management, L.P. SEI Financial Management Corporation
Firstar Investment Research & Management Company STI Capital Management, N.A.
IDS Advisory Group Inc. Wall Street Associates
Western Asset Management Company
</TABLE>
This Statement of Additional Information is not a Prospectus. It is intended to
provide additional information regarding the activities and operations of the
Trust and should be read in conjunction with the Trust's Prospectuses dated
January 31, 1996. Prospectuses may be obtained by writing the Trust's
distributor, SEI Financial Services Company, at 680 East Swedesford Road, Wayne,
PA 19087-1658, or by calling 1-800-342-5734.
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust....................................................................S-2
Description of Permitted Investments.........................................S-2
Investment Limitations......................................................S-10
Description of Ratings......................................................S-12
The Manager and Shareholder Servicing Agent.................................S-16
The Advisers and Sub-Advisers...............................................S-17
Distribution................................................................S-22
Trustees and Officers of the Trust..........................................S-24
Performance.................................................................S-26
Purchase and Redemption of Shares...........................................S-29
Shareholder Services........................................................S-30
Taxes.......................................................................S-32
Portfolio Transactions......................................................S-34
Description of Shares.......................................................S-38
Limitation of Trustees' Liability...........................................S-38
Voting......................................................................S-39
Shareholder Liability.......................................................S-39
Control Persons and Principal Holders of Securities.........................S-39
Experts.....................................................................S-41
Financial Statements.......................................................S-41
</TABLE>
January 31, 1996
SEI-F-048-07
<PAGE>
THE TRUST
SEI Institutional Managed Trust (the "Trust") is an open-end management
investment company that offers shares of diversified portfolios. The Trust
was established as a Massachusetts business trust pursuant to a Declaration of
Trust dated October 20, 1986. The Declaration of Trust permits the Trust to
offer separate series ("portfolios") of units of beneficial interest ("shares")
and separate classes of portfolios. Except for differences between the Class A
shares and/or Class D shares pertaining to sales charges, distribution,
voting rights, dividends and transfer agent expenses, each share of each
portfolio represents an equal proportionate interest in that portfolio with each
other share of that portfolio.
This Statement of Additional Information relates to the following Portfolios:
Balanced, Bond, Capital Appreciation, Capital Growth, Equity Income, High Yield
Bond, Core Fixed Income (formerly, the Limited Volatility Bond Portfolio), Large
Cap Growth, Large Cap Value, Mid-Cap (formerly, the Mid-Cap Growth Portfolio),
Small Cap Growth and Small Cap Value Portfolios (each a "Portfolio," and
together, the "Portfolios"), and any different classes of the Portfolios.
Shareholders may purchase shares in certain Portfolios through two separate
classes, Class A and Class D, which provide for variations in sales loads,
distribution costs, transfer agent fees, voting rights and dividends. The
Capital Growth Portfolio only offers Class A shares.
DESCRIPTION OF PERMITTED INVESTMENTS
All Portfolios may invest in the following investments unless specifically noted
otherwise.
AMERICAN DEPOSITORY RECEIPTS ("ADRs")--The Balanced, Capital Appreciation,
Capital Growth, Equity Income, High Yield Bond, Large Cap Growth, Large Cap
Value and Small Cap Value Portfolios may invest in ADRs traded on registered
exchanges or NASDAQ. The Large Cap Growth Portfolio may also invest in ADRs not
traded on an established exchange. While the Portfolios expect to invest
primarily in sponsored ADRs, a joint arrangement between the issuer and the
depositary, some ADRs may be unsponsored. Unlike sponsored ADRs, the holders of
unsponsored ADRs bear all expenses and the depositary may not be obligated to
distribute shareholder communications or to pass through the voting rights on
the deposited securities.
ASSET-BACKED SECURITIES--The Bond, Core Fixed Income and High Yield Bond
Portfolios may invest in securities backed by automobile or credit-card
receivables and other securities backed by other types of receivables or other
assets. Credit support for asset-backed securities may be based on the
underlying assets and/or provided by a third party through credit enhancements.
Credit enhancement techniques include letters of credit, insurance bonds,
limited guarantees (which are generally provided by the issuer), senior-
subordinated structures and overcollateralization.
BANKERS' ACCEPTANCES--A banker's acceptance is a bill of exchange or time draft
drawn on and accepted by a commercial bank. It is used by corporations to
finance the shipment and storage of goods and to furnish dollar exchange.
Maturities are generally six months or less.
CERTIFICATES OF DEPOSIT--A certificate of deposit is a negotiable interest
bearing instrument with a specific maturity. Certificates of deposit are issued
by banks and savings and loan
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institutions in exchange for the deposit of funds, and normally can be traded in
the secondary market prior to maturity. Certificates of deposit have penalties
for early withdrawal.
COMMERCIAL PAPER--Commercial paper is the term used to designate unsecured
short-term promissory notes issued by corporations and other entities.
Maturities on these issues vary from a day to nine months.
CONVERTIBLE SECURITIES--Convertible securities have characteristics similar to
both fixed income and equity securities. Because of the conversion feature, the
market value of convertible securities tends to move together with the market
value of the underlying stock. As a result, a Portfolio's selection of
convertible securities is based, to a great extent, on the potential for capital
appreciation that may exist in the underlying stock. The value of convertible
securities is also affected by prevailing interest rates, the credit quality of
the issuer and any call provisions. The Bond, Capital Appreciation, Capital
Growth, Equity Income, High Yield Bond, Mid-Cap, Large Cap Growth, Large Cap
Value, Small Cap Growth and Small Cap Value Portfolios may invest in convertible
securities.
CORPORATE ZERO COUPON SECURITIES--Corporate zero coupon securities are: (i)
notes or debentures which do not pay current interest and are issued at
substantial discounts from par value, or (ii) notes or debentures that pay no
current interest until a stated date one or more years into the future, after
which date the issuer is obligated to pay interest until maturity, usually at a
higher rate than if interest were payable from the date of issuance, and may
also make interest payments in kind (e.g., with identical zero coupon
securities). Such corporate zero coupon securities, in addition to the risks
identified above, are subject to the risk of the issuer's failure to pay
interest and repay principal in accordance with the terms of the obligation.
FOREIGN SECURITIES--The Balanced, Capital Appreciation, Capital Growth, Equity
Income, High Yield Bond, Large Cap Growth and Large Cap Value Portfolios may
invest in U.S. dollar denominated obligations or securities of foreign issuers.
Permissible investments may consist of obligations of foreign branches of U.S.
banks and foreign banks, including European Certificates of Deposit, European
Time Deposits, Canadian Time Deposits and Yankee Certificates of Deposit and
investments in Canadian Commercial Paper, foreign securities and Europaper.
These instruments may subject the Portfolio to investment risks that differ in
some respects from those related to investments in obligations of U.S. issuers.
Such risks include future adverse political and economic developments, the
possible imposition of withholding taxes on interest or other income, possible
seizure, nationalization, or expropriation of foreign deposits, the possible
establishment of exchange controls or taxation at the source, greater
fluctuations in value due to changes in the exchange rates, or the adoption of
other foreign governmental restrictions which might adversely affect the payment
of principal and interest on such obligations. Such investments may also entail
higher custodial fees and sales commissions than domestic investments. Foreign
issuers of securities or obligations are often subject to accounting treatment
and engage in business practices different from those respecting domestic
issuers of similar securities or obligations. Foreign branches of U.S. banks and
foreign banks may be subject to less stringent reserve requirements than those
applicable to domestic branches of U.S. banks. In addition, the Core Fixed
Income Portfolio may invest in Yankee Obligations.
ILLIQUID SECURITIES--Illiquid securities are securities that cannot be disposed
of in 7 days or less at approximately their carrying value (which is the value
given the security by the Portfolio on its books).
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LOWER RATED SECURITIES--The High Yield Bond Portfolio will invest in lower-rated
bonds commonly referred to as "junk bonds" or high yield/high risk securities.
Lower rated securities are defined as securities below the fourth highest rating
category by a nationally recognized statistical rating organization ("NRSRO").
Such obligations are speculative and may be in default. There is no bottom limit
on the ratings of high yield securities that may be purchased or held by the
Portfolio. In addition, the Portfolio may invest in unrated securities subject
to the restrictions stated in the Prospectus.
Certain Risk Factors Relating to High-Yield, High-Risk Securities. The
descriptions below are intended to supplement the discussion in the Prospectus
under "Risk Factors."
Growth of High Yield Bond, High-Risk Bond Market. The widespread expansion
of government, consumer and corporate debt within the U.S. economy has made the
corporate sector more vulnerable to economic downturns or increased interest
rates. Further, an economic downturn could severely disrupt the market for
lower rated bonds and adversely affect the value of outstanding bonds and the
ability of the issuers to repay principal and interest.
Sensitivity to Interest Rate and Economic Changes. Lower rated bonds are
very sensitive to adverse economic changes and corporate developments. During
an economic down turn or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress that would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals, and to obtain additional financing. If the
issuer of a bond defaulted on its obligations to pay interest or principal or
entered into bankruptcy proceedings, the Portfolio may incur losses or expenses
in seeking recovery of amounts owed to it. In addition, periods of economic
uncertainty and change can be expected to result in increased volatility of
market prices of high-yield, high-risk bonds and the Portfolio's net asset
value.
Payment Expectations. High-yield, high-risk bonds may contain redemption
or call provisions. If an issuer exercised these provisions in a declining
interest rate market, the Portfolio would have to replace the security with a
lower yielding security, resulting in a decreased return for investors.
Conversely, a high-yield, high-risk bond's value will decrease in a rising
interest rate market, as will the value of the Portfolio's assets. If the
Portfolio experiences significant unexpected net redemptions, this may force it
to sell high-yield, high-risk bonds without regard to their investment merits,
thereby decreasing the asset base upon which expenses can be spread and possibly
reducing the Portfolio's rate of return.
Liquidity and Valuation. There may be little trading in the secondary
market for particular bonds, which may affect adversely the Portfolio's ability
to value accurately or dispose of such bonds. Adverse publicity and investor
perception, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yield, high-risk bonds, especially in a thin
market.
Legislation. Federal laws require the divestiture by federally insured
savings and loan associations of their investments in lower rated bonds and
limit the deductibility of interest by certain corporate issuers of high yield
bonds. These laws could adversely affect the Portfolio's net asset value and
investment practices, the secondary market for high yield securities, the
financial condition of issuers of these securities and the value of outstanding
high yield securities.
Taxes. The Portfolio may purchase debt securities (such as zero-coupon or
pay-in-kind securities) that contain original issue discount. Original issue
discount that accrues in a taxable year is treated as earned by a Portfolio and
therefore is subject to the distribution requirements of the code. Because the
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original issue discount earned by the Portfolio in a taxable year may not be
represented by cash income, the Portfolio may have to dispose of other
securities and use the proceeds to make distributions to shareholders.
MONEY MARKET SECURITIES--Money market securities are high-quality, dollar-
denominated, short-term debt instruments. They consist of: (i) bankers'
acceptances, certificates of deposit, notes and time deposits of highly-rated
U.S. banks and U.S. branches of foreign banks; (ii) U.S. Treasury obligations
and obligations issued or guaranteed by the agencies and instrumentalities of
the U.S. Government; (iii) high quality commercial paper issued by U.S. and
foreign corporations; (iv) debt obligations with a maturity of one year or less
issued by corporations with outstanding high-quality commercial paper; and (v)
repurchase agreements involving any of the foregoing obligations entered into
with high-rated banks and broker-dealers.
MORTGAGE-BACKED SECURITIES--The Balanced, Bond, Core Fixed Income, and High
Yield Bond Portfolios may, consistent with their respective investment
objectives and policies, invest in mortgage-backed securities.
Mortgage-backed securities in which the Portfolios may invest represent pools of
mortgage loans assembled for sale to investors by various governmental agencies
such as the Government National Mortgage Association ("GNMA") and government-
related organizations such as the Federal National Mortgage Association ("FNMA")
and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by non-
governmental issuers such as commercial banks, savings and loan institutions,
mortgage bankers, and private mortgage insurance companies. Although certain
mortgage-backed securities are guaranteed by a third party or otherwise
similarly secured, the market value of the security, which may fluctuate, is not
so secured. If a Portfolio purchases a mortgage-backed security at a premium,
that portion may be lost if there is a decline in the market value of the
security whether resulting from changes in interest rates or prepayments in the
underlying mortgage collateral. As with other interest-bearing securities, the
prices of such securities are inversely affected by changes in interest rates.
However, though the value of a mortgage-backed security may decline when
interest rates rise, the converse is not necessarily true since in periods of
declining interest rates the mortgages underlying the securities are prone to
prepayment. For this and other reasons, a mortgage-backed security's stated
maturity may be shortened by unscheduled prepayments on the underlying mortgages
and, therefore, it is not possible to predict accurately the security's return
to a Portfolio. In addition, regular payments received in respect of mortgage-
backed securities include both interest and principal. No assurance can be given
as to the return a Portfolio will receive when these amounts are reinvested.
A Portfolio may also invest in mortgage-backed securities that are
collateralized mortgage obligations structured on pools of mortgage pass-through
certificates or mortgage loans. For purposes of determining the average maturity
of a mortgage-backed security in its investment portfolio, the Core Fixed Income
Portfolio will utilize the expected average life of the security, as estimated
in good faith by the Portfolio's advisers.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-backed securities
and among the securities that they issue. Mortgage-backed securities issued by
the GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") that are guaranteed as to the timely payment of principal and interest by
GNMA and are backed by the full faith and credit of the United States. GNMA is a
wholly-owned U.S. Government corporation within the Department of Housing and
Urban Development. GNMA certificates also are supported by the authority of GNMA
to borrow funds from the U.S. Treasury to make payments
S-5
<PAGE>
under its guarantee. Mortgage-backed securities issued by the FNMA include FNMA
Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") that
are solely the obligations of the FNMA and are not backed by or entitled to the
full faith and credit of the United States. The FNMA is a government-sponsored
organization owned entirely by private stockholders. Fannie Maes are guaranteed
as to timely payment of the principal and interest by FNMA. Mortgage-backed
securities issued by the FHLMC include FHLMC Mortgage Participation Certificates
(also known as "Freddie Macs" or "PC's"). The FHLMC is a corporate
instrumentality of the United States, created pursuant to an Act of Congress,
which is owned entirely by Federal Home Loan Banks. Freddie Macs are not
guaranteed by the United States or by any Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any Federal Home Loan
Bank. Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. The FHLMC guarantees either ultimate collection or
timely payment of all principal payments on the underlying mortgage loans. When
the FHLMC does not guarantee timely payment of principal, FHLMC may remit the
amount due on account of its guarantee of ultimate payment of principal at any
time after default on an underlying mortgage, but in no event later than one
year after it becomes payable.
MUNICIPAL SECURITIES -- The Core Fixed Income Portfolio may invest in municipal
securities. The two principal classifications of Municipal Securities are
"general obligation" and "revenue" issues. General obligation issues are issues
involving the credit of an issuer possessing taxing power and are payable from
the issuer's general unrestricted revenues, although the characteristics and
method of enforcement of general obligation issues may vary according to the law
applicable to the particular issuer. Revenue issues are payable only from the
revenues derived from a particular facility or class of facilities or other
specific revenue source. A Portfolio may also invest in "moral obligation"
issues, which are normally issued by special purpose authorities. Moral
obligation issues are not backed by the full faith and credit of the state and
are generally backed by the agreement of the issuing authority to request
appropriations from the state legislative body. Municipal Securities include
debt obligations issued by governmental entities to obtain funds for various
public purposes, such as the construction of a wide range of public facilities,
the refunding of outstanding obligations, the payment of general operating
expenses, and the extension of loans to other public institutions and
facilities. Certain private activity bonds that are issued by or on behalf of
public authorities to finance various privately-owned or operated facilities are
included within the term "Municipal Securities." Private activity bonds and
industrial development bonds are generally revenue bonds, the credit and quality
of which are directly related to the credit of the private user of the
facilities.
Municipal Securities may also include general obligation notes, tax anticipation
notes, bond anticipation notes, revenue anticipation notes, project notes,
certificates of indebtedness, demand notes, tax-exempt commercial paper,
construction loan notes and other forms of short-term, tax-exempt loans. Such
instruments are issued with a short-term maturity in anticipation of the receipt
of tax funds, the proceeds of bond placements or other revenues. Project notes
are issued by a state or local housing agency and are sold by the Department of
Housing and Urban Development. While the issuing agency has the primary
obligation with respect to its project notes, they are also secured by the full
faith and credit of the United States through agreements with the issuing
authority which provide that, if required, the federal government will lend the
issuer an amount equal to the principal of and interest on the project notes.
The quality of Municipal Securities, both within a particular classification and
between classifications, will vary, and the yields on Municipal Securities
depend upon a variety of factors, including general money market conditions, the
financial condition of the issuer (or other entity whose financial resources are
supporting the securities), general conditions of the municipal bond market, the
size of a particular offering, the maturity of the obligation and the rating(s)
of the issue. In this regard, it should be emphasized that the ratings of any
NRSRO are general and are not absolute standards of quality. Municipal
Securities with the same maturity, interest rate and rating(s) may have
different yields, while Municipal Securities of the same maturity and interest
rate with different rating(s) may have the same yield.
An issuer's obligations under its Municipal Securities are subject to the
provisions of bankruptcy, insolvency, and other laws affecting the rights and
remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any,
which may be enacted by Congress or state legislatures extending the time for
payment of principal or interest, or both, or imposing other constraints upon
the enforcement of such obligations or upon the ability of municipalities to
levy taxes. The power or ability of an issuer to meet its obligations for the
payment of interest on and principal of its Municipal Securities may be
materially adversely affected by litigation or other conditions.
MUNICIPAL LEASES -- The Core Fixed Income Portfolio may invest in instruments,
or participations in instruments, issued in connection with lease obligations or
installment purchase contract obligations of municipalities ("municipal lease
obligations"). Although municipal lease obligations do not constitute general
obligations of the issuing municipality, a lease obligation is ordinarily backed
by the municipality's covenant to budget for, appropriate funds for, and make
the payments due under the lease obligation. However, certain lease obligations
contain "non-appropriation" clauses, which provide that the municipality has no
obligation to make lease or installment purchase payments in future years unless
money is appropriated for such purpose in the relevant years. Municipal lease
obligations are a relatively new form of financing, and the market for such
obligations is still developing. Municipal leases will be treated as liquid
only if they satisfy criteria set forth in guidelines established by the Board
of Trustees, and there can be no assurance that a market will exist or continue
to exist for any municipal lease obligation.
PAY-IN-KIND BONDS--Investments of the High Yield Bond Portfolio in fixed-income
securities may include pay-in-kind bonds. These are securities which pay
interest in either cash or additional securities, at the issuer's option, for a
specified period. Pay-in-kind bonds, like zero coupon bonds, are designed to
give an issuer flexibility in managing cash flow. Pay-in-kind bonds are expected
to reflect the market value of the underlying debt plus an amount representing
accrued interest since the last payment. Pay-in-kind bonds are usually less
volatile than zero coupon bonds, but more volatile than cash pay securities.
OPTIONS--Options are contracts that give one of the parties to the contract the
right to buy or sell the security that is subject to the option at a stated
price during the option period, and obligates the other party to the contract to
buy or sell such security at the stated price during the option period.
Each Portfolio may trade put and call options on securities and securities
indices, as the advisers determines is appropriate in seeking the Portfolio's
investment objective, and except as restricted by each Portfolio's investment
limitations as set forth below. See "Investment Limitations."
The initial purchase (sale) of an option contract is an "opening transaction."
In order to close out an option position, the Portfolio may enter into a
"closing transaction," which is a sale (purchase) of an option contract on the
same security with the same exercise price and expiration date as the option
contract originally opened.
A put option gives the purchaser (the Portfolio) the right to sell, and imposes
on the writer of the obligation to buy, the underlying security at the exercise
price during the option period. The advantage to the Portfolio of buying the
protective put is that if the price of the security falls during the option
period, the Portfolio may exercise the put and receive the higher price for the
security. However, if the security rises in value, the Portfolio will have paid
a premium for the put, which will expire unexercised.
A call option gives the purchaser (the Portfolio) the right to buy, and imposes
on the writer the obligation to sell, the underlying security at the exercise
price during the option period. A Portfolio may buy fiduciary calls on security
that it is trying to buy. The advantage to the Portfolio of buying the fiduciary
call is that if the price of the security rises during the option period, the
Portfolio may exercise the call and buy the security for the lower exercise
price. If the security falls in value, however, the Portfolio will have paid a
premium for the call which will expire worthless, but the Portfolio will be able
to buy the security at a lower price.
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As discussed above, a call gives the purchaser the right to buy and imposes on
the writer (the Portfolio) the obligation to sell, the underlying security at
the exercise price during the option period. The advantage to the Portfolio of
writing covered call options is the Portfolio receives a premium, which is
additional income. However, if the security rises in value, the Portfolio may
not fully participate in the market appreciation. During the option period, a
covered call option writer may be assigned an exercise notice by the broker-
dealer through whom such call option was sold requiring the writer to deliver
the underlying security against payment of the exercise price. The Portfolio's
obligation as the writer of a covered call is terminated upon the expiration of
the option period or at such earlier time in which the writer effects a closing
purchase transaction. As noted above, a closing purchase transaction is one in
which the Portfolio, when obligated as a writer of an option, terminates its
obligation by purchasing an option of the same series as the option previously
written. A closing purchase transaction cannot be effected with respect to an
option once the option writer has received an exercise notice for such option.
The market value of an option generally reflects the market price of an
underlying security. Other principal factors affecting market value include
supply and demand, interest rates, the pricing volatility of the underlying
security and the time remaining until the expiration date.
Although the Portfolios will engage in option transactions only as hedging
transactions and not for speculative purposes, there are risks associated with
such investments including the following: (i) success of a hedging strategy may
depend on the ability of the advisers to predict movements in the prices of the
individual securities, fluctuations in market and movements in interest rates;
(ii) there may be imperfect correlation between the movement in prices of
securities held by the Portfolio; (iii) there may not be a liquid secondary
market for options; and (iv) while the Portfolio will receive a premium when it
writes covered call options, it may not participate fully in a rise in the
market value of the underlying security.
RECEIPTS--Receipts are interests in separately traded interest and principal
component parts of U.S. Government obligations that are issued by banks or
brokerage firms and are created by depositing U.S. Government obligations into a
special account at a custodian bank. The custodian holds the interest and
principal payments for the benefit of the registered owners of the certificates
or receipts. The custodian arranges for the issuance of the certificates or
receipts evidencing ownership and maintains the register. Receipts include
"Treasury Receipts" ("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"),
and "Certificates of Accrual on Treasury Securities" ("CATS"). TIGRs and CATS
are interests in private proprietary accounts while TRs and STRIPS (See "U.S.
Treasury Obligations") are interests in accounts sponsored by the U.S. Treasury.
Receipts are sold as zero coupon securities; for more information, see "Zero
Coupon Securities." The Bond, Capital Appreciation, Capital Growth, Core Fixed
Income, Equity Income, and Large Cap Value Portfolios may invest in receipts.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements under which
securities are acquired from a securities dealer or bank subject to resale on an
agreed upon date and at an agreed upon price which includes principal and
interest. A Portfolio involved bears a risk of loss in the event that the other
party to a repurchase agreement defaults on its obligations and a Portfolio is
delayed or prevented from exercising its rights to dispose of the collateral
securities. An adviser enters into repurchase agreements only with financial
institutions that it deems to present minimal risk of bankruptcy during the term
of the agreement, based on guidelines that are periodically reviewed by the
Board of Trustees. These guidelines currently permit each Portfolio to enter
into repurchase agreements only with approved banks and primary securities
dealers, as recognized by the Federal Reserve Bank of New York, which have
minimum
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net capital of $100 million, or with a member bank of the Federal Reserve
System. Repurchase agreements are considered to be loans collateralized by the
underlying security. Repurchase agreements entered into by a Portfolio will
provide that the underlying security at all times shall have a value at least
equal to 102% of the price stated in the agreement. This underlying security
will be marked to market daily. The advisers will monitor compliance with
this requirement. Under all repurchase agreements entered into by a Portfolio,
the Custodian or its agent must take possession of the underlying collateral.
However, if the seller defaults, a Portfolio could realize a loss on the sale of
the underlying security to the extent the proceeds of the sale are less than the
resale price. In addition, even though the Bankruptcy Code provides protection
for most repurchase agreements, if the seller should be involved in bankruptcy
or insolvency proceedings, a Portfolio may incur delay and costs in selling the
security and may suffer a loss of principal and interest if the Portfolio is
treated as an unsecured creditor.
RESTRICTED SECURITIES--Restricted securities are securities that may not be sold
freely to the public absent registration under the Securities Act of 1933, as
amended (the "1933 Act"), or an exemption from registration. Section 4(2)
commercial paper is issued in reliance on an exemption from registration under
Section 4(2) of the 1933 Act, and is generally sold to institutional investors
who purchase for investment. Any resale of such commercial paper must be in an
exempt transaction, usually to an institutional investor through the issuer or
investment dealers who make a market on such commercial paper. Rule 144A
securities are securities sold in reliance on an exemption from registration
provided by Rule 144A under the 1933 Act.
SECURITIES LENDING--In order to generate additional income, a Portfolio may lend
its securities pursuant to agreements requiring that the loans be continuously
secured by cash, securities of the U.S. Government or its agencies, or any
combination of cash and such securities, in an amount at least equal to the
market value of the securities lent. A Portfolio will continue to receive
interest on the loaned securities while simultaneously earning interest on the
investment of the cash collateral in U.S. Government securities. However, a
Portfolio will normally pay lending fees to such broker-dealers and related
expenses from the interest earned on invested collateral. There may be risks of
delay in receiving additional collateral or risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans are made only to borrowers deemed by
the advisers to be of good standing and when, in the judgment of the advisers,
the consideration that can be earned currently from such loaned securities
justifies the attendant risk. Any loan may be terminated by either party upon
reasonable notice to the other party. Each of the Portfolios may use the
Distributor as a broker in these transactions.
TIME DEPOSITS--a non-negotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market. Time deposits with a withdrawal penalty are considered to be
illiquid securities; no Portfolio will invest more than 15% of its net assets in
such time deposits and other illiquid securities. The Large Cap Growth and Small
Cap Value Portfolios may invest in time deposits.
U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations are bills, notes and bonds
issued by the U.S. Treasury and separately traded interest and principal
component parts of such obligations that are transferable through the Federal
book-entry system known as Separately Traded Registered Interest and Principal
Securities ("STRIPS"). No Portfolio may actively trade STRIPS. STRIPS are sold
as zero coupon securities; for more information, see "Zero Coupon Securities."
S-8
<PAGE>
U.S. GOVERNMENT AGENCY OBLIGATIONS--U.S. Government agency obligations are
issued by agencies of the United States Government that issue obligations,
including, among others, Farmers Home Administration, Federal Farm Credit
System, Federal Housing Administration, Government National Mortgage
Association, Maritime Administration, Small Business Administration and The
Tennessee Valley Authority. A Portfolio may purchase securities issued or
guaranteed by the GNMA which represent participations in Veterans Administration
and Federal Housing Administration backed mortgage pools. Obligations of
instrumentalities of the United States Government include securities issued by,
among others, Federal Home Loan Banks, FHLMC, Federal Land Banks, FNMA and the
United States Postal Service. Some of these securities are supported by the full
faith and credit of the United States Treasury (e.g., GNMA Securities), others
-----
are supported by the right of the issuer to borrow from the Treasury and still
others are supported only by the credit of the instrumentality (e.g., FNMA
-----
Securities). Guarantees of principal by agencies or instrumentalities of the
United States Government may be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to maturity there might not
be a market and thus no means of realizing the value of the obligation prior to
maturity.
VARIABLE OR FLOATING RATE INSTRUMENTS--Variable or floating rate instruments may
involve a demand feature and may include variable amount master demand notes
available through the Custodian. Variable or floating rate instruments bear
interest at a rate which varies with changes in market rates. The holder of an
instrument with a demand feature may tender the instrument back to the issuer at
par prior to maturity. A variable amount master demand note is issued pursuant
to a written agreement between the issuer and the holder, its amount may be
increased by the holder or decreased by the holder or issuer, it is payable on
demand, and the rate of interest varies based upon an agreed formula. The
quality of the underlying credit must, in the opinion of the Portfolio's
advisers, be equivalent to the long-term bond or commercial paper ratings
applicable to permitted investments for each Portfolio. Each Portfolio's
advisers will monitor on an ongoing basis the earning power, cash flow, and
liquidity ratios of the issuers of such instruments and will similarly monitor
the ability of an issuer of a demand instrument to pay principal and interest on
demand.
In case of obligations which include a put feature at the option of the debt
holder, the date of the put may be used as an effective maturity date for the
purpose of determining weighted average portfolio maturity.
WHEN-ISSUED SECURITIES--The Bond, Core Fixed Income and High Yield Bond
Portfolios may purchase when-issued securities that involve the purchase of
debt obligations on a when-issued basis, in which case delivery and payment
normally take place within 45 days after the date of commitment to purchase. A
Portfolio will only make commitments to purchase obligations on a when-issued
basis with the intention of actually acquiring the securities, but may sell them
before the settlement date. The when-issued securities are subject to market
fluctuation, and no interest accrues to the purchaser during this period. The
payment obligation and the interest rate that will be received on the securities
are each fixed at the time the purchaser enters into the commitment. Purchasing
obligations on a when-issued basis is a form of leveraging and can involve a
risk that the yields available in the market when the delivery takes place may
actually be higher than those obtained in the transaction itself. In that case
there could be an unrealized loss at the time of delivery. A Portfolio will
establish a segregated account with the Custodian and maintain liquid assets in
an amount at least equal in value to that Portfolio's commitments to purchase
when-issued securities. If the value of these assets declines, the Portfolio
involved will place additional liquid assets in the account on a daily basis so
that the value of the assets in the account is equal to the amount of such
commitments.
ZERO COUPON SECURITIES--STRIPS and Receipts (TRs, TIGRs and CATS) are sold as
zero coupon securities, that is, fixed income securities that have been stripped
of their unmatured interest
S-9
<PAGE>
coupons. Zero coupon securities are sold at a (usually substantial) discount and
redeemed at face value at their maturity date without interim cash payments of
interest or principal. The amount of this discount is accreted over the life of
the security, and the accretion constitutes the income earned on the security
for both accounting and tax purposes. Because of these features, the market
prices of zero coupon securities are generally more volatile than the market
prices of securities that have similar maturity but that pay interest
periodically. Zero coupon securities are likely to respond to a greater degree
to interest rate changes than are non-zero coupon securities with similar
maturity and credit qualities. See also "Taxes." The High Yield Bond Portfolio
may invest in zero coupon securities.
Other Investments
The Trust is not prohibited from investing in obligations of banks that are
clients of SEI Corporation ("SEI"). However, the purchase of shares of the Trust
by them or by their customers will not be a consideration in determining which
bank obligations the Trust will purchase. The Trust will not purchase
obligations of any of the advisers to the Trust. Distributions by a Portfolio
out of income from taxable securities will generally be taxable to shareholders
of such Portfolio as ordinary income.
INVESTMENT LIMITATIONS
Fundamental Policies
No Portfolio may:
1. Borrow money in an amount exceeding 33 1/3% of the value of its total
assets, provided that, for purposes of this limitation, investment
strategies which either obligate a Portfolio to purchase securities or
require a Portfolio to segregate assets are not considered to be
borrowings. To the extent that its borrowings exceed 5% of its assets,
(i) all borrowings will be repaid before making additional investments
and any interest paid on such borrowings will reduce income; and (ii) asset
coverage of at least 300% is required.
2. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent to other parties, except that each Portfolio may (i) purchase or hold
debt instruments in accordance with its investment objective and policies;
(ii) enter into repurchase agreements; and (iii) lend its securities.
3. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Portfolio may purchase (i) marketable
securities issued by companies which own or invest in real estate
(including real estate investment trusts), commodities, or commodities
contracts; and (ii) commodities contracts relating to financial
instruments, such as financial futures contracts and options on such
contracts.
4. Issue senior securities (as defined in the 1940 Act) except as permitted by
rule, regulation or order of the Securities and Exchange Commission (the
"SEC").
5. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
S-10
<PAGE>
6. Invest in interests in oil, gas, or other mineral exploration or
development programs and oil, gas or mineral leases.
The foregoing percentages will apply at the time of the purchase of a security
and shall not be considered violated unless an excess or deficiency occurs
immediately after or as a result of a purchase of such security. These
investment limitations and the investment limitations in each Prospectus are
fundamental policies of the Trust and may not be changed without shareholder
approval.
Non-Fundamental Policies
No Portfolio may:
1. Pledge, mortgage or hypothecate assets except to secure borrowings
permitted by the Portfolio's fundamental limitation on borrowing.
2. Invest in companies for the purpose of exercising control.
3. Purchase securities on margin or effect short sales, except that each
Portfolio may (i) obtain short-term credits as necessary for the clearance
of security transactions; (ii) provide initial and variation margin
payments in connection with transactions involving futures contracts and
options on such contracts; and (iii) make short sales "against the box" or
in compliance with the SEC's position regarding the asset segregation
requirements imposed by Section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except (i) by
purchase in the open market involving only customary brokers' commissions;
(ii) in connection with mergers, acquisitions of assets, or consolidations;
or (iii) as otherwise permitted by the 1940 Act.
5. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, trustee, partner or director of the Trust or any
investment adviser of the Trust owns beneficially more than 1/2 of the 1%
of the shares or securities of such issuer and all such officers, trustees,
partners and directors owning more than 1/2 of 1% of such shares or
securities together own more than 5% of such shares or securities.
6. Purchase securities of any company which has (with predecessors) a record
of less than three years continuing operations if, as a result, more than
5% of the total assets (taken at fair market value) would be invested in
such securities.
7. Purchase or hold illiquid securities, i.e., securities that cannot be
disposed of for their approximate carrying value in seven days or less
(which term includes repurchase agreements and time deposits maturing in
more than seven days) if, in the aggregate, more than 15% of its net assets
would be invested in illiquid securities. Notwithstanding the foregoing,
securities eligible to be re-sold under Rule 144A of the 1933 Act may
be treated as liquid securities under procedures adopted by the Board of
Trustees.
8. Purchase securities which must be registered under the 1933 Act, as
amended, before they may be sold to the public, if, in the aggregate, more
than 15% of its net assets would be invested in such restricted securities.
Securities exempted from registration upon re-sale by Rule 144A under
the 1933 Act are not deemed to be restricted securities for purposes of
this limitation.
S-11
<PAGE>
Additional Restrictions
The following are non-fundamental investment limitations that are currently
required by one or more states in which the Trust sells shares of the
Portfolios. These limitations are in addition to, and in some cases more
restrictive than, the fundamental and non-fundamental investment limitations
listed above. A limitation may be changed or eliminated without shareholder
approval if the relevant state changes or eliminates its policy regarding such
investment restriction. As long as a Portfolio's shares are registered for sale
in such states, it may not:
1. Invest more than 5% of its net assets in warrants; provided that of this 5%
no more than 2% will be in warrants that are not listed on the New York
Stock Exchange or the American Stock Exchange.
2. Invest in the securities of other investment companies except by purchase
in the open market where no commission or profit to a sponsor or dealer
results from the purchase other than the customary broker's commission, or
except when the purchase is part of a plan of merger, consolidation,
reorganization or acquisition.
3. Invest more than 15% of its net assets in illiquid securities, including
securities which are not readily marketable or are restricted.
DESCRIPTION OF RATINGS
Description of Corporate Bond Ratings
The following descriptions of corporate bond ratings have been published by
Moody's Investor's Service, Inc. ("Moody's"), Standard and Poor's Corporation
("Standard & Poor"), Duff and Phelps, Inc. ("Duff and Phelps"), Fitch Investor's
Services, Inc. ("Fitch"), IBCA Limited ("IBCA") and Thomson BankWatch,
respectively.
DESCRIPTION OF MOODY'S LONG-TERM RATINGS
Aaa Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risk appear somewhat larger than the Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.
S-12
<PAGE>
Baa Bonds which are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
DESCRIPTION OF STANDARD & POOR'S LONG-TERM RATINGS
Investment Grade
AAA Debt rated 'AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.
A Debt rated 'A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated
categories.
BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher
rated categories.
DESCRIPTION OF DUFF & PHELPS' LONG-TERM RATINGS
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+ High credit quality. Protection factors are strong.
AA- Risk is modest but may vary slightly from time to time because of economic
conditions.
A+ Protection factors are average but adequate. However,
A- risk factors are more variable and greater in periods of economic stress.
BBB+ Below average protection factors but still considered
BBB- sufficient for prudent investment. Considerable variability in risk during
economic cycles.
DESCRIPTION OF FITCH'S LONG-TERM RATINGS
Investment Grade Bond
AAA Bonds rated AAA are judged to be strictly high grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions liable to
slight market fluctuation other than through changes in the money rate.
The prime feature of an AAA bond is a showing of earnings several times or
many times greater than interest requirements, with such stability of
applicable earnings that safety is beyond reasonable question whatever
changes occur in conditions.
S-13
<PAGE>
AA Bonds rated AA are judged to be of safety virtually beyond question and
are readily salable, whose merits are not unlike those of the AAA class,
but whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to
rating by the lesser financial power of the enterprise and more local type
market.
A Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
DESCRIPTION OF IBCA'S LONG-TERM RATINGS
AAA Obligations rated AAA have the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions
are unlikely to increase investment risk significantly.
AA Obligations for which there is a very low expectation of investment risk
are rated AA. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions
may increase investment risk albeit not very significantly.
A Bonds rated A are obligations for which there is a low expectation of
investment risk. Capacity for timely repayment of principal and interest
is strong, although adverse changes in business, economic or financial
conditions may lead to increased investment risk.
BBB Bonds rated BBB are obligations for which there is currently a low
expectation of investment risk. Capacity for timely repayment of principal
and interest is adequate, although adverse changes in business, economic
or financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.
DESCRIPTION OF THOMSON BANKWATCH'S LONG-TERM DEBT RATINGS
Investment Grade
AAA Bonds rated AAA indicate that the ability to repay principal and interest
on a timely basis is very high.
AA Bonds rated AA indicate a superior ability to repay principal and interest
on a timely basis, with limited incremental risk compared to issues rated
in the highest category.
A Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse developments
(both internal and external) than obligations with higher ratings.
S-14
<PAGE>
BBB Bonds rated BBB indicate an acceptable capacity to repay principal and
interest. Issues rated BBB are, however, more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.
Description of Commercial Paper Ratings
The following descriptions of commercial paper ratings have been published by
Moody's, Standard and Poor's, Duff and Phelps, Fitch, IBCA and Thomson
BankWatch, respectively.
DESCRIPTION OF MOODY'S SHORT-TERM RATINGS
PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
- --Leading market positions in well-established industries.
- --High rates of return on funds employed.
- --Conservative capitalization structure with moderate reliance on debt and ample
asset protection.
- --Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.
- --Well-established access to a range of financial markets and assured sources of
alternate liquidity.
PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
STANDARD & POOR'S SHORT-TERM RATINGS
A-1 This highest category indicates that the degree of safety regarding timely
payment is strong. Debt determined to possess extremely strong safety
characteristics is denoted with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated 'A-1'.
DESCRIPTION OF DUFF & PHELPS' SHORT-TERM RATINGS
Duff 1+ Highest certainty of timely payment. Short-term liquidity, including
internal operating factors and/or access to alternative sources of
funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1 Very high certainty of timely payment. Liquidity factors are excellent
and supported by good fundamental protection factors. Risk factors are
minor.
Duff 1- High certainty of timely payment. Liquidity factors are strong and
supported by good fundamental protection factors. Risk factors are very
small.
Good Grade
S-15
<PAGE>
Duff 2 Good certainty of timely payment. Liquidity factors and company
fundamentals are sound. Although ongoing funding needs may enlarge
total financing requirements, access to capital markets is good. Risk
factors are small.
DESCRIPTION OF FITCH'S SHORT-TERM RATINGS
F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely
payment.
F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues
rated 'F-1+'
F-2 Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not
as great as for issues assigned 'F-1+' and 'F-1' ratings.
LOC The symbol LOC indicates that the rating is based on a letter of credit
issued by a commercial bank.
DESCRIPTION OF IBCA'S SHORT-TERM RATINGS (Up to 12 months)
A1+ Obligations supported by the highest capacity for timely repayment.
A1 Obligations supported by a strong capacity for timely repayment.
A2 Obligations supported by a satisfactory capacity for timely repayment,
although such capacity may be susceptible to adverse changes in
business, economic, or financial conditions.
DESCRIPTION OF THOMSON BANKWATCH'S SHORT-TERM RATINGS
TBW-1 The highest category; indicates a very high likelihood that principal
and interest will be paid on a timely basis.
TBW-2 The second-highest category; while the degree of safety regarding
timely repayment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1".
THE MANAGER AND SHAREHOLDER SERVICING AGENT
The Management Agreement provides that SFM shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the matters to which the Management Agreement relates, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
SFM in the performance of its duties or from reckless disregard of its duties
and obligations thereunder.
The continuance of the Management Agreement must be specifically approved at
least annually (i) by the vote of a majority of the Trustees or by the vote of a
majority of the outstanding voting securities of the Portfolio, and (ii) by the
vote of a majority of the Trustees of the Trust who are not parties to the
Management Agreement or an "interested person" (as that term is defined in the
1940 Act) of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. The Management
S-16
<PAGE>
Agreement is terminable at any time as to any Portfolio without penalty by the
Trustees of the Trust, by a vote of a majority of the outstanding shares of the
Portfolio or by SFM on not less than 30 days nor more than 60 days written
notice.
SFM, a wholly-owned subsidiary of SEI, was organized as a Delaware corporation
in 1969, and has its principal business offices at 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658. Alfred P. West, Jr., Henry H. Greer and Carmen
V. Romeo constitute the Board of Directors of SFM. Mr. West serves as the
Chairman of the Board of Directors and Chief Executive Officer of SFM and SEI.
Mr. Greer serves as President and Chief Operating Officer of SFM and SEI. SEI
and its subsidiaries are leading providers of funds evaluation services, trust
accounting systems, and brokerage and information services to financial
institutions, institutional investors and money managers. SFM also serves as
manager to the following other mutual funds: The Achievement Funds Trust, The
Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, The
Compass Capital Group, Conestoga Family of Funds, CoreFunds, Inc., CrestFunds,
Inc.(C), CUFUND, First American Funds, Inc., First American Investment Funds,
Inc., FFB Lexicon Funds, Insurance Investment Products Trust, Inventor Funds,
Inc., Marquis Funds(R), Morgan Grenfell Investment Trust, The PBHG Funds, Inc.,
The Pillar Funds, Rembrandt Funds(R), 1784 Funds, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Managed Trust, SEI International Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, Stepstone Funds, STI Classic Funds and
STI Classic Variable Trust.
If operating expenses of any Portfolio exceed limitations established by certain
states, SFM will pay such excess. SFM will not be required to bear expenses of
any Portfolio to an extent which would result in the Portfolio's inability to
qualify as a regulated investment company under provisions of the Internal
Revenue Code. The term "expenses" is defined in such laws or regulations, and
generally excludes brokerage commissions, distribution expenses, taxes, interest
and extraordinary expenses.
For the fiscal years ended September 30, 1993, 1994 and 1995, the Portfolios
paid fees to the Manager as follows:
<TABLE>
<CAPTION>
============================================================================================
Management Fees Paid (000) Management Fees Waived (000)
-----------------------------------------------------------
1993 1994 1995 1993 1994 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Portfolio $50 $173 $210 $30 $82 $105
- --------------------------------------------------------------------------------------------
Bond Portfolio $248 $337 $223 $83 $131 $125
- --------------------------------------------------------------------------------------------
Capital Appreciation Portfolio $2,795 $3,649 $2,042 $641 $377 $212
- --------------------------------------------------------------------------------------------
Capital Growth Portfolio $0 $0 $0 $932 $787 $653
- --------------------------------------------------------------------------------------------
Core Fixed Income Portfolio $830 $1,031 $1,154 $267 $297 $478
- --------------------------------------------------------------------------------------------
Equity Income Portfolio $1,078 $1,801 $1,303 $161 $149 $197
- --------------------------------------------------------------------------------------------
High Yield Bond Portfolio * * $16 * * $18
- --------------------------------------------------------------------------------------------
Large Cap Growth Portfolio * * $444 * * $0
- --------------------------------------------------------------------------------------------
Large Cap Value Portfolio $1,156 $799 $637 $21 $0 $112
- --------------------------------------------------------------------------------------------
Mid-Cap Portfolio $56 $329 $189 $44 $115 $79
- --------------------------------------------------------------------------------------------
</TABLE>
S-17
<PAGE>
<TABLE>
<CAPTION>
============================================================================================
Management Fees Paid (000) Management Fees Waived (000)
----------------------------------------------------------
1993 1994 1995 1993 1994 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Portfolio $377 $1,023 $1,267 $186 $259 $102
- --------------------------------------------------------------------------------------------
Small Cap Value Portfolio * * $156 * * $6
============================================================================================
</TABLE>
* Not in operation during such period.
THE ADVISERS AND SUB-ADVISERS
Each Advisory and Sub-Advisory Agreement provides that each Adviser (or Sub-
Adviser) shall not be protected against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or negligence/gross
negligence on its part in the performance of its duties or from reckless
disregard of its obligations or duties thereunder.
The continuance of each Advisory and Sub-Advisory Agreement must be specifically
approved at least annually (i) by the vote of a majority of the outstanding
shares of that Portfolio or by the Trustees, and (ii) by the vote of a majority
of the Trustees who are not parties to such Agreement or "interested persons" of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval. Each Advisory or Sub-Advisory Agreement will terminate
automatically in the event of its assignment, and is terminable at any time
without penalty by the Trustees of the Trust or, with respect to a Portfolio, by
a majority of the outstanding shares of that Portfolio, on not less than 30 days
nor more than 60 days written notice to the Adviser (or Sub-Adviser) or by the
Adviser (or Sub-Adviser) on 90 days written notice to the Trust. However, SFM is
currently seeking an exemptive order from the SEC that would permit SFM, with
the approval of the Trust's Board of Trustees, to retain sub-advisers for a
Portfolio without submitting the sub-advisory agreement to a vote of the
Portfolio's shareholders. If granted, the exemptive relief will permit the non-
disclosure of amounts payable by SFM under such sub-advisory agreements. The
Trust will notify shareholders in the event of any change in the identity of the
sub-adviser for a Portfolio.
For the fiscal years ended September 30, 1993, 1994 and 1995, the Portfolios
paid fees to the advisers as follows:
<TABLE>
<CAPTION>
===========================================================================================
Advisory Fees Paid (000) Advisory Fees Waived (000)
---------------------------------------------------------
1993 1994 1995 1993 1994 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Portfolio $40 $127 $193 $0 $0 $0
- -------------------------------------------------------------------------------------------
Bond Portfolio $96 $133 $127 $0 $0 $0
- -------------------------------------------------------------------------------------------
Capital Appreciation Portfolio $1,718 $2,016 $1,291 $0 $0 $0
- -------------------------------------------------------------------------------------------
Capital Growth Portfolio $0 $0 $0 $0 $0 $0
- -------------------------------------------------------------------------------------------
</TABLE>
S-18
<PAGE>
<TABLE>
<CAPTION>
===========================================================================================
Advisory Fees Paid (000) Advisory Fees Waived (000)
---------------------------------------------------------
1993 1994 1995 1993 1994 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Core Fixed Income Portfolio/1/
Western Asset Management N/A $273 $474 N/A $0 $0
Bank One Indianapolis, N.A. $319 $113 N/A $0 $0 N/A
- -------------------------------------------------------------------------------------------
Equity Income Portfolio $539 $900 $883 $81 $75 $0
- -------------------------------------------------------------------------------------------
High Yield Bond Portfolio * * $31 * * $0
- -------------------------------------------------------------------------------------------
Mid-Cap Portfolio/2/ $90 $400 $235 $0 $0 $0
Nicholas-Applegate Capital
Management, Inc.
Martingale Asset Management L.P.
- -------------------------------------------------------------------------------------------
Large Cap Growth Portfolio * * $449 * * $58
- -------------------------------------------------------------------------------------------
Large Cap Value Portfolio/3/
SFM N/A N/A $606 N/A N/A $0
Mellon Equity Associates N/A N/A $37 N/A N/A $0
Duff & Phelps Investment
Management Company $446 $320 $2 $0 $0 N/A
Dreman Value Management, L.P. $32 N/A N/A $0 $0 N/A
- -------------------------------------------------------------------------------------------
Small Cap Growth Portfolio
SFM N/A N/A $269 N/A N/A $0
Investment Advisers, Inc. $469 $451 $404 $0 $0 $0
Nicholas-Applegate Capital
Management $47 $411 $406 $0 $0 $0
Pilgrim Baxter & Associates, Ltd. $47 $420 $414 $0 $0 $0
- -------------------------------------------------------------------------------------------
Small Cap Value Portfolio * * $299 * * $1
===========================================================================================
</TABLE>
* Not in operation during such period.
1 The Trust's investment advisory agreement relating to the Core Fixed Income
Portfolio with Bank One Indianapolis, N.A. was terminated by the Board of
Trustees on December 10, 1993. Western Asset Management serves as the investment
adviser as of January 19, 1994.
2 The Trust's investment advisory agreement relating to the Mid-Cap Portfolio
with Nicholas-Applegate Capital Management was terminated by the Board of
Trustees on June 5, 1995. Martingale Asset Management, L.P. ("Martingale") has
served as sub-adviser to the Mid-Cap Portfolio since August 14, 1995.
Shareholders of the Mid-Cap Portfolio approved the investment sub-advisory
agreement between the SFM and Martingale at a meeting held on August 11, 1995,
and adjourned until August 14, 1995.
3 The Trust's investment advisory agreement respecting the Large Cap Value
Portfolio with Dreman Value Management, L.P. was terminated by the Board of
Trustees on September 17, 1992. Duff & Phelps Investment Management Company
("Duff & Phelps") served as investment adviser of the Large Cap Value Portfolio
from October 22, 1992 until October 3, 1994, when the Trust's investment
advisory agreement respecting the Large Cap Value Portfolio with Duff & Phelps
was terminated by the Board of Trustees. Mellon Equity Associates ("Mellon")
served as interim investment adviser from October 3, 1994 to December
S-19
<PAGE>
16, 1994. As of December 16, 1994, SFM has served as investment adviser, and
Merus Capital Management ("Merus") and Mellon have served as investment sub-
adviser to the Large Cap Value Portfolio since December 16, 1994.
For the fiscal years ended September 30, 1993, 1994 and 1995, SFM paid fees
to the sub-advisers as follows:
<TABLE>
<CAPTION>
====================================================================================================
Sub-Advisory Fees Paid (000) Sub-Advisory Fees Waived (000)
------------------------------------------------------------------
1993 1994 1995 1993 1994 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced Portfolio
STI Capital Management, N.A. /1/ * * $39 * * $0
- ----------------------------------------------------------------------------------------------------
Bond Portfolio
Boatmen's Trust Company /2/ * * $16 * * $0
- ----------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio
STI Capital Management, N.A. /3/ * * $181 * * $0
- ----------------------------------------------------------------------------------------------------
Capital Growth Portfolio
STI Capital Management, N.A. /4/ * * N/A * * $0
- ----------------------------------------------------------------------------------------------------
Core Fixed Income Portfolio
Western Asset Management Company /5/ * * N/A * * $0
Firstar Investment Research &
Management Company /6/ * * N/A * * $0
BlackRock Financial Management, Inc. /7/ * * N/A * * $0
- ----------------------------------------------------------------------------------------------------
Equity Income Portfolio
Merus Capital Management /8/ * * $146 * * $0
- ----------------------------------------------------------------------------------------------------
High Yield Bond Portfolio
BEA Associates /9/ * * $16 * * $0
- ----------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio
IDS Advisory Group, Inc. /10/ * * $110 * * $0
Alliance Capital Management /11/ * * $150 * * $0
- ----------------------------------------------------------------------------------------------------
Large Cap Value Portfolio
Mellon Equity Associates /12/ * * $231 * * $0
Merus Capital Management /13/ * * $90 * * $0
LSV Asset Management /14/ * * $25 * * $0
- ----------------------------------------------------------------------------------------------------
</TABLE>
S-20
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================
Sub-Advisory Fees Paid (000) Sub-Advisory Fees Waived (000)
------------------------------------------------------------------
1993 1994 1995 1993 1994 1995
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mid-Cap Portfolio
Martingale Asset Management, L.P. /15/ * * $9 * * $0
- ----------------------------------------------------------------------------------------------------
Small Cap Growth Portfolio
Investment Advisers, Inc./16/ * * $60 * * $0
Nicholas-Applegate Capital Management,
Inc./17/ * * $62 * * $0
Pilgrim Baxter & Associates, Ltd./18/ * * $69 * * $0
Apodaca-Johnston Capital Management,
Inc./19/ * * $7 * * $0
Wall Street Associates/20/ * * $7 * * $0
- ----------------------------------------------------------------------------------------------------
Small Cap Value Portfolio
1838 Investment Advisors, L.P./21/ * * $240 * * $0
Boston Partners Asset Management, L.P./22/ * * N/A * * $0
====================================================================================================
</TABLE>
1 STI Capital Management, N.A. 12 Mellon Equity Associates served as
served as sub-adviser to the sub-adviser to the portfolio as of
portfolio as of July 10, 1995. December 16, 1994.
2 Boatmen's Trust Company served 13 Merus Capital Management served as
as sub-adviser to the portfolio as sub-adviser to the portfolio as of
of July 10, 1995. December 16, 1994.
3 STI Capital Management, N.A. 14 LSV Asset Management served as
served as sub-adviser to the sub-adviser to the portfolio as of
portfolio as of July 10, 1995. March 31, 1995.
4 STI Capital Management, N.A. 15 Martingale Asset Management served
served as sub-adviser to the as sub-adviser to the portfolio as
portfolio as of July 10, 1995. of August 14, 1995.
5 Western Asset Management Company 16 Investment Advisers, Inc. served
served as sub-adviser to the as sub-adviser to the portfolio as
portfolio as of November 13, 1995. of August 11, 1995.
6 Firstar Investment Research & 17 Nicholas-Applegate Capital
Management Company served as Management, Inc. served as
sub-adviser to the portfolio as of sub-adviser to the portfolio as of
November 13, 1995. August 11, 1995.
S-21
<PAGE>
7 BlackRock Financial Management, 18 Pilgrim Baxter & Associates, Ltd.
Inc. served as sub-adviser to the served as sub-adviser to the
portfolio as of November 13, 1995. portfolio as of August 11, 1995.
8 Merus Capital Management served 19 Apodaca-Johnston Capital Management,
as sub-adviser to the portfolio as Inc. served as sub-adviser to the
of July 10, 1995. portfolio as of August 11, 1995.
9 BEA Associates served as 20 Wall Street Associates served as
sub-adviser to the portfolio as of sub-adviser to the portfolio as of
April 24, 1995. CS First Boston August 11, 1995.
Management Corporation served as
sub-adviser to the portfolio since
January 6, 1995.
10 IDS Advisory Group, Inc. served 21 1838 Investment Advisors, L.P.
as sub-adviser to the portfolio as served as sub-adviser to the
of December 16, 1994. portfolio as of December 8, 1994.
11 Alliance Capital Management 22 Boston Partners Asset Management,
served as sub-adviser to the L.P. served as sub-adviser to the
portfolio as of December 16, 1994. portfolio as of November 13, 1995.
* Not in operation during such period.
DISTRIBUTION
The Trust has adopted a Distribution Plan for (i) the Class A (the "Class A
Distribution Plan") shares of each Portfolio and (ii) the Class D shares of the
Bond, Capital Appreciation, Equity Income, High Yield Bond, Core Fixed Income,
Large Cap Growth, Large Cap Value, Mid-Cap, Small Cap Growth and Small Cap Value
Portfolios (the "Class D Distribution Plan") (the foregoing two plans are also
referred to as the "Plans") in accordance with the provisions of Rule 12b-1
under the 1940 Act (which regulates circumstances under which an investment
company may directly or indirectly bear expenses relating to the distribution of
its shares). In this regard, the Board of Trustees has determined that the Plans
and the Distribution Agreement are in the best interests of the shareholders.
Continuance of the Plans must be approved annually by a majority of the Trustees
of the Trust and by a majority of the trustees who are not "interested persons"
of the Trust (as that term is defined in the 1940 Act) and who have no direct or
indirect financial interest in the operation of a Distribution Plan or in any
agreements related thereto ("Qualified Trustees"). The Plans require that
quarterly written reports of amounts spent under the Plans and the purposes of
such expenditures be furnished to and reviewed by the Trustees. The Plans may
not be amended to increase materially the amount which may be spent thereunder
without approval by a majority of the outstanding shares of the Portfolio or
class affected. All material amendments of the Plans will require approval by a
majority of the Trustees of the Trust and of the Qualified Trustees.
The Class D Distribution Plan adopted by the Class D shareholders provides that
the Trust will pay the Distributor a fee of up to .30% of the average daily net
assets of a Portfolio's Class D class which the Distributor can use to
compensate broker-dealers and service providers, including SEI Financial
Services Company and its affiliates which provide distribution related services
to Class D shareholders or their customers who beneficially own Class D shares.
S-22
<PAGE>
The distribution-related services that may be provided under the Plans include
establishing and maintaining customer accounts and records; aggregating and
processing purchase and redemption requests from customers; placing net purchase
and redemption orders with the Distributor; automatically investing customer
account cash balances; providing periodic statements to customers; arranging for
wires; answering customer inquiries concerning their investments; assisting
customers in changing dividend options, account designations, and addresses;
performing sub-accounting functions; processing dividend payments from the Trust
on behalf of customers; and forwarding shareholder communications from the Trust
(such as proxies, shareholder reports, and dividend distribution, and tax
notices) to these customers with respect to investments in the Trust. Certain
state securities laws may require those financial institutions providing such
distribution services to register as dealers pursuant to state law.
Except to the extent that SFM (as Manager) and the Portfolio's advisers
benefitted through increased fees from an increase in the net assets of the
Trust which may have resulted in part from the expenditures, no interested
person of the Trust nor any Trustee of the Trust who is not an interested person
of the Trust had a direct or indirect financial interest in the operation of the
Distribution Plans or related agreements.
Although banking laws and regulations prohibit banks from distributing shares of
open-end investment companies such as the Trust, according to an opinion issued
to the staff of the SEC by the Office of the Comptroller of the Currency,
financial institutions are not prohibited from acting in other capacities for
investment companies, such as providing shareholder services. Should future
legislative, judicial or administrative action prohibit or restrict the
activities of financial institutions in connection with providing shareholder
services, the Trust may be required to alter materially or discontinue its
arrangements with such financial institutions.
For the fiscal year ended September 30, 1995, the Portfolios incurred the
following distribution expenses:
<TABLE>
<CAPTION>
=================================================================================================================================
Amount Paid to
3rd Parties by Prospectus Printing
SFS for Distributor and Mailing Costs
Total Related Services Sales Expenses Advertising (New Shareholders Only)
Portfolio/Class ($ Amount) ($ Amount) ($ Amount) ($ Amount) ($ Amount) Other
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio $ 67,566 --- $ 39,427 --- $22,606 $ 5,553
- ---------------------------------------------------------------------------------------------------------------------------------
Bond Portfolio $ 81,998 --- $ 51,187 --- $20,287 $10,524
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation $423,563 --- $303,663 --- $56,032 $63,868
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Growth Portfolio $ 25,041 --- $ 0 --- $15,560 $ 9,481
- ---------------------------------------------------------------------------------------------------------------------------------
Core Fixed Income $287,122 --- $229,226 --- $30,015 $27,881
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio $270,353 --- $203,275 --- $32,681 $34,397
- ---------------------------------------------------------------------------------------------------------------------------------
High Yield Bond Portfolio $ 9,268 --- $ 5,857 --- $ 2,052 $ 1,359
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-23
<PAGE>
<TABLE>
<CAPTION>
=================================================================================================================================
Amount Paid to
3rd Parties by Prospectus Printing
SFS for Distributor and Mailing Costs
Total Related Services Sales Expenses Advertising (New Shareholders Only)
Portfolio/Class ($ Amount) ($ Amount) ($ Amount) ($ Amount) ($ Amount) Other
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Growth Portfolio $ 76,819 --- $ 49,455 --- $17,631 $ 9,733
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Portfolio $131,958 --- $105,168 --- $12,770 $14,020
- ---------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Portfolio $ 62,765 --- $ 39,154 --- $14,609 $ 9,002
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Portfolio $236,910 --- $167,840 --- $42,049 $27,021
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Value $ 25,179 --- $ 15,206 --- $ 6,873 $ 3,100
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
Class D
- ---------------------------------------------------------------------------------------------------------------------------------
Bond Portfolio $ 379 --- $ 338 --- $ 29 $ 12
- ---------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation $ 3,339 --- $ 3,121 --- $ 116 $ 102
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
Core Fixed Income $ 385 --- $ 367 --- $ 9 $ 9
Portfolio
- ---------------------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio $ 4,144 --- $ 3,841 --- $ 134 $ 169
- ---------------------------------------------------------------------------------------------------------------------------------
High Yield Bond Portfolio N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth Portfolio N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Large Cap Value Portfolio N/A N/A N/A N/A N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Portfolio $ 317 --- $ 269 --- $ 23 $ 25
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth Portfolio $ 1,311 --- $ 1,211 --- $ 54 $ 46
- ---------------------------------------------------------------------------------------------------------------------------------
Small Cap Value Portfolio N/A N/A N/A N/A N/A N/A
=================================================================================================================================
</TABLE>
TRUSTEES AND OFFICERS OF THE TRUST
The Trustees and executive officers of the Trust and their principal occupations
for the last five years are set forth below. Each may have held other positions
with the named companies during that period. Unless otherwise noted, the
business address of each Trustee and executive officer is SEI Financial
Management Corporation, 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658. Certain trustees and officers of the Trust also serve as trustees
and officers of some or all of the following: The Achievement Funds Trust, The
Advisors' Inner Circle Fund, The Arbor Fund, ARK Funds, Bishop Street Funds, The
Compass Capital Group, Conestoga Family of Funds, CoreFunds, Inc., CrestFunds,
Inc.(C), CUFUND, FFB Lexicon Funds, First American Funds, Inc., First American
Investment Funds, Inc., Insurance Investment Products Trust, Inventor Funds,
Inc., Marquis Funds(R), Morgan Grenfell Investment Trust, The
S-24
<PAGE>
PBHG Funds, Inc., The Pillar Funds, Rembrandt Funds(R), 1784 Funds, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, Stepstone
Funds, STI Classic Funds and STI Classic Variable Trust, open-end management
investment companies which are managed by SEI Financial Management Corporation
and distributed by SEI Financial Services Company.
ROBERT A. NESHER - Chairman of the Board of Trustees* - Retired since 1994.
Executive Vice President of SEI 1986-94. Director and Executive Vice President
of the Manager and Executive Vice President of the Distributor 1981-94.
RICHARD F. BLANCHARD - Trustee** - P.O. Box 76, Canfield Road, Convent Station,
NJ 07961. Private Investor. Director of AEA Investors Inc. (acquisition and
investment firm) June 1981-86, Director of Baker Hughes Corp. (oil service
company) 1976-88. Director of Imperial Clevite Industries (transportation
equipment company) 1981-87. Executive Vice President of American Express Company
(financial services company), responsible for the investment function, before
June 1981.
WILLIAM M. DORAN - Trustee* - 2000 One Logan Square, Philadelphia, PA 19103.
Partner of Morgan, Lewis & Bockius LLP, counsel to the Trust, Manager and
Distributor, Director and Secretary of SEI and Secretary of the Manager and
Distributor.
F. WENDELL GOOCH - Trustee** - P.O. Box 190, Paoli, IN 47454. President, Orange
County Publishing Co., Inc., since October 1981. Publisher of the Paoli News and
the Paoli Republican and Editor of the Paoli Republican since January 1981,
President, H & W Distribution, Inc. since July 1984. Executive Vice President,
Trust Department, Harris Trust and Savings Bank and Chairman of the Board of
Directors of The Harris Trust Company of Arizona before January 1981. Trustee of
STI Classic Funds.
FRANK E. MORRIS - Trustee - 105 Walpole Street, Dover, MA 02030. Retired since
1990. Peter Drucker Professor of Management, Boston College, since 1989.
President, Federal Reserve Bank of Boston, 1968-1988. Trustee of The Arbor Fund,
Marquis Funds, Advisors' Inner Circle Fund, Advisors' Inner Circle Fund II, Inc.
and FFB Lexicon Funds.
JAMES M. STOREY - Trustee** - Ten Post Office Square, Boston, MA 02109. Partner
of Dechert Price & Rhodes (law firm).
DAVID G. LEE - President, Chief Executive Officer - Senior Vice President of the
Distributor since 1993. Vice President of the Distributor since 1991. President,
GW Sierra Trust Funds prior to 1991.
SANDRA K. ORLOW - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of the Manager and Distributor since 1988. Corporate Legal
Assistant, Omni Exploration (oil and gas investment) prior to 1983.
ROBERT B. CARROLL - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of the SEI Corporation, the Manager and Distributor since
1994. United States SEC, Division of Investment Management, 1990-94. Associate,
McGuire, Woods, Battle & Boothe (law firm), prior to 1990.
S-25
<PAGE>
KATHRYN L. STANTON - Vice President, Assistant Secretary - Vice President and
Assistant Secretary of SEI Corporation, the Manager and Distributor since 1994.
Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-94.
JOSEPH M. LYDON - Director of Business Administration of Fund Resources, SEI
Corporation since 1995. Vice President of Fund Group and Vice President of the
Advisor, Dreman Value Management and President of Dreman Financial Services,
Inc., prior to 1995.
TODD CIPPERMAN - Vice President, Assistant Secretary - SEI, the Administrator
and the Distributor since 1995. Associate, Dewey Ballantine (law firm)
1994-1995. Associate, Winston & Strawn (law firm) 1991-1994.
KEVIN P. ROBINS - Vice President, Assistant Secretary - Senior Vice President
and General Counsel of SEI and the Distributor since 1994. Vice President and
Assistant Secretary of the Manager and Distributor 1992-94. Associate, Morgan,
Lewis & Bockius LLP (law firm) prior to 1992.
JEFFREY A. COHEN - Controller, Chief Financial Officer - Director of Funds
Accounting of SEI since 1991. Senior Accountant of Price Waterhouse 1988-1991.
RICHARD W. GRANT - Secretary - 2000 One Logan Square, Philadelphia, PA 19103,
Partner, Morgan, Lewis & Bockius LLP, counsel to the Trust, Manager and
Distributor.
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.
**Messrs. Blanchard, Gooch, Morris and Storey serve as members of the Audit
Committee of the Trust.
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for unaffiliated Trustees.
Compensation of officers and affiliated Trustees of the Trust is paid by the
Manager. For the fiscal year ended September 30, 1995, the Trust paid
approximately $150,728.00 in fees to the unaffiliated Trustees.
<TABLE>
<CAPTION>
==================================================================================================================================
Aggregate Pension or Retirement Estimated Annual Total Compensation from
Compensation From Benefits Accrued as Benefits Upon Registrant and Fund
Registrant for FYE Part of Fund Expenses Retirement Complex Paid to Directors
Name of Person and Position 9/30/95 for FYE 9/30/95
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee $0 $0 $0 $0 for services on 7 boards
- ----------------------------------------------------------------------------------------------------------------------------------
Richard F. Blanchard, $23,132 $0 $0 $ 86,250 for services on 7
Trustee boards
- ----------------------------------------------------------------------------------------------------------------------------------
William M. Doran, $0 $0 $0 $ 0 for services on 7 boards
Trustee
- ----------------------------------------------------------------------------------------------------------------------------------
F. Wendell Gooch, Trustee $23,132 $0 $0 $ 86,250 for services on 7
boards
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-26
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
Aggregate Pension or Retirement Estimated Annual Total Compensation from
Compensation From Benefits Accrued as Benefits Upon Registrant and Fund
Registrant for FYE Part of Fund Expenses Retirement Complex Paid to Directors
Name of Person and Position 9/30/95 for FYE 9/30/95
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Frank E. Morris, Trustee $23,132 $0 $0 $86,250 for services on 7
boards
- ----------------------------------------------------------------------------------------------------------------------------------
James M. Storey, Trustee $23,132 $0 $0 $86,250 for services on 7
boards
==================================================================================================================================
</TABLE>
PERFORMANCE
From time to time, each Portfolio may advertise yield and/or total return. These
figures will be based on historical earnings and are not intended to indicate
future performance.
The yield of a Portfolio refers to the annualized income generated by an
investment in the Portfolio over a specified 30-day period. The yield is
calculated by assuming that the income generated by the investment during that
period is generated each period over one year and is shown as a percentage of
the investment. In particular, yield will be calculated according to the
following formula: Yield = 2[((a-b)/cd) + 1)/6/-1], where a = dividends and
interest earned during the period; b = expenses accrued for the period (net of
reimbursement); c = the current daily number of shares outstanding during the
period that were entitled to receive dividends; and d = the maximum offering
price per share on the last day of the period.
Based on the foregoing, the 30-day yield and 30-day tax equivalent yield for the
Portfolios for the 30-day period ended September 30, 1995 were as follows:
<TABLE>
<CAPTION>
================================================================================
Fund 30 Day Yield 30 Day Tax Equivalent Yield
- --------------------------------------------------------------------------------
<S> <C> <C>
Class A
- --------------------------------------------------------------------------------
Balanced Portfolio 2.99% N/A
- --------------------------------------------------------------------------------
Bond Portfolio 5.75% N/A
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio 1.13% N/A
- --------------------------------------------------------------------------------
Capital Growth Portfolio 2.05% N/A
- --------------------------------------------------------------------------------
Core Fixed Income Portfolio 6.41% N/A
- --------------------------------------------------------------------------------
Equity Income Portfolio 3.37% N/A
- --------------------------------------------------------------------------------
High Yield Bond Portfolio 10.15% N/A
- --------------------------------------------------------------------------------
Large Cap Growth Portfolio 0.67% N/A
- --------------------------------------------------------------------------------
Large Cap Value Portfolio 2.60% N/A
- --------------------------------------------------------------------------------
Mid-Cap Portfolio 1.43% N/A
- --------------------------------------------------------------------------------
Small Cap Growth Portfolio 0.00% N/A
- --------------------------------------------------------------------------------
Small Cap Value Portfolio 0.00% N/A
- --------------------------------------------------------------------------------
</TABLE>
S-27
<PAGE>
<TABLE>
<CAPTION>
================================================================================
Fund 30 Day Yield 30 Day Tax Equivalent Yield
- --------------------------------------------------------------------------------
<S> <C> <C>
Class D
- --------------------------------------------------------------------------------
Bond Portfolio 5.10% N/A
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio 0.71% N/A
- --------------------------------------------------------------------------------
Core Fixed Income Portfolio 5.73% N/A
- --------------------------------------------------------------------------------
Equity Income Portfolio 2.82% N/A
- --------------------------------------------------------------------------------
High Yield Portfolio N/A N/A
- --------------------------------------------------------------------------------
Large Cap Growth Portfolio N/A N/A
- --------------------------------------------------------------------------------
Large Cap Value Portfolio N/A N/A
- --------------------------------------------------------------------------------
Mid-Cap Portfolio 0.97% N/A
- --------------------------------------------------------------------------------
Small Cap Growth Portfolio 0.00% N/A
- --------------------------------------------------------------------------------
Small Cap Value Portfolio N/A N/A
================================================================================
</TABLE>
The total return of a Portfolio refers to the average compounded rate of return
to a hypothetical investment for designated time periods (including, but not
limited to, the period from which the Portfolio commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period. In particular, total return will be calculated according to the
following formula: P(1 + T)/n/ = ERV, where P = a hypothetical initial payment
of $1,000; T = average annual total return; n = number of years; and ERV =
ending redeemable value of a hypothetical $1,000 payment made at the beginning
of the designated time period as of the end of such period.
Based on the foregoing, the average annual total returns for the Portfolios from
inception through September 30, 1995 and for the one, five and ten year periods
ended September 30, 1995, were as follows:
<TABLE>
<CAPTION>
================================================================================
Average Annual Total Return
-------------------------------------
Portfolio Class
One Five Ten Since
Year Year Year Inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balanced Portfolio Class A/1/ 15.05% 10.53% * 9.71%
- --------------------------------------------------------------------------------
Class A/2/ 17.53% 11.40% * 9.91%
---------------------------------------------------------
Bond Portfolio Class D/3/ (no load) 16.97% * * 3.67%
---------------------------------------------------------
Class D/3/ (load) 11.69% * * 1.45%
- --------------------------------------------------------------------------------
Class A/4/ 19.03% 14.56% * 13.46%
Capital Appreciation ---------------------------------------------------------
Portfolio Class D/5/ (no load) 18.52% * * 8.76%
---------------------------------------------------------
Class D/5/ (load) 12.58% * * 6.17%
- --------------------------------------------------------------------------------
</TABLE>
S-28
<PAGE>
<TABLE>
<CAPTION>
================================================================================
Average Annual Total Return
-------------------------------------
Portfolio Class
One Five Ten Since
Year Year Year Inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital Growth Class A/6/ 23.96% 21.62% * 15.48%
Portfolio
- --------------------------------------------------------------------------------
Class A/7/ 15.87% 8.59% * 8.21%
Core Fixed Income ---------------------------------------------------------
Portfolio Class D/8/ (no load) 15.24% * * 10.10%
---------------------------------------------------------
Class D/8/ (load) 10.10% * * 6.53%
- --------------------------------------------------------------------------------
Class A/9/ 23.00% 16.83% * 13.21%
Equity Income ---------------------------------------------------------
Portfolio Class D/10/ (no load) 22.62% * * 11.47%
---------------------------------------------------------
Class D/10/ (load) 16.48% * * 8.69%
- --------------------------------------------------------------------------------
Class A/11/ 17.72% * * 17.72%
High Yield Bond ---------------------------------------------------------
Portfolio Class D (no load) * * * *
---------------------------------------------------------
Class D (load) * * * *
- --------------------------------------------------------------------------------
Class A/12/ 37.90% * * 37.90%
Large Cap Growth ---------------------------------------------------------
Portfolio Class D (no load) * * * *
---------------------------------------------------------
Class D (load) * * * *
- --------------------------------------------------------------------------------
Large Cap Value Class A/13/ 26.83% 14.09% * 8.77%
Portfolio ---------------------------------------------------------
Class D (no load) * * * *
---------------------------------------------------------
Class D (load) * * * *
- --------------------------------------------------------------------------------
Class A/14/ 19.78% * * 11.59%
Mid-Cap Portfolio ---------------------------------------------------------
Class D/15/ (no load) 19.26% * * 10.90%
---------------------------------------------------------
Class D/15/ (load) 13.32% * * 6.97%
- --------------------------------------------------------------------------------
Class A/16/ 41.65% * * 23.81%
---------------------------------------------------------
Small Cap Growth Class D/17/ (no load) 41.44% * * 27.32%
Portfolio ---------------------------------------------------------
Class D/17/ (load) 34.33% * * 22.80%
- --------------------------------------------------------------------------------
Small Cap Value Class A/18/ 29.38% * * 29.38%
Portfolio ---------------------------------------------------------
Class D (no load) * * * *
---------------------------------------------------------
Class D (load) * * * *
- --------------------------------------------------------------------------------
</TABLE>
S-29
<PAGE>
<TABLE>
<S> <C>
* Not in operation during period. /10/ Commenced operations September 22, 1993.
/1/ Commenced operations August 7, 1990. /11/ Commenced operations January 11, 1995.
/2/ Commenced operations May 4, 1987. /12/ Commenced operations December 20, 1994.
/3/ Commenced operations August 16, 1993. /13/ Commenced operations April 20, 1987.
/4/ Commenced operations March 1, 1988. /14/ Commenced operations February 16, 1993.
/5/ Commenced operations August 16, 1993. /15/ Commenced operations May 2, 1994.
/6/ Commenced operations January 4, 1990. /16/ Commenced operations April 20, 1992.
/7/ Commenced operations May 4, 1987. /17/ Commenced operations May 2, 1994.
/8/ Commenced operations May 9, 1994. /18/ Commenced operations December 20, 1994.
/9/ Commenced operations June 2, 1988.
</TABLE>
The Portfolios may, from time to time, compare their performance to other mutual
funds tracked by mutual fund rating services, to broad groups of comparable
mutual funds or to unmanaged indices which may assume investment of dividends
but generally do not reflect deductions for administrative and management costs.
PURCHASE AND REDEMPTION OF SHARES
The purchase and redemption price of shares is the net asset value of each
share. A Portfolio's securities are valued by SFM pursuant to valuations
provided by an independent pricing service (generally the last quoted sale
price). Portfolio securities listed on a securities exchange for which market
quotations are available are valued at the last quoted sale price on each
Business Day (defined as days on which the New York Stock Exchange is open for
business ("Business Day")) or, if there is no such reported sale, at the most
recently quoted bid price. Unlisted securities for which market quotations are
readily available are valued at the most recently quoted bid price. The pricing
service may also use a matrix system to determine valuations. This system
considers such factors as security prices, yields, maturities, call features,
ratings and developments relating to specific securities in arriving at
valuations. The procedures of the pricing service and its valuations are
reviewed by the officers of the Trust under the general supervision of the
Trustees.
It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in kind of readily marketable securities held
by a Portfolio in lieu of cash. Shareholders may incur brokerage charges on the
sale of any such securities so received in payment of redemptions. However, a
shareholder will at all times be entitled to aggregate cash redemptions from all
Portfolios of the Trust during any 90-day period of up to the lesser of $250,000
or 1% of the Trust's net assets.
A gain or loss for federal income tax purposes may be realized by a taxable
shareholder upon an in-kind redemption depending upon the shareholder's basis in
the shares of the Trust redeemed.
Purchases and redemptions of shares of the Portfolios may be made on any day the
New York Stock Exchange is open for business. Currently, the following holidays
are observed by the Trust: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period during which trading
on the New York Stock Exchange is
S-30
<PAGE>
restricted, or during the existence of an emergency (as determined by the SEC by
rule or regulation) as a result of which disposal or evaluation of the portfolio
securities is not reasonably practicable, or for such other periods as the SEC
may by order permit. The Trust also reserves the right to suspend sales of
shares of the Portfolios for any period during which the New York Stock
Exchange, the Manager, the Distributor, and/or the Custodian are not open
for business.
Reductions in Sales Charges
In calculating the sales charge rates applicable to current purchases of Class D
shares, members of the following affinity groups and clients of the following
broker-dealers, each of which has entered into an agreement with the
Distributor, are entitled to the following percentage-based discounts from the
otherwise applicable sales charge:
<TABLE>
<CAPTION>
Percentage Date Offer Date Offer
Name of Group Discount Starts Terminates
- ------------- -------- ------ ----------
<S> <C> <C> <C>
Countrywide Funding Corp. 100% 07/27/94 09/19/94
50% 09/23/94 11/22/94
BHC Securities, Inc. 10% 12/29/94 N/A
First Security Investor 10% 12/29/94 N/A
Services, Inc.
</TABLE>
Those members or clients who take advantage of a percentage-based reduction in
the sales charge during the offering period noted above may continue to purchase
shares at the reduced sales charge rate after the offering period relating to
each such purchaser's affinity group or broker-dealer relationship has
terminated.
For more information regarding reductions in sales charges, please contact the
Distributor at 1-800-437-6016.
SHAREHOLDER SERVICES
The following is a description of plans and privileges by which the sale charges
imposed on the Class D shares of the Bond, Capital Appreciation, Equity Income,
High Yield Bond, Core Fixed Income, Large Cap Growth, Large Cap Value, Small Cap
Growth, Small Cap Value and Mid-Cap Portfolios may be reduced.
Right of Accumulation: A shareholder qualifies for cumulative quantity discounts
when his or her new investment, together with the current market value of all
holdings of that shareholder in certain eligible portfolios, reaches a discount
level. See "Purchase and Redemption of Shares" in the Prospectuses for the sales
charge on quantity purchases.
Letter Of Intent: The reduced sales charges are also applicable to the aggregate
amount of purchases made by any such purchaser previously enumerated within a
13-month period pursuant to a written Letter of Intent provided to the
Distributor, that does not legally bind the signer to purchase any set number of
shares and provides for the holding in escrow by the Administrator of 5% of the
amount purchased until such purchase is completed within the 13-month period. A
Letter of Intent may be dated to include shares purchased up to
S-31
<PAGE>
90 days prior to the date the Letter of Intent is signed. The 13-month period
begins on the date of the earliest purchase. If the intended investment is not
completed, the Administrator will surrender an appropriate number of the
escrowed shares for redemption in order to recover the difference between the
sales charge imposed under the Letter of Intent and the sales charge that would
have otherwise been imposed.
Distribution Investment Option: Distributions of dividends and capital gains
made by the Portfolios may be automatically invested in shares of one of the
Portfolios if shares of the Portfolio are available for sale. Such investments
will be subject to initial investment minimums, as well as additional purchase
minimums. A shareholder considering the Distribution Investment Option should
obtain and read the prospectus of the other Portfolios and consider the
differences in objectives and policies before making any investment.
Reinstatement Privilege: A shareholder who has redeemed shares of any of the
Portfolios has a one-time right to reinvest the redemption proceeds in shares of
the Portfolios at their net asset value as of the time of reinvestment. Such a
reinvestment must be made within 30 days of the redemption and is limited to the
amount of the redemption proceeds. Although redemptions and repurchases of
shares are taxable events, a reinvestment within such 30-day period in the same
fund is considered a "wash sale" and results in the inability to recognize
currently all or a portion of a loss realized on the original redemption for
federal income tax purposes. The investor must notify the Transfer Agent at the
time the trade is placed that the transaction is a reinvestment.
Exchange Privilege: Some or all of a Portfolio's Class D shares for which
payment has been received (i.e., an established account), may be exchanged for
Class D shares of other portfolios of the Trust or of SEI Liquid Asset Trust,
SEI Tax Exempt Trust, SEI Daily Income Trust and SEI International Trust ("SEI
Funds"). Exchanges are made at net asset value plus any applicable sales charge.
SEI Funds' portfolios that are not money market portfolios currently impose a
sales charge on Class D shares. A shareholder who exchanges into one of these
"non-money market" portfolios will have to pay a sales charge on any portion of
the exchanged Class D shares for which he or she has not previously paid a sales
charge. If a shareholder has paid a sales charge on Class D shares, no
additional sales charge will be assessed when he or she exchanges those Class D
shares for other Class D shares. If a shareholder buys Class D shares of a "non-
money market" fund and receives a sales load waiver, he or she will be deemed to
have paid the sales load for purposes of this exchange privilege. In calculating
any sales charge payable on an exchange transaction, the SEI Funds will assume
that the first shares a shareholder exchanges are those on which he or she has
already paid a sales charge. Sales charge waivers may also be available under
certain circumstances, as described in the portfolios' prospectuses. The Trust
reserves the right to change the terms and conditions of the exchange privilege
discussed herein, or to terminate the exchange privilege, upon sixty days'
notice. Exchanges will be made only after proper instructions in writing or by
telephone (an "Exchange Request") are received for an established account by the
Distributor.
A shareholder may exchange the shares of each Portfolio's Class D shares, for
which good payment has been received, in his or her account at any time,
regardless of how long he or she has held his or her shares.
Each Exchange Request must be in proper form (i.e., if in writing, signed by the
----
record owner(s) exactly as the shares are registered; if by telephone-proper
account identification is given by the dealer or shareholder of record), and
each exchange must involve either shares having an aggregate value of at least
$1,000 or all the shares in the account. Each exchange involves the redemption
of the shares of a Portfolio (the "Old Portfolio") to be exchanged and the
purchase at net asset value (i.e., without a sales charge) of the shares of the
----
other portfolios (the "New Portfolios"). Any gain or loss on the redemption of
the shares exchanged is
S-32
<PAGE>
reportable on the shareholder's federal income tax return, unless such shares
were held in a tax-deferred retirement plan or other tax-exempt account. If the
Exchange Request is received by the Distributor in writing or by telephone on
any business day prior to the redemption cut-off time specified in each
Prospectus, the exchange usually will occur on that day if all the restrictions
set forth above have been complied with at that time. However, payment of the
redemption proceeds by the Old Portfolios, and thus the purchase of shares of
the New Portfolios, may be delayed for up to seven days if the Portfolio
determines that such delay would be in the best interest of all of its
shareholders. Investment dealers which have satisfied criteria established by
the Portfolios may also communicate a Shareholder's Exchange Request to the
Portfolios subject to the restrictions set forth above. No more than five
exchange requests may be made in any one telephone Exchange Request.
TAXES
The following is only a summary of certain additional federal tax considerations
generally affecting the Portfolios and their shareholders that are not described
in the Portfolios' prospectuses. No attempt is made to present a detailed
explanation of the federal, state or local tax treatment of the Portfolios or
their shareholders, and the discussion here and in the Portfolios' prospectuses
is not intended as a substitute for careful tax planning.
This discussion of federal income tax consequences is based on the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations issued
thereunder, in effect on the date of this Statement of Additional Information.
New legislation, as well as administrative changes or court decisions, may
significantly change the conclusions expressed herein, and may have a
retroactive effect with respect to the transactions contemplated herein.
Each Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other Portfolios. Each Portfolio intends
to qualify as a regulated investment company ("RIC") under Subchapter M of the
Code so that it will be relieved of federal income tax on that part of its
income that is distributed to shareholders. In order to qualify for treatment
as a RIC, a Portfolio must distribute annually to its shareholders at least 90%
of its investment company taxable income (generally, net investment income plus
the excess, if any, of net short-term capital gain over net long-term capital
losses) ("Distribution Requirement") and also must meet several additional
requirements. Among these requirements are the following: (i) at least 90% of a
Portfolio's gross income each taxable year must be derived from dividends,
interest, payments with respect to securities loans, and gains from the sale or
other disposition of stock or securities, or other income derived with respect
to its business of investing in such stock or securities; (ii) less than 30% of
a Portfolio's gross income each taxable year may be derived from the sale or
other disposition of stock or securities held for less than three months; (iii)
at the close of each quarter of a Portfolio's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
government securities, securities of other RICs and other securities, with such
other securities limited, in respect of any one issuer, to an amount that does
not exceed 5% of the value of a Portfolio's assets and that does not represent
more than 10% of the outstanding voting securities of such issuer; and (iv) at
the close of each quarter of a Portfolio's taxable year, not more than 25% of
the value of its assets may be invested in securities (other than U.S.
Government securities or the securities of other RICs) of any one issuer or of
two or more issuers that the Portfolio controls and which are engaged in the
same, similar, or related trades or businesses.
S-33
<PAGE>
Notwithstanding the Distribution Requirement described above, which only
requires a Portfolio to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gain, a Portfolio will be subject to a nondeductible 4% federal excise tax to
the extent it fails to distribute by the end of any calendar year at least 98%
of its ordinary income for that year and 98% of its capital gain net income (the
excess of short- and long-term capital gain over short- and long-term capital
loss) for the one-year period ending on October 31 of that year, plus certain
other amounts. Each Portfolio intends to make sufficient distributions to avoid
liability for the federal excise tax. A Portfolio may in certain circumstances
be required to liquidate Portfolio investments in order to make sufficient
distributions to avoid federal excise tax liability when the investment advisor
might not otherwise have chosen to do so, and liquidation of investments in such
circumstances may affect the ability of a Portfolio to satisfy the requirements
for qualification as a RIC.
If capital gain distributions have been made with respect to shares that are
sold at a loss after being held for six months or less, then the loss is treated
as a long-term capital loss to the extent of the capital gain distributions.
If a Portfolio fails to qualify as a RIC for any year, all of its income will be
subject to tax at corporate rates, and its distributions (including capital gain
distributions) generally will be taxable as ordinary income dividends to its
shareholders, subject to the dividends received deduction for corporate
shareholders who have held shares for more than 45 days.
A Portfolio will be required in certain cases to withhold and remit to the
United States Treasury 31% of amounts payable to any shareholder who (1) has
provided the Portfolio either an incorrect tax identification number or no
number at all, (2) who is subject to backup withholding by the Internal Revenue
Service for failure to properly report payments of interest or dividends, or (3)
who has failed to certify to the Portfolio that such shareholder is not subject
to backup withholding.
With respect to investments in STRIPS, TR's, TIGR's and CATS, which are sold at
original issue discount and thus do not make periodic cash interest payments, a
Portfolio will be required to include as part of its current income the imputed
interest on such obligations even though the Portfolio has not received any
interest payments on such obligations during that period. Because each
Portfolio distributes all of its net investment income to its shareholders, a
Portfolio may have to sell Portfolio securities to distribute such imputed
income which may occur at a time when the advisers would not have chosen to sell
such securities and which may result in taxable gain or loss.
State Taxes
A Portfolio is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the
Portfolio to shareholders and the ownership of shares may be subject to state
and local taxes. Shareholders should consult their own tax advisers regarding
the affect of federal, state and local taxes in their own individual
circumstances.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in the
execution of transactions in portfolio securities. Subject to policies
established by the Trustees, the advisers are responsible for placing orders to
execute Portfolio transactions. In placing orders, it is the Trust's policy to
seek to obtain the best net results taking into account such factors as price
(including the applicable dealer spread), size, type and difficulty of the
transaction involved, the firm's general execution and operational facilities,
and the
S-34
<PAGE>
firm's risk in positioning the securities involved. While the advisers generally
seek reasonably competitive spreads or commissions, the Trust will not
necessarily be paying the lowest spread or commission available. The Trust will
not purchase portfolio securities from any affiliated person acting as principal
except in conformity with the regulations of the SEC.
It is expected that the Portfolios may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934,
as amended, and rules and regulations of the SEC. Under these provisions, the
Distributor is permitted to receive and retain compensation for effecting
portfolio transactions for a Portfolio on an exchange if a written contract is
in effect between the Distributor and the Trust expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities being purchased or sold on a
securities exchange during a comparable period of time." In addition, the
Portfolio may direct commission business to one or more designated broker-
dealers, including the Distributor, in connection with such broker-dealer's
payment of certain of the Portfolio's expenses. The Trustees, including those
who are not "interested persons" of the Trust, have adopted procedures for
evaluating the reasonableness of commissions paid to the Distributor and will
review these procedures periodically. In addition, SFM has adopted a policy
respecting the receipt of research and related products and services in
connection with transactions effected for Portfolios operating within the
"Manager of Managers" structure. Under this policy, SFM and the various firms
that serve as sub-advisers to certain Portfolios of the Trust, in the exercise
of joint investment discretion over the assets of a Portfolio, will direct a
substantial portion of a Portfolio's brokerage to the Distributor in
consideration of the Distributor's provision of research and related products to
SFM for use in performing its advisory responsibilities. All such transactions
directed to the Distributor must be accomplished in a manner that is consistent
with the Trust's policy to achieve best net results, and must comply with the
Trust's procedures regarding the execution of transactions through affiliated
brokers.
For the fiscal year ended September 30, 1995, the Portfolios paid the following
brokerage fees:
<TABLE>
<CAPTION>
==================================================================================================================================
Total $ Amount Total $ Amount % of Total % of Total $ Total $ Amount
of Brokerage of Brokerage Brokerage Amount of Total $ Amount of Brokerage
Commissions Commissions Paid Commissions Brokerage of Brokerage Commissions
Paid in FYE to Affiliates in paid to Commission paid Transactions for Paid for
Fund 9/30/95 FYE 9/30/95 Distributor to Distributor Research Research
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balanced $148,731 --- 0 0 $37,819 ---
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Bond Portfolio $0 --- 0 0 --- ---
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation $1,577,921 $20,042 0 0 --- $20,042
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Capital Growth $131,508 --- 0 0 $1.569,484 ---
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-35
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
Total $ Amount Total $ Amount % of Total % of Total $ Total $ Amount
of Brokerage of Brokerage Brokerage Amount of Total $ Amount of Brokerage
Commissions Commissions Paid Commissions Brokerage of Brokerage Commissions
Paid in FYE to Affiliates in paid to Commission paid Transactions for Paid for
Fund 9/30/95 FYE 9/30/95 Distributor to Distributor Research Research
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Core Fixed Income $0 --- 0 0 $29,470,554 $0
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Equity Income $648,410 $33,725 0 0 $5,898,776 $33,725
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
High Yield Bond --- --- 0 0 --- ---
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Mid-Cap Portfolio $264,386 --- 0 0 $30,355,175 ---
- ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Growth $270,371 $192,232 0 0 $63,780,168 $192,232
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Large Cap Value $804,877 $115,823 0 0 $46,863,969 $115,823
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Small Cap Growth --- --- 0 0 --- ---
Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Small Cap Value $191,324 $2,814 0 0 $863,247 $2,814
Portfolio
==================================================================================================================================
</TABLE>
* Not in operation during such period.
For the fiscal years ended September 30, 1993 and 1994, the Portfolios paid the
following brokerage fees:
<TABLE>
<CAPTION>
=============================================================================================
Total $ Amount of Brokerage Total $ Amount of Brokerage
Commissions Paid Commissions Paid to Affiliates
Fund 1993 1994 1993 1994
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Portfolio $37,866 $101,709 $880 $20,376
- ---------------------------------------------------------------------------------------------
Bond Portfolio $0 $0 $0 $0
- ---------------------------------------------------------------------------------------------
Capital Appreciation $1,383,070 $1,611,243 $30,388 $173,127
Portfolio
- ---------------------------------------------------------------------------------------------
Capital Growth Portfolio $430,709 $331,813 $26,222 $29,306
- ---------------------------------------------------------------------------------------------
Core Fixed Income Portfolio $0 $1,840 $0 $0
=============================================================================================
</TABLE>
S-36
<PAGE>
<TABLE>
<CAPTION>
================================================================================
Total $ Amount of
Total $ Amount of Brokerage Commissions
Brokerage Commissions Paid Paid to Affiliates
Fund 1993 1994 1993 1994
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity Income Portfolio $440,378 $490,073 $9,761 $38,830
- --------------------------------------------------------------------------------
Mid-Cap Portfolio $135,009 $264,405 $0 $18,120
- --------------------------------------------------------------------------------
Large Cap Value Portfolio $563,429 $267,623 $136,078 $10,375
- --------------------------------------------------------------------------------
Small Cap Growth Portfolio $178,375 $447,356 $0 $47,550
================================================================================
</TABLE>
The Large Cap Growth, Small Cap Value and High Yield Bond Portfolios had not
commenced operations as of September 30, 1994.
The following Class D shares charge a sales load:
<TABLE>
<CAPTION>
========================================================================================================
Dollar Amount of Dollar Amount of Loads
--------------------------- ----------------------
Loads Retained by SFS
------ ---------------
Portfolio/Class 1993 1994 1995 1993 1994 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bond Portfolio -- Class D $1,213.60 $ 4,306.18 $430.09 $153.05 $404.24 $49.78
Capital Appreciation $2,652.76 $13,466.77 $15,353.85 $297.76 $1,312.19 $1,711.53
Portfolio -- Class D
Equity Income Portfolio -- $709.47 $26,611.27 $6,281.96 $80.09 $2,651.98 $752.30
Class D
Core Fixed Income Portfolio $0 $56.00 $3,375.64 $0 $6.22 $434.85
- - Class D
Mid-Cap Portfolio-Class D $0 $140.98 $0 $0 $14.10 $0
Small Cap Growth Portfolio- $0 $278.97 $11,874.23 $0 $27.90 $1,455,18
Class D
- --------------------------------------------------------------------------------------------------------
</TABLE>
Prior to the fiscal year ended September 30, 1994, the other Portfolios of the
Trust did not offer Class D shares.
S-37
<PAGE>
For each of the Portfolios, there is no material difference between the
percentage of brokerage commissions paid to the Distributor as compared to all
brokerage commissions and the percentage of the amount of brokered transactions
as compared to the aggregate amount of all brokered transactions.
The portfolio turnover rate for each Portfolio for the fiscal years ending
September 30, 1993 and September 30, 1994 and 1995 was as follows:
<TABLE>
<CAPTION>
================================================================================
Fund Turnover Rate
---------------------------------------------------------
1994 1995
---------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
Balanced Portfolio
Equity 128% 154%
Fixed Income 197% 159%
- --------------------------------------------------------------------------------
Bond Portfolio 73% 79%
- --------------------------------------------------------------------------------
Capital Appreciation Portfolio 109% 107%
- --------------------------------------------------------------------------------
Capital Growth Portfolio 81% 40%
- --------------------------------------------------------------------------------
Core Fixed Income Portfolio 370% 294%
- --------------------------------------------------------------------------------
Equity Income Portfolio 28% 47%
- --------------------------------------------------------------------------------
High Yield Bond Portfolio * 56%
- --------------------------------------------------------------------------------
Mid-Cap Portfolio 89% 108%
- --------------------------------------------------------------------------------
Large Cap Growth Portfolio * 44%
- --------------------------------------------------------------------------------
Large Cap Value Portfolio 67% 99%
- --------------------------------------------------------------------------------
Small Cap Growth Portfolio 97% 113%
- --------------------------------------------------------------------------------
Small Cap Value Portfolio * 64%
================================================================================
</TABLE>
* Not in operation during such period.
The Large Cap Value Portfolio experienced material portfolio turnover because
the Board of Trustees approved changing the Portfolio's benchmark from the S&P
500 Index to the S&P Barra\Value Index. Since the Portfolio's investment
portfolio included securities that were not reflected in this new benchmark,
Mellon selected securities that are reflected in the S&P Barra\Value Index.
The Core Fixed Income Portfolio experienced material portfolio turnover when
Western assumed management responsibility as a result of its investment
strategies.
Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Portfolio's advisers or sub-advisers may place portfolio
orders with qualified broker-dealers who recommend the Trust to clients, and
may, when a number of brokers and dealers can provide best price and execution
on a particular transaction, consider such recommendations by a broker or dealer
in selecting among broker-dealers.
S-38
<PAGE>
The Trust does not expect to use one particular dealer, but the Portfolio's
advisers or sub-advisers may, consistent with the interests of the Portfolio,
select brokers on the basis of the research services they provide to the
Portfolio's advisers. Such services may include analysis of the business or
prospects of a company, industry or economic sector or statistical and pricing
services. Information so received by the advisers will be in addition to and not
in lieu of the services required to be performed by a Portfolio's advisers under
the Advisory Agreements. If in the judgement of a Portfolio's advisers, the
Portfolio, or other accounts managed by the Portfolio's advisers, will be
benefitted by supplemental research services, the Portfolio's advisers is
authorized to pay brokerage commissions to a broker furnishing such services
that are in excess of commissions which another broker may have charged for
effecting the same transaction. The expenses of a Portfolio's advisers will not
necessarily be reduced as a result of the receipt of such supplemental
information.
The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the Investment Company Act) which the Trust
has acquired during its most recent fiscal year. As of September 30, 1995, the
Large Cap Value Portfolio held $4,427,221 of debt securities issued by JP Morgan
Securities, Inc., $2,716,000 of equity securities issued by JP Morgan
Securities, Inc., $753,000 of equity securities issued by Bear Stearns and
$1,907,000 of equity securities issued by Dean Witter Discover & Co.; the Small
Cap Growth Portfolio held $13,561,000 of debt securities issued by Lehman
Brothers; the Capital Appreciation Portfolio held $1,716,000 of equity
securities issued by Dean Witter Discover & Co., $1,095,000 of debt securities
issued by Merrill Lynch and $13,382,000 of debt securities issued by Lehman
Brothers; the Equity Income Portfolio held $4,495,000 of debt securities issued
by JP Morgan Securities, Inc. and $7,250,000 of equity securities issued by JP
Morgan Securities, Inc.; the Balanced Portfolio held $377,000 of equity
securities issued by Dean Witter Discover & Co., $513,000 of debt securities
issued by Salomon Brothers, Inc., $909,000 of debt securities issued by Smith
Barney and $3,128,000 of debt securities issued by Lehman Brothers.; the Mid-Cap
Portfolio held $1,615,000 of debt securities held by JP Morgan Securities, Inc.;
the Capital Growth Portfolio held $961,000 of equity securities issued by Morgan
Stanley & Co., Inc. and $16,124,000 of debt securities issued by Lehman
Brothers; the Core Fixed Income Portfolio held $4,966,000 of debt securities
with Lehman Brothers, $7,810,000 of debt securities with Paine Webber and
$65,187,000 of debt securities with JP Morgan Securities, Inc.; the Bond
Portfolio held $223,000 of debt securities with JP Morgan Securities, Inc.; the
High Yield Bond Portfolio held $1,490,000 of debt securities with Lehman
Brothers; the Large Cap Growth Portfolio held $3,150,000 of equity securities
with Dean Witter and $525,000 of debt securities with Prudential; and the Small
Cap Value Portfolio held $4,282,000 of debt securities with Prudential.
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Portfolio, each of which represents an equal proportionate
interest in that Portfolio. Each share upon liquidation entitles a shareholder
to a pro rata share in the net assets of that Portfolio, after taking into
account additional distribution and transfer agency expenses attributable to
Class D shares. Shareholders have no preemptive rights. The Declaration of Trust
provides that the Trustees of the Trust may create additional series of shares
or separate classes of portfolios. Share certificates representing the shares
will not be issued.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for his or
her own willful defaults and, if reasonable care has been exercised in the
selection of officers, agents, employees or administrators, shall
S-39
<PAGE>
not be liable for any neglect or wrongdoing of any such person. The Declaration
of Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his or her wilful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
VOTING
Where the Trust's Prospectuses or Statement of Additional Information state that
an investment limitation or a fundamental policy may not be changed without
shareholder approval, such approval means the vote of (i) 67% or more of the
affected Portfolio's 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 affected Portfolio's outstanding shares, whichever
is less.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a business trust could,
under certain circumstances, be held personally liable as partners for the
obligations of the trust. Even if, however, the Trust were held to be a
partnership, the possibility of the shareholders incurring financial loss for
that reason appears remote because the Trust's Declaration of Trust contains an
express disclaimer of shareholder liability for obligations of the Trust and
requires that notice of such disclaimer be given in each agreement, obligation
or instrument entered into or executed by or on behalf of the Trust or the
Trustees, and because the Declaration of Trust provides for indemnification
out of the Trust property for any shareholders held personally liable for the
obligations of the Trust.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of November 1, 1995, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Portfolios. The Trust believes that most of the
shares referred to below were held by the below persons in accounts for their
fiduciary, agency, or custodial customers.
Balanced Portfolio - Class A: Nabank & Co., c/o Bank of Oklahoma, N.A., Attn:
Lisa Marrs, P.O. Box 2300, Tulsa, OK 74192, 16.09%; Saul & Co., c/o First
Fidelity Bank N.A., FBO Metoplex Edison, Attn: Lou Loucente, P.O. Box 1289,
Newark, NJ 07101, 27.95%; SEI Trust Company, Attn: Jacqueline Esposito, 680 E.
Swedesford Road, Wayne, PA 19087, 47.69%.
Bond Portfolio - Class A: West One Bank, Idaho NA, Attn: Tom Coleman, Trust
Department Securities Clearance, P.O. Box 7928, Boise, ID 83707, 14.05%; Lane &
Company, c/o Union Bank, Attn: Linda Brown, P.O. Box 109, San Diego, CA 92112,
5.81%; SEI Trust Company, Attn: Jacqueline Esposito, 680 E. Swedesford Road,
Wayne, PA 19087, 25.71%.
Bond Portfolio - Class D: Sumitomo Bank Trustee, FBO, Mitsue H Velotta, 374
East Pacific Avenue, Fairfield, CA 94533, 7.39%; Sumitomo Bank Trustee, FBO,
Karen S. Ng as the Custodian for Melvin J. Yuen UGMA CA, 105 Alto Mesa Dr., San
Francisco, CA 94080, 19.90%; Sumitomo Bank Trustee, FBO,
S-40
<PAGE>
Dorothea M. Gustus & Elizabeth G. Kashinsky Jtten, 1015 Highlander Drive,
Seaside, CA 93955, 6.22%; Reliance Trust Company, P.O. Box 48449, Atlanta, GA
30362-1449, 31.73%; Ivil L. O'Connor & Marguerite L. O'Connor Jtten, 1010
Terrace Rd Sp#36, San Bernardino, CA 92410, 6.98%; Sumitomo Bank Trustee, FBO,
Eagle Trust Company, Custodian for the IRA of Despina Lastihenos, 185 Schley
Ave., Albertson, NY 11507, 8.98%.
Capital Appreciation Portfolio - Class A: Garico, c/o American National Bank of
Chicago, Attn: Wendy Kosek, Dept. 77-3272, Division 219, Chicago, IL 60678-3272,
5.09%; The Fulton Company, c/o Fulton Bank Trust Dept., Attn: Dennis Patrick,
One Penn Square, Lancaster, PA 17602, 6.92%; SEI Trust Company, Attn:
Jacqueline Esposito, 680 E. Swedesford Road, Wayne, PA 19087, 24.56%.
Capital Appreciation Portfolio - Class D: Reliance Trust Company, P.O. Box
48449, Atlanta, GA 30362-1449, 18.64%; Sumitomo Bank Trustee, FBO, Sou-Shiong
Tsay Cust FBO, Tiffany Tsay UGMA CA, 2628 E. Denise Avenue, Orange, CA 82667,
7.85%; Frost National Bank Cust., IRA of Frederick Vinson Rollover IRA, 402
Encino, San Antonio, TX 78209, 5.68%; Adelaide Di Pasquale, Teresa Di Pasquale
Jtwros, 5910 18th Ave., Brooklyn, NY 11204, 5.91%
Capital Growth Portfolio - Class A: State Street Bank & Trust Company, Cust.,
BellSouth Retirement Master Trust, Attn: Jim Hackey, Master Trust Service
Division, One Enterprise Drive, North Quincy, MA 02171; Emory University, c/o
Trust Company Bank, Endowment & Foundation Trust Services, Attn: Linda Harrison
Center 221, P.O. Box 4655, Atlanta, GA 30302, 7.48%; Northern Trust Custodian
for Police Officers Pension Plan for City of Houston, P.O. Box 92956, Chicago,
IL 60675, 13.11%; CitiBank Cust., State Board of Administration of FLA,
CMG/IIS/EBF,Sort 20807, 25th Floor, New York, NY 10043, 22.61%; Sun Bank, c/o
SunTrust Retirement Plan IM Equity, Attn: Security Cage, P.O. Box 363, Orlando,
Fl 32802, 14.85%.
Core Fixed Income Portfolio - Class A: BMS and Company, c/o Central Trust Bank,
Attn: Wanda McGlade, P.O. Box 779, Jefferson City, MO 65102, 5.02%; SEI Trust
Company, Attn: Jacqueline Esposito, 680 E. Swedesford Road, Wayne, PA 19087,
41.76%.
Equity Income Portfolio - Class A: BMS and Company, c/o Central Trust Bank,
Attn: Wanda McGlade, P.O. Box 779, Jefferson City, MO 65102, 5.06%; Garico, c/o
American National Bank of Chicago, Attn: Wendy Kosek, Dept. 77-3272, Division
219, Chicago, IL 60678-3272, 7.43%; Aco, c/o Integra Trust Services, Attn: Karen
White, Trust Securities Section 2-032, 300 Fourth Avenue, Pittsburgh, PA 15278-
2232, 9.65%; Kaw & Co. Y Bank, c/o One Valley Bank, Attn: Pam Taylor, P.O. Box
1793, One Valley Square, Charlestown, WV 25326, 9.58%; West One Bank, Idaho NA,
Attn: Tom Coleman, Trust Department Securities Clearance, P.O. Box 7928, Boise,
ID 83707, 7.18%; SEI Trust Company, Attn: Jacqueline Esposito, 680 E.
Swedesford Road, Wayne, PA 19087, 13.15%.
Equity Income Portfolio - Class D: Sumitomo Bank Trustee, FBO, Kazunobu Okada &
Taeko Okada Jtten, 1726 Holly Oak Dr. Monterey Park, CA 91755, 5.85%; Reliance
Trust Company, P.O. Box 48449, Atlanta, GA 30362-1449, 7.54%; ACO, c/o Integra
Trust Co. NA, 300 Fourth Ave., Pittsburgh, PA 15278, 44.97%.
High Yield Bond Portfolio - Class A: SEI Trust Company, Attn: Jacqueline
Esposito, 680 E. Swedesford Road, Wayne, PA 19087, 93.19%.
S-41
<PAGE>
Large Cap Growth Portfolio - Class A: SEI Trust Company, Attn: Jacqueline
Esposito, 680 E. Swedesford Road, Wayne, PA 19087, 59.06%.
Large Cap Value Portfolio - Class A: SEI Trust Company, Attn: Jacqueline
Esposito, 680 E. Swedesford Road, Wayne, PA 19087, 49.86%.
Mid-Cap Portfolio - Class A: BMS and Company, c/o Central Trust Bank, Attn:
Wanda McGlade, P.O. Box 779, Jefferson City, MO 65102, 11.94%; SEI Trust
Company, Attn: Jacqueline Esposito, 680 E. Swedesford Road, Wayne, PA 19087,
54.50%; First American Trust Company, Attn: Jeff Eubanks, 800 First American
Center, Nashville, TN 37237-0801, 5.19%.
Mid-Cap Portfolio - Class D: Reliance Trust Company, P.O. Box 48449, Atlanta,
GA 30362-1449, 96.72%.
Small Cap Growth Portfolio - Class A: Valle, c/o Marshall & Iisley, 1000 North
Water Street TR 11, Milwaukee, WI 53202, 10.42%; Batrus & Co., c/o Bankers
Trust Company, P.O. Box 9005, Church Street Station, New York, NY 10008, 8.84%;
SEI Trust Company, Attn: Jacqueline Esposito, 680 E. Swedesford Road, Wayne, PA
19087, 29.54%.
Small Cap Growth Portfolio - Class D: Reliance Trust Company, P.O. Box 48449,
Atlanta, GA 30362-1449, 16.09%; Sukhavati Temple, 74 Old Main Street, South
Varmouth, MA 02664, 30.92%; BHC Securities Inc., Trade House Account, ATTN:
Mutual Funds, One Commerce Square, 2005 Market Street, Philadelphia, PA 19103,
40.62%.
Small Cap Value Portfolio - Class A: SEI Trust Company, Attn: Jacqueline
Esposito, 680 E. Swedesford Road, Wayne, PA 19087, 52.40%.
EXPERTS
The financial statements in this Statement of Additional Information and the
Financial Highlights included in the Prospectuses have been audited by Price
Waterhouse LLP, independent accountants, as indicated in their report, with
respect thereto, and are included herein in reliance upon the authority of said
firm as experts in giving said report.
FINANCIAL STATEMENTS
Following are the audited financial statements of the Trust for the fiscal year
ended September 30, 1995, and the Report of Independent Accountants of Price
Waterhouse LLP dated November 10, 1995, relating to the financial
statements and financial highlights of the Trust.
S-42
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF
TRUSTEES
SEI INSTITUTIONAL MANAGED TRUST
In our opinion, the accompanying
statements of net assets and the related
statements of operations and of changes
in net assets and the financial
highlights present fairly, in all
material respects, the financial
position of the Large Cap Value, Large
Cap Growth, Small Cap Value, Small Cap
Growth, Mid-Cap, Capital Appreciation,
Equity Income, Balanced, Capital Growth,
Core Fixed Income, Bond and High Yield
Bond Portfolios (comprising SEI
Institutional Managed Trust, hereafter
referred to as the "Fund") at September
30, 1995, the results of each of their
operations, the changes in each of their
net assets and the financial highlights
for each of the respective periods
presented, in conformity with generally
accepted accounting principles. These
financial statements and financial
highlights (hereafter referred to as
"financial statements") are the
responsibility of the Fund's management;
our responsibility is to express an
opinion on these financial statements
based on our audits. We conducted our
audits of these financial statements in
accordance with generally accepted
auditing standards which require that we
plan and perform the audit to obtain
reasonable assurance about whether the
financial statements are free of
material misstatement. An audit includes
examining, on a test basis, evidence
supporting the amounts and disclosures
in the financial statements, assessing
the accounting principles used and
significant estimates made by
management, and evaluating the overall
financial statement presentation. We
believe that our audits, which included
confirmation of securities at September
30, 1995 by correspondence with the
custodian and brokers and the
application of alternative auditing
procedures where confirmations from
brokers were not received, provide a
reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania
November 10, 1995
16
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
LARGE CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Market
Value
Description Shares (000)
- ------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 98.1%
AEROSPACE & DEFENSE -- 1.6%
Loral 10,800 $ 616
Raytheon 28,700 2,439
Rockwell International 35,200 1,663
Thiokol 18,700 669
---------
5,387
---------
AIR TRANSPORTATION -- 0.7%
AMR* 16,900 1,220
Delta Air Lines 8,700 602
UAL* 3,800 649
---------
2,471
---------
AIRCRAFT -- 2.6%
Lockheed Martin 42,000 2,819
McDonnell Douglas 36,900 3,053
Textron 29,300 2,000
United Technologies 8,000 707
---------
8,579
---------
ALUMINUM & ALUMINUM PRODUCTS -- 0.4%
Alcan Aluminum 37,000 1,198
---------
APPAREL/TEXTILES -- 0.3%
Springs Industries, Cl A 21,700 852
V F 5,100 260
---------
1,112
---------
AUTOMOTIVE -- 3.0%
Chrysler 18,100 959
Dana 20,600 595
Eaton 24,200 1,283
Echlin 10,000 358
Ford Motor 72,000 2,241
General Motors 56,500 2,647
Paccar 18,000 842
TRW 12,000 893
---------
9,818
---------
BANKS -- 13.5%
Banc One 38,000 1,387
Bank of Boston 34,800 1,657
BankAmerica 66,000 3,949
Baybanks 8,500 645
Chase Manhattan 34,800 2,127
Chemical Banking 51,400 3,129
Citicorp 27,700 1,960
CoreStates Financial 63,800 2,337
First Interstate Bancorp 21,100 2,126
First Union 36,500 1,862
- ------------------------------------------------------------
Market
Value
Description Shares (000)
- ------------------------------------------------------------
Fleet Financial Group 33,900 $ 1,280
Great Western Financial 30,000 713
H F Ahmanson 71,700 1,819
J P Morgan 35,100 2,716
Midlantic 7,400 401
National City 30,800 951
NationsBank 49,300 3,315
NBD Bancorp 74,300 2,842
Republic New York 9,500 556
Star Banc 39,300 2,103
SunTrust Banks 10,300 681
Union Bank 14,200 753
Union Planters 37,000 1,101
US Bancorp Oregon 34,500 975
Wachovia 39,000 1,682
Wells Fargo 10,000 1,856
---------
44,923
---------
BEAUTY PRODUCTS -- 0.2%
Alberto Culver, Cl B 16,500 503
---------
CHEMICALS -- 4.9%
B F Goodrich 53,600 3,529
Cabot 11,100 590
Dow Chemical 36,200 2,697
E I du Pont de Nemours 45,100 3,101
Eastman Chemical 8,200 525
Eli Lilly 8,700 782
First Mississippi 12,800 510
Monsanto 10,300 1,038
Union Carbide 50,000 1,988
Witco 42,700 1,500
---------
16,260
---------
COMMUNICATIONS EQUIPMENT -- 1.0%
Harris 11,200 615
ITT 8,900 1,104
Sprint 47,900 1,676
---------
3,395
---------
COMPUTERS & SERVICES -- 1.9%
International Business Machines 63,000 5,946
Seagate Technology* 12,300 518
---------
6,464
---------
CONSUMER PRODUCTS -- 0.2%
Black & Decker 20,600 703
---------
CONTAINERS & PACKAGING -- 0.2%
Ball 16,700 495
---------
</TABLE>
17
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
LARGE CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
DRUGS -- 3.9%
American Home Products 25,600 $ 2,173
Baxter International 14,200 584
Bristol Myers Squibb 77,500 5,648
Merck 23,000 1,288
Rhone Poulenc Rorer 49,900 2,270
Schering Plough 8,400 433
Upjohn 11,100 495
---------
12,891
---------
ELECTRICAL SERVICES -- 9.6%
Baltimore Gas & Electric 70,900 1,835
Centerior Energy 66,900 728
Central & South West 36,000 918
Consolidated Edison of New York 52,200 1,586
Detroit Edison 56,100 1,809
Dominion Resources of Virginia 24,500 922
DQE 62,700 1,662
Duke Power 28,800 1,249
Entergy 46,300 1,210
Florida Progress 27,200 881
General Public Utilities 43,000 1,338
Illinova 14,900 404
Ohio Edison 19,900 453
Pacificorp 56,200 1,068
PECO Energy 53,500 1,531
Pinnacle West Capital 80,700 2,118
Portland General 28,300 725
Public Service Enterprise Group 115,000 3,420
SCE 121,100 2,150
Teco Energy 43,200 1,010
Texas Utilities 50,500 1,761
Unicom 53,500 1,618
Wisconsin Energy 45,200 1,277
---------
31,673
---------
ELECTRICAL TECHNOLOGY -- 0.5%
General Motors, Cl H 24,700 1,013
Texas Instruments 6,800 543
---------
1,556
---------
FINANCIAL SERVICES -- 3.7%
Alex Brown 8,900 520
Allstate 91,826 3,247
American Express 20,600 914
Bear Stearns 35,000 753
Beneficial 15,300 799
Dean Witter Discover 33,900 1,907
FNMA 9,691 1,003
Household International 30,300 1,879
SLMA 10,500 567
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
Transamerica 8,800 $ 627
---------
12,216
---------
FOOD, BEVERAGE & TOBACCO -- 4.1%
American Brands 58,300 2,463
Anheuser Busch 13,900 867
Archer Daniels Midland 46,200 710
Coca-Cola 25,700 633
CPC International 6,100 403
General Mills 14,300 797
H J Heinz 19,900 910
IBP 35,900 1,916
Philip Morris 42,100 3,517
Seaboard 400 103
UST 42,804 1,225
---------
13,544
---------
FORESTRY -- 0.2%
IP Timberlands LP 29,300 681
---------
GAS/NATURAL GAS -- 2.2%
Coastal 14,300 481
Consolidated Natural Gas 43,000 1,737
Eastern Enterprises 9,000 289
Nicor 16,300 444
Oneok 25,900 602
Pacific Enterprises 15,400 387
Panhandle Eastern 59,700 1,627
TEPPCO Partners LP 11,300 364
Williams 34,000 1,326
---------
7,257
---------
HOUSEHOLD PRODUCTS -- 1.2%
Clorox 18,800 1,341
Minnesota Mining & Manufacturing 28,400 1,605
National Service Industries 32,500 951
---------
3,897
---------
INSURANCE -- 6.0%
Aflac 23,000 955
AMBAC 5,300 233
American General 96,800 3,618
AON 5,300 217
Cigna 37,800 3,935
Jefferson Pilot 11,000 707
Lincoln National 27,200 1,282
Loews 8,900 1,295
Marsh & McLennan 16,200 1,424
Old Republic International 49,500 1,429
Providian 20,100 834
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
Safeco 14,300 $ 938
Saint Paul 39,539 2,308
US Life 27,750 812
---------
19,987
---------
LEASING & RENTING -- 0.2%
Comdisco 22,300 663
---------
MACHINERY -- 1.5%
Cummins Engine 16,500 635
Dresser Industries 18,900 451
General Electric 11,600 740
Harnischfeger Industries 13,000 434
Nacco Industries, Cl A 6,700 398
Parker-Hannifin 34,000 1,292
Timken 27,100 1,155
---------
5,105
---------
MARINE TRANSPORTATION -- 0.2%
Tidewater 22,000 619
---------
MEASURING DEVICES -- 0.2%
Tektronix 8,700 513
---------
MEDICAL PRODUCTS & SERVICES -- 1.0%
Bausch & Lomb 11,500 476
Becton Dickinson 30,900 1,943
Community Psychiatric Centers* 27,000 317
Universal Health Services, Cl B* 16,500 565
---------
3,301
---------
METALS & MINING -- 0.4%
Asarco 28,100 886
Magma Copper* 22,900 429
---------
1,315
---------
MISCELLANEOUS BUSINESS SERVICES -- 0.6%
Sun Microsystems* 22,800 1,436
SunGard Data Systems* 16,000 468
---------
1,904
---------
OFFICE FURNITURE & FIXTURES -- 0.0%
Lear Seating* 2,100 62
---------
PAPER & PAPER PRODUCTS -- 3.0%
Boise Cascade 9,500 384
Bowater 19,000 886
Champion International 45,100 2,430
Federal Paper Board 41,700 1,600
International Paper 45,600 1,915
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
Kimberly Clark 8,000 $ 537
Temple-Inland 14,900 793
Weyerhaeuser 28,100 1,282
---------
9,827
---------
PETROLEUM REFINING -- 9.7%
Amoco 79,500 5,098
Atlantic Richfield 35,900 3,855
Chevron 34,300 1,668
Exxon 141,500 10,223
Lyondell Petrochemical 42,700 1,105
Mobil 68,600 6,834
Royal Dutch Petroleum ADR 5,500 675
Texaco 31,500 2,036
USX-Marathon Group 32,300 638
---------
32,132
---------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.5%
Eastman Kodak 26,200 1,552
---------
PRINTING & PUBLISHING -- 0.8%
American Greetings 13,600 415
McGraw Hill 7,800 638
New York Times, Cl A 11,300 309
Wallace Computer Services 18,500 1,054
Washington Post, Cl B 1,000 311
---------
2,727
---------
PROFESSIONAL SERVICES -- 0.7%
Dun & Bradstreet 40,000 2,315
---------
RAILROADS -- 1.3%
Conrail 17,000 1,169
CSX 23,700 1,993
Illinois Central 14,500 567
Union Pacific 7,600 504
---------
4,233
---------
RECREATION -- 0.1%
Outboard Marine 18,800 404
---------
REPAIR SERVICES -- 0.2%
PHH 15,400 693
---------
RETAIL -- 3.6%
J C Penney 52,300 2,595
Kmart 39,500 573
May Department Stores 62,500 2,733
Melville 7,600 262
Rite Aid 20,600 577
Ruddick 22,800 616
</TABLE>
19
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
LARGE CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
Sears Roebuck 44,700 $ 1,648
Smiths Food & Drug Centers 14,200 288
Tandy 27,600 1,677
Waban* 28,000 529
Wendy's International 20,600 435
----------
11,933
----------
RUBBER & PLASTIC -- 0.2%
Goodyear Tire & Rubber 13,400 528
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 0.3%
Advanced Micro Devices* 9,000 262
Thomas & Betts 13,300 860
----------
1,122
----------
SPECIALTY MACHINERY -- 0.5%
Cooper Industries 11,100 391
Tecumseh Products, Cl A 22,800 1,095
----------
1,486
----------
STEEL & STEEL WORKS -- 0.2%
USX-US Steel Group 15,900 493
----------
TELEPHONES & TELECOMMUNICATION -- 10.5%
Alltel 26,800 801
Ameritech 107,600 5,609
Bell Atlantic 33,900 2,081
BellSouth 76,100 5,565
Cincinnati Bell 39,700 1,072
Comsat 17,300 389
GTE 144,000 5,652
MCI Communications 44,000 1,147
NYNEX 127,400 6,082
Pacific Telesis Group 48,300 1,485
SBC Communications 11,000 605
Southern New England 65,500 2,317
US West 45,900 2,163
----------
34,968
----------
TRANSPORTATION SERVICES -- 0.5%
FlightSafety International 14,500 665
Pittston Services Group 36,000 977
----------
1,642
----------
WHOLESALE -- 0.3%
Supervalu 32,900 966
----------
Total Common Stocks
(Cost $282,049,000) 325,513
----------
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 0.2%
U.S. Treasury Bills
5.380%, 10/26/95 (1) $ 200 $ 200
5.400%, 10/26/95 (1) 200 199
5.430%, 10/26/95 (1) 200 199
----------
Total U. S. Treasury Obligations
(Cost $598,000) 598
----------
REPURCHASE AGREEMENT -- 1.4%
Lehman Brothers
6.45%, dated 09/29/95, matures
10/02/95, repurchase price
$4,450,000 (collateralized by
U.S. Treasury Note, par value
$4,500,000, 5.625%, 06/30/97,
market value of collateral:
$4,540,000) 4,447 4,447
----------
Total Repurchase Agreement
(Cost $4,447,000) 4,447
----------
Total Investments -- 99.7%
(Cost $287,094,000) 330,558
----------
OTHER ASSETS AND LIABILITIES -- 0.3%
Other Assets and Liabilities, Net 1,134
----------
NET ASSETS -- 100.0% $ 331,692
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 25,506,245
outstanding shares of
beneficial interest $ 281,901
Undistributed Net Investment
Income 456
Accumulated Net Realized Gain on
Investments 5,846
Net Unrealized Appreciation on
Futures Contracts 25
Net Unrealized Appreciation on
Investments 43,464
----------
Total Net Assets $ 331,692
----------
----------
Net Asset Value, Offering and
Redemption Price Per Share --
Class A $ 13.00
----------
----------
</TABLE>
(1) Security has been pledged as collateral on open futures contracts.
*Non-income producing security
<TABLE>
<S> <C>
ADR American Depository Receipt
Cl Class
LP Limited Partnership
FNMA Federal National Mortgage Association
SLMA Student Loan Marketing Association
</TABLE>
20
<PAGE>
LARGE CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 96.9%
AIR TRANSPORTATION -- 0.7%
AMR* 28,050 $ 2,023
----------
AIRCRAFT -- 1.9%
Allied Signal 67,000 2,957
Boeing 20,300 1,385
United Technologies 13,100 1,158
----------
5,500
----------
AUTOMOTIVE -- 1.2%
General Motors 37,600 1,763
Magna International, Cl A 40,000 1,805
----------
3,568
----------
BANKS -- 2.8%
BankAmerica 42,650 2,554
Citicorp 48,100 3,402
First Chicago 34,150 2,344
----------
8,300
----------
BEAUTY PRODUCTS -- 3.7%
Avon Products 30,000 2,153
Colgate Palmolive 52,000 3,465
Procter & Gamble 70,150 5,401
----------
11,019
----------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 3.4%
Comcast Special, Cl A 97,100 1,942
Cox Communications* 85,800 1,737
Liberty Media Group, Cl A* 71,000 1,899
Tele-Communications, Cl A* 265,300 4,643
----------
10,221
----------
CHEMICALS -- 4.2%
Air Products & Chemicals 10,350 539
E I du Pont de Nemours 22,000 1,513
Monsanto 33,000 3,325
Morton International 114,000 3,533
Rohm & Haas 58,000 3,502
----------
12,412
----------
COMMUNICATIONS EQUIPMENT -- 3.0%
ITT 22,000 2,728
L M Ericsson Telephone ADR 70,400 1,725
Motorola 43,000 3,284
Vishay Intertechnology* 27,800 1,168
----------
8,905
----------
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
COMPUTERS & SERVICES -- 5.7%
Cisco Systems* 114,300 $ 7,887
Compaq Computer* 181,850 8,797
Silicon Graphics* 6,200 213
----------
16,897
----------
CONTAINERS & PACKAGING -- 0.2%
Crown Cork & Seal* 18,750 727
----------
DRUGS -- 7.4%
Amgen* 49,950 2,491
Johnson & Johnson 39,900 2,958
Merck 126,300 7,073
Pfizer 162,200 8,657
Schering Plough 17,400 896
----------
22,075
----------
ELECTRICAL TECHNOLOGY -- 0.4%
Duracell 25,900 1,162
----------
ENTERTAINMENT -- 1.6%
Walt Disney 82,000 4,705
----------
ENVIRONMENTAL SERVICES -- 0.3%
WMX Technologies 28,900 824
----------
FINANCIAL SERVICES -- 5.3%
Dean Witter Discover 56,000 3,150
FHLMC 45,000 3,111
First Financial Management 10,800 1,054
FNMA 32,200 3,333
Travelers 94,000 4,993
----------
15,641
----------
FOOD, BEVERAGE & TOBACCO -- 8.5%
Coca-Cola 107,600 7,424
Pepsico 131,000 6,681
Philip Morris 132,800 11,086
----------
25,191
----------
GAS/NATURAL GAS -- 0.5%
Enron 43,000 1,441
----------
HOTELS & LODGING -- 0.5%
Hilton Hotels 21,300 1,361
----------
HOUSEHOLD PRODUCTS -- 1.7%
Gillette 108,100 5,148
----------
</TABLE>
21
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
LARGE CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
INSURANCE -- 7.1%
American International Group 70,900 $ 6,026
General Re 25,150 3,798
Healthsource* 26,000 1,251
NAC Re 24,000 870
PMI Group* 55,000 2,606
Progressive 18,100 810
United Healthcare 89,150 4,357
UNUM 25,400 1,340
----------
21,058
----------
MACHINERY -- 6.0%
Case 21,700 797
Caterpillar 33,950 1,931
General Electric 178,950 11,408
General Instrument* 127,600 3,828
----------
17,964
----------
MEDICAL PRODUCTS & SERVICES -- 2.3%
Columbia HCA Healthcare 81,000 3,938
Medtronic 54,800 2,946
----------
6,884
----------
MISCELLANEOUS BUSINESS SERVICES -- 3.0%
Computer Associates
International 13,300 562
Informix* 71,000 2,308
Microsoft* 22,550 2,041
Oracle* 108,100 4,148
----------
9,059
----------
PAPER & PAPER PRODUCTS -- 0.2%
Kimberly Clark 8,300 557
----------
PETROLEUM & FUEL PRODUCTS -- 0.7%
Western Atlas* 45,000 2,132
----------
PETROLEUM REFINING -- 1.3%
Amoco 26,700 1,712
Mobil 11,600 1,156
Royal Dutch Petroleum ADR 8,300 1,019
----------
3,887
----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 1.6%
Eastman Kodak 43,000 2,547
Xerox 17,500 2,352
----------
4,899
----------
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
PRINTING & PUBLISHING -- 0.8%
Time Warner 63,200 $ 2,512
----------
RAILROADS -- 1.5%
Burlington Northern Santa Fe* 23,000 1,668
Conrail 39,100 2,688
----------
4,356
----------
RETAIL -- 6.1%
Autozone* 30,000 765
Dayton Hudson 3,450 262
Federated Department Stores* 31,000 880
Home Depot 204,550 8,156
Lowe's 60,000 1,800
McDonald's 132,000 5,049
Safeway* 20,600 860
Sears Roebuck 9,400 347
----------
18,119
----------
RUBBER & PLASTIC -- 0.6%
Illinois Tool Works 28,750 1,693
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 5.2%
Applied Materials* 16,000 1,636
Intel 179,200 10,774
Molex 40,500 1,468
National Semiconductor* 57,000 1,575
----------
15,453
----------
STEEL & STEEL WORKS -- 1.0%
Aluminum Company of America 31,900 1,687
Nucor 27,350 1,224
----------
2,911
----------
TELEPHONES & TELECOMMUNICATION -- 5.8%
Airtouch Communications* 212,350 6,503
AT&T 130,000 8,547
BellSouth 12,000 878
MCI 51,500 1,342
----------
17,270
----------
TESTING LABORATORIES -- 0.3%
Chiron* 9,300 842
----------
WHOLESALE -- 0.5%
Alco Standard 16,600 1,407
----------
Total Common Stocks
(Cost $254,601,000) 288,123
----------
</TABLE>
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 1.3%
U.S. Treasury Bill
5.420%, 12/21/95 (1) $ 4,050 $ 4,001
----------
Total U.S. Treasury Obligations
(Cost $4,002,000) 4,001
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 0.4%
FHLB Discount Notes
5.630%, 10/06/95 210 210
5.580%, 10/23/95 430 429
FNMA
5.600%, 10/12/95 40 40
5.680%, 10/20/95 530 528
----------
Total U.S. Government Agency
Obligations (Cost $1,207,000) 1,207
----------
COMMERCIAL PAPER -- 0.2%
Prudential Funding
6.250%, 10/02/95 (1) 525 525
----------
Total Commercial Paper
(Cost $525,000) 525
----------
Total Investments -- 98.8%
(Cost $260,335,000) 293,856
----------
OTHER ASSETS AND LIABILITIES -- 1.2%
Other Assets and Liabilities, Net 3,521
----------
NET ASSETS -- 100.0% $ 297,377
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 23,332,998
outstanding shares of
beneficial interest $ 257,661
Undistributed Net Investment
Income 603
Accumulated Net Realized Gain on
Investments 5,582
Net Unrealized Appreciation on
Futures Contracts 10
Net Unrealized Appreciation on
Investments 33,521
----------
Total Net Assets $ 297,377
----------
----------
Net Asset Value, Offering and
Redemption Price Per Share --
Class A $ 12.75
----------
----------
</TABLE>
(1) Security has been pledged as collateral on open futures contracts.
*None-income producing security
<TABLE>
<S> <C>
ADR American Depository Receipt
Cl Class
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
FHLB Federal Home Loan Bank
</TABLE>
Small Cap Value Portfolio
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 97.7%
AIR TRANSPORTATION -- 0.3%
Midwest Express Holdings* 13,200 $ 297
----------
APPAREL/TEXTILES -- 0.9%
Springs Industries, Cl A 18,800 738
Tarrant Apparel Group* 33,800 228
----------
966
----------
AUTOMOTIVE -- 0.1%
Stant 7,600 76
----------
BANKS -- 8.5%
Albank Financial 20,000 600
Amfed Financial 42,300 1,332
Astoria Financial* 14,500 618
BankAtlantic Bancorp 38,450 735
BankNorth Group 32,600 1,084
DS Bancorp* 17,430 462
First Federal Bancshares* 43,800 610
Long Island Bancorp 45,500 1,115
Mercantile Bankshares 34,700 946
Reliance Bancorp 22,900 335
Southern National Bank 33,507 880
----------
8,717
----------
BUILDING & CONSTRUCTION SUPPLIES -- 1.0%
American Buildings* 20,000 473
NCI Building Systems* 24,200 568
----------
1,041
----------
CHEMICALS -- 1.5%
Cytec Industries* 27,500 1,592
----------
COMMUNICATIONS EQUIPMENT -- 1.4%
ACT Manufacturing* 6,800 96
Plantronics* 35,800 1,302
----------
1,398
----------
COMPUTERS & SERVICES -- 4.6%
Computer Horizons* 51,200 1,024
Gateway 2000* 45,000 1,379
Intersolv* 51,600 1,038
Quantum* 57,100 1,249
----------
4,690
----------
</TABLE>
23
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
SMALL CAP VALUE PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS -- 2.1%
Maxwell Shoe* 10,900 $ 55
Nu-Kote Holding, Cl A* 53,200 1,157
Velcro Industries 15,300 956
----------
2,168
----------
CONTAINERS & PACKAGING -- 1.0%
US Can* 78,100 1,045
----------
ENTERTAINMENT -- 4.2%
All American Communications* 15,500 205
Anchor Gaming* 18,000 455
Boomtown* 90,000 844
Casino America* 35,400 332
Cinergi Pictures Entertainment* 93,000 546
Dick Clark Productions* 45,000 428
Griffin Gaming & Entertainment* 89,540 1,141
Spelling Entertainment Group 31,640 419
----------
4,370
----------
FINANCIAL SERVICES -- 1.3%
Greenpoint Financial 19,900 550
MLF Bancorp 34,600 800
----------
1,350
----------
FOOD, BEVERAGE & TOBACCO -- 1.2%
Robert Mondavi* 48,230 1,230
----------
GLASS PRODUCTS -- 1.4%
Libbey 59,800 1,428
----------
HOTELS & LODGING -- 0.5%
Sholodge* 35,400 478
----------
HOUSEHOLD FURNITURE & FIXTURES -- 1.0%
Holophane* 39,000 1,073
----------
INSURANCE -- 18.7%
American Travelers* 45,900 855
Capitol American Financial 30,000 668
First Colony 100 3
Harleysville Group 21,500 640
HCC Insurance Holdings* 26,900 891
Healthplan Services* 52,700 1,074
Home State Holdings* 48,100 433
Horace Mann Educators 31,400 864
John Alden Financial 44,000 996
Leucadia National 10,800 633
Life Partners Group 21,700 374
Mercury General 6,200 236
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
National Re Holdings 26,200 $ 927
Partnerre Holdings 38,000 941
Paul Revere 22,600 427
Penncorp Financial Group 66,000 1,575
PMI Group* 28,800 1,364
Presidential Life 60,900 525
PXRE 17,100 466
Renaissance Re Holdings* 47,000 1,146
Security Capital* 4,900 261
State Auto Financial 54,100 1,217
TIG Holdings 66,800 1,792
Western National 68,550 943
----------
19,251
----------
MACHINERY -- 8.1%
Alamo Group 51,800 932
BW/IP Holding, Cl A 67,300 1,203
Chase Brass Industries* 41,100 524
CMI* 116,400 757
DT Industries 53,100 730
Exide Electronics Group* 73,200 1,373
Fisher Scientific International 33,300 1,078
Ucar International* 63,600 1,733
----------
8,330
----------
MEASURING DEVICES -- 2.7%
Oak Industries* 51,200 1,542
Safetytek* 33,000 536
Veeco Instruments* 28,600 751
----------
2,829
----------
MEDICAL PRODUCTS & SERVICES -- 5.3%
ADAC Laboratories 78,000 936
Coventry* 31,530 623
Medisense* 52,800 1,274
Mid Atlantic Medical Services* 54,000 1,060
Ornda Healthcorp* 45,500 967
Sterile Concepts Holdings 39,600 549
Universal Health Services, Cl B* 2,600 89
----------
5,498
----------
MISCELLANEOUS BUSINESS SERVICES -- 0.3%
Broadway & Seymour* 10,800 270
----------
MISCELLANEOUS MANUFACTURING -- 4.1%
Belden 63,100 1,656
Cable Design Technologies* 25,000 750
Wolverine Tube* 49,200 1,864
----------
4,270
----------
PAPER & PAPER PRODUCTS -- 1.0%
Caraustar Industries 49,000 980
----------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
PETROLEUM & FUEL PRODUCTS -- 0.6%
Citation* 32,900 $ 592
----------
RETAIL -- 9.5%
Big B 56,900 846
BMC West* 60,500 847
Catherine's Stores* 78,200 919
Circle K* 43,800 909
Claire's Stores 43,600 894
Consolidated Stores* 29,900 691
Daka International* 46,500 1,523
Fabri-Centers of America, Cl A* 19,400 298
Little Switzerland* 46,000 184
Mueller Industries* 10,600 550
Vons Companies* 50,300 1,195
Zale* 70,000 971
----------
9,827
----------
RUBBER & PLASTIC -- 3.1%
Aptargroup 41,200 1,365
Mark IV Industries 44,820 997
West 28,100 790
----------
3,152
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 3.3%
DH Technology* 34,400 1,101
SGS-Thomson Microelec* 27,700 1,346
Zycon* 75,400 924
----------
3,371
----------
STEEL & STEEL WORKS -- 1.8%
National-Standard* 45,000 608
Schnitzer Steel Industries, Cl A 23,400 667
Synalloy 24,500 560
----------
1,835
----------
TECHNOLOGY, GENERAL -- 0.5%
Tel-Save Holdings* 33,000 507
----------
TELEPHONES & TELECOMMUNICATION -- 1.2%
EIS International* 61,300 1,096
Numerex, Cl A* 19,600 164
----------
1,260
----------
WHOLESALE -- 6.5%
Bell Microproducts* 93,000 1,070
Congoleum* 47,300 497
- -----------------------------------------------------------
Shares/Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
Duracraft* 23,700 $ 1,069
Marshall Industries* 41,800 1,578
TBC* 95,200 916
Wyle Electronics 34,800 1,562
----------
6,692
----------
Total Common Stocks
(Cost $89,719,000) 100,583
----------
REPURCHASE AGREEMENT -- 4.1%
Prudential
6.45%, dated 09/29/95, matures
10/02/95, repurchase price
$4,285,000 (collateralized
by FHLMC obligation, par
value $4,365,000, 6.275%,
09/21/05, market value of
collateral: $4,372,000) $ 4,282 4,282
----------
Total Repurchase Agreement
(Cost $4,282,000) 4,282
----------
Total Investments -- 101.8%
(Cost $94,001,000) 104,865
----------
OTHER ASSETS AND LIABILITIES -- (1.8%)
Other Assets and Liabilities, Net (1,890)
----------
NET ASSETS -- 100% $ 102,975
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 8,444,888
outstanding shares of
beneficial interest $ 90,332
Distributions in Excess of Net
Investment Income (28)
Accumulated Net Realized Gain on
Investments 1,807
Net Unrealized Appreciation on
Investments 10,864
----------
Total Net Assets $ 102,975
----------
----------
Net Asset Value, Offering and
Redemption Price Per Share --
Class A $ 12.19
----------
----------
</TABLE>
* Non-income producing securities
<TABLE>
<S> <C>
C1 Class
FHLMC Federal Home Loan Mortgage Company
</TABLE>
25
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
SMALL CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 95.2%
AEROSPACE & DEFENSE -- 0.2%
Watkins Johnson 11,100 $ 608
----------
AIRCRAFT -- 0.1%
Simula* 7,050 177
----------
APPAREL/TEXTILES -- 3.6%
Ashworth* 15,200 122
Just For Feet* 6,200 191
Lydall* 81,300 2,022
Nautica Enterprises* 109,675 3,756
Quiksilver* 8,000 217
St. John Knits 55,900 2,725
Tommy Hilfiger* 65,300 2,122
----------
11,155
----------
AUTOMOTIVE -- 0.9%
Regal Beloit 52,800 983
The Allen Group 35,700 1,295
Titan Wheel International 27,400 469
----------
2,747
----------
BANKS -- 0.3%
Peoples Heritage Financial Group 50,000 913
Saint Francis Capital* 5,900 134
----------
1,047
----------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 0.5%
Clear Channel Communications* 21,500 1,629
----------
BUILDING & CONSTRUCTION -- 0.2%
Acme Cleveland 26,800 717
----------
CHEMICALS -- 0.3%
OM Group 28,900 878
----------
COMMUNICATIONS EQUIPMENT -- 4.0%
ADC Telecommunications* 31,600 1,438
American Radio Systems 800 20
Checkpoint Systems* 19,000 501
Cincinnati Microwave* 2,400 36
Colonial Data Technologies* 1,600 30
Comverse Technology* 16,500 359
Harman International 1,000 49
Inter-Tel* 4,900 86
Kemet* 97,800 3,349
Mercury Interactive* 25,000 694
Microcom* 23,500 444
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
Microdyne* 40,800 $ 1,035
Microwave Power Devices* 17,200 151
Mobilemedia* 1,600 43
National Wireless Holdings* 10,700 139
Network Express* 9,500 151
Spectrian* 12,500 427
Stratacom* 30,600 1,691
Symmrtricom* 6,500 146
Tellabs* 30,200 1,272
Teltrend* 11,000 363
----------
12,424
----------
COMPUTERS & SERVICES -- 11.2%
Adaptive Solutions* 27,000 192
Alantec* 34,300 1,089
Atria Software* 35,100 1,027
Auspex Systems* 90,700 1,417
Avid Technology* 18,200 783
Broderbund Software* 16,800 1,279
Catalina Marketing* 14,400 893
CBT Group PLC ADR* 19,900 950
Challenger International* 7,500 48
Cirrus Logic* 1,500 86
Comshare* 27,800 813
Cybex Computer Products* 9,900 248
Discreet Logic* 200 11
Dynatech* 4,300 68
Electronics for Imaging* 47,000 3,364
FTP Software* 17,200 477
Gandalf Technologies* 25,000 152
GRC International* 3,300 75
Helix Technology 61,700 2,854
Hyperion Software* 50,900 2,889
Imnet Systems* 10,000 258
Inference, Cl A* 11,800 177
Key Tronic* 16,900 244
Level One Communications* 5,900 139
Macro Media* 24,400 1,394
Microchip Technology* 2,900 110
Netmanage* 43,200 1,026
Network General* 14,300 590
Optical Data Systems* 74,700 2,913
Phamis* 5,400 148
Pinnacle Systems* 25,700 790
Printronix* 5,500 164
Project Software & Development* 7,900 205
Pure Software* 8,600 307
Rasterops* 19,000 150
Sanctuary Woods Multimedia* 25,000 175
Simware* 12,700 127
Stormedia* 33,200 1,502
Syncronys Softcorp* 8,500 122
</TABLE>
26
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
System Software Associates 1,400 $ 56
Trident Microsystems* 43,500 946
Veritas Software* 8,000 208
Wonderware* 75,500 2,935
Zebra Technology* 26,700 1,422
----------
34,823
----------
CONSUMER PRODUCTS -- 0.9%
Cidco* 33,400 1,177
Davidson & Associates* 47,400 1,648
Wolverine World Wide 1,500 41
----------
2,866
----------
DRUGS -- 1.9%
Avecor Cardiovascular* 8,900 125
Columbia Laboratories* 61,000 572
Idexx Laboratories* 59,200 2,205
Northfield Laboratories* 7,500 139
Ventritex* 13,100 282
Watson Pharmaceuticals* 63,086 2,586
----------
5,909
----------
ELECTRICAL TECHNOLOGY -- 1.2%
Electro Scientific Industries* 26,300 917
Input/Output* 26,000 998
Komag* 600 39
Presstek* 30,200 1,609
Zycon* 11,300 138
----------
3,701
----------
ENERGY & POWER -- 0.1%
Micro Linear* 16,000 250
----------
ENTERTAINMENT -- 1.1%
Movie Gallery* 31,900 1,364
Regal Cinemas* 36,300 1,493
Station Casinos* 23,900 367
Videonics* 7,900 164
----------
3,388
----------
ENVIRONMENTAL SERVICES -- 1.2%
Tetra Tech* 67,876 1,578
United Waste Systems* 50,900 2,125
----------
3,703
----------
FINANCIAL SERVICES -- 2.8%
Aames Financial 34,900 1,021
Commercial Federal* 14,800 529
Credit Acceptance* 56,400 1,523
Mercury Finance 47,166 1,150
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
Olympic Financial* 46,300 $ 1,267
The Money Store 40,650 1,925
World Acceptance* 81,600 1,163
----------
8,578
----------
FOOD, BEVERAGE & TOBACCO -- 1.0%
Opta Food Ingredients* 5,700 90
Robert Mondavi* 44,000 1,122
Starbucks* 46,000 1,748
----------
2,960
----------
HOTELS & LODGING -- 0.1%
Doubletree* 8,700 193
LaQuinta Inns 2,500 70
Winston Hotels 9,500 107
----------
370
----------
HOUSEHOLD PRODUCTS -- 1.3%
Blount, Cl A 20,900 995
Blyth Industries* 23,200 1,085
Chicago Miniature Lamp* 8,900 158
Department 56* 25,100 1,173
Semitool* 7,500 188
Thermolase* 6,400 130
USA Detergents* 12,200 253
----------
3,982
----------
INSURANCE -- 1.5%
General Acceptance* 11,100 369
Healthplan Services* 5,100 104
Inphynet Medical Management* 4,200 79
Oxford Health Plans* 40,700 2,961
Penncorp Financial Group 39,800 950
United Dental Care* 5,900 177
----------
4,640
----------
LUMBER & WOOD PRODUCTS -- 0.4%
Champion Enterprises* 67,600 1,344
----------
MACHINERY -- 5.8%
BMC Industries, Minnesota 34,400 1,329
Brooks Automation* 25,700 553
Cascade* 57,900 883
Computational Systems* 3,900 63
Edelbrock* 9,100 139
Flextronics International* 5,700 147
FSI International* 96,100 3,194
Gasonics International* 48,000 1,788
Indresco* 48,900 874
JLG Industries 30,000 1,350
</TABLE>
27
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
SMALL CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
Kulicke & Soffa Industries* 59,000 $ 2,154
Mackie Designs* 11,200 162
Micrel* 19,700 552
Novellus Systems* 20,300 1,421
Photronics* 53,350 1,787
PRI Automation* 4,000 164
Uniphase* 8,900 314
UNR Industries 130,000 1,121
----------
17,995
----------
MANUFACTURING -- 0.2%
Health Payment Review* 15,500 361
West Marine* 10,700 342
----------
703
----------
MEASURING DEVICES -- 3.0%
Bio Rad Labs* 28,000 1,127
Cognex* 39,400 1,901
Cyberoptics* 7,500 255
Digital Link* 4,700 121
Esterline Technologies* 41,200 1,128
Fluke 15,300 581
KLA Instruments* 17,300 1,388
LTX* 22,500 284
Tencor Instrument* 41,900 1,854
Teradyne* 1,800 65
Thermedics* 9,700 193
Tylan General* 11,200 188
Veeco Instruments* 10,700 281
----------
9,366
----------
MEDICAL PRODUCTS & SERVICES -- 8.6%
Arrow International 12,800 554
CNS* 107,600 1,412
Community Health Systems* 39,300 1,587
Compdent* 39,700 1,161
Conmed* 32,500 1,064
Express Scripts, Cl A* 20,000 880
Gulf South Medical Supply* 63,300 1,559
Healthsource* 55,200 2,657
Healthsouth Rehabilitation* 1,500 38
Hemasure* 1,400 22
Horizon Mental Health
Management* 5,600 85
Horizon/CMS Healthcare* 1,600 36
Integrated Health Services* 400 11
Intermagnetics General* 27,500 519
Medic Computer Sytems* 45,800 2,324
Medpartners* 20,000 630
Mid Atlantic Medical Services* 1,600 31
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
Omnicare 103,800 $ 4,050
Pediatrix Medical Group* 10,400 213
Phycor* 102,250 3,502
Physician Reliance Network* 10,000 370
Physicians Health Services* 8,300 228
Rotech Medical* 17,100 425
Softdesk* 8,000 202
Steris* 45,700 1,925
Tecnol Medical Products* 2,000 39
Universal Health Services, Cl B* 35,200 1,206
Zygo* 2,300 65
----------
26,795
----------
MISCELLANEOUS BUSINESS SERVICES -- 7.8%
Acxiom* 72,300 2,042
Alternative Resources* 67,900 2,173
American Business Information* 108,900 2,205
Arcsys* 6,900 285
Baan N.V.* 16,700 752
Cambridge Technology Partners* 55,800 2,832
Cellular Technical Services* 16,500 373
Diamond Multimedia Systems* 7,400 239
Electronic Arts* 2,000 74
Intersolv* 8,000 161
Legato Systems* 6,500 172
Manugistics* 12,500 189
McAfee Associates* 60,900 3,138
MDL Information Systems* 46,100 859
Meridian Data* 17,000 172
Minnesota Educational Computing* 6,900 186
National Data 31,500 847
National Instruments* 9,200 186
Networth* 11,500 239
Number Nine Visual Technology* 16,800 277
Open Environment* 11,500 201
Parametric Technology* 29,700 1,827
Platinum Software* 2,100 24
Premenos Technology* 4,400 143
Quarterdeck* 76,600 1,484
Security Dynamics Technology* 11,500 549
Spyglass* 3,200 146
Synopsys* 59,000 1,814
Transaction Systems Architects* 4,800 128
Viasoft* 18,000 234
Wind River Systems* 7,200 169
----------
24,120
----------
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS CONSUMER SERVICES -- 1.5%
ABR Information Services* 10,200 $ 258
Accustaff* 23,400 860
Career Horizons* 6,100 169
Corrections Corporation of
America* 36,400 1,752
Loewen Group 27,400 1,130
Robert Half International* 12,200 416
----------
4,585
----------
MOTORCYCLES, BICYCLES & PARTS -- 0.1%
Cannondale* 8,800 145
----------
PETROLEUM & FUEL PRODUCTS -- 0.4%
Belden & Blake* 7,100 135
Pride Petroleum Services* 88,000 879
Reading & Bates* 2,400 29
Snyder Oil 2,700 33
Weatherford Enterra* 2,300 30
----------
1,106
----------
PETROLEUM REFINING -- 0.3%
Varlen 31,460 857
----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 0.3%
Innovex 45,900 1,004
----------
PRINTING & PUBLISHING -- 2.3%
Books-A-Million* 52,900 932
Desktop Data* 10,900 379
Devon Group* 50,400 2,180
Gartner Group, Cl A* 88,200 2,889
Scientific Games Holdings* 19,000 710
----------
7,090
----------
PROFESSIONAL SERVICES -- 0.7%
Medaphis* 46,900 1,313
Sylvan Learning Systems* 30,300 962
----------
2,275
----------
REAL ESTATE -- 0.0%
Innkeepers USA Trust 5,100 48
----------
RETAIL -- 11.8%
Apple South 47,700 1,085
Baby Superstore* 22,800 1,029
Bed Bath & Beyond* 23,100 705
Boise Cascade Office Products* 25,000 694
Borders Group* 2,200 38
Boston Chicken* 51,400 1,343
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
CDW Computer Centers* 24,100 $ 1,283
Corporate Express* 106,050 2,585
Daka International* 7,800 255
Dave & Buster's* 6,300 98
Discount Auto Parts* 44,100 1,334
Dollar Tree Stores* 8,500 289
Fastenal 48,000 1,752
Friedman's, Cl A* 2,300 50
Garden Ridge* 5,500 161
General Nutrition* 43,400 1,975
Gymboree* 66,600 2,006
Hollywood Entertainment* 25,600 549
Lone Star Steakhouse & Saloon* 2,200 90
Longhorn Steak* 6,800 121
Men's Wearhouse* 23,700 853
Micro Warehouse* 22,900 1,048
Moovies* 7,200 141
O'Charleys* 9,200 138
Office Depot* 23,050 694
Orchard Supply Hardware* 5,000 73
Outback Steakhouse* 53,400 1,642
Papa John's International* 50,500 2,273
Petco Animal Supplies* 19,500 507
Petsmart* 56,550 1,909
Proffitts* 1,900 52
Ross Stores 60,400 951
Sonic* 39,900 908
Staples* 89,912 2,540
Sunglass Hut International* 54,900 2,742
Trend-Lines* 29,400 390
Viking Office Products* 60,700 2,534
----------
36,837
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 9.1%
Actel* 29,900 527
Aetrium* 40,400 869
Alliance Semiconductor* 2,300 91
Alpha Industries* 13,500 241
Altera* 1,200 75
Atmel* 56,600 1,910
Brooktree* 35,200 704
Burr-Brown* 46,200 1,756
Chips & Technologies* 23,700 320
Credence Systems* 23,800 863
Dallas Semiconductor* 800 16
DSP Communications* 38,900 1,284
Electroglas* 26,100 1,778
Epic Design Technology* 23,400 1,135
General Scanning* 1,400 16
GTI* 2,900 58
Integrated Process Equipment* 22,900 912
Integrated Silicon Solutions* 20,700 771
</TABLE>
29
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
SMALL CAP GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
Integrated Silicon Systems* 1,000 $ 30
Interphase* 10,400 152
Lattice Semiconductor* 2,400 98
Linear Technology 45,500 1,888
Mattson Technology* 12,900 548
Oak Technology* 1,900 80
Read-Rite* 22,654 827
S3* 71,700 2,498
Sanmina* 36,400 1,738
SEEQ Technology* 35,000 158
Semiconductor Packaging
Materials* 14,000 165
Sierra Semiconductor* 44,700 2,196
Silicon Valley Group* 31,400 1,213
Tower Semiconductor* 7,100 231
Transwitch* 1,000 13
Triquint Semiconductor* 11,800 270
Vicor* 41,800 1,011
VLSI Technology* 1,700 58
Xilinx* 39,700 1,911
----------
28,411
----------
SPECIALTY MACHINERY -- 0.1%
U.S. Filter* 7,500 180
----------
STEEL & STEEL WORKS -- 0.3%
Synalloy 45,400 1,039
----------
TECHNOLOGY -- 0.8%
Ultratech Stepper* 49,000 2,071
VSI Enterprises* 45,000 264
----------
2,335
----------
TELEPHONES & TELECOMMUNICATION -- 3.8%
Applied Digital Access* 7,300 93
Ascend Communications* 48,800 3,904
Aspect Telecommunications* 44,800 1,210
Cascade Communications 32,100 1,581
Coherent Communications Systems* 31,000 853
LCI International* 26,100 1,024
Mobile Telecommunication
Technology* 32,700 1,010
P-Com* 2,200 98
Pairgain Technologies* 26,200 904
Panamsat* 1,200 18
Premisys Communications* 7,100 573
VTEL* 17,500 435
----------
11,703
----------
- ----------------------------------------------------------
Shares/Face Market
Amount Value
Description (000) (000)
- ----------------------------------------------------------
TRANSPORTATION SERVICES -- 0.9%
Fritz* 21,200 $ 1,562
Wisconsin Central* 17,500 1,168
----------
2,730
----------
TRUCKING -- 0.0%
Trism* 13,400 97
----------
WHOLESALE -- 2.9%
America Online* 16,800 1,155
Applix* 5,100 112
Aspen Technology* 8,200 246
Barrett Resources* 1,700 38
Cellstar* 42,200 1,319
Communications Systems 41,900 618
Duracraft* 1,500 68
Global Village Communication* 54,800 754
Information Storage Devices* 1,800 41
Inso* 48,700 1,570
Ontrak Systems* 8,000 221
Physician Sales & Services* 24,600 1,181
Ride* 8,100 170
Supreme International* 700 13
US Office Products* 20,900 316
Vital Signs 58,000 1,204
----------
9,026
----------
Total Common Stocks
(Cost $207,811,000) 296,343
----------
REPURCHASE AGREEMENT -- 4.4%
Lehman Brothers
6.45%, dated 09/29/95,
matures 10/02/95, repurchase
price $13,564,000
(collateralized by FHLB
Note, par value $13,815,000,
6.275%, 09/12/05, market
value of collateral:
$13,837,000) $ 13,562 13,562
----------
Total Repurchase Agreement
(Cost $13,562,000) 13,562
----------
Total Investments--99.6%
(Cost $221,373,000) 309,905
----------
OTHER ASSETS AND LIABILITIES -- 0.4%
Other Assets and Liabilities,
Net 1,119
----------
NET ASSETS -- 100.0% $ 311,024
----------
----------
</TABLE>
30
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description (000)
- -----------------------------------------------------------
<S> <C> <C>
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization --
no par value) based on
15,608,259 outstanding shares
of beneficial interest $ 178,468
Portfolio shares of Class D
(unlimited authorization --
no par value) based on 39,974
outstanding shares of
beneficial interest 601
Accumulated Net Investment Loss (283)
Accumulated Net Realized Gain on
Investments 43,706
Net Unrealized Appreciation on
Investments 88,532
----------
Total Net Assets $ 311,024
----------
----------
Net Asset Value, Offering and
Redemption Price Per
Share -- Class A $ 19.88
----------
----------
Net Asset Value and Redemption
Price Per Share -- Class D $ 19.78
----------
----------
Maximum Offering Price Per
Share -- Class D ($19.78
divided by 95%) $ 20.82
----------
----------
</TABLE>
* Non-income producing security
<TABLE>
<S> <C>
FHLB Federal Home Loan Bank
ADR American Depository Receipt
Cl Class
</TABLE>
MID-CAP PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------
Market
Description Shares Value (000)
- --------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 92.8%
AEROSPACE & DEFENSE -- 0.1%
Loral 700 $ 40
-----------
AIR TRANSPORTATION -- 0.9%
Delta Air Lines 3,800 263
-----------
AIRCRAFT -- 1.0%
Northrop Grumman 4,400 268
-----------
APPAREL/TEXTILES -- 0.3%
Fruit of The Loom, Cl A 3,900 80
-----------
AUTOMOTIVE -- 1.9%
Dana 4,900 141
Eaton 4,800 254
Paccar 2,900 136
-----------
531
-----------
BANKS -- 8.8%
Bank of Boston 3,700 176
Comerica 9,500 346
National City 2,100 65
Republic New York 8,300 486
Southern National Bank 8,300 218
Southtrust 1,200 30
Star Banc 400 21
TCF Financial 3,700 216
US Bancorp Oregon 13,500 381
Washington Mutual 19,800 526
-----------
2,465
-----------
BEAUTY PRODUCTS -- 0.2%
Ecolab 1,500 41
-----------
CHEMICALS -- 4.1%
Arco Chemical 6,800 332
Eastman Chemical 5,800 370
FMC* 700 53
Georgia Gulf 2,400 83
Union Carbide 5,300 211
Wellman 3,500 86
-----------
1,135
-----------
COMMUNICATIONS EQUIPMENT -- 2.2%
DSC Communications* 2,400 142
Harris 8,700 478
-----------
620
-----------
</TABLE>
31
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
MID-CAP PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
COMPUTERS & SERVICES -- 3.1%
EMC* 12,700 $ 230
Gateway 2000* 1,700 52
Seagate Technology* 5,900 249
Tandy 5,500 334
----------
865
----------
CONCRETE & MINERAL PRODUCTS -- 1.0%
USG* 10,100 283
----------
CONSUMER PRODUCTS -- 0.1%
Callaway Golf 1,500 23
----------
CONTAINERS & PACKAGING -- 1.1%
Ball 2,000 59
Owens-Illinois* 20,500 259
----------
318
----------
DRUGS -- 0.8%
Mylan Laboratories 11,400 228
----------
ELECTRICAL SERVICES -- 6.1%
AES* 3,300 63
Boston Edison 2,800 77
Centerior Energy 8,800 96
MidAmerican Energy 8,300 128
Niagara Mohawk Power 32,100 421
Northeast Utilities 4,800 117
PP&L Resources 19,100 447
Rochester Gas & Electric 12,500 295
Washington Water Power 3,500 56
----------
1,700
----------
ENERGY & POWER -- 1.8%
California Energy* 25,200 517
----------
FINANCIAL SERVICES -- 2.7%
Advanta, Cl A 6,000 269
Bear Stearns 9,100 196
First USA 3,300 179
SLMA 1,500 81
Sunamerica 600 38
----------
763
----------
FOOD, BEVERAGE & TOBACCO -- 3.1%
IBP 6,200 331
Lancaster Colony 5,400 184
Universal Foods 10,400 362
----------
877
----------
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
GAS/NATURAL GAS -- 1.1%
National Fuel Gas 1,700 $ 49
Pacific Enterprises 10,100 254
----------
303
----------
HOUSEHOLD PRODUCTS -- 0.3%
Clorox 800 57
National Service Industries 1,400 41
----------
98
----------
INSURANCE -- 6.1%
Aflac 2,100 87
Alexander & Alexander Services 2,100 51
AON 1,500 61
Equifax 5,800 243
MGIC Investment 8,100 464
Saint Paul 9,000 525
USF&G 13,600 264
----------
1,695
----------
LEASING & RENTING -- 1.0%
Comdisco 9,000 268
----------
MACHINERY -- 5.7%
Brunswick 24,100 489
Cummins Engine 10,100 389
Novellus Systems* 1,600 112
Parker-Hannifin 4,300 163
Timken 3,100 132
Trinova 3,300 111
Varity* 4,500 200
----------
1,596
----------
MEASURING DEVICES -- 2.1%
Johnson Controls 6,500 411
Millipore 5,100 191
----------
602
----------
MEDICAL PRODUCTS & SERVICES -- 1.5%
Beverly Enterprises* 5,300 73
Manor Care 2,700 92
Medtronic 4,800 258
----------
423
----------
MISCELLANEOUS BUSINESS SERVICES -- 3.3%
Adobe Systems 1,300 67
Autodesk 7,400 324
CUC International* 2,900 101
Manpower 1,800 52
</TABLE>
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
Oracle* 6,000 $ 230
Sterling Software* 3,400 155
----------
929
----------
PAPER & PAPER PRODUCTS -- 2.9%
Boise Cascade 6,400 258
Champion International 3,600 194
Federal Paper Board 600 23
Willamette Industries 5,100 341
----------
816
----------
PETROLEUM & FUEL PRODUCTS -- 1.6%
Equitable Resources 6,800 200
Louisiana Land & Exploration 500 18
Nabors Industries* 9,100 86
Union Texas Petroleum Holdings 7,900 144
----------
448
----------
PETROLEUM REFINING -- 1.7%
Lyondell Petrochemical 5,200 135
Valero Energy 14,700 352
----------
487
----------
PRINTING & PUBLISHING -- 1.8%
American Greetings 3,600 110
Lafarge 11,200 205
Marvel Entertainment Group* 1,600 25
Media General, Cl A 4,300 154
----------
494
----------
REPAIR SERVICES -- 1.7%
Ryder Systems 18,600 472
----------
RETAIL -- 6.4%
Best Buy* 5,900 155
Circuit City Stores 7,600 240
Dollar General Stores 4,500 132
Federated Department Stores* 10,000 284
Marriott International 1,200 45
Safeway* 6,300 263
Staples* 15,300 432
Wendy's International 10,800 228
----------
1,779
----------
RUBBER & PLASTIC -- 0.9%
Premark International 4,700 239
----------
- -----------------------------------------------------------
Shares/Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
SEMI-CONDUCTORS/INSTRUMENTS -- 2.9%
Advanced Micro Devices* 11,100 $ 324
Analog Devices* 6,700 232
Cypress Semiconductor* 3,300 127
Integrated Device Technology* 5,600 140
----------
823
----------
STEEL & STEEL WORKS -- 2.6%
Allegheny Ludlum 11,600 236
Asarco 9,400 297
Phelps Dodge 2,800 175
Reynolds Metals 400 23
----------
731
----------
TELEPHONES & TELECOMMUNICATION -- 3.3%
Lin Television* 7,600 236
Telephone & Data Systems 3,900 164
Worldcom* 16,300 523
----------
923
----------
TRANSPORTATION SERVICES -- 1.4%
Gatx 7,400 383
----------
WHOLESALE -- 5.2%
Arrow Electronics* 6,400 348
Avnet 3,900 201
Cardinal Health 2,600 144
Cordis* 3,400 288
Fleming 12,600 302
Supervalu 3,900 115
Terra Industries 4,000 57
----------
1,455
----------
Total Common Stocks
(Cost $23,628,000) 25,981
----------
REPURCHASE AGREEMENT -- 5.7%
J P Morgan
6.40%, dated 09/29/95, matures
10/02/95, repurchase price
$1,616,000 (collateralized by
FHLMC obligation, par value
$3,640,000, 6.429%, 10/01/20,
market value of collateral:
$1,647,000) $ 1,615 1,615
----------
Total Repurchase Agreement
(Cost $1,615,000) 1,615
----------
Total Investments -- 98.5%
(Cost $25,243,000) 27,596
----------
</TABLE>
33
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
MID-CAP PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description (000)
- -----------------------------------------------------------
<S> <C> <C>
OTHER ASSETS AND LIABILITIES -- 1.5%
Other Assets and Liabilities, Net $ 410
----------
NET ASSETS -- 100.0% $ 28,006
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 2,140,286
outstanding shares of
beneficial interest $ 26,501
Portfolio shares of Class D
(unlimited authorization -- no
par value) based on 8,336
shares of beneficial interest 91
Undistributed Net Investment
Income 18
Accumulated Net Realized Loss on
Investments ( 957)
Net Unrealized Appreciation on
Investments 2,353
----------
Total Net Assets $ 28,006
----------
----------
Net Asset Value, Offering and
Redemption Price Per Share --
Class A $ 13.04
----------
----------
Net Asset Value and Redemption
Price Per Share -- Class D $ 12.96
----------
----------
Maximum Offering Price Per Share
-- Class D ($12.96 divided
by 95%) $ 13.64
----------
----------
</TABLE>
* Non-income producing security
<TABLE>
<S> <C>
Cl Class
SLMA Student Loan Marketing Association
FHLMC Federal Home Loan Mortgage Corporation
</TABLE>
CAPITAL APPRECIATION
PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 93.5%
AIRCRAFT -- 2.7%
Allied Signal 98,400 $ 4,342
Textron 18,000 1,229
United Technologies 33,000 2,916
----------
8,487
----------
AUTOMOTIVE -- 1.3%
General Motors 30,000 1,406
General Motors, Cl E 60,700 2,762
----------
4,168
----------
BANKS -- 4.6%
Bank of Boston 18,300 872
BankAmerica 24,100 1,443
Chemical Banking 73,400 4,468
Cullen Frost Bankers 7,100 330
Integra Financial 25,900 1,505
Mellon Bank 102,000 4,552
Midlantic 23,500 1,275
----------
14,445
----------
BROADCASTING, NEWSPAPERS & ADVERTISING -- 5.5%
Capital Cities/ABC 35,100 4,129
Liberty Media Group, Cl A* 5,850 156
Sphere Drake Holdings 232,700 3,491
Tele-Communications, Cl A* 303,400 5,309
Viacom, Cl B* 80,500 4,005
----------
17,090
----------
BUILDING & CONSTRUCTION -- 1.0%
Foster Wheeler 53,000 1,875
Halliburton 27,900 1,165
----------
3,040
----------
CHEMICALS -- 2.4%
Air Products & Chemicals 24,800 1,293
Dow Chemical 4,900 365
E I du Pont de Nemours 84,900 5,837
----------
7,495
----------
COMMUNICATIONS EQUIPMENT -- 5.0%
ITT 30,700 3,807
Motorola 83,700 6,392
Scientific Atlanta 311,200 5,252
----------
15,451
----------
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
COMPUTERS & SERVICES -- 1.5%
Autotote, Cl A* 47,100 $ 206
Digital Equipment* 1,900 87
International Business Machines 46,300 4,369
----------
4,662
----------
DRUGS -- 7.6%
Abbott Laboratories 87,600 3,734
American Home Products 10,300 874
Amgen* 10,100 504
Bristol Myers Squibb 30,100 2,194
Bush Boake Allen* 1,900 54
Johnson & Johnson 51,700 3,832
Merck 76,400 4,277
Pfizer 57,500 3,069
Pharmacia Aktiebolag ADR* 15,100 452
Smithkline Beecham ADR 95,500 4,832
----------
23,822
----------
ELECTRICAL SERVICES -- 0.1%
Shandong Huaneng Power ADR* 16,100 143
----------
ELECTRICAL TECHNOLOGY -- 0.6%
Duracell International 42,400 1,903
----------
ENTERTAINMENT -- 1.0%
Hasbro 23,700 738
Walt Disney 39,500 2,266
----------
3,004
----------
ENVIRONMENTAL SERVICES -- 3.1%
Browning Ferris Industries 87,000 2,643
Molten Metal Technology* 118,000 3,820
WMX Technologies 114,900 3,275
----------
9,738
----------
FINANCIAL SERVICES -- 3.3%
Dean Witter Discover 30,500 1,716
FHLMC 51,700 3,574
Travelers 93,766 4,981
----------
10,271
----------
FOOD, BEVERAGE & TOBACCO -- 6.5%
Coca-Cola 49,500 3,416
Cott 97,500 926
CPC International 7,200 475
Kellogg 19,500 1,411
Pepsico 33,600 1,714
Philip Morris 78,300 6,539
RJR Nabisco Holdings 46,680 1,511
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
Sara Lee 103,600 $ 3,082
UST 37,500 1,073
----------
20,147
----------
GAS/NATURAL GAS -- 0.1%
Sonat 9,500 304
----------
HOUSEHOLD PRODUCTS -- 2.3%
Gillette 32,300 1,538
Procter & Gamble 57,500 4,428
Sunbeam 91,500 1,361
----------
7,327
----------
INSURANCE -- 5.3%
American General 48,300 1,805
American International Group 47,000 3,995
Chubb 25,700 2,467
General Re 17,500 2,643
Penncorp Financial Group 16,800 401
United Healthcare 20,000 978
Washington National 164,300 4,086
----------
16,375
----------
LUMBER & WOOD PRODUCTS -- 0.7%
Georgia-Pacific 24,000 2,100
----------
MACHINERY -- 6.7%
American Standard* 30,000 885
Emerson Electric 55,600 3,975
Fisher Scientific International 26,400 855
General Electric 109,800 7,000
General Signal 118,800 3,475
Tyco International 73,300 4,618
----------
20,808
----------
MARINE TRANSPORTATION -- 1.4%
Carnival, Cl A 183,700 4,409
----------
MEASURING DEVICES -- 0.7%
Purus* 35,000 18
Wheelabrator Technologies 146,600 2,180
----------
2,198
----------
MEDICAL PRODUCTS & SERVICES -- 2.7%
Columbia HCA Healthcare 136,320 6,628
Tenet Healthcare* 99,200 1,724
----------
8,352
----------
MISCELLANEOUS BUSINESS SERVICES -- 2.8%
Automatic Data Processing 26,900 1,833
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
Microsoft* 35,800 $ 3,239
Novell* 49,800 909
Oracle* 69,800 2,679
----------
8,660
----------
PAPER & PAPER PRODUCTS -- 0.6%
International Paper 12,200 512
Willamette Industries 19,900 1,329
----------
1,841
----------
PETROLEUM & FUEL PRODUCTS -- 0.7%
Schlumberger 20,000 1,305
Union Texas Petroleum Holdings 54,500 995
----------
2,300
----------
PETROLEUM REFINING -- 5.1%
Amoco 68,400 4,386
Atlantic Richfield 16,800 1,804
Chevron 34,300 1,668
Mobil 32,200 3,208
Texaco 45,000 2,908
Unocal 62,900 1,793
----------
15,767
----------
PHOTOGRAPHIC EQUIPMENT & SUPPLIES -- 2.6%
Eastman Kodak 73,400 4,349
Xerox 28,500 3,830
----------
8,179
----------
PRINTING & PUBLISHING -- 0.8%
American Greetings 85,500 2,608
----------
RAILROADS -- 0.7%
Burlington Northern* 5,100 370
Union Pacific 29,300 1,941
----------
2,311
----------
RETAIL -- 8.6%
Albertson's 38,000 1,297
American Stores 45,700 1,297
Federated Department Stores* 195,300 5,542
Home Depot 175,200 6,983
Limited 24,200 460
McDonald's 121,900 4,663
Office Depot* 66,600 2,006
Wal-Mart Stores 154,100 3,833
Wendy's International 35,000 739
----------
26,820
----------
- -----------------------------------------------------------
Shares/Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
RUBBER & PLASTIC -- 0.1%
Goodyear Tire & Rubber 5,400 $ 213
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 2.9%
AMP 125,200 4,820
Intel 69,000 4,149
----------
8,969
----------
TELEPHONES & TELECOMMUNICATION -- 1.8%
AT&T 85,278 5,607
Worldcom* 5,000 161
----------
5,768
----------
WHOLESALE -- 0.7%
Sysco 79,800 2,175
----------
Total Common Stocks
(Cost $259,536,000) 291,350
----------
CONVERTIBLE PREFERRED STOCKS -- 2.1%
INSURANCE -- 0.4%
Merrill Lynch
Convertible to .8333 shares
common stock 20,000 1,095
----------
PAPER & PAPER PRODUCTS -- 0.9%
International Paper
Convertible to .4630 shares
common stock 60,000 2,835
----------
PETROLEUM REFINING -- 0.5%
Unocal
Convertible to 1.626 shares
common stock (A) 30,000 1,586
----------
PRINTING & PUBLISHING -- 0.3%
Time Warner
Convertible to 1 share of
Hasbro Inc 30,000 975
----------
Total Convertible Preferred Stocks
(Cost $6,388,000) 6,491
----------
CONVERTIBLE BONDS -- 0.3%
National Semiconductor
Convertible to 23.375 shares
common stock
6.500%, 10/01/02 (A) $ 1,000 1,000
----------
Total Convertible Bonds
(Cost $1,000,000) 1,000
----------
</TABLE>
36
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Shares/Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 4.3%
Lehman Brothers
6.45%, dated 09/29/95, matures
10/02/95, repurchase price
$13,389,000 (collateralized by
FHLMC obligations, par value
$13,630,000, 6.82%, 09/12/05,
market value of collateral:
$13,653,000) $ 13,382 $ 13,382
----------
Total Repurchase Agreement (Cost
$13,382,000) 13,382
----------
Total Investments -- 100.2%
(Cost $280,306,000) 312,223
----------
OTHER ASSETS AND LIABILITIES -- (0.2%)
Other Assets and Liabilities, Net (530)
----------
NET ASSETS -- 100.0% $ 311,693
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization --
no par value) based on
18,614,401 outstanding shares
of beneficial interest $ 253,193
Portfolio shares of Class D
(unlimited authorization --
no par value) based on 52,529
outstanding shares of
beneficial interest 858
Undistributed Net Investment
Income 294
Accumulated Net Realized Gain on
Investments 25,431
Net Unrealized Appreciation on
Investments 31,917
----------
Total Net Assets $ 311,693
----------
----------
Net Asset Value, Offering and
Redemption price Per
Share -- Class A $ 16.70
----------
----------
Net Asset Value and Redemption
Price Per Share -- Class D $ 16.69
----------
----------
Maximum Offering Price Per
Share -- Class D (16.69 divided
by 95%) $ 17.57
----------
----------
</TABLE>
*Non-Income Producing Security
(A) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold only in transaction exempt from registration,
normally to qualified institutional buyers.
<TABLE>
<S> <C>
FHLMC Federal Home Loan Mortgage Corporation
ADR American Depository Receipt
Cl Class
</TABLE>
EQUITY INCOME PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
COMMON STOCKS -- 98.4%
BANKS -- 11.5%
Banc One 101,700 $ 3,712
BankAmerica 56,700 3,395
Fleet Financial Group 90,600 3,420
Great Western Financial 83,400 1,981
H F Ahmanson 47,800 1,213
J P Morgan 93,700 7,249
National City 82,200 2,538
US Bancorp Oregon 94,500 2,670
Wachovia 65,200 2,812
----------
28,990
----------
CHEMICALS -- 8.1%
B F Goodrich 116,600 7,681
Dow Chemical 30,500 2,272
E I du Pont de Nemours 23,600 1,623
Eli Lilly 23,700 2,130
Monsanto 28,250 2,846
Witco 116,100 4,078
----------
20,630
----------
CONCRETE & MINERAL PRODUCTS -- 1.7%
Minnesota Mining & Manufacturing 75,900 4,288
----------
DRUGS -- 7.9%
American Home Products 71,160 6,040
Baxter International 38,800 1,596
Bristol Myers Squibb 103,300 7,527
Merck 63,800 3,573
Schering Plough 23,400 1,205
----------
19,941
----------
ELECTRICAL SERVICES -- 10.2%
Baltimore Gas & Electric 122,850 3,179
Dominion Resources of Virginia 65,470 2,463
Florida Progress 72,300 2,341
PacifiCorp 150,400 2,858
Public Service Enterprise Group 136,100 4,049
Teco Energy 118,100 2,761
Texas Utilities 134,900 4,703
Wisconsin Energy 125,400 3,543
----------
25,897
----------
FINANCIAL SERVICES -- 1.9%
Beneficial 38,600 2,017
FNMA 26,300 2,722
----------
4,739
----------
FOOD, BEVERAGE & TOBACCO -- 9.2%
American Brands 120,600 5,095
Anheuser Busch 37,700 2,352
General Mills 39,700 2,213
H J Heinz 53,200 2,434
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
EQUITY INCOME PORTFOLIO
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Market
Value
Description Shares (000)
- ----------------------------------------------------------
<S> <C> <C>
Philip Morris 93,000 $ 7,766
UST 117,100 3,352
----------
23,212
----------
GAS/NATURAL GAS -- 2.3%
Consolidated Natural Gas 114,900 4,639
Nicor 43,700 1,191
----------
5,830
----------
HOUSEHOLD PRODUCTS -- 2.0%
Clorox 36,300 2,591
National Service Industries 86,700 2,536
----------
5,127
----------
INSURANCE -- 8.9%
American General 154,400 5,771
Jefferson Pilot 30,000 1,928
Lincoln National 74,334 3,503
Marsh & McLennan 43,100 3,787
Safeco 38,800 2,546
Saint Paul 87,100 5,084
----------
22,619
----------
MACHINERY -- 1.3%
Dresser Industries 51,300 1,225
General Electric 31,600 2,014
----------
3,239
----------
PAPER & PAPER PRODUCTS -- 2.0%
Kimberly Clark 21,400 1,436
Weyerhaeuser 77,000 3,514
----------
4,950
----------
PETROLEUM REFINING -- 9.4%
Amoco 104,200 6,682
Atlantic Richfield 38,100 4,091
Chevron 93,100 4,527
Exxon 52,700 3,808
Texaco 72,700 4,698
----------
23,806
----------
PRINTING & PUBLISHING -- 0.7%
McGraw Hill 21,000 1,717
----------
PROFESSIONAL SERVICES -- 2.5%
Dun & Bradstreet 108,300 6,268
----------
RAILROADS -- 0.5%
Union Pacific 20,300 1,345
----------
RETAIL -- 4.7%
J C Penney 142,100 7,053
Kmart 104,300 1,512
- -----------------------------------------------------------
Shares/Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
May Department Stores 58,500 $ 2,559
Melville 20,700 714
----------
11,838
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 0.9%
Thomas & Betts 35,300 2,281
----------
SPECIALTY MACHINERY -- 0.4%
Cooper Industries 29,700 1,047
----------
TELEPHONES & TELECOMMUNICATION -- 12.3%
Ameritech 49,300 2,570
Bell Atlantic 92,700 5,689
BellSouth 55,100 4,029
GTE 209,100 8,207
NYNEX 100,000 4,775
US West 125,566 5,917
----------
31,187
----------
Total Common Stocks
(Cost $210,067,000) 248,951
----------
REPURCHASE AGREEMENT -- 1.8%
J P Morgan
6.40%, dated 09/29/95, matures
10/02/95, repurchase price
$4,498,000 (collateralized by
FHLB note, par value
$1,000,000, 4.51%, 03/01/96,
and FHLMC ARM, par value
$7,927,000, 6.429%, 10/01/20,
market value of collateral:
$4,585,000) $ 4,495 4,495
----------
Total Repurchase Agreement
(Cost $4,495,000) 4,495
----------
Total Investments -- 100.2%
(Cost $214,562,000) 253,446
----------
OTHER ASSETS AND LIABILITIES -- (0.2%)
Other Assets and Liabilities, Net (534)
----------
NET ASSETS -- 100.0% $ 252,912
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization --
no par value) based on
15,594,632 outstanding shares
of beneficial interest $ 191,310
Portfolio shares of Class D
(unlimited authorization --
no par value) based on
143,543 outstanding shares of
beneficial interest 2,094
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
Undistributed Net Investment
Income $ 611
Accumulated Net Realized Gain on
Investments 20,013
Net Unrealized Appreciation on
Investments 38,884
----------
Total Net Assets $ 252,912
----------
----------
Net Asset Value, Offering and
Redemption Price Per
Share -- Class A $ 16.07
----------
----------
Net Asset Value and Redemption
Price Per Share -- Class D $ 16.05
----------
----------
Maximun Offering Price Per
Share -- Class D ($16.05 divided
by 95%) $ 16.89
----------
----------
</TABLE>
<TABLE>
<S> <C>
ARM Adjustable Rate Mortgage
FNMA Federal National Mortgage Association
FHLMC Federal Home Loan Mortgage Corporation
FHLB Federal Home Loan Bank
</TABLE>
BALANCED PORTFOLIO
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 58.8%
AUTOMOTIVE -- 0.5%
General Motors 7,000 328
Goodyear Tire & Rubber 700 28
----------
356
----------
BANKS -- 3.1%
Bank of Boston 4,500 214
BankAmerica 3,500 210
Chemical Banking 4,800 292
Cullen Frost Bankers 2,500 116
Integra Financial 4,000 233
Mellon Bank 14,500 647
Midlantic 6,100 331
Shawmut National 4,200 141
----------
2,184
----------
BUILDING -- 0.6%
American Standard* 5,700 168
Foster Wheeler 7,000 248
----------
416
----------
CHEMICALS -- 1.8%
Air Products & Chemicals 3,600 188
Dow Chemical 2,700 201
E I du Pont de Nemours 12,300 845
----------
1,234
----------
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
CONCRETE & MINERAL PRODUCTS -- 0.3%
Minnesota Mining & Manufacturing 3,400 $ 192
----------
DRUGS -- 4.9%
Abbott Laboratories 7,500 320
American Home Products 2,000 170
Amgen* 1,400 70
Bristol Myers Squibb 4,400 321
Johnson & Johnson 6,400 474
Merck 12,100 678
Pfizer 6,800 363
Pharmacia ADR* 2,100 63
Schering Plough 5,600 288
Smithkline Beecham 13,700 693
----------
3,440
----------
ELECTRICAL -- 2.9%
Emerson Electric 8,000 572
General Electric 15,800 1,007
General Signal 15,200 445
----------
2,024
----------
ENERGY -- 3.6%
Amoco 7,000 449
Atlantic Richfield 2,900 311
Chevron 4,600 224
Halliburton 4,000 167
Mobil 4,500 448
Phillips Petroleum 2,800 91
Schlumberger 2,800 183
Sonat 1,400 45
Texaco 6,400 414
Unocal 8,400 239
----------
2,571
----------
FINANCIAL SERVICES -- 2.2%
Dean Witter Discover 6,700 377
FHLMC 6,700 463
Travelers 13,700 728
----------
1,568
----------
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD -- 7.3%
Bush Boake Allen* 8,700 246
Coca-Cola 7,200 497
Cott 11,200 106
CPC International 1,000 66
Duracell International 6,100 274
Gillette 4,700 224
Kellogg 5,200 376
</TABLE>
39
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
BALANCED PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
Pepsico 4,700 $ 240
Philip Morris 11,000 918
Procter & Gamble 8,300 639
RJR Nabisco Holdings 6,760 219
Sara Lee 14,900 443
Sunbeam 14,400 214
Sysco 11,000 300
UST 13,100 375
----------
5,137
----------
INSURANCE -- 2.6%
American General 7,800 292
American International Group 6,650 565
Chubb 5,900 566
General Re 2,500 378
----------
1,801
----------
LEISURE -- 2.1%
Carnival, Cl A 26,500 636
Marriott International 5,600 209
Mattel 10,000 294
Walt Disney 5,700 327
----------
1,466
----------
LUMBER & WOOD PRODUCTS -- 0.4%
Georgia-Pacific 3,500 306
----------
MEDIA -- 3.2%
American Greetings 8,900 271
Capital Cities/ABC 4,800 565
Liberty Media Group, Cl A* 875 23
Tele-Communications, Cl A* 47,100 825
Viacom, Cl B* 11,465 570
----------
2,254
----------
MEDICAL PRODUCTS & SERVICES -- 2.2%
Columbia HCA Healthcare 17,220 837
Health Care & Retirement* 8,400 270
Healthsouth Rehabilitation* 7,000 179
Tenet Healthcare* 14,400 250
----------
1,536
----------
MISCELLANEOUS -- 4.9%
Allied Signal 14,100 622
Boeing 1,700 116
Eastman Kodak 11,300 670
ITT 4,600 570
Textron 2,800 191
Tyco International 11,200 706
United Technologies 6,500 574
----------
3,449
----------
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
PAPER & PAPER PRODUCTS -- 0.4%
International Paper 2,200 $ 92
Willamette Industries 2,800 187
----------
279
----------
RAILROADS -- 0.5%
Burlington Northern Santa Fe 700 51
Union Pacific 4,200 278
----------
329
----------
RETAIL -- 4.5%
Albertson's 5,500 188
American Stores 6,700 190
Federated Department Stores* 26,100 741
Home Depot 25,133 1,001
Limited 1,900 36
Office Depot* 12,000 362
Wal-Mart 22,400 557
Wendy's International 5,000 106
----------
3,181
----------
SERVICE -- 2.1%
Browning Ferris 12,500 380
Molten Metal Technology* 14,500 469
WMX Technologies 21,100 601
----------
1,450
----------
TECHNOLOGY -- 7.5%
AMP 14,700 566
Automatic Data Processing 1,200 82
Digital Equipment* 300 14
General Motors, Cl E 8,500 387
IBM 7,000 661
Intel 8,400 505
Microsoft* 6,400 579
Motorola 11,884 909
Novell* 7,400 135
Oracle* 8,500 326
Scientific Atlanta 34,100 575
Xerox 4,200 564
----------
5,303
----------
TELEPHONES & TELECOMMUNICATION -- 1.3%
AT&T 12,400 816
Worldcom* 3,500 112
----------
928
----------
Total Common Stocks
(Cost $37,193,000) 41,404
----------
</TABLE>
40
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Shares/Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS -- 0.1%
ENTERTAINMENT -- 0.1%
Time Warner
Convertible to 1 share of
Hasbro, Inc. 3,000 $ 98
----------
Total Preferred Stocks
(Cost $93,000) 98
----------
U. S. TREASURY OBLIGATIONS -- 17.6%
U.S. Treasury Notes
7.250%, 11/15/96 $ 1,500 1,523
8.500%, 07/15/97 250 261
8.750%, 10/15/97 590 622
9.000%, 05/15/98 2,210 2,374
8.250%, 07/15/98 1,200 1,271
7.000%, 04/15/99 1,250 1,290
6.750%, 05/31/99 1,555 1,594
6.875%, 03/31/00 690 712
7.750%, 02/15/01 1,545 1,664
7.875%, 08/15/01 1,020 1,109
----------
Total U. S. Treasury Obligations
(Cost $12,286,000) 12,420
----------
GOVERNMENT MORTGAGE-BACKED
OBLIGATIONS -- 9.7%
FHLMC
6.000%, 12/01/98 527 523
8.000%, 06/01/02 671 687
8.000%, 12/01/02 931 950
FNMA
5.500%, 12/25/05 500 490
FNMA REMIC
7.500%, 10/25/05 2,000 2,027
GNMA
9.000%, 11/15/17 2,041 2,158
----------
Total Government Mortgage-
Backed Obligations
(Cost $6,775,000) 6,835
----------
CORPORATE OBLIGATIONS -- 8.1%
AMR
9.500%, 07/15/98 275 289
Beneficial MTN
8.375%, 12/29/99 870 925
General Motors Acceptance
7.125%, 05/15/03 1,200 1,211
International Lease MTN
7.300%, 09/21/98 675 691
KeyCorp
8.100%, 12/20/96 700 717
Salomon Brothers MTN
5.650%, 02/10/98 530 513
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
Sears Roebuck
9.250%, 08/01/97 $ 400 $ 421
Smith Barney
6.875%, 06/15/05 920 909
----------
Total Corporate Obligations
(Cost $5,635,000) 5,676
----------
CONVERTIBLE BONDS -- 0.6%
National Semiconductor
Convertible to 23.375 shares
of common stock
6.500%, 10/01/02 (A) 400 400
----------
Total Convertible Bonds
(Cost $400,000) 400
----------
ASSET BACKED SECURITIES -- 0.4%
Merrill Lynch
5.125%, 07/15/98 29 29
Navistar Financial
5.930%, 10/15/99 282 281
----------
Total Asset Backed Securities
(Cost $311,000) 310
----------
REPURCHASE AGREEMENT -- 4.4%
Lehman Brothers
6.45%, dated 09/29/95, matures
10/02/95, repurchase price
$3,130,000 (collateralized by
FHLB Note, 6.275%, 09/12/05,
market value of collateral:
$3,195,000) 3,128 3,128
----------
Total Repurchase Agreement
(Cost $3,128,000) 3,128
----------
Total Investments -- 99.7%
(Cost $65,821,000) 70,271
----------
OTHER ASSETS AND LIABILITIES -- 0.3%
Other Assets and Liabilities, Net 193
----------
NET ASSETS -- 100.0% $ 70,464
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization --
no par value) based on
5,523,981 outstanding shares
of beneficial interest $ 64,565
Undistributed Net Investment
Income 176
Accumulated Net Realized Gain on
Investments 1,273
Net Unrealized Appreciation on
Investments 4,450
----------
Total Net Assets $ 70,464
----------
----------
</TABLE>
41
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
BALANCED PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
Net Asset Value, Offering and
Redemption Price Per
Share -- Class A $ 12.76
----------
----------
</TABLE>
* Non-income producing security
(A) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold only in transactions exempt from registration,
normally to qualified institutional buyers.
<TABLE>
<S> <C>
ADR American Depository Receipt
Cl Class
FHLMC Federal Home Loan Mortgage Corporation
FHLB Federal Home Loan Bank
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
</TABLE>
CAPITAL GROWTH PORTFOLIO
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 85.2%
AEROSPACE & DEFENSE -- 1.7%
Gencorp 22,800 242
Litton Industries* 23,500 1,023
Loral 11,000 627
----------
1,892
----------
AIR TRANSPORTATION -- 0.2%
Atlantic Southeast Airlines 8,600 201
----------
AIRCRAFT -- 0.6%
OEA 11,000 360
Sundstrand 5,000 324
----------
684
----------
APPAREL/TEXTILES -- 0.8%
Cintas 11,500 506
Shaw Industries 29,300 432
----------
938
----------
AUTOMOTIVE -- 0.4%
Dana 9,400 271
Magna International 3,500 158
----------
429
----------
BANKS -- 8.9%
Comerica 19,000 691
Crestar Financial 17,300 967
First Bank System 33,200 1,598
First Security 28,000 879
Firstar 63,400 2,354
Keycorp 11,380 390
Marshall & Ilsley 15,000 377
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
Meridian Bancorp 9,000 $ 344
Midlantic 9,700 526
Regions Financial 19,500 792
Southtrust 23,900 600
UJB Financial 12,000 384
----------
9,902
----------
BROADCASTING, NEWSPAPERS &
ADVERTISING -- 1.0%
Chris-Craft* 11,000 478
Omnicom Group 5,000 326
United International Holdings* 17,000 315
----------
1,119
----------
BUILDING & CONSTRUCTION -- 0.9%
Foster Wheeler 29,800 1,054
----------
CHEMICALS -- 5.2%
A. Schulman 38,375 959
Dexter 14,700 375
Georgia Gulf 11,000 380
Lubrizol 26,600 868
Nalco Chemical 25,000 853
Olin 6,400 440
Praxair 23,000 615
Witco 36,900 1,296
----------
5,786
----------
COMMUNICATIONS EQUIPMENT -- 0.7%
ADC Telecommunications* 8,900 404
DSC Communications* 6,000 356
----------
760
----------
COMPUTERS & SERVICES -- 8.9%
Adobe Systems 24,800 1,283
Autodesk 11,300 494
Bay Networks* 14,000 747
Cabletron Systems* 9,500 626
Cadence Design Systems* 5,000 196
Diebold 10,000 464
EMC* 44,500 807
General Motors, Cl E 37,900 1,726
Informix* 23,400 761
Mentor Graphics* 22,000 451
Parametric Technology* 9,600 590
Quantum* 13,800 302
Seagate Technology* 16,500 695
Sequent Computer Systems* 6,000 119
Silicon Graphics* 11,800 406
Symantec* 9,000 270
----------
9,937
----------
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
CONCRETE & MINERAL PRODUCTS -- 0.3%
Ferro 11,600 $ 289
----------
DRUGS -- 1.8%
Forest Labs* 7,400 329
Genzyme-General Division* 6,000 348
IVAX 5,000 151
Mylan Laboratories 27,750 554
R P Scherer* 4,000 174
Teva Pharmaceutical ADR 12,000 434
----------
1,990
----------
ELECTRICAL SERVICES -- 3.7%
Illinova 42,000 1,139
Montana Power 36,900 853
Northeast Utilities 61,400 1,497
Pinnacle West Capital 25,000 656
----------
4,145
----------
ENTERTAINMENT -- 1.2%
Circus Circus Enterprises* 22,000 616
Mirage Resorts* 22,900 753
----------
1,369
----------
ENVIRONMENTAL SERVICES -- 0.3%
Laidlaw, Cl B 34,000 298
----------
FINANCIAL SERVICES -- 2.5%
A G Edwards 20,975 558
First Financial Management 11,000 1,074
Morgan Stanley 10,000 961
WFS Financial* 9,000 205
----------
2,798
----------
FOOD, BEVERAGE, TOBACCO &
HOUSEHOLD -- 1.2%
IBP 9,000 480
McCormick 17,000 406
Tyson Foods 17,000 457
----------
1,343
----------
GAS/NATURAL GAS -- 0.9%
National Fuel Gas 10,800 311
Questar 21,000 674
----------
985
----------
HOUSEHOLD PRODUCTS -- 0.6%
Dial 13,000 322
Sunbeam 25,100 373
----------
695
----------
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
INSURANCE -- 5.3%
AFLAC 17,100 $ 710
AON 37,500 1,531
Equifax 19,000 796
Kemper 10,000 483
Pacificare Health Systems* 6,500 442
Progressive 5,500 246
Reliastar Financial 4,500 183
TIG Holdings 11,000 296
Transatlantic Holdings 9,500 639
Value Health* 20,500 543
----------
5,869
----------
MACHINERY -- 3.9%
Cincinnati Milacron 9,000 284
Fisher Scientific 73,300 2,372
General Signal 9,000 263
Goulds Pumps 15,000 345
Kennametal 8,600 312
Stewart & Stevenson Services 10,000 323
Trinity Industries 13,000 403
----------
4,302
----------
MARINE TRANSPORTATION -- 0.8%
Carnival, Cl A 38,000 912
----------
MEASURING DEVICES -- 1.2%
Johnson Controls 12,100 765
Teradyne* 15,000 540
----------
1,305
----------
MEDICAL PRODUCTS & SERVICES -- 2.4%
Biogen* 10,000 600
C R Bard 6,000 183
Chiron* 4,000 362
Healthsouth Rehabilitation* 17,000 434
Stryker 13,500 629
Varian Associates 8,100 429
----------
2,637
----------
METALS & MININGS -- 0.9%
Potash of Saskatchewan 16,000 996
----------
MISCELLANEOUS BUSINESS SERVICES -- 2.9%
CUC International* 45,075 1,572
Kelly Services 8,000 214
Olsten 6,000 233
Reynolds & Reynolds, Cl A 22,200 763
Sensormatic Electronics 17,200 396
----------
3,178
----------
</TABLE>
43
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
CAPITAL GROWTH PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS CONSUMER SERVICES -- 0.7%
Service International 19,850 $ 777
----------
MISCELLANEOUS MANUFACTURING -- 0.3%
International Game Technology 23,300 312
----------
PAPER & PAPER PRODUCTS -- 0.5%
Willamette Industries 8,100 541
----------
PETROLEUM & FUEL PRODUCTS -- 3.2%
Anadarko Petroleum 22,100 1,047
Apache 37,800 992
BJ Services* 10,000 253
Mapco 14,300 736
Noble Affiliates 18,000 475
----------
3,503
----------
PETROLEUM REFINING -- 0.6%
Murphy Oil 9,500 380
Valero Energy 13,000 312
----------
692
----------
PRECIOUS METALS -- 0.3%
Barrick Gold 13,500 349
----------
PRINTING & PUBLISHING -- 1.9%
A H Belo 20,000 688
American Greetings 41,000 1,250
Houghton Miflin 4,900 228
----------
2,166
----------
RAILROADS -- 0.6%
Illinois Central 12,600 493
Southern Pacific Rail* 7,475 181
----------
674
----------
RETAIL -- 5.8%
Barnes & Noble* 19,000 727
Brinker International* 21,200 315
Federated Department Stores* 20,000 568
Fred Meyer* 25,000 613
Hannaford Brothers 14,000 376
Hollywood Entertainment* 22,400 480
Kohl's* 6,000 311
Micro Warehouse* 6,600 302
Office Depot* 49,500 1,491
Outback Steakhouse* 15,000 461
Staples* 7,000 198
Wendy's International 28,700 606
----------
6,448
----------
- -----------------------------------------------------------
Market
Value
Description Shares (000)
- -----------------------------------------------------------
RUBBER & PLASTIC -- 1.6%
M A Hanna 23,950 $ 632
Sonoco Products 40,350 1,119
----------
1,751
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 3.7%
American Power Conversion* 15,900 195
Analog Devices* 25,750 892
Atmel* 21,600 729
Linear Technology 15,600 647
LSI Logic* 20,800 1,201
Molex 11,094 402
----------
4,066
----------
SPECIALTY MACHINERY -- 0.5%
York International 13,200 556
----------
STEEL & STEEL WORKS -- 2.2%
Allegheny Ludlum 42,000 856
Alumax 3,000 101
Molten Metal Technology* 27,000 874
Nucor 12,900 577
----------
2,408
----------
TELEPHONES &
TELECOMMUNICATION -- 3.0%
Alltel 12,800 382
Frontier 18,000 479
Southern New England 8,800 311
Telephone & Data Systems 12,400 521
Worldcom* 50,500 1,623
----------
3,316
----------
WHOLESALE -- 1.3%
Avnet 7,600 392
Checkfree* 7,000 140
Cordis* 10,800 916
----------
1,448
----------
Total Common Stocks
(Cost $79,518,000) 94,820
----------
PREFERRED STOCKS -- 0.0%
FINANCIAL SERVICES -- 0.0%
Everen Capital* 320 7
----------
Total Preferred Stocks
(Cost $7,000) 7
----------
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 14.5%
Lehman
6.45%, dated 09/29/95, matures
10/02/95, repurchase price
$16,133,000 (collateralized by
FHLB Note, par value
$16,420,000, 6.275%, 09/12/05,
market value of collateral:
$16,447,000) $ 16,124 $ 16,124
----------
Total Repurchase Agreement
(Cost $16,124,000) 16,124
----------
Total Investments -99.7%
(Cost $95,649,000) 110,951
----------
OTHER ASSETS AND LIABILITIES -- 0.3%
Other Assets and Liabilities, Net 321
----------
NET ASSETS -- 100.0% $ 111,272
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares
(unlimited authorization -- no
par value) based on 9,209,824
outstanding shares of
beneficial interest $ 85,302
Undistributed Net Investment
Income 161
Accumulated Net Realized Gain on
Investments 10,507
Net Unrealized Appreciation on
Investments 15,302
----------
Total Net Assets $ 111,272
----------
----------
Net Asset Value, Offering and
Redemption Price Per Share $ 12.08
----------
----------
</TABLE>
* Non-income producing security
<TABLE>
<S> <C>
Cl Class
FHLB Federal Home Loan Bank
ADR American Depository Receipt
</TABLE>
CORE FIXED INCOME PORTFOLIO
<TABLE>
<S> <C> <C>
U. S. TREASURY OBLIGATIONS -- 29.8%
U.S. Treasury Bill
5.390%, 01/18/96 (B) $ 1,300 1,279
U.S. Treasury Bonds
12.000%, 08/15/13 15,940 23,512
6.250%, 08/15/23 43,030 40,935
U.S. Treasury Notes
7.500%, 01/31/97 8,100 8,274
5.625%, 08/31/97 10,000 9,961
7.875%, 01/15/98 2,000 2,084
5.625%, 01/31/98 7,000 6,961
7.500%, 10/31/99 15,280 16,088
7.500%, 02/15/05 11,930 12,993
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
U.S. Treasury STRIPS
05/15/17 (B) $ 14,149 $ 3,291
----------
Total U. S. Treasury Obligations
(Cost $120,064,000) 125,378
----------
CORPORATE OBLIGATIONS -- 24.6%
Associates of North America
10.750%, 11/01/95 2,000 2,007
Banque Paribas
6.875%, 03/01/09 7,100 6,798
Commonwealth Edison
6.400%, 10/15/05 5,000 4,700
Equitable
9.000%, 12/15/04 4,700 5,299
Ford Motor Credit
8.375%, 01/15/00 1,000 1,066
Ford Motor Credit MTN
(Quarterly Reset = 3 Month
LIBOR + 0.40%)
6.338%, 05/26/98 (C) 6,050 6,068
Joseph Seagram & Sons
9.650%, 08/15/18 7,000 8,565
Lehman Brothers Holdings
5.500%, 06/15/96 5,000 4,966
Loews
7.625%, 06/01/23 6,000 5,880
Long Island Lighting
8.625%, 04/15/04 1,750 1,875
9.625%, 07/01/24 2,460 2,485
News America Holdings
7.750%, 01/20/24 4,800 4,734
8.450%, 08/01/34 2,300 2,527
Niagara Mohawk Power
9.750%, 11/01/05 3,680 4,283
Paine Webber Group
7.625%, 02/15/14 8,000 7,810
RJR Nabisco
8.750%, 08/15/05 1,300 1,321
8.750%, 07/15/07 2,960 2,975
7.550%, 06/15/15 2,700 2,660
Tele-Communications
9.250%, 01/15/23 4,000 4,195
Time Warner
9.125%, 01/15/13 2,100 2,271
9.150%, 02/01/23 600 653
Time Warner Entertainment
8.375%, 03/15/23 2,180 2,226
8.375%, 07/15/33 3,000 3,049
United Airlines
11.210%, 05/01/14 6,300 7,867
Wal-Mart Stores
8.000%, 05/01/96 2,500 2,528
</TABLE>
45
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
CORE FIXED INCOME PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
Walt Disney
(Semi-annual coupon through
03/01/97; future coupons based
on revenues from a portfolio
of live action films)
2.000%, 03/01/00 (A) $ 4,200 $ 4,326
----------
Total Corporate Obligations
(Cost $96,865,000) 103,134
----------
GOVERNMENT MORTGAGE-BACKED OBLIGATIONS -- 15.3%
FHLMC
9.000%, 12/01/05 455 477
7.500%, 11/01/07 2,475 2,520
FHLMC CMO Ser 11-C
9.500%, 04/15/19 407 418
FHLMC REMIC
7.000%, 11/15/19 130 131
FHLMC REMIC Ser 1717-OA
(Monthly Reset = 2.166 x 10
year treasury rate)
7.432%, 04/15/24 (C) 8,000 5,841
FHLMC TBA
7.500%, 11/01/25 12,500 12,527
FNMA
8.500%, 09/01/13 383 397
FNMA REMIC IO
Ser G-23 (Monthly Reset =
-69.3846 X 1 Month LIBOR +
111,362.404 BP)
705.60%, 06/25/21 (C) (D) 20 326
GNMA
7.500%, 09/15/06 3,029 3,060
7.500%, 04/15/07 72 73
7.500%, 04/15/23 6,757 6,827
7.500%, 01/20/25 4,860 4,988
7.000%, 04/20/25 4,455 4,555
7.000%, 05/20/25 12,925 13,215
7.000%, 06/15/25 8,729 8,925
----------
Total Government Mortgage-Backed
Obligations
(Cost $62,674,000) 64,280
----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.2%
FHLB
5.100%, 07/08/96 5,000 4,979
Government Trust Certificates
Zero Coupon, 05/15/03 5,000 3,064
Resolution Funding
8.625%, 01/15/30 1,660 2,043
RFCO Strips
Zero Coupon, 01/15/17 2,539 588
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
Zero Coupon, 04/15/17 $ 1,913 $ 436
Zero Coupon, 10/15/19 5,730 1,104
Zero Coupon, 10/15/20 7,300 1,313
----------
Total U.S. Government Agency
Obligations
(Cost $12,920,000) 13,527
----------
ASSET BACKED SECURITIES -- 8.9%
Champion 95-2 A2
7.340%, 10/25/26 (A) 6,171 6,191
Fund America Investors REMIC ARM
Ser 1993-A
7.714%, 06/25/23 (C) 8,728 8,728
PSSF Pool 1995-1A REMIC
(Monthly Reset = 1 x 1 Month
LIBOR + 61 BP)
6.610%, 04/25/26 (C) 13,827 13,904
SASCO
6.600%, 10/25/24 (E) 8,000 7,580
Signet Credit Card CMO
9.000%, 06/15/97 958 960
SPNB Home Equity Loan
7.850%, 05/15/98 157 159
----------
Total Asset Backed Securities
(Cost $37,230,000) 37,522
----------
MORTGAGE-BACKED OBLIGATIONS -- 4.9%
RTC ARM
6.180%, 05/25/21 (C) 12,232 11,696
8.078%, 09/25/29 (C) 6,222 6,265
RTC ARM
(Monthly Reset = 1 x D11COF +
171 BP)
6.854%, 06/25/21 (C) 2,420 2,357
----------
Total Mortgage-Backed Obligations
(Cost $20,316,000) 20,318
----------
REPURCHASE AGREEMENT -- 15.5%
J P Morgan
6.40%, dated 09/29/95, matures
10/02/95, repurchase price
$65,222,000 (collateralized by
various FHLMC obligations,
total par value 67,767,000,
6.429%-9.00%,
10/01/20-09/01/25, and various
FNMA obligations, total par
value $154,258,000,
0.00%-7.00%,
05/25/00-12/25/22, market
value of collateral:
$66,491,000) 65,187 65,187
----------
</TABLE>
46
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
Total Repurchase Agreement
(Cost $65,187,000) $ 65,187
----------
Total Investments -102.2%
(Cost $415,256,000) 429,346
----------
OTHER ASSETS AND LIABILITIES -- (2.2%)
Other Assets and Liabilities, Net (9,178)
----------
NET ASSETS -- 100.0% $ 420,168
----------
----------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 40,134,798
outstanding shares of
beneficial interest $ 405,165
Portfolio shares of Class D
(unlimited authorization -- no
par value) based on 20,021
outstanding shares of
beneficial interest 198
Undistributed Net Investment
Income 2,162
Accumulated Net Realized Loss on
Investments (1,302)
Net Unrealized Depreciation on
Futures Contracts (145)
Net Realized Appreciation on
Investments 14,090
----------
Total Net Assets $ 420,168
----------
----------
Net Asset Value, Offering and
Redemption Price Per
Share -- Class A $ 10.46
----------
----------
Net Asset Value and Redemption
Price Per Share -- Class D $ 10.44
----------
----------
Maximum Offering Price Per
Share -- Class D ($10.44 divided
by 95.5%) $ 10.93
----------
----------
</TABLE>
(A) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold only in transaction exempt from registration,
normally to qualified from registration, normally to qualified institutional
buyers.
(B) Securities have been pledged as collateral on open futures contracts.
(C) The rate reflected on the Statement of Net Assets is the rate in effect on
September 30, 1995.
(D) Inverse Floater
(E) Structured Note
<TABLE>
<S> <C>
ARM Adjustable Rate Mortgage
CMO Collateralized Mortgage Obligation
FHLB Federal Home Loan Bank
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
GNMA Government National Mortgage Association
IO Interest Only
LIBOR London Inter Bank Offering Rate
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
RFCO Resolution Trust Funding Corporation
RTC Resolution Trust Corporation
SER Series Separately Traded Registered Interest and Principal
STRIPS Securities
TBA To Be Announced
DIICOF District 11 Cost of Funds
BP Basis Points
</TABLE>
BOND PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 98.0%
U.S. Treasury Bonds
7.500%, 11/15/16 $ 22,600 $ 24,800
7.125%, 02/15/23 2,300 2,438
U.S. Treasury Notes
4.250%, 11/30/95 3,750 3,742
6.500%, 09/30/96 4,125 4,156
6.875%, 10/31/96 4,125 4,172
7.250%, 11/30/96 4,100 4,165
6.875%, 02/28/97 5,600 5,680
6.500%, 04/30/97 4,100 4,141
---------
Total U.S. Treasury Obligations
(Cost $49,986,000) 53,294
---------
REPURCHASE AGREEMENT -- 0.4%
J P Morgan
6.35%, dated 09/29/95, matures
10/02/95, repurchase price
$223,000 (collateralized by
FFCB obligation, par value
$230,000, 5.65%, 11/20/95,
market value of collateral:
$228,000) 223 223
---------
Total Repurchase Agreement
(Cost $223,000) 223
---------
Total Investments -- 98.4%
(Cost $50,209,000) 53,517
---------
OTHER ASSETS AND LIABILITIES -- 1.6%
Other Assets and Liabilities, Net 890
---------
NET ASSETS -- 100.0% $ 54,407
---------
---------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 4,998,284
outstanding shares of
beneficial interest $ 57,390
Portfolio shares of Class D
(unlimited authorization -- no
par value) based on 11,113
outstanding shares of
beneficial interest 124
Undistributed Net Investment
Income 279
Accumulated Net Realized Loss on
Investments (6,694)
Net Unrealized Appreciation on
Investments 3,308
----------
Total Net Assets $ 54,407
----------
----------
Net Asset Value, Offering and
Redemption Price Per Share --
Class A $ 10.86
----------
----------
Net Asset Value and Redemption
Price Per Share -- Class D $ 10.84
----------
----------
Maximum Offering Price Per
Share -- Class D (10.84 divided
by 95.5%) $ 11.35
----------
----------
</TABLE>
<TABLE>
<S> <C>
FFCB Federal Farm Credit Bank
</TABLE>
47
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
HIGH YIELD BOND PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
CORPORATE OBLIGATIONS -- 89.3%
Abbey Healthcare
9.500%, 11/01/02 $ 65 $ 68
Adelphia Communications
12.500%, 05/15/02 100 100
AK Steel
10.750%, 04/01/04 100 107
Allied Waste Industries
12.000%, 02/01/04 50 53
American Restaurant Group
12.000%, 09/15/98 100 74
American Rice
13.000%, 07/31/02 200 188
American Safety Razor
9.875%, 08/01/05 (A) 250 250
American Standard
11.375%, 05/15/04 20 22
Zero Coupon, 06/01/05 (B) 250 203
Amerigas Partners LP
10.125%, 04/15/07 100 108
Arcadian Partner
10.750%, 05/01/05 100 105
Armco
11.375%, 10/15/99 100 104
Bally's Casino Holding
Zero Coupon, 06/15/98 200 152
Bally's Grand
10.375%, 12/15/03 100 98
Bally's Health & Tennis
13.000%, 01/15/03 100 89
Bally's Park Place Funding
9.250%, 03/15/04 200 195
Bayou Steel
10.250%, 03/01/01 100 92
Bell Cablemedia
Zero Coupon, 07/15/04 (B) 300 201
Big V Supermarkets
11.000%, 02/15/04 75 60
Building Materials
Zero Coupon, 07/01/04 (B) 200 126
Cablevision Industries
9.250%, 04/01/08 50 53
Cablevision Systems
9.875%, 02/15/13 50 52
CAI Wireless System
12.250%, 09/15/02 250 258
Calmar
11.500%, 08/15/05 (A) 200 202
Cencall Communication
Zero Coupon, 01/15/04 (B) 100 51
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
CF Cable Television
11.625%, 02/15/05 $ 50 $ 54
Cole National
11.250%, 10/01/01 100 99
Comcast
9.375%, 05/15/05 150 152
9.500%, 01/15/08 50 51
10.625%, 07/15/12 50 55
Commodore Media
7.500%, 05/01/03 (B) 100 90
Container
9.750%, 04/01/03 50 51
Continental Cablevision
11.000%, 06/01/07 100 111
9.500%, 08/01/13 150 156
Coty
10.250%, 05/01/05 100 105
County Seat Stores
12.000%, 10/01/02 100 94
Crown Packaging Holdings
Zero Coupon, 11/01/03 (B) 300 137
Crown Paper
11.000%, 09/01/05 250 248
Dairy Mart Convenience Stores
10.250%, 03/15/04 200 170
Day International Group
11.125%, 06/01/05 (A) 200 207
Doman Industries
8.750%, 03/15/04 250 242
Duane Reade
12.000%, 09/15/02 250 225
Exide
10.000%, 04/15/05 (A) 100 106
Falcon Holding Group PIK
11.000%, 09/15/03 211 199
Farm Fresh
12.250%, 10/01/00 50 44
Farm Fresh, Ser A
12.250%, 10/01/00 200 175
Figgie International
9.875%, 10/01/99 150 151
Finlay Enterprises
Zero Coupon, 05/01/05 (B) 50 33
Fort Howard
9.000%, 02/01/06 225 209
G-I Holdings
Zero Coupon, 10/01/98 300 216
Galaxy Telecom LP
12.375%, 10/01/05 250 249
Gaylord Container
11.500%, 05/15/01 50 52
</TABLE>
48
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
Gaylord Container
Zero Coupon, 05/15/05 (B) $ 200 $ 197
General Media
10.625%, 12/31/00 100 84
Genesis Health Ventures
9.750%, 06/15/05 100 104
Geneva Steel
9.500%, 01/15/04 100 75
GNF
10.625%, 04/01/03 200 174
GPA Delaware
8.750%, 12/15/98 250 223
Grancare
9.375%, 09/15/05 250 251
Great Bay Property Funding
10.875%, 01/15/04 105 88
Groupe Videotron
10.625%, 02/15/05 100 105
Grupo Industrial Durango
12.000%, 07/15/01 200 183
GS Technologies
12.000%, 09/01/04 100 99
Harris Chemical
Zero Coupon, 07/15/01 (B) 75 67
Helicon Group
9.000%, 11/01/03 (B) 150 138
Herff Jones
11.000%, 08/15/05 (A) 150 155
Hills Stores
10.250%, 09/30/03 250 234
Huntsman
10.625%, 04/15/01 250 262
Imax
7.000%, 03/01/01 (B) 100 95
Indah Kait Pulp & Paper
11.875%, 06/15/02 250 257
Integrated Health Services
9.625%, 05/31/02 (A) 250 258
Interlake
12.125%, 03/01/02 200 197
International Cabletel
Zero Coupon, 04/15/05 (A) (B) 150 90
International Wire Group
11.750%, 06/01/05 (A) 250 253
Ithaca Industries
11.125%, 12/15/02 100 96
Jones Intercable
9.625%, 03/15/02 100 104
Jordan Industries
10.375%, 08/01/03 250 230
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
JPS Automotive Products
11.125%, 06/15/01 $ 100 $ 101
K-III Communications
10.625%, 05/01/02 50 53
Kelley Oil & Gas
13.500%, 06/15/99 250 240
Kloster Cruise
13.000%, 05/01/03 150 108
Laroche Industries
13.000%, 08/15/04 250 259
Malette
12.250%, 07/15/04 100 112
Marvel III Holdings
9.125%, 02/15/98 100 93
Maxus Energy
9.875%, 10/15/02 250 244
Mesa
12.750%, 06/30/98 250 231
MFS Communications
Zero Coupon, 01/15/04 (B) 350 261
Mobile Telecommunications
Technologies
13.500%, 12/15/02 50 56
Mohegan Tribal Gaming
13.500%, 11/15/02 (A) 250 257
Monarch Acquisition
12.500%, 07/01/03 (A) 200 203
Nextel Communications
Zero Coupon, 08/15/04 (B) 300 147
NL Industries
11.750%, 10/15/03 100 106
NL Industries
Zero Coupon, 10/15/05 (B) 200 149
NWCG Holding
Zero Coupon, 06/15/99 300 201
Panamsat LP
9.750%, 08/01/00 50 52
Pathmark Stores
Zero Coupon, 11/01/03 (B) 300 195
Peoples Telephone
12.250%, 07/15/02 (A) 200 206
Petroleum Heat & Power
12.250%, 02/01/05 50 54
Pioneer Americas
13.375%, 04/01/05 (A) 200 204
Plantronics
10.000%, 01/15/01 175 178
Portola Packaging
10.750%, 10/01/05 200 201
Pricellular Wireless
Zero Coupon, 10/01/03 (B) 350 249
</TABLE>
49
<PAGE>
STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
HIGH YIELD BOND PORTFOLIO
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
<S> <C> <C>
Rainy River Forest Products
10.750%, 10/15/01 $ 100 $ 107
Red Roof Inns
9.625%, 12/15/03 50 49
Repap Wisconsin
9.875%, 05/01/06 100 97
Republic Engineered Steel
9.875%, 12/15/01 150 140
Resorts International
11.000%, 09/15/03 250 227
Revlon Consumer Products
9.375%, 04/01/01 150 149
10.500%, 02/15/03 100 102
Revlon Worldwide
Zero Coupon, 03/15/98 150 110
Rexene
11.750%, 12/01/04 250 266
Rio Hotel & Casino
10.625%, 07/15/05 (A) 250 242
Rogers Cablesystem
10.000%, 03/15/05 100 105
Santa Fe Energy Resource
11.000%, 05/15/04 50 54
Santa Fe Hotel
11.000%, 12/15/00 90 72
SCI Television
11.000%, 06/30/05 50 53
Sherritt
10.500%, 03/31/14 150 154
Showboat
9.250%, 05/01/08 100 95
Sinclair Broadcast Group
10.000%, 09/30/05 200 204
Specialty Equipment
11.375%, 12/01/03 250 259
Station Casinos
9.625%, 06/01/03 100 95
Stone Consolidated
10.250%, 12/15/00 100 105
Stone Container
9.875%, 02/01/01 300 294
Synthetic Industries
12.750%, 12/01/02 150 148
Telewest Communications PLC
9.625%, 10/01/06 150 152
Zero Coupon, 10/01/07 (B) 200 119
Terra Nova Holding
10.750%, 07/01/05 250 263
Tracor
10.875%, 08/15/01 50 52
- -----------------------------------------------------------
Face Market
Amount Value
Description (000) (000)
- -----------------------------------------------------------
Transtexas Gas
11.500%, 06/15/02 $ 100 $ 105
Trump Castle Funding
11.750%, 11/15/03 200 153
Trump Plaza Funding
10.875%, 06/15/01 250 231
Trump Taj Mahal PIK
11.350%, 11/15/99 252 224
UCC Investors
11.000%, 05/01/03 50 51
United International Holding
Zero Coupon, 11/15/99 250 150
Universal Health Services
8.750%, 08/15/05 250 244
US Air
10.000%, 07/01/03 250 204
US Leather
10.250%, 07/31/03 200 166
Van De Kamps
12.000%, 09/15/05 (A) 250 253
Venture Holdings Trust
9.750%, 04/01/04 250 218
Viacom International
8.000%, 07/07/06 100 98
Videotron Holdings PLC
Zero Coupon, 08/15/05 (B) 200 114
Waban
11.000%, 05/15/04 250 254
WCI Steel
10.500%, 03/01/02 100 97
Wright Medical Technology
10.750%, 07/01/00 50 50
----------
Total Corporate Obligations
(Cost $20,826,000) 21,196
----------
UNITS -- 4.7%
Australis Media 1 Unit = 1
senior subordinate discount
note + 1 warrant
Zero Coupon, 05/15/03 (B) 300 177
Casino America 1 Unit = 1 bond +
1 warrant
11.500%, 11/15/01 200 194
Cellular Communications 1 Unit =
1 senior discount note + 1
warrant
Zero Coupon, 08/15/00 500 275
Health O Meter 1 Unit = 1 senior
subordinate note + 1 warrant
13.000%, 08/15/02 100 91
</TABLE>
50
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Face Market
Amount Value
Description (000)/Shares (000)
- -----------------------------------------------------------
<S> <C> <C>
In Flight Phone 1 Unit = 1 note
+ 1 warrant
Zero Coupon, 05/15/02 (A)(B) $ 200 $ 80
Intelcom Group 1 Unit = 10
senior discount notes + 33
warrants
Zero Coupon, 09/15/05 (A)(B) 350 193
MVE 1 Unit = 1 senior note + 1
warrant
12.500%, 02/15/02 100 107
----------
Total Units
(Cost $1,123,000) 1,117
----------
REPURCHASE AGREEMENT -- 6.3%
Lehman Brothers
6.35%, dated 9/29/95, matures
10/02/95, repurchase price
$1,491,000 (collateralized by
U.S. Treasury Bond, total par
value $1,370,000, 8.25%,
05/15/05, market value of
collateral: $1,523,000) 1,490 1,490
----------
Total Repurchase Agreement
(Cost $1,490,000) 1,490
----------
PREFERRED STOCKS -- 0.8%
BCP/Essex Holdings
Convertible (A)* 7,262 185
----------
Total Preferred Stocks
(Cost $184,000) 185
----------
WARRANTS -- 0.1%
Commodore Media Warrant 100 8
Wright Medical Technology
Warrants 21 3
----------
Total Warrants
(Cost $12,000) 11
----------
Total Investments -101.2%
(Cost $23,635,000) 23,999
----------
OTHER ASSETS AND LIABILITIES -- (1.2%)
Other Assets and Liabilities, Net (275)
----------
NET ASSETS -- 100.0% $ 23,724
----------
----------
- -----------------------------------------------------------
Market
Value
Description (000)
- -----------------------------------------------------------
NET ASSETS CONSISTED OF:
Portfolio shares of Class A
(unlimited authorization -- no
par value) based on 2,228,527
outstanding shares of
beneficial interest $ 23,089
Undistributed Net Investment
Income 190
Accumulated Net Realized Gain on
Investments 81
Net Unrealized Appreciation on
Investments 364
----------
Total Net Assets $ 23,724
----------
----------
Net Asset Value, Offering and
Redemption Price Per Share --
Class A $ 10.65
----------
----------
</TABLE>
* Non-Income producing security
(A) Security exempt from registration under Rule 144A of the Securities Act of
1933. This security may be resold only in transactions exempt from registration,
normally to qualified institutional buyers.
(B) Step Bond -- The rate reflected on the Statement of Net Assets is the rate
in effect on September 30, 1995. The initial coupon on a step bond changes on a
specific date, to a predetermined higher rate.
<TABLE>
<S> <C>
LP Limited Partnership
PIK Payment In Kind
Ser Series
PLC Public Limited Company
</TABLE>
The accompanying notes are an integral part of the financial statements.
51
<PAGE>
STATEMENT OF OPERATIONS (000)
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--For the year ended September 30, 1995
<TABLE>
<CAPTION>
------------------ ------------------ ------------------ ------------------
LARGE CAP LARGE CAP SMALL CAP SMALL CAP
VALUE GROWTH VALUE GROWTH
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 6,750 $ 1,978 $ 295 $ 534
Interest 526 563 330 903
---------- ---------- ---------- ------------------
Total Investment Income 7,276 2,541 625 1,437
---------- ---------- ---------- ------------------
EXPENSES:
Management fees 749 444 162 1,369
Less management fees waived (112) -- (6) (102)
Contribution from Manager -- -- -- --
Investment advisory fees 645 507 300 1,493
Less investment advisory
fees waived -- (58) (1) --
Custodian/wire agent fees 35 35 10 48
Transfer agent fees (1) -- -- -- 1
Professional fees 26 24 6 39
Registration & filing fees 14 10 3 27
Printing expense 13 18 7 42
Trustee fees 11 12 2 17
Insurance expense 3 5 1 4
Pricing fees 7 8 2 10
Distribution fees 105 49 15 168
Class D Distribution fees (1) -- -- -- 1
Amortization of deferred
organization costs -- 4 4 16
Miscellaneous 11 20 2 17
---------- ---------- ---------- ------------------
Total expenses 1,507 1,078 507 3,150
---------- ---------- ---------- ------------------
NET INVESTMENT INCOME (LOSS) 5,769 1,463 118 (1,713)
---------- ---------- ---------- ------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net realized gain (loss) from
security transactions 8,764 5,973 1,807 60,571
Net realized gain (loss) on
futures contracts 212 (391) -- --
Net change in unrealized
appreciation (depreciation) on
investments 39,363 33,531 10,864 43,577
---------- ---------- ---------- ------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 54,108 $ 40,576 $ 12,789 $ 102,435
---------- ---------- ---------- ------------------
---------- ---------- ---------- ------------------
</TABLE>
(1) Fees are incurred at the Class D level only.
The accompanying notes are an integral part of the financial statements.
52
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
------------- -------------- ------------- ------------- ------------- ------------- -------------
CAPITAL EQUITY CAPITAL CORE FIXED
MID-CAP APPRECIATION INCOME BALANCED GROWTH INCOME BOND
------------- -------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
386 8,583 13,605 690 1,608 -- --
150 1,948 817 1,796 667 27,121 5,997
-------------- --------------- -------------- -------------- -------------- -------------- --------------
536 10,531 14,422 2,486 2,275 27,121 5,997
-------------- --------------- -------------- -------------- -------------- -------------- --------------
268 2,254 1,500 315 573 1,632 348
(79) (212) (197) (105) (573) (478) (125)
-- -- -- -- (80) -- --
235 1,291 883 193 -- 474 127
-- -- -- -- -- -- --
7 59 47 11 16 62 11
-- 2 2 -- -- -- --
9 67 45 9 16 48 12
9 64 35 5 9 28 11
15 56 33 23 16 30 21
4 33 20 4 7 22 5
1 7 6 1 2 3 2
2 16 11 3 7 14 3
39 304 204 39 -- 229 51
-- 3 3 -- -- -- --
2 5 -- -- --
3 30 19 4 7 23 5
-------------- --------------- -------------- -------------- -------------- -------------- --------------
515 3,974 2,611 507 -- 2,087 471
-------------- --------------- -------------- -------------- -------------- -------------- --------------
21 6,557 11,811 1,979 2,275 25,034 5,526
-------------- --------------- -------------- -------------- -------------- -------------- --------------
6,416 22,785 21,863 1,528 10,562 9,061 (6,522)
-- -- -- -- -- 831 --
(3,370) 33,283 25,307 6,199 10,875 23,651 13,663
-------------- --------------- -------------- -------------- -------------- -------------- --------------
$ 3,067 $ 62,625 $ 58,981 $ 9,706 $ 23,712 $ 58,577 $ 12,667
-------------- --------------- -------------- -------------- -------------- -------------- --------------
-------------- --------------- -------------- -------------- -------------- -------------- --------------
<CAPTION>
-------------
HIGH-YIELD
BOND
-------------
--
1,036
-------
1,036
-------
34
(18)
--
31
--
2
--
1
1
2
--
1
--
6
--
4
1
-------
65
-------
971
-------
81
--
364
-------
$ 1,416
-------
-------
</TABLE>
53
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS (000)
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust
<TABLE>
<CAPTION>
---------------- ------------------ ------------------ -----------
LARGE CAP LARGE CAP SMALL CAP SMALL CAP
VALUE GROWTH VALUE GROWTH
---------------- ------------------ ------------------ -----------
10/1/94- 10/1/93- 12/20/94(1)- 12/20/94(1)- 10/1/94-
9/30/95 9/30/94 9/30/95 9/30/95 9/30/95
----------- ----------- ------------------- ------------------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 5,769 $ 4,012 $ 1,463 $ 118 ($ 1,713)
Net realized gain (loss) from security
transactions 8,976 (1,397) 5,582 1,807 60,571
Net unrealized appreciation
(depreciation) on investments 39,363 (5,723) 33,531 10,864 43,577
----------- ----------- -------- -------- -----------
Net increase (decrease) in net asssets
from operations 54,108 (3,108) 40,576 12,789 102,435
----------- ----------- -------- -------- -----------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Class A (5,593) (3,906) (860) (146) --
Class D -- -- -- -- --
Net realized gains:
Class A (1,783) (6,458) -- -- (95)
Class D -- -- -- -- --
----------- ----------- -------- -------- -----------
Total dividends distributed (7,376) (10,364) (860) (146) (95)
----------- ----------- -------- -------- -----------
CAPITAL SHARE TRANSACTIONS:
Class A:
Proceeds from shares issued 244,446 93,802 283,750 105,041 325,142
Shares issued in lieu of cash
distributions 4,571 4,152 633 100 64
Cost of shares repurchased (97,235) (156,461) (26,722) (14,809) (417,431)
----------- ----------- -------- -------- -----------
Increase (decrease) in net assets
derived from Class A transactions 151,782 (58,507) 257,661 90,332 (92,225)
----------- ----------- -------- -------- -----------
Class D:
Proceeds from shares issued -- -- -- -- 471
Shares issued in lieu of cash
distributions -- -- -- -- --
Cost of shares repurchased -- -- -- -- (29)
----------- ----------- -------- -------- -----------
Increase (decrease) in net assets
derived from Class D transactions -- -- -- -- 442
----------- ----------- -------- -------- -----------
Increase (decrease) in net assets
derived from capital share
transactions 151,782 (58,507) 257,661 90,332 (91,783)
----------- ----------- -------- -------- -----------
Net increase (decrease) in net
assets 198,514 (71,979) 297,377 102,975 10,557
----------- ----------- -------- -------- -----------
NET ASSETS:
Beginning of period 133,178 205,157 -- -- 300,467
----------- ----------- -------- -------- -----------
End of period $ 331,692 $ 133,178 $ 297,377 $ 102,975 $ 311,024
----------- ----------- -------- -------- -----------
----------- ----------- -------- -------- -----------
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares issued 21,273 8,573 25,564 9,750 21,497
Shares issued in lieu of cash
distributions 407 376 56 9 5
Shares repurchased (8,608) (14,285) (2,287) (1,314) (27,282)
----------- ----------- -------- -------- -----------
Total Class A transactions 13,072 (5,336) 23,333 8,445 (5,780)
----------- ----------- -------- -------- -----------
----------- ----------- -------- -------- -----------
Class D:
Shares issued -- -- -- -- 29
Shares issued in lieu of cash
distributions -- -- -- -- --
Shares repurchased -- -- -- -- (1)
----------- ----------- -------- -------- -----------
Total Class D transactions -- -- -- -- 28
----------- ----------- -------- -------- -----------
----------- ----------- -------- -------- -----------
Undistributed net investment income
(loss) $ 456 $ 280 $ 603 $ (28) $ (283)
----------- ----------- -------- -------- -----------
----------- ----------- -------- -------- -----------
<CAPTION>
----------------
SMALL CAP
GROWTH
----------------
10/1/93-
9/30/94
-----------
-----------
OPERATIONS:
Net investment income (loss) $ (1,298)
Net realized gain (loss) from security
transactions (15,251)
Net unrealized appreciation
(depreciation) on investments 17,438
-----------
Net increase (decrease) in net asssets
from operations 889
-----------
DIVIDENDS DISTRIBUTED FROM:
Net investment income:
Class A --
Class D --
Net realized gains:
Class A (9,736)
Class D --
-----------
Total dividends distributed (9,736)
-----------
CAPITAL SHARE TRANSACTIONS:
Class A:
Proceeds from shares issued 339,928
Shares issued in lieu of cash
distributions 6,020
Cost of shares repurchased (230,614)
-----------
Increase (decrease) in net assets
derived from Class A transactions 115,334
-----------
Class D:
Proceeds from shares issued 164
Shares issued in lieu of cash
distributions --
Cost of shares repurchased --
-----------
Increase (decrease) in net assets
derived from Class D transactions 164
-----------
Increase (decrease) in net assets
derived from capital share
transactions 115,498
-----------
Net increase (decrease) in net
assets 106,651
-----------
NET ASSETS:
Beginning of period 193,816
-----------
End of period $ 300,467
-----------
-----------
CAPITAL SHARE TRANSACTIONS:
Class A:
Shares issued 24,230
Shares issued in lieu of cash
distributions 438
Shares repurchased (16,493)
-----------
Total Class A transactions 8,175
-----------
-----------
Class D:
Shares issued 12
Shares issued in lieu of cash
distributions --
Shares repurchased --
-----------
Total Class D transactions 12
-----------
-----------
Undistributed net investment income
(loss) $ (3)
-----------
-----------
</TABLE>
(1) Commencement of operations
The accompanying notes are an integral part of the financial statements.
54
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
---------
--------------- --------------- --------------- --------------- --------------- CORE
CAPITAL EQUITY CAPITAL FIXED
MID-CAP APPRECIATION INCOME BALANCED GROWTH INCOME
--------------- --------------- --------------- --------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/1/94- 10/1/93- 10/1/94- 10/1/93- 10/1/94- 10/1/93- 10/1/94- 10/1/93- 10/1/94- 10/1/93- 10/1/94-
9/30/95 9/30/94 9/30/95 9/30/94 9/30/95 9/30/94 9/30/95 9/30/94 9/30/95 9/30/94 9/30/95
------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
$ 21 $ 30 $ 6,557 $ 11,708 $ 11,811 $ 14,351 $ 1,979 $ 1,045 $ 2,275 $ 2,538 $ 25,034
6,416 (7,299) 22,785 43,555 21,863 13,247 1,528 673 10,562 21,531 9,892
(3,370) (233) 33,283 (56,038) 25,307 (22,246) 6,199 (3,626) 10,875 (21,582) 23,651
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3,067 (7,502) 62,625 (775) 58,981 5,352 9,706 (1,908) 23,712 2,487 58,577
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
-- (52) (7,592) (12,431) (12,234) (14,001) (1,951) (946) (2,254) (2,585) (24,852)
-- -- (12) (18) (41) (15) -- -- -- -- (7)
(28) (1,409) (38,179) (46,476) (12,863) (13,646) (568) (363) (16,475) (28,664) (63)
-- -- 97 (3) (31) (9) -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(28) (1,461) (45,880) (58,928) (25,169) (27,671) (2,519) (1,309) (18,729) (31,249) (24,922)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
40,217 97,222 114,358 385,631 112,061 259,144 22,864 57,474 -- 2,700 287,210
15 715 26,031 31,762 11,371 12,935 2,383 1,146 13,103 23,045 10,246
(123,357) (38,642) (575,444) (405,290) (324,628) (169,497) (27,450) (23,730) (39,776) (67,022) (223,096)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(83,125) 59,295 (435,055) 12,103 (201,196) 102,582 (2,203) 34,890 (26,673) (41,277) 74,360
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
30 61 530 4,809 1,342 916 -- -- -- -- 151
-- -- 31 4 61 22 -- -- -- -- 3
-- -- (1,840) (2,678) (206) (47) -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
30 61 (1,279) 2,135 1,197 891 -- -- -- -- 154
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(83,095) 59,356 (436,334) 14,238 (199,999) 103,473 (2,203) 34,890 (26,673) (41,277) 74,514
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(80,056) 50,393 (419,589) (45,465) (166,187) 81,154 4,984 31,673 (21,690) (70,039) 108,169
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
108,062 57,669 731,282 776,747 419,099 337,945 65,480 33,807 132,962 203,001 311,999
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
$ 28,006 $ 108,062 $ 311,693 $ 731,282 $ 252,912 $ 419,099 $ 70,464 $ 65,480 $ 111,272 $ 132,962 $ 420,168
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3,757 8,534 7,758 24,234 7,800 18,318 1,979 4,826 -- 227 29,084
1 63 1,904 2,006 837 920 207 96 1,367 2,005 1,025
(11,538) (3,442) (39,064) (25,709) (22,794) (12,020) (2,346) (1,999) (3,668) (5,284) (22,285)
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
(7,780) 5,155 (29,402) 531 (14,157) 7,218 (160) 2,923 (2,301) (3,052) 7,824
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3 5 35 316 91 65 -- -- -- -- 15
-- -- 2 -- 4 2 -- -- -- -- --
-- -- (128) (172) (15) (3) -- -- -- -- --
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3 5 (91) 144 80 64 -- -- -- -- 15
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
$ 18 $ (3) $ 294 $ 1,341 $ 611 $ 1,075 $ 176 $ 148 $ 161 $ 140 $ 2,162
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<CAPTION>
------------ ------------- ---------------
CORE FIXED HIGH YIELD
INCOME BOND BOND
------------ -------------- ---------------
10/1/93- 10/1/94- 10/1/93- 1/11/95(1)-
9/30/94 9/30/95 9/30/94 9/30/95
------- ------- ------- -------
------- ------- ------- -------------
$ 17,209 $ 5,526 $ 5,971 $ 971
(11,191) (6,522) 2,576 81
(23,150) 13,663 (18,567) 364
--------- --------- --------- ---------------
(17,132) 12,667 (10,020) 1,416
--------- --------- --------- ---------------
(16,555) (5,869) (5,734) (781)
(1) (7) (3) --
(3,124) (876) (5,659) --
-- (1) (1) --
--------- --------- --------- ---------------
(19,680) (6,753) (11,397) (781)
--------- --------- --------- ---------------
184,547 39,415 92,376 23,824
4,319 3,304 5,656 755
(135,897) (117,666) (40,460) (1,490)
--------- --------- --------- ---------------
52,969 (74,947) 47,572 23,089
--------- --------- --------- ---------------
44 32 154 --
-- 4 3 --
-- (31) (40) --
--------- --------- --------- ---------------
44 5 117 --
--------- --------- --------- ---------------
53,013 (74,942) 47,689 23,089
--------- --------- --------- ---------------
16,201 (69,028) 26,272 23,724
--------- --------- --------- ---------------
295,798 123,435 97,163 --
--------- --------- --------- ---------------
$ 311,999 $ 54,407 $ 123,435 $ 23,724
--------- --------- --------- ---------------
--------- --------- --------- ---------------
17,953 3,914 8,530 2,297
422 328 513 72
(13,274) (11,635) (4,585) (140)
--------- --------- --------- ---------------
5,101 (7,393) 4,458 2,229
--------- --------- --------- ---------------
--------- --------- --------- ---------------
5 3 15 --
-- -- -- --
-- (3) (4) --
--------- --------- --------- ---------------
5 -- 11 --
--------- --------- --------- ---------------
--------- --------- --------- ---------------
$ 1,987 $ 279 $ 629 $ 190
--------- --------- --------- ---------------
--------- --------- --------- ---------------
</TABLE>
55
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust -- For the periods ended September 30
<TABLE>
<CAPTION>
Net Realized Distributions
Net Asset Net and Dividends from Net Assets Ratio of
Value Investment Unrealized from Net Realized Net Asset End of Expenses
Beginning Income Gains (Losses) Investment Capital Value End Total Period to Average
of Period (Loss) on Securities Income Gains of Period Return (000) Net Assets
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------
LARGE CAP VALUE PORTFOLIO(A)
- --------------------------------
CLASS A
1995 $ 10.71 $ 0.33 $ 2.44 $ (0.33) $ (0.15) $ 13.00 26.83% $ 331,692 0.76%
1994 11.54 0.28 (0.46) (0.27) (0.38) 10.71 (1.64)% 133,178 0.75%
1993 12.49 0.31 0.22 (0.33) (1.15) 11.54 4.35% 205,157 0.75%
1992 12.05 0.34 0.71 (0.33) (0.28) 12.49 9.17% 242,065 0.75%
1991 9.30 0.35 2.92 (0.35) (0.17) 12.05 35.95% 187,876 0.75%
- -------------------------------
LARGE CAP GROWTH PORTFOLIO
- -------------------------------
1995 (9) $ 10.00 $ 0.11 $ 2.72 $ (0.08) $ -- $ 12.75 37.90% $ 297,377 0.85%
- -----------------------------
SMALL CAP VALUE PORTFOLIO
- -----------------------------
1995 (10) $ 10.00 $ 0.03 $ 2.19 $ (0.03) $ -- $ 12.19 29.38% $ 102,975 1.10%
- -------------------------------
SMALL CAP GROWTH PORTFOLIO
- -------------------------------
CLASS A
1995 $ 14.04 $ (0.14) $ 5.98 $ -- $ -- $ 19.88 41.65% $ 310,238 1.10%
1994 14.67 (0.05) 0.07 -- (0.65) 14.04 0.23% 300,296 1.01%
1993 10.65 (0.02) 4.05 (0.01) -- 14.67 37.81% 193,816 0.97%
1992(4) 10.00 0.02 0.65 (0.02) -- 10.65 15.07% 36,191 0.97%
CLASS D
1995 $ 13.99 $ (0.09) $ 5.88 $ -- $ -- $ 19.78 41.44%* $ 786 1.50%
1994(7) 14.04 (0.02) (0.03) -- -- 13.99 (3.02)%* 171 1.49%
- --------------------
MID CAP PORTFOLIO
- --------------------
CLASS A
1995 $ 10.89 $ 0.01 $ 2.14 $ -- $ -- $ 13.04 19.78% $ 27,898 0.94%
1994 12.10 0.01 (0.98) (0.01) (0.23) $ 10.89 (8.10)% 108,002 0.93%
1993(3) 10.00 0.01 2.10 (0.01) -- 12.10 34.06% 57,669 0.90%
CLASS D
1995 $ 10.87 $ (0.01) $ 2.10 $ -- $ -- $ 12.96 19.26%* $ 108 1.30%
1994(6) 11.19 (0.01) (0.31) -- -- 10.87 (8.63)%* 60 1.36%
- ----------------------------------
CAPITAL APPRECIATION PORTFOLIO
- ----------------------------------
CLASS A
1995 $ 15.18 $ 0.22 $ 2.42 $ (0.23) $ (0.89) $ 16.70 19.03% $ 310,693 0.84%
1994 16.36 0.24 (0.22) (0.25) (0.95) 15.18 (0.11)% 729,100 0.79%
1993 15.09 0.32 1.68 (0.30) (0.43) 16.36 13.50% 776,745 0.75%
1992 14.15 0.30 1.23 (0.30) (0.29) 15.09 11.03% 536,028 0.75%
1991 11.21 0.41 3.06 (0.40) (0.13) 14.15 31.69% 248,440 0.75%
CLASS D
1995 $ 15.17 $ 0.12 $ 2.45 $ (0.16) $ (0.89) $ 16.69 18.52%* $ 1,000 1.24%
1994 16.36 0.18 (0.22) (0.20) (0.95) 15.17 (0.46)%* 2,182 1.24%
1993(2) 16.17 0.05 0.16 (0.02) -- 16.36 10.65%* 2 1.15%
- ---------------------------
EQUITY INCOME PORTFOLIO
- ---------------------------
CLASS A
1995 $ 14.06 $ 0.55 $ 2.48 $ (0.55) $ (0.47) $ 16.07 23.00% $ 250,609 0.82%
1994 15.00 0.51 (0.38) (0.50) (0.57) 14.06 1.05% 418,207 0.78%
1993 13.33 0.54 1.75 (0.51) (0.08) 15.00 17.34% 337,939 0.75%
1992 12.36 0.52 1.05 (0.52) (0.08) 13.33 13.03% 178,756 0.75%
1991 10.09 0.57 2.54 (0.60) (0.24) 12.36 32.05% 93,552 0.75%
CLASS D
1995 $ 14.04 $ 0.48 $ 2.50 $ (0.50) $ (0.47) $ 16.05 22.62%* $ 2,303 1.22%
1994 15.00 0.45 (0.38) (0.46) (0.57) 14.04 0.61%* 892 1.20%
1993(1) 14.82 0.02 0.16 -- -- 15.00 42.39%* 6 1.15%
<CAPTION>
Ratio of Net
Ratio of Net Ratio of Investment
Investment Expenses Income (Loss)
Income to Average to Average
(Loss) Net Assets Net Assets Portfolio
to Average (Excluding (Excluding Turnover
Net Assets Waivers) Waivers) Rate
- ------------------------------------------------------------------------------------------------------------------------------
- --------------------------------
LARGE CAP VALUE PORTFOLIO(A)
- --------------------------------
CLASS A
1995 2.92% 0.82% 2.86% 99%
1994 2.51% 0.75% 2.51% 67%
1993 2.64% 0.76% 2.63% 96%
1992 2.79% 0.80% 2.74% 17%
1991 3.11% 0.83% 3.03% 25%
- -------------------------------
LARGE CAP GROWTH PORTFOLIO
- -------------------------------
1995 (9) 1.15% 0.89% 1.11% 44%
- -----------------------------
SMALL CAP VALUE PORTFOLIO
- -----------------------------
1995 (10) 0.26% 1.12% 0.24% 64%
- -------------------------------
SMALL CAP GROWTH PORTFOLIO
- -------------------------------
CLASS A
1995 (0.60)% 1.13% (0.63)% 113%
1994 (0.51)% 1.11% (0.61)% 97%
1993 (0.25)% 1.14% (0.42)% 85%
1992(4) 0.49% 1.29% 0.17% 33%
CLASS D
1995 (1.03)% 1.55% (1.08)% 113%
1994(7) (0.92)% 1.52% (0.95)% 97%
- --------------------
MID CAP PORTFOLIO
- --------------------
CLASS A
1995 0.04% 1.09% (0.11)% 108%
1994 0.03% 1.06% (0.10)% 89%
1993(3) 0.26% 1.12% 0.04% 87%
CLASS D
1995 (0.06)% 1.48% (0.24)% 108%
1994(6) (0.41)% 1.45% (0.50)% 89%
- ----------------------------------
CAPITAL APPRECIATION PORTFOLIO
- ----------------------------------
CLASS A
1995 1.39% 0.89% 1.34% 107%
1994 1.45% 0.84% 1.40% 109%
1993 2.06% 0.84% 1.97% 119%
1992 2.12% 0.88% 1.99% 84%
1991 3.10% 0.94% 2.91% 83%
CLASS D
1995 0.98% 1.29% 0.93% 107%
1994 1.20% 1.27% 1.16% 109%
1993(2) 2.54% 1.24% 2.45% 119%
- ---------------------------
EQUITY INCOME PORTFOLIO
- ---------------------------
CLASS A
1995 3.72% 0.88% 3.66% 47%
1994 3.68% 0.84% 3.62% 28%
1993 3.73% 0.85% 3.63% 39%
1992 4.15% 0.87% 4.03% 18%
1991 4.99% 0.86% 4.88% 42%
CLASS D
1995 3.21% 1.30% 3.13% 47%
1994 3.36% 1.35% 3.21% 28%
1993(1) 5.39% 1.46% 5.08% 39%
</TABLE>
56
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Realized Distributions
Net Asset and Dividends from Net Assets Ratio of
Value Net Unrealized from Net Realized Net Asset End of Expenses
Beginning Investment Gains (Losses) Investment Capital Value End Total Period to Average
of Period Income on Securities Income Gains of Period Return (000) Net Assets
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------
BALANCED PORTFOLIO
- -----------------------
CLASS A
1995 $ 11.52 $ 0.34 $ 1.34 $ (0.34) $ (0.10) $ 12.76 15.05% $ 70,464 0.75%
1994 12.24 0.23 (0.62) (0.22) (0.11) 11.52 (3.25)% 65,480 0.75%
1993 11.35 0.25 1.29 (0.26) (0.39) 12.24 14.49% 33,807 0.75%
1992 10.70 0.52 0.73 (0.53) (0.07) 11.35 11.64% 5,974 0.75%
1991 9.77 0.65 0.96 (0.68) -- 10.70 15.96% 2,174 0.75%
- ----------------------------
CAPITAL GROWTH PORTFOLIO
- ----------------------------
1995 $ 11.55 $ 0.22 $ 2.05 $ (0.21) $ (1.53) $ 12.08 23.96% $ 111,272 0.00%
1994 13.94 0.20 (0.04) (0.20) (2.35) 11.55 1.51% 132,962 0.00%
1993 12.50 0.21 2.66 (0.21) (1.22) 13.94 24.40% 203,001 0.00%
1992 11.51 0.55 1.81 (0.57) (0.80) 12.50 18.87% 170,829 0.00%
1991 8.38 0.26 3.16 (0.25) (0.04) 11.51 43.00% 123,057 0.00%
- -----------------------------------
CORE FIXED INCOME PORTFOLIO(B)
- -----------------------------------
CLASS A
1995 $ 9.65 $ 0.65 $ 0.82 $ (0.66) $ -- $ 10.46 15.87% $ 419,959 0.55%
1994 10.87 0.56 (1.12) (0.55) (0.11) 9.65 (5.36)% 311,955 0.55%
1993 10.77 0.60 0.23 (0.60) (0.18) 10.87 8.58% 295,798 0.55%
1992 10.30 0.69 0.49 (0.69) (0.02) 10.77 11.91% 213,632 0.55%
1991 9.79 0.73 0.52 (0.74) -- 10.30 13.31% 153,356 0.55%
CLASS D
1995 $ 9.65 $ 0.62 $ 0.79 $ (0.62) $ -- $ 10.44 15.24%* $ 209 0.95%
1994 (8) 9.77 0.21 (0.15) (0.18) -- 9.65 3.29%* 44 0.92%
- ----------------
BOND PORTFOLIO
- ----------------
CLASS A
1995 $ 9.95 $ 0.70 $ 0.97 $ (0.69) $ (0.07) $ 10.86 17.53% $ 54,286 0.55%
1994 12.25 0.59 (1.62) (0.59) (0.68) 9.95 (9.12)% 123,329 0.55%
1993 11.09 0.66 1.19 (0.67) (0.02) 12.25 17.36% 97,163 0.55%
1992 10.47 0.73 0.62 (0.73) -- 11.09 13.52% 65,061 0.55%
1991 9.39 0.76 1.10 (0.77) (0.01) 10.47 20.56% 40,683 0.55%
CLASS D
1995 $ 9.94 $ 0.62 $ 1.00 $ (0.65) $ (0.07) $ 10.84 16.97%* $ 121 0.95%
1994 12.24 0.58 (1.64) (0.56) (0.68) 9.94 (9.37)%* 106 0.95%
1993(5) 12.07 0.07 0.15 (0.05) -- 12.24 14.75%* 2 0.95%
- -----------------------------
HIGH YIELD BOND PORTFOLIO
- -----------------------------
1995 (11) $ 10.00 $ 0.67 $ 0.55 $ (0.58) $ -- $ 10.64 17.72% $ 23,724 0.67%
<CAPTION>
Ratio of Net
Ratio of Investment
Ratio of Net Expenses Income
Investment to Average to Average
Income Net Assets Net Assets Portfolio
to Average (Excluding (Excluding Turnover
Net Assets Waivers) Waivers) Rate
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------
BALANCED PORTFOLIO
- -----------------------
CLASS A
1995 2.92% 0.90% 2.77% 159%
1994 2.05% 0.91% 1.89% 149%
1993 2.24% 0.94% 2.05% 109%
1992 4.83 1.12% 4.46% 101%
1991 5.68% 2.54% 3.89% 19%
- ----------------------------
CAPITAL GROWTH PORTFOLIO
- ----------------------------
1995 1.97% 0.56% 1.41% 40%
1994 1.61% 0.54% 1.07% 81%
1993 1.63% 0.54% 1.09% 120%
1992 1.78% 0.55% 1.23% 111%
1991 2.60% 0.59% 2.01% 135%
- -----------------------------------
CORE FIXED INCOME PORTFOLIO(B)
- -----------------------------------
CLASS A
1995 6.60% 0.68% 6.47% 294%
1994 5.57% 0.62% 5.50% 370%
1993 5.63% 0.66% 5.52% 35%
1992 6.71% 0.68% 6.58% 39%
1991 7.41% 0.73% 7.23% 44%
CLASS D
1995 6.17% 1.09% 6.03% 294%
1994 (8) 5.91% 1.00% 5.83% 370%
- ----------------
BOND PORTFOLIO
- ----------------
CLASS A
1995 6.46% 0.70% 6.31% 79%
1994 5.61% 0.67% 5.49% 73%
1993 5.87% 0.66% 5.76% 47%
1992 6.98% 0.71% 6.82% 24%
1991 7.77% 0.76% 7.56% 8%
CLASS D
1995 5.96% 1.10% 5.81% 79%
1994 5.38% 1.86% 4.47% 73%
1993(5) 4.66% 1.06% 4.55% 47%
- -----------------------------
HIGH YIELD BOND PORTFOLIO
- -----------------------------
1995 (11) 10.02% 0.86% 9.83% 56%
</TABLE>
1 Equity Income Class D shares were offered beginning September 22, 1993. All
ratios including total return for that period have been annualized.
2 Capital Appreciation Class D shares were offered beginning August 16, 1993.
All ratios including total return for that period have been annualized.
3 Mid-Cap Growth Class A shares were offered beginning February 16, 1993. All
ratios including total return for that period have been annualized.
4 Small Cap Growth Class A shares were offered beginning April 20, 1992. All
ratios including total return for that period have been annualized.
5 Bond Class D shares were offered beginning August 16, 1993. All ratios
including total return for that period have been annualized.
6 Mid-Cap Growth Class D shares were offered beginning May 2, 1994. All ratios
including total return for that period have been annualized.
7 Small Cap Growth Class D shares were offered May 2, 1994. All ratios
including total return for that period have been annualized.
8 Core Fixed Income Class D shares were offered beginning May 9, 1994. All
ratios including total return for that period have been annualized.
9 Large Cap Growth shares were offered beginning December 20, 1994. All ratios
including total return for that period have been annualized.
10 Small Cap Value shares were offered beginning December 20, 1994. All ratios
including total return for that period have been annualized.
11 High Yield Bond shares were offered beginning January 11, 1995. All ratios
including total return for that period have been annualized.
* Sales load is not reflected in total return.
(a) During the year ended September 30, 1995, the Value Portfolio changed its
name to the Large Cap Value Portfolio.
(b) During the year ended September 30, 1995, the Intermediate Bond Portfolio
changed its name to the Core Fixed Income Portfolio.
The accompanying notes are an integral part of the financial statements.
57
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
1. ORGANIZATION
SEI Institutional Managed Trust (the "Trust") is organized as a Massachusetts
business trust under a Declaration of Trust dated October 20, 1986.
2. SIGNIFICANT ACCOUNTING POLICIES
The Trust is registered under the Investment Company Act of 1940, as amended, as
an open-end investment company with twelve diversified Portfolios and one
non-diversified portfolio (the "Portfolios"): Large Cap Value, Large Cap Growth,
Small Cap Value, Small Cap Growth, Mid-Cap, Capital Appreciation, Equity Income,
Balanced, Capital Growth, Core Fixed Income, Bond, and High Yield Bond. The Real
Estate Securities Portfolio (the non-diversified portfolio) had not commenced
operations as of September 30, 1995. The Trust is registered to offer Class A,
Class B and Class D shares of the Large Cap Value, Large Cap Growth, Small Cap
Value, Small Cap Growth, Mid-Cap, Capital Appreciation, Equity Income, Balanced,
Core Fixed Income, Bond, and High Yield Bond Portfolios. The following is a
summary of the significant accounting policies followed by the Trust.
Security Valuation--Investments in equity securities which are traded on a
national securities exchange (or reported on NASDAQ national market system) are
stated at the last quoted sales price if readily available for such equity
securities on each business day; other equity securities traded in the
over-the-counter market and listed equity securities for which no sale was
reported on that date are stated at the last quoted bid price. Debt obligations
with remaining maturities in excess of sixty days are valued at the most
recently quoted bid price. Debt obligations with remaining maturities of sixty
days or less are valued at their amortized cost.
Federal Income Taxes--It is each Portfolio's intention to continue to
qualify as a regulated investment company for Federal income tax purposes and
distribute all of its taxable income (including net capital gains). Accordingly,
no provision for Federal income taxes is required.
Net Asset Value Per Share--Net asset value per share is calculated on a
daily basis by dividing the assets of each Portfolio less its liabilities by the
number of outstanding shares of the Portfolio.
Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held by each Portfolio's custodian bank until maturity of the
Repurchase Agreement. Provisions of the Agreement and procedures adopted by the
Manager and the Advisers of the Trust ensure that the market value of the
collateral, including accrued interest thereon, is sufficient in the event of
default by the counterparty. The Portfolios also invest in tri-party repurchase
agreements. Securities held as collateral for tri-party repurchase agreements
are maintained by the broker's custodian bank in a segregated account until
maturity of the repurchase agreement. Provisions of the agreements ensure that
the market value of the collateral, including accrued interest thereon, is
sufficient in the event of default. If the counterparty defaults and the value
of the collateral declines or if the counterparty enters into an insolvency
proceeding, realization of the collateral by the Portfolios may be delayed or
limited.
Discount and Premium Amortization--All amortization is calculated using the
effective interest method over the holding period of the security. Amortization
of premiums and discounts is included in interest income.
Classes--Class-specific expenses are borne by that class of shares. Income,
realized and unrealized gains/losses and non class-specific expenses are
allocated to the respective classes on the basis of relative daily net assets.
Distributions--Distributions from net investment income are paid to
Shareholders monthly for the Large Cap Value, Capital Appreciation, Equity
Income, Balanced, Capital Growth, Core Fixed Income, Bond, and High Yield Bond
Portfolios and quarterly for the Large Cap Growth, Small Cap Value, Small Cap
Growth, and Mid-Cap Portfolios. Any net realized capital gains on the sales of
securities by a Portfolio are distributed annually to the Shareholders of that
Portfolio.
58
<PAGE>
- --------------------------------------------------------------------------------
Effective October 1, 1993, the Fund adopted Statement of Position 93-2
"Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain, and Return of Capital Distribution by Investment Companies." In
connection therewith $1,433,000 relating to permanent differences attributable
to cumulative net operating losses of the Small Cap Growth Portfolio as of
September 30, 1995 have been reclassified from that portfolio's accumulated net
investment loss to paid-in-capital.
Futures Contracts--The Large Cap Growth and Large Cap Value Portfolios
utilized S&P futures contracts and the Core Fixed Income Portfolio utilized U.S.
Long Bond futures contracts to a limited extent during the year ended September
30, 1995. The Large Cap Growth and Large Cap Value Portfolio's investment in S&P
500 Index futures contracts is designed to enable the Portfolios' to more
closely approximate the performance of their benchmark indices. The Core Fixed
Income Portfolio's use of futures contracts is primarily for tactical hedging
purposes. Initial margin deposits of cash or securities are made upon entering
into futures contracts. The contracts are marked to market daily and the
resulting changes in value are accounted for as unrealized gains and losses.
Variation margin payments are paid or received, depending upon whether
unrealized losses or gains are incurred. When the contract is closed, the
Portfolio records a realized gain or loss equal to the difference between the
proceeds from (or cost of) the closing transaction and the amount invested in
the contract.
Risks related to futures contracts include the possibility that there may
not be a liquid market for the contracts, that changes in the values of the
contract may not directly correlate with changes in the values of the underlying
securities, and that the counterparty to a contract may default on its
obligation to perform.
Structured Notes and Indexed Notes--The Core Fixed Income Portfolio may
invest in structured notes and indexed notes whose values are linked either
directly or inversely to changes in foreign currency exchange rates, interest
rates, indexes, or other reference instruments. The values of these instruments
may be more volatile than the rates, indexes or instruments to which they refer,
but any loss is limited to the amount of the original investment.
Other--Security transactions are recorded on the trade date of the security
purchase or sale. Cost used in determining net realized capital gains and losses
on the sale of securities are those of the specific securities sold. Dividend
income is recognized on the ex-dividend date, and interest income is recognized
using the accrual basis of accounting.
3. MANAGEMENT, INVESTMENT ADVISORY, AND DISTRIBUTION AGREEMENTS
The Trust and SEI Financial Management Corporation ("SFM") (the "Manager"), a
wholly-owned subsidiary of SEI Corporation, are parties to a management
agreement (the "Agreement") dated January 22, 1987. Under this agreement, the
Manager provides management, administrative, and shareholder servicing for an
annual fee of .35% of the average daily net assets of the Large Cap Value, Large
Cap Growth, Small Cap Value, High Yield Bond, Small Cap Growth, Mid-Cap, Capital
Appreciation, Equity Income, and Balanced Portfolios; .50% of the average daily
net assets of the Capital Growth Portfolio; .43% of the average daily net assets
of the Core Fixed Income Portfolio; and .28% of the average daily net assets of
the Bond Portfolio. The Manager has agreed to waive a portion of its fee so that
the total annual expenses of each Portfolio will not exceed the lower of the
maximum limitations established by certain states or voluntary expense
limitations adopted by the Manager. In the event that the total annual expenses
of a Portfolio, after reflecting a waiver of all fees by the Manager, exceed the
specific limitation, the Manager has agreed to bear such excess.
As of December 16, 1994, SFM serves as the investment advisor to the Large
Cap Value, Large Cap Growth, Small Cap Value and High Yield Bond Portfolios
pursuant to an investment advisory agreement with the Trust. For its services,
SFM receives a fee of .35% of the average daily net
59
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
assets of the Large Cap Value Portfolio, .40% of the average daily net assets of
the Large Cap Growth Portfolio, .65% of the average daily net assets of the
Small Cap Value Portfolio, and .4875% of the average daily net assets of the
High Yield Bond Portfolio. For the year ended September 30, 1995, SFM received
$593,000, $507,000, $300,000, and $31,000 as compensation for its services as
investment adviser to the Large Cap Value, Large Cap Growth, Small Cap Value and
High Yield Bond Portfolios, respectively.
As of July 10, 1995, SFM serves as the investment advisor to the Balanced,
Capital Appreciation, Equity Income and Bond Portfolios pursuant to an
investment advisory agreement with the Trust. For its services, SFM receives a
fee of .40% of the average daily net assets of the Balanced, Capital
Appreciation, and Equity Income Portfolios and .275% of the average daily net
assets of the Bond Portfolio. For the year ended September 30, 1995, SFM
received $63,000, $292,000, $273,000 and $37,000 as compensation for its
services as investment adviser to the Balanced, Capital Appreciation, Equity
Income, and Bond Portfolios, respectively.
As of August 11, 1995 and August 14, 1995, SFM serves as the investment
advisor to the Small Cap Growth and Mid-Cap Portfolios, respectively, pursuant
to an investment advisory agreement with the Trust. For its services, SFM
receives a fee of .65% of the average daily net assets of the Small Cap Growth
Portfolio and .40% of the average daily net assets of the Mid-Cap Portfolio. For
the year ended September 30, 1995, SFM received $269,000 and $14,000 as
compensation for its services as investment adviser to the Small Cap and Mid-Cap
Portfolios, respectively.
Mellon Equity Associates ("Mellon") serves as an investment sub-advisor to
a portion of the assets of the Large Cap Value Portfolio, and is party to an
investment sub-advisory agreement with the Trust dated December 16, 1994. Under
the investment sub-advisory agreement with the Trust and SFM, Mellon receives an
annual fee, paid by SFM, of .20% of the average monthly market value of
investments under its management. Prior to December 16, 1994, Mellon served as
the investment advisor of the Large Cap Value Portfolio, and was party to an
investment advisory agreement with the Trust dated October 3, 1994. Under the
investment advisory agreement, Mellon was paid a fee at the annual rate of .20%
of the average daily net assets of the Portfolio. Prior to October 3, 1994 Duff
& Phelps Investment Management Company ("Duff & Phelps") served as the
investment advisor of the Large Cap Value Portfolio, and was party to an
investment advisory agreement with the Trust dated October 22, 1992. Under the
investment advisory agreement, Duff & Phelps was paid a fee at the annual rate
of .20% of the average daily net assets of the Portfolio. For the year ended
September 30, 1995, Duff & Phelps and Mellon received $2,000 and $37,000,
respectively as compensation for their services as investment advisor to the
Portfolio.
Merus Capital Management ("Merus") serves as an investment sub-advisor to a
portion of the assets of the Large Cap Value Portfolio, and is party to an
investment sub-advisory agreement with the Trust and SFM dated December 16,
1994. Under the investment sub-advisory agreement, Merus receives an annual fee,
paid by SFM, of .20% of the average monthly market value of investments under
its management
Merus Capital Management ("Merus") serves as investment sub-adviser to the
Equity Income Portfolio and is party to an investment sub-advisory agreement
with the Trust and SFM dated July 10, 1995. Prior to July 10, 1995, Merus served
as investment adviser of the Equity Income Portfolio, and was party to an
investment advisory agreement with the Trust dated September 27, 1987. Under the
agreement, Merus received an annual fee of .25% of the average daily net assets
of the Equity Income Portfolio. For the year ended September 30, 1995, Merus
received $647,000 as compensation for its services as investment adviser to the
Portfolio.
LSV Capital Management ("LSV") serves as an investment sub-advisor to a
portion of the assets of the Large Cap Value Portfolio, and is party to an
investment sub-advisory agreement with the Trust and SFM dated March 10, 1995.
Under the investment sub-advisory agreement, LSV receives
60
<PAGE>
- --------------------------------------------------------------------------------
an annual fee, paid by SFM, of .20% of the average monthly market value of
investments under its management.
lDS Advisory Group Inc. serves as an investment sub-advisor to a portion of
the assets of the Large Cap Growth Portfolio, and is party to an investment
sub-advisory agreement with the Trust and SFM dated December 16, 1994. Under the
investment sub-advisory agreement, IDS Advisory Group Inc. is entitled to an
annual fee of the greater of $125,000 or a fee paid monthly by SFM at an annual
rate of .25% of the average monthly market value of investments under its
management.
Alliance Capital Management L.P. ("Alliance") serves as an investment
sub-advisor to a portion of the assets of the Large Cap Growth Portfolio, and is
party to an investment sub-advisory agreement with the Trust and SFM dated
December 16, 1994. Under the investment sub-advisory agreement, Alliance is
entitled to an annual fee of the greater of $125,000 or a fee paid monthly by
SFM at an annual rate of .25% of the average monthly market value of investments
under its management.
1838 Investment Advisors, L.P. ("1838") serves as an investment sub-advisor
for the Small Cap Value Portfolio, and is party to an investment sub-advisory
agreement with the Trust and SFM dated December 16, 1994. Under the investment
sub-advisory agreement, 1838 receives an annual fee of .50% of the average
monthly market value of investments under its management.
Investment Advisers, Inc, Nicholas-Applegate Capital Management, Pilgrim
Baxter & Associates, Wall Street Associates, and Apodaca-Johnston serve as
investment sub-advisers of the Small Cap Growth Portfolio and are parties to
investment sub-advisory agreements with the Trust and SFM dated August 14, 1995.
Prior to August 14, 1995, Investment Advisers, Inc, Nicholas-Applegate Capital
Management, and Pilgrim Baxter & Associates served as investment advisers of the
Small Cap Growth Portfolio, and were parties to investment advisory agreements
with the Trust dated July 1, 1993. Under the agreements, the advisers received
an annual fee of .50% of the average daily net assets of the portion of the
Portfolio that they advised. For the year ended September 30, 1995, Investment
Advisers, Inc, Nicholas-Applegate Capital Management, and Pilgrim Baxter &
Associates, received $404,000, $406,000, and $414,000, respectively, as
compensation for their services as investment advisers to the Portfolio.
Martingale Asset Management serves as investment sub-adviser to the Mid-Cap
Portfolio and is party to an investment sub-advisory agreement with the Trust
and SFM dated August 14, 1995. Prior to August 14, 1995, Nicholas-Applegate
Capital Management served as investment adviser of the Mid-Cap Portfolio, and
was party to an investment advisory agreement with the Trust dated November 16,
1992. Under the agreement, the adviser received an annual fee of .45% of the
first $100,000,000 of the Portfolio's average daily net assets and .40% of the
average daily net assets in excess of $100,000,000. For the year ended September
30, 1995, Nicholas-Applegate Capital Management received $221,000 as
compensation for its services as investment adviser to the Portfolio.
SunBank Capital Management, N.A. ("SunBank") serves as investment
sub-adviser of the Capital Appreciation and Balanced Portfolios and is party to
an investment sub-advisory agreement with the Trust and SFM dated July 10, 1995.
Prior to July 11, 1995, SunBank served as investment adviser of the Capital
Appreciation and Balanced Portfolios and was party to an investment advisory
agreement with the Trust dated September 9, 1987 for the Capital Appreciation
Portfolio and September 6, 1992 for the Balanced Portfolio. Under the agreement,
the adviser received an annual fee of .25% of the average daily net assets of
the Portfolios. For the year ended September 30, 1995, SunBank received $999,000
and $130,000 for the Capital Appreciation and Balanced Portfolios, respectively,
as compensation for its services as investment adviser. SunBank is the adviser
of the Capital Growth Portfolio and is party to an investment advisory agreement
with the Trust dated September 9, 1987. SunBank is not paid a fee by the Trust
for the investment advisory
61
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
SEI Institutional Managed Trust--September 30, 1995
services connected with the Capital Growth Portfolio.
Boatmen's Trust Company serves as investment sub-adviser to the Bond
Portfolio and is party to an investment sub-advisory agreement with the Trust
and SFM dated July 10, 1995. Prior to July 10, 1995, Boatmen's Trust Company
served as investment adviser of the Bond Portfolio, and was party to an
investment advisory agreement with the Trust dated December 29, 1988. Under the
agreement, the adviser received an annual fee of .125% of the average daily net
assets of the Bond Portfolio. For the year ended September 30, 1995, Boatmen's
Trust Company received $90,000 as compensation for its services as investment
adviser to the Portfolio.
Western Asset Management, the adviser of the Core Fixed Income Portfolio is
party to an investment advisory agreement dated January 19, 1994. Under the
investment advisory agreement, Western Asset Management receives an annual fee
of .125% of the average daily net assets of the Portfolio.
BEA Associates ("BEA") serves as investment sub-adviser to the High Yield
Bond Portfolio and is party to an investment sub-advisory agreement with the
Trust dated August 11, 1995. Under the investment sub-advisory agreement, BEA is
entitled to a fee paid monthly by SFM of .3375% of the average monthly market
value of investments under its management. Prior to August 11, 1995 BEA
Associates acted as investment sub-adviser to the Portfolio under an agreement
with SFM pursuant to which BEA received no compensation. Prior to April 24,
1995, CS First Boston Investment Management Corporation ("CS First Boston")
acted as investment sub-advisor to the High Yield Bond Portfolio under an
agreement with the Trust dated December 16, 1994. Under this agreement CS First
Boston was entitled to a fee paid monthly by SFM of .3375% of the average
monthly market value of investments under its management.
SEI Financial Services Company ("the Distributor"), a wholly-owned
subsidiary of SEI Corporation and a registered broker-dealer, acts as the
distributor of the shares of the Trust under distribution plans which provide
for the Trust to reimburse the Distributor for certain distribution-related
expenses incurred by the Distributor. Such expenses may not exceed .30% of the
average daily net assets of a Portfolio, provided these expenses are permissible
as to both type and amount under a budget approved and monitored by the Board of
Trustees.
In addition to providing for the reimbursement payments described above,
the Class B and Class D distribution plans provide for additional payments to
the Distributor. This additional payment may be used to compensate financial
institutions that provide distribution-related services to their customers.
Distribution-related expenses for the Class B and Class D shares of the
Portfolios may not exceed .60%.
The Distribution Agreement between the Distributor and the Trust provides
that the Distributor may receive compensation on portfolio transactions effected
for the Trust in accordance with the rules of the Securities and Exchange
Commission ("SEC"). Accordingly, it is expected that portfolio transactions may
result in brokerage commissions being paid to the Distributor. The SEC rules
require that such commissions not exceed usual and customary commissions.
4. ORGANIZATIONAL COSTS AND TRANSACTIONS WITH AFFILIATES
Organizational costs have been capitalized by the Fund and are being amortized
over sixty months commencing with operations. In the event any of the initial
shares are redeemed by any holder thereof during the period that the Fund is
amortizing its organizational costs, the redemption proceeds payable to the
holder thereof by the Fund will be reduced by the unamortized organizational
costs in the same ratio as the number of initial shares outstanding at the time
of the redemption.
Certain officers and/or trustees of the Trust are also officers of the
Manager. The Trust pays each unaffiliated Trustee an annual fee for attendance
of quarterly, interim and committee meetings. Compensation of officers and
affiliated Trustees of the Trust is paid by the Manager.
Each of the Portfolios also used the Distributor as an agent in placing
repurchase agreements. For
62
<PAGE>
- --------------------------------------------------------------------------------
this service the Distributor retains a portion of the interest earned as a
commission. Such commissions for repurchase agreements placed during the year
ended September 30, 1995 were nominal in the aggregate.
5. INVESTMENT TRANSACTIONS
The cost of security purchases and proceeds from the sale of securities
including US Government securities, other than temporary cash investments during
the period ended September 30, 1995, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
(000) (000)
----------- ---------
<S> <C> <C>
Large Cap Value $ 345,346 $ 192,124
Large Cap Growth 318,055 70,314
Small Cap Value 123,603 35,691
Small Cap Growth 307,783 399,622
Mid Cap 57,084 138,545
Capital Appreciation 481,210 918,980
Equity Income 141,928 343,717
Balanced 102,095 100,354
Capital Growth 41,026 88,495
Core Fixed Income 1,052,129 986,329
Bond 57,324 132,264
High Yield Bond 29,151 7,241
</TABLE>
On September 30, 1995, the total cost of securities and the net realized
gains or losses on securities sold for Federal income tax purposes was not
materially different from amounts reported for financial reporting purposes. The
aggregate gross unrealized appreciation and depreciation on securities at
September 30, 1995 is as follows:
<TABLE>
<CAPTION>
NET
APPRECIATED DEPRECIATED UNREALIZED
SECURITIES SECURITIES APPRECIATION
(000) (000) (000)
----------- ----------- -----------
<S> <C> <C> <C>
Large Cap Value $ 45,561 $ 2,072 $ 43,489
Large Cap Growth 37,745 4,214 33,531
Small Cap Value 13,584 2,720 10,864
Small Cap Growth 92,372 3,840 88,532
Mid Cap 2,920 567 2,353
Capital
Appreciation 39,830 7,913 31,917
Equity Income 39,716 832 38,884
Balanced 5,148 698 4,450
Capital Growth 18,626 3,324 15,302
Core Fixed Income 14,930 985 13,945
Bond 3,309 1 3,308
High Yield Bond 650 286 364
</TABLE>
The market values of the Core Fixed Income, Bond and High Yield Bond
Portfolios' investments will change in response to interest rate changes and
other factors. During periods of falling interest rates, the values of fixed
income securities generally rise. Conversely, during periods of rising interest
rates, the values of such securities generally decline. Changes by recognized
rating agencies in the ratings of any fixed income security and in the ability
of an issuer to make payments of interest and principal may also affect the
value of these investments.
At September 30, 1995 the following Portfolios had available realized
capital losses to offset future net capital gains through fiscal year ended
2004.
<TABLE>
<CAPTION>
(000)
---------
<S> <C>
Mid-Cap $ 944
Core Fixed Income 1,299
</TABLE>
6. FUTURES CONTRACTS:
The Core Fixed Income Portfolio had the following bond futures contracts open as
of September 30, 1995:
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NUMBER OF TRADE SETTLEMENT (LOSS)
DESCRIPTION CONTRACTS PRICE MONTH (000)
- ------------ --------------- --------- ---------- -----------
<S> <C> <C> <C> <C>
US 10 Year 227 $ 149.94 Dec. 1995 $ (82)
Note (CBT)
US 10 Year 91 100.33 Dec. 1995 (63)
Note (CBT)
-----------
$ (145)
-----------
-----------
</TABLE>
Futures contracts open as of September 30, 1995 are as follows:
Large Cap Growth
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT NUMBER OF TRADE SETTLEMENT GAIN
DESCRIPTION CONTRACTS PRICE MONTH (000)
- ------------ --------------- --------- ---------- -------------
<S> <C> <C> <C> <C>
S & P 500 3 $ 585.10 Dec. 1995 $ 5
S & P 500 1 582.70 Dec. 1995 3
S & P 500 3 587.40 Dec. 1995 1
S & P 500 1 586.50 Dec. 1995 1
S & P 500 1 587.70 Dec. 1995 0
---
$ 10
---
---
</TABLE>
Large Cap Value
<TABLE>
<S> <C> <C> <C> <C>
S & P 500 2 $ 578.78 Dec. 1995 $ 9
S & P 500 3 582.73 Dec. 1995 8
S & P 500 1 581.33 Dec. 1995 4
S & P 500 3 586.33 Dec. 1995 3
S & P 500 3 587.53 Dec. 1995 1
---
$ 25
---
---
</TABLE>
63
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits:
(a) Financial Statements:
1. Audited Financial Statements for the Core Fixed Income (formerly the
Intermediate Bond Portfolio), Bond, High Yield Bond, Large Cap Value,
Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-Cap (formerly
the Mid-Cap Growth Portfolio), Capital Appreciation, Equity Income,
Balanced and Capital Growth Portfolios of the Registrant for the
fiscal period ended September 30, 1995, included in the Statement
of Additional Information, filed as part of Post-Effective Amendment
No. 25 to the Registrant's Registration Statement on Form N-1A
(File Nos. 33-9504 and 811-4878) are included herein.
(b) Additional Exhibits:
<TABLE>
<S> <C>
(1) Declaration of Trust./1/
(2) By-Laws./1/
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Management Agreement between the Trust and SEI
Financial Management Corporation./1/
(5) (b) Investment Advisory Agreement between the Trust and
SunBank, N.A. with respect to the Trust's Capital
Appreciation Portfolio./3/
(5) (c) Investment Advisory Agreement between the Trust and
The Bank of California with respect to the Trust's
Equity Income Portfolio./3/
(5) (d) Investment Advisory Agreement between the Trust and
Merus Capital Management, Inc. with respect to the
Trust's Equity Income Portfolio./3/
(5) (e) Investment Advisory Agreement between the Trust and
Boatmen's Trust Company with respect to the Trust's
Bond Portfolio./4/
(5) (f) Investment Advisory Agreement between the Trust and
Bank One, Indianapolis, N.A. with respect to the
Trust's Limited Volatility Bond Portfolio./5/
(5) (g) Schedule C to Management Agreement between the Trust
and SEI Financial Management Corporation adding the
Mid-Cap Growth Portfolio./6/
(5) (h) Investment Advisory Agreement between the Trust and
Nicholas-Applegate Capital Management with respect to
the Trust's Mid-Cap Growth Portfolio./6/
(5) (i) Investment Advisory Agreement between the Trust
and Investment Advisers, Inc. with respect to the
Trust's Small Cap Growth.*
(5) (j) Investment Advisory Agreement between the Trust
and Nicholas Applegate Capital Management with respect
to the Trust's Small Cap Growth Portfolio.*
(5) (k) Investment Advisory Agreement between the Trust
and Pilgrim Baxter & Associates with respect to
the Trust's Small Cap Growth Portfolio.*
(5) (l) Investment Advisory Agreement between the Trust and
Duff & Phelps Investment Management Co. with respect to
the Trust's Value Portfolio./10/
(5) (m) Schedule D to Management Agreement between the Trust
and SEI Financial Management Corporation adding the
Real Estate Securities Portfolio./10/
(5) (n) Investment Advisory Agreement between the Trust
and E.I.I. Realty Securities, Inc. with respect to the
Trust's Real Estate Securities Portfolio.*
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(5) (o) Investment Advisory Agreement between the Trust and
Western Asset Management with respect to the Trust's
Intermediate Bond Portfolio./15/
(5) (p) Investment Advisory Agreement between the Trust and
Mellon Equity Associates with respect to the Trust's
Large Cap Value Portfolio./15/
(5) (q) Investment Advisory Agreement between the Trust and LSV
Asset Management with respect to the Trust's Large Cap
Value Portfolio.*
(5) (r) Investment Advisory Agreement between the Trust and
Alliance Capital Management L.P. with respect to the
Trust's Large Cap Growth Portfolio.*
(5) (s) Investment Advisory Agreement between the Trust and IDS
Advisory Group, Inc. with respect to the Trust's Large
Cap Growth Portfolio.*
(5) (t) Investment Advisory Agreement between the Trust and
1838 Investment Advisors, L.P. with respect to the
Trust's Small Cap Value Portfolio.*
(5) (u) Investment Advisory Agreement between the Trust and
Martingale Asset Management with respect to the Trust's
Mid-Cap Portfolio.*
(5) (v) Form of Investment Advisory Agreement between the
Trust and BlackRock Financial Management, Inc. with
respect to the Trust's Core Fixed Income Portfolio.*
(5) (x) Investment Advisory Agreement between the Trust and
Firstar Investment Research & Management Company with
respect to the Trust's Core Fixed Income Portfolio.*
(5) (y) Investment Advisory Agreement between the Trust and BEA
Associates with respect to the Trust's High Yield Bond
Portfolio.*
(5) (z) Investment Advisory Agreement between the Trust and
Boston Partners Asset Management, L.P. with respect to
the Trust's Small Cap Value Portfolio.*
(5) (aa) Investment Advisory Agreement between the Trust and
Apodaca-Johnston Capital Management, Inc. with respect
to the Trust's Small Cap Growth Portfolio.*
(5) (bb) Investment Advisory Agreement between the Trust and
Wall Street Associates with respect to the Trust's
Small Cap Growth Portfolio.*
(6) Distribution Agreement between the Trust and SEI Financial
Services Company./1/
(7) Not Applicable.
(8) (a) Custodian Agreement between the Trust and CoreStates
Bank, N.A. (formerly Philadelphia National Bank)./2/
(8) (b) Custodian Agreement between the Trust and United
States National Bank of Oregon./2/
(9) Not Applicable.
(10) Opinion and Consent of Counsel./2/
(11) Consent of Independent Public Accountants.*
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) (a) Distribution Plan pursuant to Rule 12b-1 (Class A)./1/
(15) (b) Distribution Plan pursuant to Rule 12b-1 (Class B)./10/
(15) (c) Form of Distribution Plan pursuant to Rule 12b-1
(ProVantage Class)./12/
(15) (d) Rule 18F-3 Multiple Class Plan./16/
(16) Performance Quotation Computation./13/
(17) Powers of Attorney./14/
</TABLE>
- ------------------------------------------------
* Filed herewith.
/1/ Incorporated by reference to Registrant's Registration Statement on
Form N-1A (File No. 33-9504) filed with the SEC on October 17, 1986.
/2/ Incorporated by reference to Pre-Effective Amendment No. 1 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on January 29, 1987.
2
<PAGE>
/3/ Incorporated by reference to Post-Effective Amendment No. 4 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on November 25, 1987.
/4/ Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on November 30, 1988.
/5/ Incorporated by reference to Post-Effective Amendment No. 6 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on May 4, 1989.
/6/ Incorporated by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on September 15, 1992.
/7/ Incorporated by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on October 30, 1992.
/8/ Incorporated by reference to Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on December 1, 1992.
/9/ Incorporated by reference to Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on March 4, 1993.
/10/ Incorporated by reference to Post-Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on June 21, 1993.
/11/ Incorporated by reference to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on August 31, 1993.
/12/ Incorporated by reference to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on December 2, 1993.
/13/ Incorporated by reference to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on December 2, 1993.
/14/ Incorporated by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on October 7, 1994.
/15/ Incorporated by reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on November 29, 1994.
/16/ Incorporated by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504)
filed with the SEC on June 19, 1995.
Item 25. Persons Controlled by or under Common Control with Registrant:
None.
Item 26. Number of Holders of Securities:
As of November 1, 1995:
<TABLE>
<CAPTION>
Number of
Record
Title of Class Holders
-------------- ---------
<S> <C>
Shares of beneficial interest, without par value-
Large Cap Value Portfolio
Class A....................................... 162
Class D....................................... 0
Large Cap Growth Portfolio
Class A....................................... 95
Class D....................................... 0
Small Cap Value Portfolio
Class A....................................... 98
Class D....................................... 0
Small Cap Growth Portfolio
Class A....................................... 205
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Class D....................................... 28
Mid-Cap Growth Portfolio
Class A....................................... 91
Class D....................................... 7
Capital Appreciation Portfolio
Class A....................................... 224
Class D....................................... 86
Equity Income Portfolio
Class A....................................... 63
Class D....................................... 105
Balanced Portfolio
Class A....................................... 61
Capital Growth Portfolio........................... 18
Core Fixed Income Portfolio
Class A....................................... 172
Class D....................................... 0
Bond Portfolio
Class A....................................... 117
Class D....................................... 23
High Yield Bond Portfolio
Class A....................................... 28
Class D....................................... 0
</TABLE>
Item 27. Indemnification:
Article VIII of the Agreement and Declaration of Trust filed as Exhibit 1 to the
Registration Statement is incorporated by reference. Insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
trustees, directors, officers and controlling persons of the Registrant by the
Registrant pursuant to the Declaration of Trust or otherwise, the Registrant is
aware that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and, therefore,
is unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by trustees, directors, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suit or proceeding) is
asserted by such trustees, directors, officers or controlling persons in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issues.
Item 28. Business and Other Connections of Investment Adviser:
Other business, profession, vocation, or employment of a substantial nature in
which each director or principal officer of each Investment Adviser is or has
been, at any time during the last two fiscal years, engaged for his own account
or in the capacity of director, officer, employee, partner or trustee are as
follows:
1838 Investment Advisors, L.P.
1838 Investment Advisors, L.P. is an investment sub-adviser for the Registrant's
Small Cap Value Portfolio. The principal address of 1838 Investment Advisors,
L.P. is 100 Matsonford Road, Radnor, Pennsylvania 19087. 1838 Investment
Advisors, L.P. is an investment adviser registered under the Advisers Act.
4
<PAGE>
The list required by this Item 28 of officers and directors of 1838 Investment
Advisors, L.P., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by 1838 Investment Advisors, L.P. to the Advisers Act
(SEC File No. 801-33025).
Alliance Capital Management L.P.
Alliance Capital Management L.P. is an investment sub-adviser for the
Registrant's Large Cap Growth Portfolio. The principal address of Alliance
Capital Management L.P. is 1345 Avenue of the Americas, New York, New York
10105. Alliance Capital Management L.P. is an investment adviser registered
under the Advisers Act.
The list required by this Item 28 of officers and directors of Alliance Capital
Management L.P., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Alliance Capital Management L.P. to the Advisers Act
(SEC File No. 801-32361).
Apodaca-Johnston Capital Management, Inc.
Apodaca-Johnston Capital Management, Inc. is an investment sub-adviser for the
Registrant's Small Cap Growth Portfolio. The principal address of Apodaca-
Johnston Capital Management, Inc. is 50 California Street, Suite 3315, San
Francisco, California 94111. Apodaca-Johnston Capital Management, Inc. is an
investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Apodaca-Johnston
Capital Management, Inc., together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
Schedules A and D of Form ADV filed by Apodaca-Johnston Capital Management, Inc.
to the Advisers Act (SEC File No. 801-29032).
BEA Associates
BEA Associates is an investment sub-adviser for the Registrant's High Yield Bond
Portfolio. The principal address of BEA Associates is One Citicorp Center, 153
East 53rd Street, New York, New York 10022. BEA Associates is an investment
adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of BEA Associates,
together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by BEA Associates to the Advisers Act (SEC File No. 801-37170).
BlackRock Financial Management, Inc.
BlackRock Financial Management, Inc. is an investment sub-adviser for the
Registrant's Core Fixed Income Portfolio. The principal address of BlackRock
Financial Management, Inc. is 345 Park Avenue, 30th Floor, New York, New York
10154. BlackRock Financial Management, Inc. is an investment adviser registered
under the Advisers Act.
The list required by this Item 28 of officers and directors of BlackRock
Financial Management, Inc., together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
5
<PAGE>
Schedules A and D of Form ADV filed by BlackRock Financial Management, Inc. to
the Advisers Act (SEC File No. 801-48433).
<TABLE>
<CAPTION>
Name and Position Connection with
with Investment Adviser Name of Other Company Other Company
----------------------- --------------------- ---------------
<S> <C> <C>
Boatmen's Trust Company --
Howard F. Baer
Director of Adviser
Clarence C. Barksdale Southwestern Bell Corp. Director
Director of Adviser
Washington University Vice Chairman
John F. Biggs, Jr. Brown Group, Inc. Senior Vice President
Director of Adviser
Gerald D. Blatherwick Southwestern Bell Vice Chairman
Director of Adviser Corporation
Telmex Director
Stephen F. Brauer Hunter Engineering Company President
Director of Adviser
Mary Leyhe Burke, Ph.D. Whitfield School Head of School
George K. Conant Tri-Star Supply, Inc. Consultant
Director of Adviser
Blue Cross/Blue Shield of Director
Missouri
Andrew B. Craig III Boatmen's Bancshares, Inc. Chairman and Chief
Director of Adviser Executive Officer
The Boatmen's National Director
Bank of St. Louis
The Boatmen's Bank of Chairman
Delaware
Petrolite Corp. Director
Anheuser-Busch Company, Director
Inc.
Wm. S. Barnickel & Co. Director
Donald Danforth, Jr. Danforth Agri-Resources, President
Director of Adviser Inc.
Kennelwood Village, Inc. President
Vector Corp. Chairman
Ralston Purina Co. Chairman
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Name and Position Connection with
with Investment Adviser Name of Other Company Other Company
----------------------- --------------------- ---------------
<S> <C> <C>
Martin E. Gait, III -- --
President of Adviser
A. William Hager Hager Hinge Company Chairman
Director of Adviser
Laclede Steel Co. Director
Muny Opera Director
Samuel B. Hayes, III Boatmen's National Bank Chairman, President &
of St. Louis C.F.O.
Boatmen's Bancshares, Inc. President
Robert E. Kresko Rekko Management Co. President
Director of Adviser
Cupplos Manufacturing Co. Director
Nooney R.E.I.T. Director
John Peters MacCarthy Boatmen's Bancshares, Inc. Vice Chairman and
Director of Adviser Director
Boatmen's Trust Chairman and Chief
Company Executive Officer
Union Electric Company Director
James S. McDonnell, III McDonnell-Douglas Corp. Director
Director of Adviser
Automobile Club of Director
Missouri
John B. McKinney Laclede Steel Company President, Chief
Director of Adviser Executive Officer and
Director
Automobile Club of Director
Missouri
Webster University Director
Whitfield School Director
St. Louis University Advisory Board Member
Reuben M. Morriss, III Boatmen's Trust Company Vice Chairman
Director of Adviser
The Boatmen's National Executive Vice
Bank of St. Louis President and Senior
Trust Officer
Bellefontaine Cemetery Director
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Name and Position Connection with
with Investment Adviser Name of Other Company Other Company
----------------------- --------------------- ---------------
<S> <C> <C>
Churchill School Director
Opera Theatre of St. Louis Director
St. Louis Bi-State Director
American Red Cross
St. Louis Country Club Director
St. Luke's Hospital Director
William Woods College Chairman
William C. Nelson Boatmen's First National Chairman, President &
Bank of Kansas City C.E.O.
Boatmen's Bank of Delaware Director
Boatmen's Bancshares of Director
Iowa
Consumer Bankers Director
Association
Kansas City Board of Trade Director
William A. Peck, M.D. Washington University Executive Vice
School of Medicine Chancellor & Dean
W. R. Persons
Director of Adviser -- --
Jerry E. Ritter Boatmen's Bancshares, Inc. Director
Director of Adviser
Anheuser-Busch Companies Executive Vice
President, Chief
Financial Officer and
Chief Administrative
Officer
Louis S. Sachs Sachs Properties, Inc. Chairman
Director of Adviser
SEM5 Chairman
Sachs Holdings, Inc. Chairman
Washington University Trustee
Missouri Botanical Gardens Trustee Emeritus
Hugh Scott, III Western Diesel Service, Chairman and Chief
Director of Adviser Inc. Executive Officer
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Name and Position Connection with
with Investment Adviser Name of Other Company Other Company
----------------------- --------------------- ---------------
<S> <C> <C>
Richard W. Shomaker Brown Group, Inc Consultant
Director of Adviser
Lee-Rowan Company Director
Brice R. Smith, Jr. Sverdrup Corporation Chairman and Chief
Director of Adviser Executive Officer
William D.Stamper W. D. Stamper Company President
Director of Adviser
Janet M. Weakley Janet McAfee Inc. Real President
Director of Adviser Estate
Gordon E. Wells Boatmen's First National Director
Bank of Kansas City
Eugene F. Williams, Jr. Olin Corporation Director
AMR Corporation Director
Emerson Electric Co. Director
STI Capital Management, N.A. -- --
Anthony R. Gray
Chairman & Chief
Investment Officer
James R. Wood -- --
President & Chief
Operating Officer
Elliott A. Perny -- --
Senior Executive Vice
President
Chief Portfolio Manager
Robert Buhrmann -- --
Senior Vice President
L. Earl Denney -- --
Senior Vice President
Thomas A. Edgar -- --
Senior Vice President
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Name and Position Connection with
with Investment Adviser Name of Other Company Other Company
----------------------- --------------------- ---------------
<S> <C> <C>
Stuart F. Van Arsdale -- --
Senior Vice President
Ryan R. Burrow
Senior Vice President -- --
Christopher A. Jones
Senior Vice President, -- --
Internal Control Officer
Judith C. McAnney
Vice President -- --
Mills A. Riddick
Senior Vice President -- --
David E. West
Vice President -- --
William Breda, Jr.
Assistant Vice President -- --
J. Kurt Wood
Vice President -- --
Bank of California
Stanley F. Farrar Sullivan & Cromwell Partner
Director of Adviser
Kazuo Ibuki The Mitsubishi Bank Chairman
Director Limited
Raymond E. Miles Univ. of California Dean
Director of Adviser School of Bus. Admin.
J. Fernado Niedbla Infotec Development, Inc. Chairman & CEO
Director of Adviser
Hiroo Nozawa BanCal Tri-State Chairman, President &
Director of Adviser Corporation CEO
Chairman, President & CEO
Carl W. Robertson Warland Investments Managing Director
Director of Adviser Company
Paul W. Steere Bogle & Gates Partner
Director of Adviser
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Name and Position Connection with
with Investment Adviser Name of Other Company Other Company
----------------------- --------------------- ---------------
<S> <C> <C>
Charles R. Scott Leadership Centers USA Chairman & CEO
Director of Adviser
Henry T. Swigert ESCO Corporation Chairman
Director of Adviser
Yasuyuki Hirai The Mitsubishi Bank Chief Executive Officer
Director of Adviser, Limited
Chief Executive Officer North America Headquarters
Minoru Noda BanCal Tri-State Vice Chairman
Director of Adviser, Corporation
Vice Chairman Credit &
Finance
Roy A. Henderson BanCal Tri-State Vice Chairman
Director of Adviser, Corporation
Chairman, Regional Banking
Peter R. Butcher -- --
Executive Vice President
Chief Credit Officer
David W. Ehlers -- --
Executive Vice President
Chief Financial Officer
Michael Spilsbury -- --
Executive Vice President
Resources & Services Sector
William R. Sweet -- --
Executive Vice President
Wholesale & International
Group
Magan C. Patel
Executive Vice President -- --
International Banking
Luke Mazur -- --
Senior Vice President &
Manager
</TABLE>
Boston Partners Asset Management, L.P.
Boston Partners Asset Management, L.P. is an investment sub-adviser
for the Small Cap Value Portfolio. The principal address of Boston
Partners Asset Management, L.P. is One Financial Center, 43rd Floor, Boston,
Massachusetts 02111. Boston Partners Asset Management, L.P. is an investment
adviser registered under the Advisers Act.
11
<PAGE>
The list required by this Item 28 of officers and directors of Boston
Partners Asset Management, L.P., together with information as to any other
business profession, vocation, or employment of a substantial nature engaged in
by such officers and directors during the past two years is incorporated by
reference to Schedules A and D of Form ADV filed by Boston Partners Asset
Management, L.P. to the Advisers Act (SEC File No. 801-49059).
Firstar Investment Research & Management Company
Firstar Investment Research & Management Company is an investment sub-adviser
for the Core Fixed Income Portfolio. The principal address of Firstar
Investment Research & Management Company is 777 E. Wisconsin Avenue, Suite 800,
Milwaukee, Wisconsin 53202. Firstar Investment Research & Management Company is
an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Firstar
Investment Research & Management Company, together with information as to
any other business profession, vocation, or employment of a substantial nature
engaged in by such officers and directors during the past two years is
incorporated by reference to Schedules A and D of Form ADV filed by Firstar
Investment Research & Management Company to the Advisers Act (SEC File No.
801-28084).
IDS Advisory Group Inc.
IDS Advisory Group Inc. is an investment sub-adviser for the Registrant's
Large Cap Growth Portfolio. The principal address of IDS Advisory Group Inc. is
IDS Tower 10, Minneapolis, Minnesota 55440. IDS Advisory Group Inc. is an
investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of IDS Advisory
Group Inc., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by IDS Advisory Group Inc. to the Advisers Act (SEC File
No. 801-25943).
LSV Asset Management
LSV Asset Management is an investment sub-adviser for the Large Cap Value
Portfolio. The principal address of LSV Asset Management is 181 West Madison
Street, Chicago, Illinois 60602. LSV Asset Management is an investment adviser
registered under the Advisers Act.
The list required by this Item 28 of officers and directors of LSV Asset
Management, together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by LSV Asset Management to the Advisers Act (SEC File
No. 801-47689).
Martingale Asset Management, L.P.
Martingale Asset Management, L.P. is the investment sub-adviser for the Mid-Cap
Portfolio. The principal address of Martingale Asset Management, L.P. is 222
Berkeley Street, Boston, Massachusettes 02116. Martingale Asset Management,
L.P. is an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Martingale Asset
Management, L.P., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Martingale Asset Management, L.P. to the Advisers Act
(SEC File No. 801-30067).
12
<PAGE>
Mellon Equity Associates
Mellon Equity Associates is an investment sub-adviser for the Large Cap Value
Portfolio. The principal address of Mellon Equity Associates is 500 Grant
Street, Suite 3700, Pittsburgh, Pennsylvania. Mellon Equity Associates is an
investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Mellon Equity
Associates, together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Mellon Equity Associates to the Advisers Act (SEC
File No. 801-28692).
Nicholas Applegate Capital Management, Inc.
Nicholas Applegate Capital Management, Inc. is an investment sub-adviser for the
Small Cap Growth Portfolio. The principal address of Nicholas Applegate Capital
Management, Inc. is 600 West Broadway, 29th Floor, San Diego, California 92101.
Nicholas Applegate Capital Management, Inc. is an investment adviser registered
under the Advisers Act.
The list required by this Item 28 of officers and directors of Nicholas
Applegate Management, Inc., together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
Schedules A and D of Form ADV filed by Nicholas Applegate Capital Management,
Inc. to the Advisers Act (SEC File No. 801-21442).
Pilgrim Baxter & Associates, Ltd.
Pilgrim Baxter & Associates, Ltd. is an investment sub-adviser for the Small Cap
Growth Portfolio. The principal address of Pilgrim Baxter & Associates, Ltd. is
1255 Drummers Lane, Suite 300, Wayne, Pennsylvania 19087. Pilgrim Baxter &
Associates, Ltd. is an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Pilgrim Baxter &
Associates, Ltd., together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Pilgrim Baxter & Associates, Ltd. to the Advisers Act
(SEC File No. 801-19165).
SEI Financial Management Corporation
SEI Financial Management Company ("SFM") is an investment adviser for the Large
Cap Value, Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-Cap, Capital
Appreciation, Equity Income, Balanced, Core Fixed Income, Bond and High Yield
Bond Portfolios. The principal address of SFM is 680 East Swedesford Road,
Wayne, Pennsylvania 19087-1658. SFM is an investment adviser registered under
the Advisers Act.
The list required by this Item 28 of officers and directors of SFM, together
with information as to any other business profession, vocation, or employment of
a substantial nature engaged in by such officers and directors during the past
two years is incorporated by reference to Schedules A and D of Form ADV filed by
SFM to the Advisers Act (SEC File No. 801-24593).
Wall Street Associates
13
<PAGE>
Wall Street Associates is an investment sub-adviser for the Small Cap Growth
Portfolio. The principal address of Wall Street Associates is 1200 Prospect
Street, Suite 100, La Jolla, California 92037. Wall Street Associates is an
investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Wall Street
Associates, together with information as to any other business profession,
vocation, or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Wall Street Associates to the Advisers Act (SEC File
No. 801-30019).
Western Asset Management Company
Western Asset Management Company is an investment sub-adviser for the
Intermediate Bond Portfolio. The principal address of Western Asset Management
Company is 117 East Colorado Boulevard, Pasadena, California 91105. Western
Asset Management Company is an investment adviser registered under the Advisers
Act.
The list required by this Item 28 of officers and directors of Western Asset
Management Company, together with information as to any other business
profession, vocation, or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
Schedules A and D of Form ADV filed by Western Asset Management Company to the
Advisers Act (SEC File No. 801-08162).
Item 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or
investment adviser.
Registrant's distributor, SEI Financial Services Company ("SFS"), acts as
distributor for:
<TABLE>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI International Trust August 30, 1988
Stepstone Funds January 30, 1991
The Compass Capital Group March 8, 1991
FFB Lexicon Funds October 18, 1991
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
1784 Funds June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis/SM/ Funds August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
Inventor Funds, Inc. August 1, 1994
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
The Achievement Funds Trust December 27, 1994
Insurance Investment Products Trust December 30, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
Conestoga Family of Funds May 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
</TABLE>
SFS provides numerous financial services to investment managers, pension
plan sponsors, and bank trust departments. These services include portfolio
evaluation, performance measurement and consulting services ("Funds
Evaluation") and automated execution, clearing and settlement of securities
transactions ("MarketLink").
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is 680 East Swedesford Road, Wayne, PA 19087.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman & Chief Executive Officer --
Henry H. Greer Director, President & Chief Operating Officer --
Carmen V. Romeo Director, Executive Vice President & Treasurer Treasurer & Assistant
Secretary
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Charles A. Marsh Executive Vice President-Capital Resources Division --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Jerome Hickey Senior Vice President --
David G. Lee Senior Vice President President & Chief
Executive Officer
William Madden Senior Vice President --
A. Keith McDowell Senior Vice President --
Dennis J. McGonigle Senior Vice President --
Hartland J. McKeown Senior Vice President --
James V. Morris Senior Vice President --
Steven Onofrio Senior Vice President --
Kevin P. Robins Senior Vice President, General Counsel & Vice President
Secretary & Assistant Secretary
Robert Wagner Senior Vice President --
Patrick K. Walsh Senior Vice President --
Kenneth Zimmer Senior Vice President --
Robert Crudup Managing Director --
Ward Curtis Vice President --
Jeff Drennen Vice President --
Vic Galef Managing Director --
Lawrence D. Hutchison Vice President --
Kim Kirk Managing Director --
John Krzeminski Managing Director --
Carolyn McLaurin Managing Director --
Barbara Moore Managing Director --
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- ------------------- ---------------------
<S> <C> <C>
Donald Pepin Managing Director --
Mark Samuels Managing Director --
Wayne M. Withrow Managing Director --
Robert Ludwig Team Leader Assistant Secretary
Vicki Malloy Team Leader Assistant Secretary
Mick Duncan Team Leader Assistant Secretary
Robert Aller Vice President --
Charles Baker Vice President --
Steve Bendinelli Vice President --
Cris Brookmyer Vice President & Controller --
Gordon W. Carpenter Vice President --
Robert B. Carroll Vice President & Assistant Secretary Vice President &
Assistant Secretary
Ed Daly Vice President --
Lucinda Duncalfe Vice President --
Kathy Hellig Vice President --
Michael Kantor Vice President --
Samuel King Vice President --
Donald H. Korytowski Vice President --
Robert S. Ludwig Vice President --
Jack May Vice President --
Sandra K. Orlow Vice President & Assistant Secretary Vice President &
Assistant Secretary
Kim Rainey Vice President --
Paul Sachs Vice President --
Steve Smith Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President &
Assistant Secretary
Daniel Spaventa Vice President --
William Zawaski Vice President --
Larry Pokora Vice President --
James Dougherty Director of Brokerage Services --
</TABLE>
Item 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records are maintained at
the offices of Registrant's Custodian:
CoreStates Bank, N.A.
Broad and Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101
16
<PAGE>
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and (D);
(4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books and
records are maintained at the offices of Registrant's Manager:
SEI Financial Management Corporation
680 E. Swedesford Road
Wayne, PA 19087
(c) With respect to Rules 31a-1(b)(5),(6),(9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Advisers:
1838 Investment Advisors, L.P.
100 Matsonford Road
Radnor, PA 19087
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, NY 10105
Apodaca-Johnston Capital Management, Inc.
50 California Street
Suite 3315
San Francisco, CA 94111
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, NY 10022
BlackRock Financial Management, Inc.
345 Park Avenue
New York, NY 10154
Boatmen's Trust Company
510 Locust Street
St. Louis, MO 63101
Boston Partners Asset Management, L.P.
One Financial Center, 43rd Floor
Boston, MA 02111
Firstar Investment Research & Management Company
777 East Wisconsin Avenue
Suite 800
Milwaukee, WI 53202
IDS Advisory Group Inc.
IDS Tower 10
Minneapolis, MN 55440
17
<PAGE>
LSV Asset Management
181 W. Madison Avenue
Chicago, IL 60602
Martingale Asset Management, L.P.
222 Berkeley Street
Boston, MA 02210
Mellon Equity Associates
500 Grant Street
Suite 3700
Pittsburgh, PA 15258
Merus Capital Management
475 Sansome Street
San Francisco, CA 94104
Nicholas Applegate Capital Management, Inc.
600 West Broadway, 29th Floor
San Diego, CA 92101
Pilgrim Baxter & Associates, Ltd.
1255 Drummers Lane, Suite 300
Wayne, PA 19087
SEI Financial Management Corporation
680 E. Swedesford Road
Wayne, PA 19087
STI Capital Management, N.A.
P.O. Box 3808
Orlando, FL 32802
Wall Street Associates
1200 Prospect Street
Suite 100
La Jolla, CA 92037
Western Asset Management Company
117 East Colorado Boulevard
Pasadena, CA 91105
Item 31. Management Services:
None.
18
<PAGE>
Item 32. Undertakings:
Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the Trust,
the Trustees will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate cost of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant undertakes to hold a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to Shareholder communications.
Registrant undertakes to furnish each person to whom a prospectus for any
series of the Registrant is delivered with a copy of the Registrant's latest
annual report to shareholders for such series, when such annual report is issued
containing information called for by Item 5A of Form N-1A, upon request and
without charge.
19
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of SEI Institutional
Managed Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, officers, or Shareholders individually but are binding only upon the
assets and property of the Trust.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, the Registrant has duly caused
this Amendment to Registration Statement No. 33-9504 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Wayne,
Commonwealth of Pennsylvania on the 29th day of November, 1995.
SEI INSTITUTIONAL MANAGED TRUST
By /s/ David G. Lee
--------------------
David G. Lee
President
ATTEST:
By /s/ Jeffrey A. Cohen
------------------------
Jeffrey A. Cohen
Controller
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
<TABLE>
<S> <C> <C>
* Trustee November 29, 1995
- -----------------------------
Richard F. Blanchard
* Trustee November 29, 1995
- -----------------------------
William M. Doran
* Trustee November 29, 1995
- -----------------------------
F. Wendell Gooch
* Trustee November 29, 1995
- -----------------------------
Frank E. Morris
* Trustee November 29, 1995
- -----------------------------
James M. Storey
* Trustee November 29, 1995
- -----------------------------
Robert A. Nesher
/s/ Jeffrey A. Cohen Controller & Assistant Secretary November 29, 1995
- -----------------------------
Jeffrey A. Cohen
/s/ Carmen V. Romeo Treasurer & Assistant Secretary November 29, 1995
- -----------------------------
Carmen V. Romeo
*By /s/ David G. Lee
-----------------------
David G. Lee
Attorney in Fact
</TABLE>
21
<PAGE>
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
(1) Declaration of Trust./1/
(2) By-Laws./1/
(3) Not Applicable.
(4) Not Applicable.
(5) (a) Management Agreement between the Trust and SEI Financial Management
Corporation./1/
(5) (b) Investment Advisory Agreement between the Trust and SunBank, N.A. with
respect to the Trust's Capital Appreciation Portfolio./3/
(5) (c) Investment Advisory Agreement between the Trust and The Bank of
California with respect to the Trust's Equity Income Portfolio./3/
(5) (d) Investment Advisory Agreement between the Trust and Merus Capital
Management, Inc. with respect to the Trust's Equity Income Portfolio./3/
(5) (e) Investment Advisory Agreement between the Trust and Boatmen's Trust
Company with respect to the Trust's Bond Portfolio./4/
(5) (f) Investment Advisory Agreement between the Trust and Bank One,
Indianapolis, N.A. with respect to the Trust's Limited Volatility Bond
Portfolio./5/
(5) (g) Schedule C to Management Agreement between the Trust and SEI Financial
Management Corporation adding the Mid-Cap Growth Portfolio./6/
(5) (h) Investment Advisory Agreement between the Trust and Nicholas-Applegate
Capital Management with respect to the Trust's Mid-Cap Growth Portfolio./6/
(5) (i) Investment Advisory Agreement between the Trust and Investment
Advisers, Inc. with respect to the Trust's Small Cap Growth Portfolio.*
(5) (j) Investment Advisory Agreement between the Trust and Nicholas
Applegate Capital Management with respect to the Trust's Small Cap Growth
Portfolio.*
(5) (k) Investment Advisory Agreement between the Trust and Pilgrim
Baxter & Associates with respect to the Trust's Small Cap Growth
Portfolio.*
(5) (l) Investment Advisory Agreement between the Trust and Duff & Phelps
Investment Management Co. with respect to the Trust's Value Portfolio./10/
(5) (m) Schedule D to Management Agreement between the Trust and SEI Financial
Management Corporation adding the Real Estate Securities Portfolio./10/
(5) (n) Investment Advisory Agreement between the Trust and E.I.I. Realty
Securities, Inc. with respect to the Trust's Real Estate Securities
Portfolio.*
(5) (o) Investment Advisory Agreement between the Trust and Western Asset Management
with respect to the Trust's Intermediate Bond Portfolio./15/
(5) (p) Investment Advisory Agreement between the Trust and Mellon Equity Associates
with respect to the Trust's Large Cap Value Portfolio./15/
(5) (q) Investment Advisory Agreement between the Trust and LSV Asset Management with
respect to the Trust's Large Cap Value Portfolio.*
(5) (r) Investment Advisory Agreement between the Trust and Alliance Capital
Management L.P. with respect to the Trust's Large Cap Growth Portfolio.*
(5) (s) Investment Advisory Agreement between the Trust and IDS Advisory Group, Inc.
with respect to the Trust's Large Cap Growth Portfolio.*
(5) (t) Investment Advisory Agreement between the Trust and 1838 Investment
Advisors, L.P. with respect to the Trust's Small Cap Value Portfolio.*
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
(5) (u) Investment Advisory Agreement between the Trust and Martingale Asset
Management with respect to the Trust's Mid-Cap Portfolio.*
(5) (v) Form of Investment Advisory Agreement between the Trust and BlackRock
Financial Management, Inc. with respect to the Trust's Core Fixed
Income Portfolio.*
(5) (x) Investment Advisory Agreement between the Trust and Firstar Investment
Research & Management Company with respect to the Trust's Core Fixed
Income Portfolio.*
(5) (y) Investment Advisory Agreement between the Trust and BEA Associates with
respect to the Trust's High Yield Bond Portfolio.*
(5) (z) Investment Advisory Agreement between the Trust and Boston Partners
Asset Management, L.P. with respect to the Trust's Small Cap Value Portfolio.*
(5) (aa) Investment Advisory Agreement between the Trust and Apodaca-Johnston Capital
Management, Inc. with respect to the Trust's Small Cap Growth Portfolio.*
(5) (bb) Investment Advisory Agreement between the Trust and Wall Street Associates
with respect to the Trust's Small Cap Growth Portfolio.*
(6) Distribution Agreement between the Trust and SEI Financial Services Company./1/
(7) Not Applicable.
(8) (a) Custodian Agreement between the Trust and CoreStates Bank, N.A. (formerly
Philadelphia National Bank)./2/
(8) (b) Custodian Agreement between the Trust and United States National Bank of
Oregon./2/
(9) Not Applicable.
(10) Opinion and Consent of Counsel./2/
(11) Consent of Independent Public Accountants.*
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) (a) Distribution Plan pursuant to Rule 12b-1 (Class A)./1/
(15) (b) Distribution Plan pursuant to Rule 12b-1 (Class B)./10/
(15) (c) Form of Distribution Plan pursuant to Rule 12b-1 (ProVantage Class)./12/
(15) (d) Rule 18F-3 Multiple Class Plan./16/
(16) Performance Quotation Computation./13/
(17) Powers of Attorney./14/
</TABLE>
- --------------------------------------------------------------------------------
* Filed herewith.
/1/ Incorporated by reference to Registrant's Registration Statement on Form
N-1A (File No. 33-9504) filed with the SEC on October 17, 1986.
/2/ Incorporated by reference to Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A (File No. 33-9504) filed with the SEC
on January 29, 1987.
/3/ Incorporated by reference to Post-Effective Amendment No. 4 to Registrant's
Registration Statement on Form N-1A (File No. 33-9504) filed with the
SEC on November 25, 1987.
/4/ Incorporated by reference to Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A (File No. 33-9504) filed with the
SEC on November 30, 1988.
23
<PAGE>
/5/ Incorporated by reference to Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A (File No. 33-9504) filed with the SEC
on May 4, 1989.
/6/ Incorporated by reference to Post-Effective Amendment No. 12 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on September 15, 1992.
/7/ Incorporated by reference to Post-Effective Amendment No. 13 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on October 30, 1992.
/8/ Incorporated by reference to Post-Effective Amendment No. 14 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on December 1, 1992.
/9/ Incorporated by reference to Post-Effective Amendment No. 15 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on March 4, 1993.
/10/ Incorporated by reference to Post-Effective Amendment No. 17 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on June 21, 1993.
/11/ Incorporated by reference to Post-Effective Amendment No. 18 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on August 31, 1993.
/12/ Incorporated by reference to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on December 2, 1993.
/13/ Incorporated by reference to Post-Effective Amendment No. 19 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on December 2, 1993.
/14/ Incorporated by reference to Post-Effective Amendment No. 20 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on October 7, 1994.
/15/ Incorporated by reference to Post-Effective Amendment No. 21 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on November 29, 1994.
/16/ Incorporated by reference to Post-Effective Amendment No. 23 to
Registrant's Registration Statement on Form N-1A (File No. 33-9504) filed
with the SEC on June 19, 1995.
24
<PAGE>
Exhibit 5(i)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 11th day of August, 1995, between among SEI Financial
----
Management Corporation, (the "Adviser") and Investment Advisers, Inc. (the
"Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Growth
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 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
1
<PAGE>
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 if 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 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 Securities and Exchange Commission ("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-Adviser upon the termination of his 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.
2
<PAGE>
(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 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 current interpretation thereon), the Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be
3
<PAGE>
limited to the period and the amount set forth in Section 36(b)(3) of the
1940 Act), or a loss resulting from willful misfeasance, bad faith or
negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. 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; the actions of the Sub-Adviser under this
Agreement; provided, however, that the Sub-Adviser's obligation under this
Section 6 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.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. This Agreement shall
continue in effect for a period of more of 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 Section 7, 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 rules and
regulations thereunder, subject to such exceptions as may be granted by the
Commission under the 1940 Act.
8. 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.
9. 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.
10. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
4
<PAGE>
To the Sub-Adviser at: Investment Advisers, Inc.
3700 First Bank Place
Minneapolis, MN 55402
Attention: President
11. 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 of the 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
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation Investment Advisers, Inc.
By: /s/ Robert B. Carroll By: [SIGNATURE ILLEGIBLE]
-------------------------------- --------------------------------
Name: Robert B. Carroll Name:
------------------------------- -------------------------------
Title: Vice President Title:
------------------------------ ------------------------------
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT DATED AUGUST ___, 1995
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
INVESTMENT ADVISERS, INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Small Cap Growth Portfolio .50%
6
<PAGE>
Exhibit 5(j)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 11th day of August, 1995, between SEI Financial
-----
Management Corporation, (the "Adviser") and Nicholas-Applegate Capital
Management (the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Growth
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 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
1
<PAGE>
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 if 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 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 Securities and Exchange Commission ("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-Adviser upon the termination of his 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.
2
<PAGE>
(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. The Sub-Adviser will notify the Adviser of
any change in its partners within a reasonable time.
(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 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. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with
3
<PAGE>
respect to the receipt of compensation for services (in which case any
award of damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act), or a loss resulting from willful
misfeasance, bad faith or negligence on the Sub-Adviser's part in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement, except as may otherwise be provided under
provisions of applicable state law which cannot be waived or modified
hereby.
6. 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 6 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.
The Adviser shall indemnify and hold harmless the Sub-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 Adviser's obligations
under this Agreement; provided, however, that the Adviser's obligation
under this Section 6 shall be reduced to the extent that the claim against,
or the loss, liability or damage experienced by the Sub-Adviser, is caused
by or is otherwise directly related to the Sub-Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
7. DURATION AND TERMINATION. This Agreement shall become effective upon
its approval by the Trust's Board of Trustees and by the vote of a majority
of the outstanding voting securities of the Portfolio. 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 7, 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 Commission under the 1940 Act.
8. 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.
9. 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.
4
<PAGE>
10. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: Nicholas-Applegate Capital Management
600 West Broadway, 29th Floor
San Diego, CA 92101
Attention: General Counsel
11. 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.
12. MISCELLANEOUS. The name "Nicholas-Applegate" is a registered trademark of
the Sub-Adviser, and any use or continued use of the name by the Adviser is
subject to the Sub-Adviser's continuing, consent, in its sole discretion,
which consent will not be withheld during the term of this Agreement.
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 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
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation Nicholas-Applegate Capital Management
By: By:
/s/ Robert B. Carroll /s/ E. Blake Moore, Jr.
--------------------------------- ---------------------------------
Name: Robert B. Carroll Name:
E. Blake Moore, Jr.
---------------------------------
Title: Vice President Title:
General Counsel
---------------------------------
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT DATED AUGUST 11 , 1995
----
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Small Cap Growth Portfolio .50%
6
<PAGE>
Exhibit 5(k)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 11th day of August, 1995, between SEI Financial
----
Management Corporation, (the "Adviser") and Pilgrim & Baxter Associates (the
"Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Growth
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 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
1
<PAGE>
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(c) 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 if 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 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 Securities and Exchange Commission ("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-Adviser upon the termination of his 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.
2
<PAGE>
(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 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. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be
3
<PAGE>
limited to the period and the amount set forth in Section 36(b)(3) of the
1940 Act), or a loss resulting from willful misfeasance, bad faith or
negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. 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; the actions of the Sub-Adviser under this
Agreement; provided, however, that the Sub-Adviser's obligation under this
Section 6 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.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. 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 7, 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 Commission under the 1940 Act.
8. 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.
9. 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.
10. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
4
<PAGE>
To the Sub-Adviser at: Pilgrim Baxter & Associates, Ltd.
1255 Drummers Lane, Suite 300
Wayne, PA 19087
Attention : Chairman and Chief Executive
Officer
11. 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 of the 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
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation Pilgrim Baxter & Associates, Ltd.
By: /s/ Robert B. Carroll By: /s/ Harold J. Baxter
--------------------------------- -----------------------------------
Name: Robert B. Carroll Name: Harold J. Baxter
------------------------------- ---------------------------------
Title: Vice President Title: Chairman & CEO
------------------------------ --------------------------------
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT DATED AUGUST 11 , 1995
----
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
PILGRIM BAXTER & ASSOCIATES, LTD.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Small Cap Growth Portfolio .50%
6
<PAGE>
Exhibit 5(n)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 20th day of August, 1993, by and between SEI
Institutional Managed Trust, a Massachusetts business trust (the "Trust"), and
E.I.I. Realty Securities, Inc., (the "Adviser").
WHEREAS, the Trust is an open-end, diversified management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), consisting of several series of shares, each having its own
investment policies; and
WHEREAS, the Trust has retained SEI Financial Management Corporation (the
"Administrator") to provide administration of the Trust's operations, subject to
the control of the Board of Trustees;
WHEREAS, the Trust desires to retain the Adviser to render investment
management services with respect to its Real Estate Securities 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, and to continuously review,
supervise, and administer the investment program of the Portfolios, to
determine in its discretion the securities to be purchased or sold, to
provide the Administrator and the Trust with records concerning the
Adviser's activities which the Trust is required to maintain, and to
render regular reports to the Administrator and to the Trust's
Officers and Trustees concerning the Adviser's discharge of the
foregoing responsibilities.
The Adviser shall discharge the foregoing responsibilities subject to
the control of the Board of Trustees of the Trust and in compliance
with such policies as the Trustees may from time to time establish,
and in compliance with the objectives, policies, and limitations for
each such Portfolio set forth in the Trust's prospectus and statement
of additional information as amended from time to time, and applicable
laws and regulations.
The Adviser accepts such employment and agrees, at its own expense, to
render the services and to provide the office space, furnishings and
equipment and the personnel required by it to perform the services on
the terms and for the compensation provided herein.
1
<PAGE>
2. PORTFOLIO TRANSACTIONS. The Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities for the Portfolios and is directed to use its
best efforts to obtain the best net results as described in the
Trust's prospectus and statement of additional information from time
to time. The Adviser will promptly communicate to the Administrator
and to the officers and the Trustees of the Trust such information
relating to portfolio transactions as they may reasonably request.
It is understood that the Adviser will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Trust or be in
breach of any obligation owing to the Trust under this Agreement, or
otherwise, solely by reason of its having directed a securities
transaction on behalf of the Trust to a broker-dealer in compliance
with the provisions of Section 28(e) of the Securities Exchange Act of
1934.
3. COMPENSATION OF THE ADVISER. For the services to be rendered by the
Adviser as provided in Sections 1 and 2 of this Agreement, the Trust
shall pay to the Adviser compensation at the rate specified in 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. The fee shall be based on the average daily net assets
for the month involved.
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this
Agreement.
4. REPORTS. The Trust and the Adviser agree to furnish to each other, if
applicable, current prospectuses, proxy statements, reports to
shareholders, certified copies of their financial statements, and such
other information with regard to their affairs as each may reasonably
request.
5. STATUS OF THE ADVISER. The services of the Adviser to the Trust are
not to be deemed exclusive, and the Adviser shall be free to render
similar services to others so long as its services to the Trust are
not impaired thereby. The Adviser shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
6. CERTAIN RECORDS. Any records required to be maintained and preserved
pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the 1940 Act which are prepared or maintained by the Adviser on
behalf of the Trust are the property of the Trust and will be
surrendered promptly to the Trust on request.
2
<PAGE>
7. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser
shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against the Adviser
hereunder. The Adviser shall not be liable for any error of judgment
or mistake of law or for any loss arising out of any investment or for
any act or omission in carrying out its duties hereunder, except a
loss resulting from willful misfeasance, bad faith or gross negligence
in the performance of its duties, or by reason of reckless disregard
of its obligations and duties hereunder, except as may otherwise be
provided under provisions of applicable state law which cannot be
waived or modified hereby. (As used in this Paragraph 7, the term
"Adviser" shall include directors, officers, employees and other
corporate agents of the Adviser as well as that corporation itself).
8. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the
Trust are or may be interested in the Adviser (or any successor
thereof) as directors, partners, officers, or shareholders, or
otherwise; directors, partners, officers, agents, and shareholders of
the Adviser are or may be interested in the Trust as Trustees,
shareholders or otherwise; and the Adviser (or any successor) is or
may be interested in the Trust as a shareholder or otherwise. In
addition, brokerage transactions for the Trust may be effected through
affiliates of the Adviser if approved by the Board of Trustees,
subject to the rules and regulations of the Securities and Exchange
Commission.
9. DURATION AND TERMINATION. This Agreement, unless sooner terminated as
provided herein, shall remain in effect until two years from date of
execution, and thereafter, for periods of one year so long as such
continuance thereafter is specifically approved at least annually (a)
by the vote of a majority of those Trustees of the Trust who are not
parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of each Portfolio;
provided, however, that if the shareholders of any Portfolio fail to
approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the 1940
Act and rules and regulations thereunder. The foregoing requirement
that continuance of this Agreement be "specifically approved at least
annually" shall be construed in a manner consistent with the 1940 Act
and the rules and regulations thereunder.
This Agreement may be terminated as to any Portfolio at any time,
without the payment of any penalty by vote of a majority of the
Trustees of the Trust or by vote of a majority of the outstanding
voting securities of the Portfolio on not less than 30 days nor more
than 60 days written notice to the Adviser, or by the Adviser at any
time without the payment of any penalty, on 90 days written notice to
the Trust. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this
Agreement shall be given in
3
<PAGE>
writing, addressed and delivered, or mailed postpaid, to the other
party at any office of such party.
As used in this Section 9, the terms "assignment", "interested
persons", and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder; subject to such
exemptions as may be granted by the Securities and Exchange Commission
under said Act.
10. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, postage prepaid, addressed by the party giving notice
to the other party at the last address furnished by the other party to
the party giving notice: if to the Trust, at 680 East Swedesford
Road, Wayne, PA and if to the Adviser at: 667 Madison Avenue, 16th
Floor, New York, New York, 10021.
11. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
A copy of the Agreement and Declaration of Trust of the Trust is on file with
the Secretary of The Commonwealth of Massachusetts, and notice is hereby given
that this instrument is executed on behalf of the Trustees of the Trust as
Trustees, and are not binding upon any of the Trustees, officers, or
shareholders of the Trust individually but binding only upon the assets and
property of the Trust.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as of the day and year first written above.
SEI Institutional Managed Trust E.I.I. Realty Securities, Inc.
By: [SIGNATURE IS NOT LEGIBLE] By: [SIGNATURE IS NOT LEGIBLE]
------------------------------ -------------------------------
Attest:[SIGNATURE IS NOT LEGIBLE] Attest: [SIGNATURE IS NOT LEGIBLE]
-------------------------- --------------------------
4
<PAGE>
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
SEI INSTITUTIONAL MANAGED TRUST
AND
E.I.I. REALTY SECURITIES, INC.
Pursuant to Article 3, the Trust shall pay the Adviser compensation at an annual
rate as follows:
<TABLE>
<CAPTION>
Portfolio Fee (in basis points)
--------- ---------------------
<S> <C>
Real Estate Securities Portfolio .40% of assets
</TABLE>
5
<PAGE>
Exhibit 5(q)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 31st day of March, 1995, by and among SEI Financial
----
Management Corporation, (the "Adviser") and LSV Asset Management (the "Sub-
Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Large Cap Value
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 the investment
operations of the Portfolio and the composition of the Portfolio, including
the purchase, retention and disposition of securities and other 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 provide supervision of the Portfolio's
investments and determine from time to time what investments and securities
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 securities to be purchased or sold
by the Portfolio 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
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
<PAGE>
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 (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 Sub-Adviser or an affiliate
of the Sub-Adviser may exercise investment discretion. The Sub-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 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 if authorized to allocate
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the 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 any Portfolio's
securities be purchased from or sold to the Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust, the
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.
(d) The Sub-Adviser shall maintain all books and records with respect to
the Portfolio's portfolio transactions required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act and shall render to the Adviser or Board of Trustees such periodic and
special reports as the Adviser or Board of Trustees may reasonably request
The Sub-Adviser shall keep the Portfolio's books and records required to be
maintained by the Sub-Adviser of 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 that is required to
be filled by the Adviser or the Trust with the Securities and Exchange
Commission ("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-Adviser upon the termination of
his 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
<PAGE>
(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.
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 nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for compliance
with the Portfolio's investment objectives, policies, and restrictions, as
provided in Section 1 hereunder.
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 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 investments under
management and will be paid to the Sub-Adviser monthly. The Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with performance of its obligations under this Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3)
of the 1940 Act), or a loss resulting from willful misfeasance, bad faith
or negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. REPORTS. During the term of this Agreement, the Adviser agrees to furnish
the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Portfolios, the Trust or the public
that refer to the Sub-Adviser or its clients in any way prior to use
thereof and not to use material if the Sub-Adviser reasonably objects in
writing within five business days (or such other period as may be mutually
agreed) after receipt thereof. The Sub-Adviser's right to object to such
materials is limited to the portions of such materials that expressly
relate to the Sub-Adviser, its services and
<PAGE>
its clients. The Adviser agrees to use its reasonable best efforts to
ensure that materials prepared by its employees or agents or its affiliates
that refer to the Sub-Adviser or its clients in any way are consistent with
those materials previously approved by the Sub-Adviser as referenced in the
first sentence of this paragraph. Sales literature may be furnished to the
Sub-Adviser by first class or overnight mail, facsimile transmission
equipment or hand delivery.
7. 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 this Agreement or the performance by the
Sub-Adviser of its duties hereunder; provided, however, that the Sub-
Adviser shall not be required to indemnify or otherwise hold the Adviser
harmless under this Section 7 where 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.
8. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the SEC
permitting it to engage a Sub-Adviser without first obtaining approval of
the Agreement from a majority of the outstanding voting securities of the
Portfolio(s) involved, the Agreement shall become effective upon its
approval by the Trust's Board of Trustees. 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.
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 such 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 other party, or (c) by the Sub-
Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the other party. 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 8, 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 Commission under the 1940 Act.
9. 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.
10. 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.
11. 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
<PAGE>
addressed by the party giving notice to the other party at the last address
furnished by the other party:
To the Adviser at: SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: LSV Asset Management
181 W. Madison Avenue
Chicago, IL 60602
Attention: President
12. 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.
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation LSV Asset Management
By SEI Funds, Inc.,
a general partner
By: [SIGNATURE ILLEGIBLE] By: [SIGNATURE ILLEGIBLE]
Title: [ILLEGIBLE] Title: Senior V.P.
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
LSV ASSET MANAGEMENT
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Large Cap Value Portfolio .20%
<PAGE>
Exhibit 5(r)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 16 th day of December, 1994, by and among SEI Financial
------
Management Corporation, (the "Adviser") and Alliance Capital Management L.P.
(the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16th, 1994 (the "Advisory Agreement") with the Trust, pursuant to
----
which the Adviser will act as investment adviser to the Large Cap Growth
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 the investment of
all of the securities and other assets of the Portfolio entrusted to it
hereunder, including the purchase, retention and disposition of securities
and other 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 provide supervision of the Portfolio's
investments and determine from time to time what investments and securities
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.
The Adviser agrees promptly to deliver any amendment or supplement to the
Prospectus to the Sub-Adviser on an on-going basis, and until the Adviser
delivers any such amendment or supplement to its Sub-Adviser, the Sub-
Adviser shall be fully protected in relying on the Prospectus as previously
furnished.
(c) The Sub-Adviser shall determine the securities to be purchased or
sold by the Portfolio 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 and Prospectus or as the
Board of Trustees or the Adviser may direct from time 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
<PAGE>
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 (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 Sub-Adviser or an affiliate
of the Sub-Adviser may exercise investment discretion. The Sub-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 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 portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the 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 any Portfolio's
securities be purchased from or sold to the Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust, the
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.
(d) The Sub-Adviser shall maintain all books and records with respect to
the Portfolio's portfolio transactions required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act and shall render to the Adviser or Board of Trustees such periodic and
special reports as the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records required to be
maintained by the Sub-Adviser by 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
that is required to be filed by the Adviser or the Trust with the
Securities and Exchange Commission ("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-Adviser
upon the termination of his 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 such information and such periodic or
special reports as the Adviser or Board of Trustees may reasonably request.
2
<PAGE>
(f) Adviser understands that the Sub-Adviser now acts, will continue to
act and may act in the future as investment manager or adviser to fiduciary
and other managed accounts, and as investment manager or adviser to other
investment companies, including any offshore entities, or accounts, and the
Portfolio has no objection to the Sub-Adviser's so acting, provided that
whenever the Portfolio and one or more other investment companies or
accounts managed or advised by the Sub-Adviser have available funds for
investment, investments suitable and appropriate for each will be allocated
in accordance with a formula believed to be equitable to each company and
account. The Adviser recognizes that in some cases this procedure may
adversely affect the size of the position obtainable for the Portfolio. In
addition, the Adviser understands that the persons employed by the Sub-
Adviser to assist in the performance of the Sub-Adviser's duties under this
Agreement will not devote their full time to such service and nothing
contained in this Agreement shall be deemed to limit or restrict the right
of the Sub-Adviser or any affiliate of the Sub-Adviser to engage in and
devote time and attention to other businesses or to render services of
whatever kind or nature.
(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.
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 nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for compliance
with the Portfolio's investment objectives, policies, and restrictions, as
provided in Section 1 hereunder.
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.
(d) The Trust's most recent Registration Statement as filed with the
Securities and Exchange Commission.
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 accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule A which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of investments under
management and will be paid to the Sub-Adviser monthly. The Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
3
<PAGE>
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting (i) willful misfeasance, bad faith or negligence on
the Sub-Adviser's part in the performance of its duties, or (ii) reckless
disregard of its obligations and duties under this Agreement, or (iii) a
violation of law or any duty imposed by federal or state law.
6. REPORTS. During the term of this Agreement, the Adviser agrees to furnish
the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Portfolios, the Trust or the public
that refer to the Sub-Adviser or its clients in any way prior to use
thereof and not to use material if the Sub-Adviser reasonably objects in
writing within five business days (or such other period as may be mutually
agreed) after receipt thereof. The Sub-Adviser's right to object to such
materials is limited to the portions of such materials that expressly
relate to the Sub-Adviser, its services and its clients. The Adviser
agrees to use its reasonable best efforts to ensure that materials prepared
by its employees or agents or its affiliates that refer to the Sub-Adviser
or its clients in any way are consistent with those materials previously
approved by the Sub-Adviser as referenced in the first sentence of this
paragraph. Sales literature may be furnished to the Sub-Adviser by first
class or overnight mail, facsimile transmission equipment or hand delivery.
7. CHANGE IN THE SUB-ADVISER'S MEMBERSHIP. The Sub-Adviser agrees that it
shall notify the Adviser of any change in the membership of the general
partners of the Sub-Adviser within a reasonable time after such change.
8. 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 this Agreement or the performance by the
Sub-Adviser of its duties hereunder; provided, however, that the Sub-
Adviser shall not be required to indemnify or otherwise hold the Adviser
harmless under this Section 8 where 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.
9. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the SEC
permitting it to engage a Sub-Adviser without first obtaining approval of
the Agreement from a majority of the outstanding voting securities of the
Portfolio(s) involved, the Agreement shall become effective upon its
approval by the Trust's Board of Trustees. 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.
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 such Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less
4
<PAGE>
than 30 days' written notice to the other party, or (c) by the Sub-Adviser
at any time, without the payment of any penalty, on 90 days' written notice
to the other party. 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 9, 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 Commission under the 1940 Act.
10. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
11. 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.
12. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, NY 10105
Attention: Corporate Legal and
Attention: Thomas Leavitt SVP
13. NAMES. The Trust may use the names "Alliance Capital Management
L.P.", "Alliance Capital Management", "Alliance Capital", or "Alliance"
only for so long as this Agreement or any extension, renewal, or amendment
hereof remains in effect. At such times as this Agreement shall no longer
be in effect, the Trust shall cease to use such names or any other name
indicating that it is advised by or otherwise connected with the Sub-
Adviser.
14 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 of the 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.
5
<PAGE>
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation Alliance Capital Management, L.P.
By: [SIGNATURE IS NOT LEGIBLE] By: Alliance Capital Management
Corporation, its General Partner
Title: [SIGNATURE IS NOT LEGIBLE] By: /s/ Mark R. Manley
--------------------------------
Mark R. Manley
Assistant Secretary
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
ALLIANCE CAPITAL MANAGEMENT L.P.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at the
greater of an annual rate of .25% of the average monthly market value of assets
of the Large Cap Growth Portfolio under management (determined by averaging the
market value as of the first and last business days of the month) calculated and
paid monthly or an annual minimum fee of $125,000. The difference (if any)
between the annual asset based fee of .25% and $125,000 will be paid to the Sub-
Adviser on an annual basis.
The fee payable to the Sub-Adviser pursuant to this schedule begins to accrue
from the date of effectiveness. If this agreement begins or terminates before
the end of any month, the fee for the period from such effective date to the end
of such month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs. Upon
termination, the amount of the annual minimum fee shall be determined on a
prorated basis according to the proportion of the year during which services
were rendered.
7
<PAGE>
Exhibit 5(s)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 16th day of December, 1994, by and among SEI Financial
----
Management Corporation, (the "Adviser") and IDS Advisory Group, Inc. (the "Sub-
Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16th, 1994 (the "Advisory Agreement") with the Trust, pursuant to
----
which the Adviser will act as investment adviser to the Large Cap Growth
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 the investment of
all of the securities and other assets of the Portfolio entrusted to it
hereunder, including the purchase, retention and disposition of securities
andother 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 the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall provide supervision of the Portfolio's
investments and determine from time to time what investments and securities
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 securities to be purchased or sold
by the Portfolio 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 and Prospectus or as the
Board of Trustees or the Adviser may direct from time 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
<PAGE>
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 (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 Sub-Adviser or an affiliate
of the Sub-Adviser may exercise investment discretion. 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
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 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 and other accounts. In addition, the Sub-
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 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 any Portfolio's securities be purchased from or
sold to the Sub-Adviser, the Trust's principal underwriter, or any
affiliated person of either the Trust, the 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.
(d) The Sub-Adviser shall maintain all books and records with respect to
the Portfolio's portfolio transactions required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act and shall render to the Adviser or Board of Trustees such periodic and
special reports as the Adviser or Board of Trustees may reasonably request.
Upon reasonable request and for purposes of a Securities and Exchange
Commission or other regulatory inspection, the Adviser will furnish Sub-
Adviser with information maintained by it as Adviser to the Portfolio.
The Sub-Adviser shall keep the Portfolio's books and records required to be
maintained by the Sub-Adviser by 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 that is required to
be filed by the Adviser or the Trust with the Securities and Exchange
Commission ("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-Adviser upon the termination of
his 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.
<PAGE>
(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 custodian and
other parties providing services to the Portfolio to promptly forward
misdirected proxies to 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 nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for compliance
with the Portfolio's investment objectives, policies, and restrictions, as
provided in Section 1 hereunder.
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 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 investments under
management and will be paid to the Sub-Adviser monthly. The Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its the Sub-Adviser's obligations under
this Agreement, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services (in which case any
award of damages shall be limited to the period and the amount set forth in
Section 36(b)(3) of the 1940 Act), or a loss resulting from willful
misfeasance, bad faith or negligence on the Sub-Adviser's part in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement, except as may otherwise be provided under
provisions of applicable state law which cannot be waived or modified
hereby.
3
<PAGE>
6. REPORTS. During the term of this Agreement, the Adviser agrees to furnish
the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Portfolios, the Trust or the public
that refer to the Sub-Adviser or its clients in any way prior to use
thereof and not to use material if the Sub-Adviser reasonably objects in
writing within five business days (or such other period as may be mutually
agreed) after receipt thereof. The Sub-Adviser's right to object to such
materials is limited to the portions of such materials that expressly
relate to the Sub-Adviser, its services and its clients. The Adviser agrees
to use its reasonable best efforts to ensure that materials prepared by its
employees or agents or its affiliates that refer to the Sub-Adviser or its
clients in any way are consistent with those materials previously approved
by the Sub-Adviser as referenced in the first sentence of this paragraph.
Sales literature may be furnished to the Sub-Adviser by first class or
overnight mail, facsimile transmission equipment or hand delivery.
7. 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 by the Sub-Adviser of
its duties under this Agreement; provided, however, that the Sub-Adviser
shall not be required to indemnify or otherwise hold the Adviser harmless
under this Section 7 where 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.
The Adviser shall indemnify and hold harmless the Sub-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 by the Adviser of its duties
under this Agreement; provided, however, that the Adviser shall not be
required to indemnify or otherwise hold the Sub-Adviser harmless under this
Section 7 where the claim against, or the loss, liability or damage
experienced by the Sub-Adviser, is caused by or is otherwise directly
related to the Sub-Adviser's own willful misfeasance, bad faith or
negligence, or to the reckless disregard of its duties under this
Agreement.
8. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the SEC
permitting it to engage a Sub-Adviser without first obtaining approval of
the Agreement from a majority of the outstanding voting securities of the
Portfolio(s) involved, the Agreement shall become effective upon its
approval by the Trust's Board of Trustees. 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.
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 such 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 other party, or (c) by the Sub-
Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the other party. This Agreement shall
<PAGE>
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 8, 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 Commission under the 1940 Act.
9. 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.
10. 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.
11. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: IDS Advisory Group Inc.
IDS Tower 10
Minneapolis, MN 55440
Attention: President
12. MISCELLANEOUS. The Trust may be identified by name in the Sub-Adviser's
current client list. Such list may be used with third parties. The Sub-
Adviser is an affirmative action company.
13. 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 of the 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
Commission, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
<PAGE>
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 Financial Management Corporation IDS Advisory Group, Inc.
By: [SIGNATURE ILLEGIBLE] By: [SIGNATURE ILLEGIBLE]
Title: [ILLEGIBLE] Title: Pres & C.E.O.
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
IDS ADVISORY GROUP, INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at the
greater of an annual rate of .25% of the average monthly market value of assets
of the Large Cap Growth Portfolio under management (determined by averaging the
market value as of the first and last business days of the month) calculated and
paid monthly or an annual minimum fee of $125,000. The difference (if any)
between the annual asset based fee of .25% and $125,000 will be paid to the Sub-
Adviser on an annual basis.
The fee payable to the Sub-Adviser pursuant to this schedule begins to accrue
from the date of effectiveness before the end of any month. If this agreement
begins or terminates before the end of any month, the fee for the period from
such effective date to the end of such month or from the beginning of such month
to the date of termination, as the case may be, shall be prorated according to
the proportion which such period bears to the full month in which such
effectiveness or termination occurs. Upon termination, the amount of the annual
minimum fee shall be determined on a prorated basis according to the proportion
of the year during which services were rendered.
7
<PAGE>
Exhibit 5(t)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 8th day of December, 1994, by and among SEI Financial
-----
Management Corporation, (the "Adviser") and 1838 Investment Advisors, L.P. (the
"Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December ___, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Value
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 the investment
operations of the Portfolio and the composition of the Portfolio, including
the purchase, retention and disposition of securities and other 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 provide supervision of the Portfolio's
investments and determine from time to time what investments and securities
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 securities to be purchased or sold
by the Portfolio 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
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
<PAGE>
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 (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 Sub-Adviser
or an affiliate of the Sub-Adviser may exercise investment discretion. The
Sub-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 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 if authorized to
allocate purchase and sale orders for portfolio securities to brokers or
dealers (including brokers and dealers that are affiliated with the 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 any Portfolio's
securities be purchased from or sold to the Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust, the
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.
(d) The Sub-Adviser shall maintain all books and records with respect to
the Portfolio's portfolio transactions required by subparagraphs (b)(5),
(6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940
Act and shall render to the Adviser or Board of Trustees such periodic and
special reports as the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records required to be
maintained by the Sub-Adviser of 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 that is required to
be filled by the Adviser or the Trust with the Securities and Exchange
Commission ("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-Adviser upon the termination of
his 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.
<PAGE>
(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.
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 nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for compliance
with the Portfolio's investment objectives, policies, and restrictions, as
provided in Section 1 hereunder.
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 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 investments under
management and will be paid to the Sub-Adviser monthly. The Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with performance of its obligations under this Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3)
of the 1940 Act), or a loss resulting from willful misfeasance, bad faith
or negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. REPORTS. During the term of this Agreement, the Adviser agrees to furnish
the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Portfolios, the Trust or the public
that refer to the Sub-Adviser or its clients in any way prior to use
thereof and not to use material if the Sub-Adviser reasonably objects in
writing within five business days (or such other period
<PAGE>
as may be mutually agreed) after receipt thereof. The Sub-Adviser's right
to object to such materials is limited to the portions of such materials
that expressly relate to the Sub-Adviser, its services and its clients. The
Adviser agrees to use its reasonable best efforts to ensure that materials
prepared by its employees or agents or its affiliates that refer to the
Adviser or its clients in any way are consistent with those materials
Sub-previously approved by the Sub-Adviser as referenced in the first
sentence of this paragraph. Sales literature may be furnished to the Sub-
Adviser by first class or overnight mail, facsimile transmission equipment
or hand delivery.
7. CHANGE IN THE SUB-ADVISER'S MEMBERSHIP. The Sub-Adviser agrees that it
shall notify the Trust of any change in the membership of the Sub-Adviser
within a reasonable time after such change.
8. 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 this Agreement or the performance by the
Sub-Adviser of its duties hereunder; provided, however, that the Sub-
Adviser shall not be required to indemnify or otherwise hold the Adviser
harmless under this Section 8 where 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.
9. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the SEC
permitting it to engage a Sub-Adviser without first obtaining approval of
the Agreement from a majority of the outstanding voting securities of the
Portfolio(s) involved, the Agreement shall become effective upon its
approval by the Trust's Board of Trustees. 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.
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 such 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 other party, or (c) by the Sub-
Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the other party. 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 9, 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 Commission under the 1940 Act.
10. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
<PAGE>
11. 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.
12. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: 1838 Investment Advisors, L.P.
5 Radnor Corporate Center
100 Matsonford Road, Suite 320
Radnor, Pa 19087
13. 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.
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation 1838 Investment Advisors, L.P.
By: [SIGNATURE ILLEGIBLE] By: [SIGNATURE ILLEGIBLE]
Title: [ILLEGIBLE] Title: President
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
1838 INVESTMENT ADVISORS, L.P.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Small Cap Value .50%
<PAGE>
Exhibit 5(u)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 26th day of September, 1995, between SEI
Financial Management Corporation, (the "Adviser") and Martingale Asset
Management, L.P. (the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Mid Cap 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 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
1
<PAGE>
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 if 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 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 Securities and Exchange Commission ("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-Adviser upon the termination of his 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.
2
<PAGE>
(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 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 current interpretation thereon), the Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be
3
<PAGE>
limited to the period and the amount set forth in Section 36(b)(3) of the
1940 Act), or a loss resulting from willful misfeasance, bad faith or
negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. 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; the actions of the Sub-Adviser under this
Agreement or the performance by the Sub-Adviser of its duties hereunder;
provided, however, that the Sub-Adviser's obligation under this Section 6
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.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. 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 conference with the 1940 Act; provided, however, that this
Agreement may be terminated with respect to 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 section 7, 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 Commission under the 1940 Act.
8. 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.
9. 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.
10. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
4
<PAGE>
To the Sub-Adviser at: Martingale Asset Management, L.P.
222 Berkeley Street
Boston, MA 02116
Attention: Treasurer
11. 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 of the 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
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation Martingale Asset Management, L.P.
By: Martingale Asset
Management Corporation, its
General Partner
By: /s/ Robert B. Carroll By: /s/ Arnold S. Wood
--------------------------------- -------------------------
Name: Robert B. Carroll Name: Arnold S. Wood
------------------------------- ------------------------------
Title: Vice President Title: President
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT DATED SEPTEMBER 26, 1995
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
MARTINGALE ASSET MANAGEMENT, L.P.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Mid Cap Portfolio .25%
6
<PAGE>
Exhibit 5(v)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 13th day of November, 1995, between SEI Financial
Management Corporation, (the "Adviser") and BlackRock Financial Management, Inc.
(the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Core Fixed Income
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 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
1
<PAGE>
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 if 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-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.
2
<PAGE>
(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 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
3
<PAGE>
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.
The Adviser shall indemnify and hold harmless the Sub-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 Adviser's obligations
under this Agreement; provided, however, that the 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 Sub-Adviser, is caused
by or is otherwise directly related to the Sub-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 and by the vote of a majority of
the outstanding voting securities of the Portfolio. 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 and, on not less than 30 days' written
notice to the Sub-Adviser, (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 Commission 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:
To the Adviser at: SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
4
<PAGE>
To the Sub-Adviser at: BlackRock Financial Management, Inc.
345 Park Avenue, 30th Floor
New York, NY 10154
Attn: President
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 Financial Management Corporation BlackRock Financial Management, Inc.
By: By:
________________________________ ___________________________________
Name: Name:
________________________________ ___________________________________
Title: Title:
________________________________ ___________________________________
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
BLACKROCK FINANCIAL MANAGEMENT, INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Core Fixed Income Portfolio .15%
6
<PAGE>
Exhibit 5(x)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 13 day of November, 1995, between SEI Financial
--
Management Corporation, (the "Adviser") and Firstar Investment Research &
Management Company (the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Core Fixed Income
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 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
1
<PAGE>
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 a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
tranaction 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 if 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-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.
2
<PAGE>
(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 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 current 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
3
<PAGE>
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 and by the vote of a majority of
the outstanding voting securities of the Portfolio. 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:
<TABLE>
<S> <C>
To the Adviser at: SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: Firstar Investment Research & Management
Company
777 E. Wisconsin Avenue, Suite 1800
Milwaukee, WI 53202
Attn: President
</TABLE>
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
4
<PAGE>
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 Financial Management Firstar Investment Research & Management
Corporation Company
By: /s/ R.B. Carroll By: /s/ Charles B Groeschell
------------------------------- -----------------------------------
Name: R.B Carroll Name: Charles B Groeschell
------------------------------- -----------------------------------
Title: Vice President Title: Senior Vice President
------------------------------- -----------------------------------
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
FIRSTAR INVESTMENT RESEARCH & MANAGEMENT COMPANY
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Core Fixed Income Portfolio .10%
6
<PAGE>
Exhibit 5(y)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 11th day of August, 1995, between SEI Financial
------
Management Corporation, (the "Adviser") and BEA Associates (the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16th, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the High Yield Bond
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 the investment of
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 investment objectives,
policies and limitations with respect to the Portfolio set forth in the
Trust's Declaration of Trust (as defined herein) and the Prospectus and
with applicable 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, including the Sub-Adviser or
affiliates thereof, in accordance with the policy with respect to brokerage
set forth in the Portfolio's Registration Statement and Prospectus or as
the Trust's Board of Trustees or the Adviser may direct from time 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
<PAGE>
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 (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 Sub-Adviser or an affiliate of the Sub-Adviser may
exercise investment discretion. 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 in terms of
the overall responsibilities of the Sub-Adviser to the Portfolio and the
accounts as to which the Sub-Adviser exercises investment discretion. It is
recognized that the services provided by such brokers or dealers may be
useful to the Sub-Adviser in connection with the Sub-Adviser's services to
other clients. In no instance, however, will any of 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, the
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. On occasions when the Sub-Adviser deems the
purchase or sale of a security to be in the best interest of the Portfolio
as well as other customers, the Sub-Adviser may, to the extent permitted by
applicable laws and regulations, but shall not be obligated to, aggregate
the securities to be sold or purchased in order to obtain the best
execution and lower brokerage commissions, if any. In such event,
allocation of the securities so purchased or sold, as well as expenses
incurred in the transaction, will be made by the Sub-Adviser in the manner
it considers to be fair and equitable and consistent with its fiduciary
obligation to the Portfolio, and, if applicable, to other customers.
The Adviser acknowledges that in order to comply with federal securities
laws and related regulatory requirements, there may be periods when the
Sub-Adviser will not be permitted to initiate or recommend certain types of
transactions in the securities or issuers for which affiliates of the Sub-
Adviser are performing investment banking services, and neither the Trust
nor the Adviser will be advised of that fact. For example, during certain
periods when affiliates of the Sub-Adviser are engaged in an underwriting
or other distribution of a company's securities, the Sub-Adviser may be
prohibited from purchasing or recommending the purchase of certain
securities of that company for its clients. Similarly, the Sub-Adviser may
on occasion be prohibited from selling or recommending the sale of
securities of a company for which affiliates are providing investment
banking services.
(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
and shall render to the Adviser or the Trust's Board of Trustees such
periodic and special reports as the Adviser or the Trust's Board of
Trustees may reasonably request.
2
<PAGE>
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 Securities and Exchange Commission ("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-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
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 other clients, as long as such services
do not impair the services rendered to the Adviser or the Trust. The Sub-
Adviser may give advice, and take action, with respect to any of its other
clients that may differ from the advice given, or the time or nature of
action taken, with respect to the Portfolio. The Sub-Adviser shall have no
obligation to purchase or sell for the Portfolio or to recommend for
purchase or sale by the Portfolio, any securities that the Sub-Adviser, its
principals, affiliates or employees may purchase for themselves or for any
other clients.
(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.
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 respect to the
Portfolio, 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:
3
<PAGE>
(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.
Copies of any amendments to the above documents will be furnished promptly
to the Sub-Adviser.
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 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. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3)
of the 1940 Act), or a loss resulting from willful misfeasance, bad faith
or negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
The Sub-Adviser shall not be responsible for any loss incurred by reason of
any act or omission of any broker-dealer; provided, however, that the Sub-
Adviser shall use reasonable care in its selection and use of brokers in
effecting transactions for the Portfolio. The Sub-Adviser shall have no
obligation to seek to obtain any material non-public ("inside") information
about any issuer of securities, nor to purchase or sell, or to recommend
for purchase or sale, for the Portfolio the securities of any issuer on the
basis of any such information as may come into its possession.
The Adviser acknowledges and agrees that the Sub-Adviser makes no
representation and warranty, express or implied, that any level of
performance or investment results will be achieved by the Portfolio or that
the Portfolio will perform comparably with any standard or index, including
other clients of the Sub-Adviser whether public or private.
6. REPORTS. During the term of this Agreement, the Adviser agrees to furnish
the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Portfolios, the Trust or the public
that refer to the Sub-Adviser or its clients in any way prior to use
thereof and not to use such material if the Sub-Adviser reasonably objects
in writing within five business days (or such other period as may be
mutually agreed) after receipt thereof. The Sub-Adviser's right to object
to such materials is limited to the portions of such materials that
expressly relate to the Sub-Adviser, its services and
4
<PAGE>
its clients. The Adviser agrees to use its reasonable best efforts to
ensure that materials prepared by its agents or its affiliates that refer
to the Sub-Adviser or its clients in any way are consistent with those
materials previously approved by the Sub-Adviser as referenced in the first
sentence of this paragraph. Sales literature may be furnished to the Sub-
Adviser by first class or overnight mail, facsimile transmission equipment
or hand delivery.
7. PORTFOLIO COMPOSITION. The Adviser shall provide (or cause the Trust's
custodian to provide) timely information to the Sub-Adviser regarding such
matters as the composition of the Assets and cash available for investment
in the Portfolio and cash requirements (with respect to the redemption of
Portfolio shares) and such other information as the parties may reasonably
agree upon.
8. EXPENSES. The Sub-Adviser shall bear expenses incurred by it in connection
with its duties hereunder, including payment for compensation of and office
space for its officers and employees engaged in providing services
hereunder, but shall not be responsible for any expenses of the Trust.
9. CUSTODY. The cash and assets of the Portfolio shall be held by CoreStates
Bank, N.A. (the "Custodian"), which the Adviser hereby represents has
agreed to act as custodian for the Portfolio. The Sub-Adviser shall at no
time have custody or physical control of the Assets in the Portfolio. In
addition, the Sub-Adviser shall not be liable for any act or omission of
the Custodian. The Sub-Adviser shall give instructions to the Custodian in
writing or orally (at the discretion of the Custodian) and confirmed in
writing as soon as practicable thereafter. The Adviser shall instruct the
Custodian to provide the Sub-Adviser with such periodic reports concerning
the status of the Portfolio as the Sub-Adviser and the Adviser may agree
from time to time. The Adviser shall provide the Sub-Adviser with a copy of
the Portfolio's agreement with the Custodian and any modification thereto
and will notify the Sub-Adviser in advance of a change in the Custodian.
10. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser represents and
warrants to the Sub-Adviser that (a) the Adviser has the authority to act
on behalf of the Trust and has and will continue to convey to the Sub-
Adviser all relevant information regarding the Trust and the Portfolio
including, but not limited to, any relevant investment restrictions of the
Trust and the Portfolio; (b) this Agreement has been duly authorized,
executed and delivered by the Adviser and constitutes its valid and binding
obligation, enforceable in accordance with its terms; (c) no governmental
authorizations, approvals, consents or filings are required in connection
with the execution, delivery or performance of this Agreement by the
Adviser; (d) the execution, delivery and performance of this Agreement by
the Adviser will not violate or result in any default under the Adviser's
certificate of incorporation or by-laws (or equivalent constituent
documents), any contract or other agreement to which the Adviser is a party
or by which its assets may be bound or any statute or any rule, regulation
or order of any government agency or body; (e) the Assets of the Portfolio
do not and will not constitute assets of any employee benefit plan within
the meaning of Section 3(3) of the Employee Retirement Security Act of 1974
or Section 4975(e) of the Internal Revenue Code of 1986 and this Agreement
and the transactions contemplated hereby will not constitute an investment
by a "benefit plan investor" within the meaning of DOL Reg. Section 2510.3-
101; and (f) the Adviser has received a copy of Part II of the Sub-
Adviser's Form ADV as most recently filed with the SEC.
11. DIRECTIONS TO SUB-ADVISER. All directions by or on behalf of the Adviser to
the Sub-Adviser shall be in writing signed either (a) by a director or
officer of the Adviser, or (b) by a duly authorized agent of the Adviser.
The Sub-Adviser shall be fully protected in relying upon any direction
signed in the appropriate manner with respect to any instruction, direction
or approval of the Adviser.
5
<PAGE>
The Sub-Adviser shall also be fully protected when acting upon any
instrument, certificate or paper the Sub-Adviser reasonably believes to be
genuine and to be signed or presented by the proper person or persons. The
Sub-Adviser shall be under no duty to make any investigation or inquiry as
to any statement contained in any such writing and may accept the same as
conclusive evidence of the truth and accuracy of the statements therein
contained.
12. PROXIES, TENDER OFFERS, CLASS ACTIONS, ETC. Subject to any other written
instructions of the Adviser, the Sub-Adviser is hereby appointed the
Adviser's agent and attorney-in-fact on behalf of the Portfolio in its
discretion to vote, tender or convert any of the Assets; to execute
proxies, waivers, consents, account documentation, agreements, contracts,
and other instruments with respect to the Assets; to endorse, transfer or
deliver the Assets and to participate in or consent to any class action,
plan of reorganization, merger, combination, consolidation, liquidation or
similar plan with reference to the Assets; and the Sub-Adviser shall not
incur any liability to the Adviser or the Portfolio by reason of any
exercise of, or failure to exercise, any such discretion. Notwithstanding
the provisions of this Section 12, if the Sub-Adviser determines that it,
or any of its affiliates, has an adverse or potentially adverse interest
with respect to the vote or other requested action, the Sub-Adviser shall
so inform the Adviser, which shall thereupon become responsible for the
determination on such vote or other action.
13. INDEMNIFICATION. (a) The Adviser shall indemnify and hold harmless the Sub-
Adviser, its officers, directors, employees, agents and each person, if
any, who controls the Sub-Adviser within the meaning of Section 15 of the
Securities Act of 1933 (the "1933 Act") (any and all such persons shall be
referred to as "Sub-Adviser Indemnified Party"), 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 this Agreement or the performance by the Adviser of its duties
hereunder; provided, however, that the Adviser shall not be required to
indemnify or otherwise hold any particular Sub-Adviser Indemnified Party
harmless under this Section 13 where the claim against, or the loss,
liability or damage experienced by the Sub-Adviser Indemnified Party is
caused by or is otherwise directly related to such Sub-Adviser Indemnified
Party's own willful misfeasance, bad faith or negligence, or to the
reckless disregard of its duties under this Agreement.
(b) The Sub-Adviser shall indemnify and hold harmless the Adviser, its
officers, directors, employees, agents and each person, if any, who
controls the Adviser within the meaning of Section 15 of the 1933 Act (any
and all such persons shall be referred to as "Adviser Indemnified Party")
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 this Agreement or the performance by the
Sub-Adviser of its duties hereunder; provided, however, that the Sub-
Adviser shall not be required to indemnify or otherwise hold any particular
Adviser Indemnified Party harmless under this Section 13 where the claim
against, or the loss, liability or damage experienced by the Adviser
Indemnified Party, is caused by or is otherwise directly related to such
Adviser Indemnified Party's own willful misfeasance, bad faith or
negligence, or to the reckless disregard of its duties under this
Agreement.
14. DURATION AND TERMINATION. This Agreement shall become effective as of the
date hereof.
This Agreement shall continue in effect until the earlier of (i) a period
two years from the date hereof only so long as continuance is specifically
approved at least annually in conformance with the 1940 Act or (ii) the
approval by a majority of the outstanding voting securities of the
Portfolio of an Investment Sub-Advisory Agreement with substantially the
same terms and conditions except
6
<PAGE>
with respect to compensation to the Sub-Adviser; 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 such 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 14, 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.
15. 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.
16. 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.
17. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: BEA Associates
153 East 53rd Street
New York, NY 10022
Attn.: President
18. 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.
7
<PAGE>
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 Financial Management Corporation BEA Associates
By: /s/ Robert B. Carroll By: [SIGNATURE ILLEGIBLE]
- --------------------------------------------------------------------------------
Name Robert B. Carroll Name [ILLEGIBLE]
- --------------------------------------------------------------------------------
Title: Vice President Title: V.P. & Legal Counsel
- --------------------------------------------------------------------------------
8
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
BEA ASSOCIATES
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
High Yield Bond Portfolio .3375%
9
<PAGE>
Exhibit 5(z)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 13th day of November, 1995, between SEI Financial
Management Corporation, (the "Adviser") and Boston Partners Asset Management,
L.P. (the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Value
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, on a discretionary basis, 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 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
1
<PAGE>
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 if 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-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.
2
<PAGE>
(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. In addition, it
is understood that the Sub-Adviser performs investment advisory services
for various clients other than the Adviser. The Sub-Adviser may give advice
and take action in the performance of its duties with respect to any of its
other clients which may differ from the advice given, or the timing or
nature of action taken, with respect to the Assets. Nothing in this
Agreement shall be deemed to impose upon the Sub-Adviser any obligation to
purchase or sell for the Portfolio any security or other property which
Sub-Adviser purchases or sells for its own account or for the account of
any other client.
(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 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
3
<PAGE>
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 an explicit instruction by
the Adviser or the Adviser's own willful misfeasance, bad faith or
negligence, or to the reckless disregard of its duties under this
Agreement.
The Adviser shall indemnify and hold harmless the Sub-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 Adviser's obligations
under this Agreement; provided, however, that the 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 Sub-Adviser, is caused
by or is otherwise directly related to the Sub-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 and by the vote of a majority of
the outstanding voting securities of the Portfolio. 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:
4
<PAGE>
To the Adviser at: SEI Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
To the Sub-Adviser at: Boston Partners Asset Management, L.P.
One Financial Center
43rd Floor
Boston, MA 02111
attn: President
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.
11. INFORMATION. The Sub-Adviser will notify the Adviser of any change in the
composition of its partners within a reasonable time after such change.
12. FORM ADV, PART II. Adviser represents that Sub-Adviser has delivered to it
a copy of Part II of Sub-Adviser's current Form ADV as required by the
Investment Advisers Act of 1940. If Adviser did not receive Part II of Sub-
Adviser's Form ADV at least 48 hours prior to entering into the Agreement,
Adviser may terminate this Agreement without penalty within five business
days hereof.
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 Financial Management Corporation Boston Partners Asset Management, L.P.
By: /s/ Robert B. Carroll By: Boston Partners, Inc., the
------------------------------------
General Partner
By: /s/ William J. Kelly
----------------------------------
Name: Robert B. Carroll Name: William J. Kelly
Title: Vice President Title: Treasurer
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
BOSTON PARTNERS ASSET MANAGEMENT, L.P.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Small Cap Value Portfolio .50%
6
<PAGE>
Exhibit 5(aa)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 11 th day of August, 1995, between SEI Financial
-----
Management Corporation, (the "Adviser") and Apodaca-Johnston Capital Management,
Inc. (the "Sub-Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Growth
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 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
1
<PAGE>
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 if 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 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 Securities and Exchange Commission ("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-Adviser upon the termination of his 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.
2
<PAGE>
(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 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 current interpretation thereon), the Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this
Agreement, except a loss resulting from a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any
award of damages shall be
3
<PAGE>
limited to the period and the amount set forth in Section 36(b)(3) of the
1940 Act), or a loss resulting from willful misfeasance, bad faith or
negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. 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; the actions of the Sub-Adviser under this
Agreement; provided, however, that the Sub-Adviser's obligation under this
Section 6 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.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. 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 7, 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 Commission under the 1940 Act.
8. 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.
9. 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.
10. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
4
<PAGE>
To the Sub-Adviser at: Apodaca-Johnston Capital Management, Inc.
50 California Street
Suite 3315
San Francisco, CA 94111
Attention: President
11. 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 of the 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
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation Apodaca-Johnston Capital Management, Inc.
By: /s/ Robert B. Carroll By: /s/ Jerry C. Apodaca, Jr.
_______________________________ _________________________________
Name: Robert B. Carroll Name: Jerry C. Apodaca,Jr.
_______________________________ __________________________________
Title: Vice President Title: Vice President
_______________________________ __________________________________
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT DATED AUGUST 11 , 1995
---
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
APODACA-JOHNSTON CAPITAL MANAGEMENT, INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
<TABLE>
<S> <C>
Small Cap Growth Portfolio .50%
</TABLE>
6
<PAGE>
Exhibit 5(bb)
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL MANAGED TRUST
AGREEMENT made this 11th day of August, 1995, between SEI Financial
------
Management Corporation, (the "Adviser") and Wall Street Associates (the "Sub-
Adviser").
WHEREAS, SEI Institutional Managed Trust, 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 December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Growth
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 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
1
<PAGE>
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 if 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 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 Securities and Exchange Commission ("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-Adviser upon the termination of his 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.
2
<PAGE>
(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 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. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be
3
<PAGE>
limited to the period and the amount set forth in Section 36(b)(3) of the
1940 Act), or a loss resulting from willful misfeasance, bad faith or
negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. 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; the actions of the Sub-Adviser under this
Agreement; provided, however, that the Sub-Adviser's obligation under this
Section 6 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.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio. This Agreement shall
continue in effect for a period of more than two year 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 7, 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
Commission under the 1940 Act.
8. 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.
9. 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.
10. 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 Financial Management Corporation
680 East Swedesford Road
Wayne, PA 19087
Attention: Legal Department
4
<PAGE>
To the Sub-Adviser at: Wall Street Associates
1200 Prospect Street
Suite 100
La Jolla, CA 92037
Attention: President
11. 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 of the 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
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 by their officers designated below as of the day and year first written
above.
SEI Financial Management Corporation Wall Street Associates
By: /s/ Robert B. Carroll By: /s/ William Jeffrey III
-------------------------------- --------------------------------
Name: Robert B. Carroll Name: William Jeffrey III
------------------------------ ------------------------------
Title: Vice President Title: President
----------------------------- -----------------------------
5
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT DATED AUGUST 11 , 1995
----
BETWEEN
SEI FINANCIAL MANAGEMENT CORPORATION
AND
WALL STREET ASSOCIATES
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Small Cap Growth Portfolio .50%
6
<PAGE>
Exhibit 11
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 25 to the Registration
Statement on Form N-1A ("Registration Statement") of our report dated
November 10, 1995, relating to the financial statements of the Large Cap Value,
Large Cap Growth, Small Cap Value, Small Cap Growth, Mid-Cap, Capital
Appreciation, Equity Income, Balanced, Capital Growth, Core Fixed Income, Bond
and High Yield Bond Portfolios of SEI Institutional Managed Trust, which appears
in such Statement of Additional Information and to the incorporation by
reference of our report into the Prospectuses constituting part of the
Registration Statement. We also consent to the references to us under the
headings "Experts" and "Financial Statements" in the Statement of Additional
Information and to the references to us under the headings "Financial
Highlights" and "Counsel and Independent Accountants" in the Prospectuses.
/s/ Price Waterhouse LLP
PRICE WATERHOUSE LLP
Philadelphia, PA
November 27, 1995
<TABLE> <S> <C>
<PAGE>
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<DIVIDEND-INCOME> 386
<INTEREST-INCOME> 150
<OTHER-INCOME> 0
<EXPENSES-NET> 515
<NET-INVESTMENT-INCOME> 21
<REALIZED-GAINS-CURRENT> 6,416
<APPREC-INCREASE-CURRENT> (3,370)
<NET-CHANGE-FROM-OPS> 3,067
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 30
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7,345)
<OVERDISTRIB-NII-PRIOR> (3)
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 235
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 594
<AVERAGE-NET-ASSETS> 81
<PER-SHARE-NAV-BEGIN> 10.87
<PER-SHARE-NII> (.01)
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<PER-SHARE-NAV-END> 12.96
<EXPENSE-RATIO> 1.3
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
