SEI INSTITUTIONAL MANAGED TRUST, 485APOS, 1998-11-25

SEI INSTITUTIONAL MANAGED TRUST
485APOS, 1998-11-25

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 25, 1998

FILE NO. 33-9504
FILE NO. 811-4878
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-1A

REGISTRATION STATEMENT UNDER THE

SECURITIES ACT OF 1933 / /
POST-EFFECTIVE AMENDMENT NO. 29 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / /
AMENDMENT NO. 31 /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

EDWARD D. LOUGHLIN
c/o SEI Investments Company
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)

COPIES TO:

<TABLE>
<S> <C>
Richard W. Grant, Esq. John H. Grady, Jr., Esq.
Morgan Lewis & Bockius LLP Morgan Lewis & Bockius LLP
2000 One Logan Square 2000 One Logan Square
Philadelphia, Pennsylvania 19103 Philadelphia, Pennsylvania
19103
</TABLE>

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

Title of Securities Being Registered . . . . . . . . . . . . . . Units of
Beneficial Interest

It is proposed that this filing become effective (check appropriate box)

<TABLE>
<C> <S>
/ / immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / 75 days after filing pursuant to paragraph (a)
/X/ on January 26, 1999 pursuant to paragraph (a) of Rule 485
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SEI
INSTITUTIONAL
MANAGED
TRUST
CLASS A SHARES
CLASS D SHARES

PROSPECTUS
JANUARY 31, 1999

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

EQUITY FUNDS: BALANCED FUND:
LARGE CAP VALUE FUND BALANCED FUND
LARGE CAP GROWTH FUND
TAX-MANAGED LARGE CAP FUND FIXED INCOME FUNDS:
SMALL CAP VALUE FUND CORE FIXED INCOME FUND
SMALL CAP GROWTH FUND HIGH YIELD BOND FUND
MID-CAP FUND
CAPITAL APPRECIATION FUND
EQUITY INCOME FUND

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

INVESTMENT ADVISER
SEI INVESTMENTS MANAGEMENT CORPORATION

SUB-ADVISERS:
<TABLE>
<S> <C>
1838 INVESTMENT ADVISORS, L.P. MELLON EQUITY ASSOCIATES, LLP
ALLIANCE CAPITAL MANAGEMENT L.P. NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
BEA ASSOCIATES PROVIDENT INVESTMENT COUNSEL, INC.
BLACKROCK, INC. ROBERTSON STEPHENS INVESTMENT MANAGEMENT, L.P.
BOSTON PARTNERS ASSET MANAGEMENT, L.P. SANFORD C. BERNSTEIN & CO., INC.
FIRSTAR INVESTMENT RESEARCH & MANAGEMENT LLC SPYGLASS ASSET MANAGEMENT, INC.
FURMAN SELZ CAPITAL MANAGEMENT LLC STI CAPITAL MANAGEMENT, N.A.
HIGHMARK CAPITAL MANAGEMENT, INC. TCW FUNDS MANAGEMENT INC.
LSV ASSET MANAGEMENT, L.P. WALL STREET ASSOCIATES
MARTINGALE ASSET MANAGEMENT L.P. WESTERN ASSET MANAGEMENT COMPANY
</TABLE>

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED ANY FUND SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE.

IT IS A CRIME FOR ANYONE TO TELL YOU OTHERWISE.

<PAGE>

SEI Institutional
Managed Trust
HOW TO READ THIS PROSPECTUS
- -------------------------------------------------------------------------------

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

We have arranged the prospectus into different sections so that you can easily
review this important information. On the next page, we discuss general
information you should know about investing in the Funds. For more detailed
information about the Funds, please see:

LARGE CAP VALUE FUND..................................................
LARGE CAP GROWTH FUND.................................................
TAX-MANAGED LARGE CAP FUND............................................
SMALL CAP VALUE FUND..................................................
SMALL CAP GROWTH FUND.................................................
MID-CAP FUND..........................................................
CAPITAL APPRECIATION FUND.............................................
EQUITY INCOME FUND....................................................
BALANCED FUND.........................................................
CORE FIXED INCOME FUND................................................
HIGH YIELD BOND FUND..................................................
THE FUNDS' PRINCIPAL INVESTMENTS......................................
THE ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS......................
PURCHASING, SELLING AND EXCHANGING FUND SHARES........................
DIVIDENDS, DISTRIBUTIONS AND TAXES....................................
FINANCIAL HIGHLIGHTS..................................................
HOW TO OBTAIN MORE INFORMATION ABOUT SEI INSTITUTIONAL MANAGED
TRUST.......................................................Back Cover

- -------------------------------------------------------------------------------
THE FUNDS AND GLOBAL ASSET ALLOCATION

STRATEGIES: Each Fund has its own distinct risk and reward characteristics,
investment objectives, policies, and strategies. SEI Investments Management
Corporation (SIMC) constructs and maintains global asset allocation
strategies, and certain of the Funds are designed in part to implement those
strategies. The degree to which an investor's portfolio is invested in the
particular market segments and/or asset classes represented by these Funds
varies, as does the investment risk/return potential represented by each
portfolio. Some Funds, especially the High Yield Bond Fund, may have
extremely volatile returns. Because of the historical lack of correlation
between various asset classes, an investment in a portfolio of Funds as part
of an asset allocation strategy may reduce the strategy's overall level of
volatility. As a result, a global asset allocation strategy may reduce risk.

SIMC focuses on four key principles: asset allocation, portfolio structure,
the use of specialist managers, and continuous portfolio management. Asset
allocation across appropriate asset classes (represented by some of the
Funds) is the central theme of SIMC's investment philosophy. SIMC seeks to
reduce risk by creating a portfolio that is diversified within each asset
class. SIMC then oversees a network of specialist managers who invest the
assets of these Funds in distinct segments of the market or class represented
by each Fund. These specialist managers adhere to distinct investment
disciplines, with the goal of providing greater consistency and
predictability of results, as well as broader diversification across and
within asset classes. Finally, SIMC regularly rebalances to ensure that the
appropriate mix of assets is constantly in place, and constantly monitors and
evaluates specialist managers for these Funds to ensure that they do not
deviate from their stated investment philosophy or process.

<PAGE>

INTRODUCTION

Each Fund is a mutual fund. A mutual fund pools shareholders' money and, using
professional investment managers, invests it in securities like stocks and
bonds. Before you invest, you should know a few things about investing in mutual
funds.

Each Fund has its own investment goal and strategies for reaching that
goal. Each Fund's assets are managed under the direction of SIMC, and one or
more Sub-Advisers manage portions of each Fund's assets. SIMC acts as
"manager of managers" for each Fund, and ensures that the Sub-Adviser(s)
comply with the Funds' investment policies and guidelines. SIMC also
recommends the appointment of additional or replacement Sub-Advisers to the
Funds' Board. Still, there is no guarantee that a Fund will achieve its goal.
SIMC and the Sub-Advisers (the "Advisers") make judgments about the stock
market, the economy, or companies, but these judgments may not anticipate
actual market movements or the impact of economic conditions on company
performance. In fact, no matter how good a job the Advisers do, you could
lose money on your investment in a Fund, just as you could with other
investments. A Fund share is not a bank deposit, and it is not insured or
guaranteed by the FDIC or any government agency.

The value of your investment in a Fund is based on the market value (or price)
of the securities the Fund holds. These prices change daily due to economic and
other events that affect securities markets generally, as well as those that
affect particular companies or governments. These price movements, sometimes
called volatility, will vary depending on the types of securities the Fund owns
and the markets in which they trade. The effect on a Fund's share price of a
change in the value of a single security holding will depend on how widely the
Fund's holdings are diversified.

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

Like other mutual funds (and most organizations around the world), the Funds
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Funds
or on the financial markets in general, we are taking steps to protect Fund
investors. These include efforts to ensure that our own systems are prepared
to make the transition to the year 2000, and to determine that the problem
will not affect the systems used by the Funds' major service providers.
Whether these steps will be effective can only be known for certain in the
year 2000. There is additional information on these risks in our Statement of
Additional Information.

<PAGE>

LARGE CAP VALUE FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term growth of capital and income
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium to high
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple sub-advisers that manage in a
value style, the Fund invests in large cap
income-producing U.S. common stocks.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Large Cap Value Fund invests primarily in common stocks of U.S. companies
with market capitalizations of more than $1 billion. The Fund uses a
multi-manager approach, relying on a number of Sub-Advisers to manage
portions of the Fund's portfolio under the general supervision of SIMC. Each
Sub-Adviser, in managing its portion of the Fund's assets, selects stocks it
believes are undervalued in light of such fundamental characteristics as
earnings, book value or return on equity. The Fund's portfolio is diversified
as to issuers and industries.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

In addition, the Fund is subject to the risk that its principal market segment,
large capitalization value stocks, may underperform other equity market segments
or the equity markets as a whole.

<PAGE>

LARGE CAP VALUE FUND

PERFORMANCE INFORMATION

The bar chart and the performance table below illustrate the volatility of an
investment in the Fund. Of course, the Fund's past performance does not
necessarily indicate how the Fund will perform in the future.

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(APRIL 20,
1 YEAR 5 YEARS 10 YEARS 1987)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
LARGE CAP VALUE FUND % % % %
- ---------------------------------------------------------------------
INDEX* % % % %
- ---------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER.

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

Every mutual fund has operating expenses to pay for professional advisory,
shareholder, distribution, administration and custody services and other costs
of doing business. This table describes the highest fees and expenses that you
may currently pay if you hold shares of the Fund.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES CLASS A
<S> <C>
Investment Advisory Fees 0.35%
Distribution and Service (12b-1) Fees None
Other Expenses 0.50%
------
Total Annual Fund Operating Expenses 0.85%*
</TABLE>

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS AND
SUB-ADVISERS" AND "DISTRIBUTION OF FUND SHARES."

EXAMPLE

This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The Example assumes that you
invest $10,000 in the Fund for the time periods indicated. The Example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns might be different, your
approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Value Fund $ $ $ $
</TABLE>

<PAGE>

LARGE CAP GROWTH FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium to high
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple sub-advisers that manage in a
growth style, the Fund invests in large cap U.S.
common stocks.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Large Cap Growth Fund invests primarily in common stocks of U.S.
companies with market capitalizations of more than $1 billion. The Fund uses
a multi-manager approach, relying on a number of Sub-Advisers to manage
portions of the Fund's portfolio under the general supervision of SIMC. Each
Sub-Adviser, in managing its portion of the Fund's assets, selects stocks it
believes have significant growth potential in light of such characteristics
as revenue and earnings growth and positive earnings surprises. The Fund's
portfolio is diversified as to issuers and industries.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

In addition, the Fund is subject to the risk that its principal market segment,
large capitalization growth stocks, may underperform other equity market
segments or the equity markets as a whole.
<PAGE>

LARGE CAP GROWTH FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(DECEMBER 20,
1 YEAR 1994)
<S> <C> <C>
- ---------------------------------------------------------------
LARGE CAP GROWTH FUND % %
- ---------------------------------------------------------------
INDEX* % %
- ---------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.50%
----------
Total Annual Fund Operating Expenses 0.90%*
</TABLE>

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

<TABLE>
<S> <C>
Large Cap Growth Fund .85%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
Example assumes that you invest $10,000 in the Fund for the time periods
indicated. The Example also assumes that each year your investment has a 5%
return and Fund expenses remain the same. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Growth Fund $ $ $ $
</TABLE>

<PAGE>

TAX-MANAGED LARGE CAP FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL High long-term after-tax returns
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium to high
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple sub-advisers, the Fund seeks
long-term capital appreciation while minimizing
the current tax impact to shareholders by buying
and holding large cap U.S. common stocks with
lower dividend yields.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Tax-Managed Large Cap Fund invests primarily in common stocks of
well-established U.S. companies with the expectation of holding these
securities for a period of ten years. The Fund uses a multi-manager approach,
relying upon a number of Sub-Advisers to manage portions of the Fund's
portfolio under the general supervision of SIMC. The Sub-Advisers attempt to
minimize taxes by using a "buy and hold" strategy, and through such
techniques as investing in companies that pay relatively low dividends;
selling stocks with the highest tax cost first; and offsetting losses against
gains where possible. To protect against loss of value during periods of
market decline, the Sub-Advisers may use a variety of hedging techniques,
such as buying put options, selling index futures, short selling "against the
box" and entering into equity swaps.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's equity
securities may fluctuate drastically from day-to-day. This price volatility is
the principal risk of investing in the Fund. The Fund's "buy and hold" strategy
may increase its exposure to the risks of market declines, notwithstanding its
use of the hedging techniques described above.

The Fund is managed to minimize tax consequences to investors but will likely
earn taxable income and gains from time to time.
<PAGE>

PROSPECTUS

PERFORMANCE INFORMATION

This table compares the Fund's total return for the period from inception (March
4, 1998) through December 31, 1998 to those of the Index.

<TABLE>
<S> <C>
TAX-MANAGED LARGE CAP FUND %
INDEX* %
</TABLE>

* An index measures the market price of a specific group of securities in a
particular market of securities in a market sector. You cannot invest directly
in an index. An index does not have an investment adviser and does not pay any
commissions or expenses. If an index had expenses, its performance would be
lower.

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.50%
----------
Total Annual Fund Operating Expenses 0.90%*
</TABLE>

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

<TABLE>
<S> <C>
TAX-MANAGED LARGE CAP FUND .85%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

This Example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The Example
assumes that you invest $10,000 in the Fund for the time periods indicated.
The Example also assumes that each year your investment has a 5% return and
Fund expenses remain the same. Although your actual costs and returns might
be different, your approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Tax-Managed Large Cap Fund $ $ $ $
</TABLE>

<PAGE>

SMALL CAP VALUE FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple sub-advisers that manage in a
value style, the Fund invests in common stocks of
smaller U.S. companies.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Small Cap Value Fund invests primarily in common stocks of U.S. companies
with market capitalizations of less than $2 billion. The Fund uses a
multi-manager approach, relying upon a number of Sub-Advisers to manage
portions of the Fund's portfolio under the general supervision of SIMC. Each
Sub-Adviser, in managing its portion of the Fund's assets, selects stocks it
believes are undervalued in light of such fundamental characteristics as
earnings, book value or return on equity. The Fund's portfolio is diversified
as to issuers and industries.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that its principal market segment, small
capitalization value stocks, may underperform other equity market segments or
the equity markets as a whole. The smaller capitalization companies the Fund
invests in may be more vulnerable to adverse business or economic events than
larger, more established companies. In particular, these small companies may
have limited product lines, markets and financial resources, and may depend
upon a relatively small management group. Therefore, small cap stocks may be
more volatile than those of larger companies.

<PAGE>

SMALL CAP VALUE FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(DECEMBER 30,
1 YEAR 1994)
<S> <C> <C>
- ---------------------------------------------------------------
SMALL CAP VALUE FUND % %
- ---------------------------------------------------------------
INDEX* % %
- ---------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.65%
Distribution and Service (12b-1) Fees None
Other Expenses 0.45%
-------
Total Annual Fund Operating Expenses 1.10%*
</TABLE>

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS AND
SUB-ADVISERS" AND "DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Small Cap Value Fund $ $ $ $
</TABLE>

<PAGE>

SMALL CAP GROWTH FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple sub-advisers that manage in a
growth style, the Fund invests in common stocks of
smaller U.S. companies.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Small Cap Growth Fund invests primarily in common stocks of U.S.
companies with market capitalizations of less than $2 billion. The Fund uses
a multi-manager approach, relying upon a number of Sub-Advisers to manage
portions of the Fund's portfolio under the general supervision of SIMC. Each
Sub-Adviser, in managing its portion of the Fund's assets, selects stocks it
believes have significant growth potential in light of such characteristics
as revenue and earnings growth and positive earnings surprises. The Fund's
portfolio is diversified as to issuers and industries.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that its principal market segment, small
capitalization growth stocks, may underperform other equity market segments
or the equity markets as a whole. The small capitalization companies the Fund
invests in may be more vulnerable to adverse business or economic events than
larger, more established companies. In particular, these small companies may
have limited product lines, markets and financial resources, and may depend
upon a relatively small management group. Therefore, small cap stocks may be
more volatile than those of larger companies.

<PAGE>

SMALL CAP GROWTH FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

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

<TABLE>
<CAPTION>
SINCE
INCEPTION
(APRIL 20,
1 YEAR 5 YEARS 1992)
<S> <C> <C> <C>
- ----------------------------------------------------------------
SMALL CAP GROWTH FUND % % %
- ----------------------------------------------------------------
INDEX* % % %
- ----------------------------------------------------------------
</TABLE>

*AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER.

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

This table describes the shareholders fees and expenses that you may pay if you
purchase Fund Shares. You would pay these fees directly from your investment in
the Fund.

<TABLE>
<CAPTION>
SHAREHOLDER FEES CLASS A SHARES CLASS D SHARES
<S> <C> <C>
Maximum Sales Charge (Load) Imposed on
Purchases (as a percentage of offering
price).* None 5.00%
</TABLE>

* THIS SALES CHARGE VARIES DEPENDING ON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A CLASS D
<S> <C> <C>
Investment Advisory Fees 0.65% 0.65%
Distribution and Service (12b-1) Fees None 0.30%
Other Expenses 0.45% 0.45%
---------- ----------
Total Annual Fund Operating Expenses 1.10%* 1.40%*
</TABLE>

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

<TABLE>
<S> <C>
Small Cap Growth Fund 1.35%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Small Cap Growth Fund Class A $ $ $ $
Small Cap Growth Fund Class D $ $ $ $
</TABLE>

<PAGE>

MID-CAP FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Long-term capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser that manages in a growth
style, the Fund invests in mid-cap U.S. common
stocks.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Mid-Cap Fund invests primarily in common stocks of U.S. companies with
market capitalizations of between $500 million and $5 billion. The Fund utilizes
a specialist Sub-Adviser to manage the Fund's portfolio under the general
supervision of SIMC. The Sub-Adviser, in managing the Fund's assets, seeks
stocks it believes have significant growth potential in light of such
characteristics as revenue and earnings growth and positive earnings surprises,
as well as increased institutional ownership and strong price appreciation. The
Fund's portfolio is diversified as to issuers and industries.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that its particular market segment,
mid-cap common stocks, may underperform other equity market segments or the
equity markets as a whole. The medium capitalization companies the Fund
invests in may be more vulnerable to adverse business or economic events than
larger, more established companies. Therefore, mid-cap stocks may be more
volatile than those of larger companies.

<PAGE>

MID-CAP FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %

</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (February 16, 1993)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
MID-CAP FUND % % %

- ----------------------------------------------------------------------------------
INDEX* % % %

- ----------------------------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.60%
----------
Total Annual Fund Operating Expenses 1.00%*
</TABLE>

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISERS AND
SUB-ADVISERS" AND "DISTRIBUTION OF FUND SHARES."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Mid-Cap Fund $ $ $ $
</TABLE>

<PAGE>

CAPITAL APPRECIATION FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium to high
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser experienced in selecting
undervalued securities, the Fund invests in U.S.
common stocks and convertible securities.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Capital Appreciation Fund invests primarily in U.S. common stocks and
convertible securities issued by U.S. companies of various market
capitalizations. The Fund utilizes a specialist Sub-Adviser to manage the
Fund's portfolio under the general supervision of SIMC. In selecting
investments for the Fund, the Sub-Adviser chooses stocks and convertible
securities of companies it sees as undervalued based on their background,
industry position, historical returns, and management. The Sub-Adviser will
rotate the Fund's holdings between various market sectors based on its view
of economic factors and the overall business cycle.

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

In addition, the Fund is subject to the risk that its principal market segment,
U.S. value stocks, may underperform other equity market segments or the equity
markets as a whole.

The convertible securities the Fund owns have characteristics of both fixed
income and equity securities. The value of these convertible securities tends to
move with the market value of the underlying stock, but may also be affected by
interest rates, credit quality of the issuers and any call provisions.

Any small and medium capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small and mid-size companies may have limited
product lines, markets and financial resources, and may depend on a relatively
small management group.
<PAGE>

CAPITAL APPRECIATION FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH 1,
1 YEAR 5 YEARS 1998)
<S> <C> <C> <C>
- ----------------------------------------------------------------
CAPITAL APPRECIATION FUND % % %
- ----------------------------------------------------------------
INDEX* % % %
- ----------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.49%
----------
Total Annual Fund Operating Expenses 0.89%*
</TABLE>

<TABLE>
<S> <C>
CAPITAL APPRECIATION FUND .84%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Capital Appreciation Fund $ $ $ $
</TABLE>

<PAGE>

EQUITY INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income and moderate capital appreciation
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser experienced in selecting
stocks with above-average dividend yield, the Fund
invests in dividend-paying U.S. common stocks.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Equity Income Fund invests primarily in common stocks of U.S. companies
that historically have paid dividends and that have a current dividend yield
that is higher than the stocks in the Standard & Poor's 500 Index. The Fund
utilizes a specialist Sub-Adviser to manage the Fund's portfolio under the
general supervision of SIMC. The Fund's portfolio is diversified as to
issuers and industries.

Due to its investment strategy, the Fund may buy and sell securities
frequently. This may result in higher transaction costs and additional
capital gains tax liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that its principal market segment,
dividend-paying U.S. stocks, may underperform other equity market segments or
the equity markets as a whole.

<PAGE>

EQUITY INCOME FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(JUNE 2,
1 YEAR 5 YEARS 1988)
<S> <C> <C> <C>
- ---------------------------------------------------------------------
EQUITY INCOME FUND % % %
- ---------------------------------------------------------------------
INDEX* % % %

- ---------------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.50%
----------
Total Annual Fund Operating Expenses 0.90%*
</TABLE>

<TABLE>
<S> <C>
EQUITY INCOME FUND .85%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Equity Income Fund $ $ $ $
</TABLE>

<PAGE>

BALANCED FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Total return with preservation of capital
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing an experienced sub-adviser, the Fund
balances its investments between U.S. common
stocks and fixed income securities.
- ------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Balanced Fund invests primarily in common stocks and intermediate
maturity investment grade fixed income securities, including government and
corporate securities. The Fund utilizes a specialist Sub-Adviser to manage
the Fund's portfolio under the general supervision of SIMC. In selecting
investments for the Fund, the Sub-Adviser seeks total return in all market
environments by purchasing common stocks that produce income, and will
attempt to minimize price declines during equity market downturns by
reallocating assets to fixed income securities of varying maturities.

Due to its investment strategy, the Fund may buy and sell securities
frequently. This may result in higher transaction costs and additional
capital gains tax liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
creditworthiness of individual issuers, including governments. Generally,
fixed income securities decrease in value if interest rates rise and vice
versa. Longer-term securities are generally more volatile and the average
maturity or duration of these securities affects the level of risk of such
securities. The volatility of lower rated securities is even greater since the
prospects for repayment of principal and interest is more speculative.

The Fund is also subject to the risk that the Sub-Adviser's asset allocation
decisions will not anticipate market trends well. For example, weighting
common stocks too heavily during a stock market decline may result in a
failure to preserve capital. Conversely, investing too heavily in fixed
income securities during a period of stock market appreciation may result in
lower total return.

<PAGE>

BALANCED FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index and the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(SEPTEMBER 6,
1 YEAR 5 YEARS 1990)
<S> <C> <C> <C>
- --------------------------------------------------------------------
BALANCED FUND % % %
- --------------------------------------------------------------------
INDEX* % % %
- --------------------------------------------------------------------
INDEX* % % %
- --------------------------------------------------------------------
</TABLE>

*AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER.

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses 0.41%
-------
Total Annual Fund Operating Expenses 0.81%*
</TABLE>

<TABLE>
<S> <C>
BALANCED FUND .75%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

This Example is intended to help you compare the cost of investing in the
Fund with the cost of investing in other mutual funds. The Example assumes
that you invest $10,000 in the Fund for the time periods indicated. The
Example also assumes that each year your investment has a 5% return and Fund
expenses remain the same. Although your actual costs and returns might be
different, your approximate costs of investing $10,000 in the Fund would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Balanced Fund $ $ $ $
</TABLE>
<PAGE>

CORE FIXED INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Current income and preservation of capital
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple sub-advisers that have fixed
income investment expertise, the Fund invests in
investment grade U.S. fixed income securities.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The Core Fixed Income Fund invests primarily in investment grade U.S.
corporate and government fixed income securities, including mortgage-backed
securities. The Fund uses a multi-manager approach, relying upon a number of
Sub-Advisers to manage portions of the Fund's portfolio under the general
supervision of SIMC. Sub-Advisers are selected for their expertise in
managing various kinds of fixed income securities, and each Sub-Adviser makes
investment decisions based on an analysis of yield trends, credit ratings and
other factors in accordance with its particular discipline. While each
Sub-Adviser chooses securities of different types and maturities, the Fund in
the aggregate generally will have a dollar-weighted average duration that is
consistent with that of the broad U.S. fixed income market (currently
years).

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The prices of fixed income securities respond to economic developments,
particularly interest rate changes, as well as to perceptions about the
creditworthiness of individual issuers, including governments. Generally,
fixed income securities decrease in value if interest rates rise and vice
versa. Longer-term securities are generally more volatile, and the average
maturity or duration of these securities affects the level of risk of such
securities. The volatility of lower rated securities is even greater since
the prospects for repayment of principal and interest is more speculative.

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

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

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

CORE FIXED INCOME FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(MAY 1,
1 YEAR 5 YEARS 10 YEARS 1987)
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------
CORE FIXED INCOME FUND % % % %
- ------------------------------------------------------------------------------
INDEX* % % % %
- ------------------------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.28%
Distribution and Service (12b-1) Fees None
Other Expenses 0.34%
----------
Total Annual Fund Operating Expenses 0.62%*
</TABLE>

<TABLE>
<S> <C>
Core Fixed Income Fund .60%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Core Fixed Income Fund $ $ $ $
</TABLE>

<PAGE>

HIGH YIELD BOND FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Total return
- ------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
- ------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing a sub-adviser that has high yield
investment expertise, the Fund invests in high
yield, high risk securities.
- ------------------------------------------------------------------------------------------------------
</TABLE>

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

INVESTMENT STRATEGY

The High Yield Bond Fund invests primarily in fixed income securities rated
below investment grade ("junk bonds"), including corporate bonds and debentures,
convertible and preferred securities, and zero coupon obligations. The
Sub-Adviser chooses securities that offer a high current yield as well as total
return potential. The Fund's securities are diversified as to issuers and
industries. The Fund's average weighted maturity is typically between and
years, and there is no limit on the maturity or on the credit quality of any
security.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

Junk bonds involve greater risks of default or downgrade, are more volatile than
investment grade securities. Junk bonds involve greater risk of default or price
declines than investment grade securities due to actual or perceived changes in
an issuer's creditworthiness. In addition, issuers of junk bonds may be more
susceptible than other issuers to economic downturns. Junk bonds are subject to
the risk that the issuer may not be able to pay interest or dividends and
ultimately to repay principal upon maturity. Discontinuation of these payments
could substantially adversely affect the market price of the security.

The Fund is also subject to the risk that its particular market segment, high
yield securities, may underperform other fixed income market segments or the
fixed income markets as a whole.

<PAGE>

HIGH YIELD BOND FUND

PERFORMANCE INFORMATION

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

[BAR CHART]

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
% %
</TABLE>

* The performance information shown above is based on a calendar year.

This table compares the Fund's average annual total returns for the periods
ending December 31, 1998 to those of the Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(JANUARY 11,
1 YEAR 1995)
<S> <C> <C>
- ------------------------------------------------------
HIGH YIELD BOND FUND % %
- ------------------------------------------------------
INDEX* % %
- ------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.49%
Distribution and Service (12b-1) Fees None
Other Expenses 0.41%
----------
Total Annual Fund Operating Expenses 0.90%*
</TABLE>

<TABLE>
<S> <C>
High Yield Bond Fund .85%
</TABLE>

For more information about these fees, see "Investment Advisers and
Sub-Advisers" and "Distribution of Fund Shares."

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
High Yield Bond Fund $ $ $ $
</TABLE>
<PAGE>

THE FUNDS' PRINCIPAL INVESTMENTS

THE TABLE BELOW SHOWS EACH FUND'S PRINCIPAL INVESTMENTS. IN OTHER WORDS, THE
TABLE DESCRIBES THE TYPE OR TYPES OF INVESTMENTS THAT WE BELIEVE WILL MOST
LIKELY HELP EACH FUND ACHIEVE ITS INVESTMENT GOAL.

<TABLE>
<CAPTION>
TAX-
LARGE CAP LARGE CAP MANAGED SMALL CAP SMALL CAP CAPITAL EQUITY
VALUE GROWTH LARGE CAP VALUE GROWTH MID-CAP APPRECIATION INCOME
FUND FUND FUND FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
U.S. Common Stocks X X X X X X X X
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
CORE FIXED HIGH YIELD
BALANCED INCOME BOND
FUND FUND FUND
<S> <C> <C> <C>
- ---------------------------------------------------------
Fixed Income
Obligations X X X
- ---------------------------------------------------------
U.S. Common Stocks X
- ---------------------------------------------------------
Junk Bonds X
- ---------------------------------------------------------
</TABLE>

Each Fund also may invest in other securities, use other strategies and engage
in other investment practices, which are described in detail in our Statement of
Additional Information (SAI). Of course, we cannot guarantee that any Fund will
achieve its investment goal.

The investments listed above and the investments and strategies described
throughout this prospectus are those that the Advisers use under normal
conditions. During unusual economic or market conditions or for temporary
defensive or liquidity purposes, each Fund may invest up to 100% of its
assets in cash, money market instruments, repurchase agreements and
short-term obligations that would not ordinarily be consistent with the
Funds' objectives. A Fund will do so only if the Adviser or Sub-Adviser
believes that the risk of loss outweighs the opportunity for capital gains or
higher income.

INVESTMENT ADVISER AND SUB-ADVISERS
- --------------------------------------------------------------------------------

The Investment Adviser and each Sub-Adviser makes investment decisions for
the assets it manages and continuously reviews, supervises and administers
their Funds' investment programs. SIMC ACTS AS THE MANAGER OF MANAGERS OF THE
FUNDS, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF EACH FUND SINCE
IT ALLOCATES EACH FUND'S ASSETS TO ONE OR MORE SUB-ADVISERS AND RECOMMENDS
HIRING OR CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES. SIMC oversees the
Sub-Advisers to ensure compliance with the Funds' investment policies and
guidelines, and monitors each Sub-Advisers' adherence to its investment
style. The Board of Trustees supervises the Adviser and Sub-Advisers;
establishes policies that they must follow in their management activities,
and oversees the hiring and termination of Sub-Advisers recommended by SIMC.
SIMC pays the Sub-Advisers out of the investment advisory fees it receives
(described below).

<PAGE>

SEI Investments Management Corporation, an SEC-registered adviser, serves as
the Adviser to each Fund. As of October 31, 1998 SIMC had approximately $
billion in assets under management. For the fiscal year ended September
30,1998, the Funds paid SIMC investment advisory fees as follows:

<TABLE>
<S> <C>
LARGE CAP VALUE FUND.............................. .35%
LARGE CAP GROWTH FUND............................. .40%
TAX-MANAGED LARGE CAP FUND........................ .40%
SMALL CAP VALUE FUND.............................. .65%
SMALL CAP GROWTH FUND............................. .65%
MID-CAP FUND...................................... .40%
CAPITAL APPRECIATION FUND......................... .40%
EQUITY INCOME FUND................................ .40%
BALANCED FUND..................................... .40%
CORE FIXED INCOME FUND............................ .275%
HIGH YIELD BOND FUND.............................. .4875%
</TABLE>

The Advisers may use its affiliates (including affiliates of the Sub-Advisers)
as brokers for Fund transactions provided certain SEC guidelines are followed.
These guidelines are described in the SAI.

SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP VALUE FUND

LSV ASSET MANAGEMENT, L.P.: Josef Lakonishok, Andrei Shleifer and Robert
Vishny serve as portfolio managers for LSV Asset Management, L.P ("LSV").
They manage the Large Cap Value Fund. Together they are officers and
partners of LSV. An affiliate of SIMC owns a majority interest in LSV. SIMC
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 Fund
managed by LSV.

MELLON EQUITY ASSOCIATES, LLP: William P. Rydell and Robert A. Wilk serve as
portfolio managers for Mellon Equity Associates, LLP ("Mellon Equity"). They
manage the Large Cap Value Fund. Mr. Rydell is the President and Chief
Executive Officer of Mellon Equity, and has been managing individual and
collective portfolios at Mellon Equity since 1982. Mr. Wilk is a Senior Vice
President and Portfolio Manager of Mellon Equity, and has been involved with
securities analysis, quantitative research, asset allocation, trading, and
client services at Mellon Equity since April 1990.

SANFORD C. BERNSTEIN & CO., INC.: Lewis A. Sanders and Marilyn Goldstein
Fedak serve as portfolio managers for Sanford C. Bernstein & Co., Inc.
("Bernstein"). They manage the Large Cap Value Fund. Mr. Sanders has been
employed by Bernstein since 1969, and is currently Chairman of the Board,
Chief Executive Officer, and a Director of Bernstein. Ms. Fedak, Chief
Investment Officer--Large Capitalization Domestic Equities and a Director of
Bernstein, has been employed by Bernstein since 1984.

LARGE CAP GROWTH FUND

ALLIANCE CAPITAL MANAGEMENT L.P.: A committee of investment professionals at
Alliance Capital Management L.P. provides investment advice to the Large Cap
Growth Fund.

PROVIDENT INVESTMENT COUNSEL, INC.: George E. Handtmann III and Jeffrey J.
Miller serve as portfolio managers for Provident Investment Counsel, Inc.
("Provident"). They manage the Large Cap Growth Fund. Mr. Handtmann has been
with Provident since 1982, and Mr. Miller has been with Provident since
1972.

TCW FUNDS MANAGEMENT INC.: Glen E. Bickerstaff serves as portfolio manager
for TCW Funds Management Inc. ("TCW"). He manages the Large Cap Growth Fund.
Mr. Bickerstaff is a Managing Director of TCW, and has over 18 years of
investment experience dedicated to investing large cap growth securities.
Mr. Bickerstaff joined TCW in May, 1998 after 10 years at Transamerica
Investment Services, where he served as Vice President and Senior Portfolio
Manager.
<PAGE>

TAX-MANAGED LARGE CAP FUND

ALLIANCE CAPITAL MANAGEMENT L.P.: A committee of investment professionals at
Alliance Capital Management L.P. provides investment advice to the
Tax-Managed Large Cap Fund.

MELLON EQUITY ASSOCIATES, LLP: William P. Rydell and Robert A. Wilk serve as
portfolio managers for Mellon Equity Associates, LLP ("Mellon Equity"). They
manage the Tax-Managed Large Cap Fund. Mr. Rydell is the President and Chief
Executive Officer of Mellon Equity, and has been managing individual and
collective portfolios at Mellon Equity since 1982. Mr. Wilk is a Senior Vice
President and Portfolio Manager of Mellon Equity, and has been involved with
securities analysis, quantitative research, asset allocation, trading, and
client services at Mellon Equity since April 1990.

SANFORD C. BERNSTEIN & CO., INC.: Lewis A. Sanders and Marilyn Goldstein
Fedak serve as portfolio managers for Sanford C. Bernstein & Co., Inc.
("Bernstein"). They manage the Tax-Managed Large Cap Fund. Mr. Sanders has
been employed by Bernstein since 1969, and is currently Chairman of the
Board, Chief Executive Officer, and a Director of Bernstein. Ms. Fedak,
Chief Investment Officer--Large Capitalization Domestic Equities and a
Director of Bernstein, has been employed by Bernstein since 1984.

SMALL CAP VALUE FUND

1838 INVESTMENT ADVISORS, L.P.: Edwin B. Powell, J. Kelly Flynn and Cynthia
R. Axelrod serve as portfolio managers for 1838 Investment Advisors, L.P.
("1838"). They manage the Small Cap Value Fund. Prior to joining 1838, Mr.
Powell managed small cap equity funds for Provident Capital Management from
1987 to 1994. Mr. Flynn, a Director of 1838, has over five years of
experience in the investment business. Prior to joining 1838 in 1997, Mr.
Flynn was in the Investment Banking Division at CS First Boston and was an
Associate of the Edgewater Private Equity Fund. Mr. Flynn has also worked in
the Equities Division of Goldman, Sachs & Co. Prior to joining 1838 in 1995,
Ms. Axelrod was with Friess Associates from 1992 to 1995.

BOSTON PARTNERS ASSET MANAGEMENT, L.P.: Wayne J. Archambo, C.F.A. serves as
portfolio manager for Boston Partners Asset Management, L.P. ("BPAM"). Mr.
Archambo manages the Small Cap Value Fund. He has been employed by BPAM
since its organization, and has 14 years experience investing in equities.
Prior to joining BPAM, Mr. Archambo was employed at The Boston Company Asset
Management, Inc. ("TBCAM"), from 1989 through April 1995. He created TBCAM's
small cap value product in 1992.

LSV ASSET MANAGEMENT, L.P.: Josef Lakonishok, Andrei Shleifer and Robert
Vishny serve as portfolio managers for LSV Asset Management, L.P ("LSV").
They manage the Small Cap Value Fund. Together they are officers and
partners of LSV. An affiliate of SIMC owns a majority interest in LSV. SIMC
pays LSV 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 Fund
managed by LSV.

MELLON EQUITY ASSOCIATES, LLP: William P. Rydell and Robert A. Wilk serve as
portfolio managers for Mellon Equity Associates, LLP ("Mellon Equity"). They
manage the Small Cap Value Fund. Mr. Rydell is the President and Chief
Executive Officer of Mellon Equity, and has been managing individual and
collective portfolios at Mellon Equity since 1982. Mr. Wilk is a Senior Vice
President and Portfolio Manager of Mellon Equity, and has been involved with
securities analysis, quantitative research, asset allocation, trading, and
client services at Mellon Equity since April 1990.
<PAGE>

SMALL CAP GROWTH FUND

FURMAN SELZ CAPITAL MANAGEMENT, LLC: Matthew S. Price and David C. Campbell
serve as portfolio managers for Furman Selz Capital Management, LLC,
("Furman Selz"). They manage the Small Cap Growth Fund. Mr. Price and Mr.
Campbell have been with Furman Selz for over 5 and 7 years, respectively.
Prior to Joining Furman Selz, Mr. Price and Mr. Campbell were Senior
Portfolio Managers at Value Line Asset Management.

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT: Arthur E. Nicholas and John Kane
serve as portfolio managers for Nicholas-Applegate Capital Management
("Nicholas-Applegate"). They manage the Small Cap Growth Fund. Mr. Nicholas
is the founder and Chief Investment Officer of the firm. Under the
supervision of Mr. Nicholas, the U.S. Systematic team is responsible for the
day-to-day management of the Small Cap Growth Fund's assets. Mr. Kane is the
lead portfolio manager of the U.S. Systematic team. He has been a fund
manager and investment team leader since June 1994. Prior to joining
Nicholas-Applegate, he had 25 years of investment/economics experience with
ARCO Investment Management Company and General Electric Company.

ROBERTSON, STEPHENS INVESTMENT MANAGEMENT, L.P.: Jim Callinan serves as
portfolio manager for Robertson, Stephens Investment Management, L.P.
("Robertson"). He manages the Small Cap Growth Fund. Mr. Callinan is a
managing director of Robertson. He joined Robertson in June 1996 after nine
years at Putnam Investments ("Putnam") in Boston, where he served as a
portfolio manager of the Putnam OTC Emerging Growth Fund. Mr. Callinan also
served as a specialty growth research analyst and portfolio manager of both
the Putnam Emerging Information Science Trust Fund and the Putnam Emerging
Health Sciences Trust Fund while at Putnam.

SPYGLASS ASSET MANAGEMENT, INC.: Roger H. Stamper and Stephen Wisneski serve
as portfolio managers for Spyglass Asset Management, Inc. ("Spyglass"). They
manage the Small Cap Growth Fund. Mr. Stamper, President of Spyglass, has 14
years of investment experience. Prior to founding Spyglass, Mr. Stamper
served as Managing Director of Equities at First of America Investment
Management, where he also served as portfolio manager of the $1 billion
small cap growth equity product. Mr. Wisneski, Chief Operating Officer, has
over 12 years of investment experience. Prior to joining Spyglass, Mr.
Wisneski served as portfolio manager on the large cap growth products for
First of America Investment Management.

WALL STREET ASSOCIATES: William Jeffery III, Kenneth F. McCain and Richard
S. Coons serve as portfolio managers for Wall Street Associates ("WSA").
They manage the Small Cap Growth Fund. Each owns 1/3 of, and is a principal
of, WSA. They each have an average of 27 years of investment management
experience.

MID-CAP FUND

MARTINGALE ASSET MANAGEMENT, L.P.: William Jacques serves as portfolio
manager for Martingale Asset Management, L.P. ("Martingale"). He manages the
Mid-Cap Fund. Mr. Jacques is an Executive Vice President and has been with
Martingale since 1987.

CAPITAL APPRECIATION FUND

STI CAPITAL MANAGEMENT, N.A.: Anthony Gray serves as portfolio manager for
STI Capital Management, N.A. ("STI"). He manages the Capital Appreciation
Fund. Mr. Gray is Chairman and Chief Investment Officer for STI. Prior to
establishing STI as a separate entity within the SunTrust organization in
1989, Mr. Gray served as director of Equity Investments for the bank's trust
assets.

<PAGE>

EQUITY INCOME FUND

HIGHMARK CAPITAL MANAGEMENT, INC.: A committee of investment professionals
at HighMark Capital Management, Inc. provides investment advice to the
Equity Income Fund.

BALANCED FUND

STI CAPITAL MANAGEMENT, N.A.: Anthony Gray serves as portfolio manager for
STI Capital Management, N.A. ("STI"). He manages the Balanced Fund. Mr. Gray
is Chairman and Chief Investment Officer for STI. Prior to establishing STI
as a separate entity within the SunTrust organization in 1989, Mr. Gray
served as director of Equity Investments for the bank's trust assets.

CORE FIXED INCOME FUND

BLACKROCK, INC.: Keith Anderson and Andrew Phillips serve as portfolio
managers for BlackRock, Inc. ("BlackRock"). They manage the Core Fixed
Income Fund. Mr. Anderson is a Managing Director and Co-Head of Portfolio
Management at BlackRock, and has 14 years' experience investing in fixed
income securities. Mr. Phillips is a Principal and portfolio manager with
primary responsibility for the management of the firm's investment
activities in fixed-rate mortgage securities.

FIRSTAR INVESTMENT RESEARCH & MANAGEMENT COMPANY, LLC: Charles Groeschell
serves as portfolio manager for Firstar Investment Research & Management
Company, LLC ("FIRMCO"). He manages the Core Fixed Income Fund. Mr.
Groeschell is a Senior Vice President of FIRMCO investment and has been
employed by FIRMCO or its affiliates since 1983. He has 16 years experience
in fixed income management.

WESTERN ASSET MANAGEMENT COMPANY: A committee of investment professionals at
Western Asset Management Company provides investment advice to the Core
Fixed Income Fund.

HIGH YIELD BOND FUND

BEA ASSOCIATES: Richard J. Lindquist, C.F.A. serves as portfolio manager for
BEA Associates ("BEA"). He manages the High Yield Bond Fund. Mr. Lindquist
joined BEA in 1995 as a result of BEA's acquisition of CS First Boston
Investment Management, and has had 15 years of investment management
experience, all of which were with high yield bonds. Prior to joining CS
First Boston, Mr. Lindquist was with Prudential Insurance Company of America
where he managed high yield funds totaling approximately $1.3 billion. Prior
to joining Prudential, Mr. Lindquist managed high yield funds at T. Rowe
Price.
<PAGE>

PURCHASING, SELLING AND EXCHANGING FUND SHARES

The Funds offer Class A Shares only to financial institutions for their own or
their customers' accounts. Class D Shares are available to individual investors.
The two classes have different expenses and other characteristics.

CLASS A SHARES
- - NO SALES CHARGE
- - LOWER ANNUAL EXPENSES
- - $100,000 MINIMUM INITIAL INVESTMENT

CLASS D SHARES (SMALL CAP GROWTH FUND ONLY)
- - FRONT-END SALES CHARGE
- - HIGHER ANNUAL EXPENSES
- - $1,000 MINIMUM INITIAL INVESTMENT

For Class D Shares, the minimum initial investment for IRAs is $500. If you
participate in the Systematic Investment Plan, the minimum initial
investment is $250. Additional investments into Class D Shares must be at
least $100 ($50 per month for the Systematic Investment Plan).

HOW TO PURCHASE FUND SHARES
You may purchase shares on any day that the New York Stock Exchange is open for
business (a Business Day).

Financial institutions may purchase Class A Shares by placing orders with the
Funds' Transfer Agent (or its authorized agent). Institutions that use certain
SEI proprietary systems may place orders electronically through those systems.

You may purchase Class D Shares directly from us by:
- - mail
- - telephone
- - wire, or
- - Automated Clearing House (ACH).

To purchase shares directly from us, please call 1-800-DIAL-SEI. Write your
check, payable in U.S. dollars, to "SEI Institutional Managed Trust" and include
the name of the appropriate Fund(s) on the check. We cannot accept third-party
checks, credit cards, credit card checks or cash. We may reject any purchase
order if we determine that accepting the order would not be in the best
interests of the Trust or its shareholders.

Certain other investors who deal directly with a financial institution or
financial intermediary will have to follow the institution's or
intermediary's procedures for transacting with the Funds. If you purchase,
sell or exchange Fund shares through a financial institution (rather than
directly from us), you may have to transmit your purchase, sale and exchange
requests to your financial institution at an earlier time for your
transaction to become effective that day. This allows the financial
institution time to process your request and transmit it to us. For more
information about how to purchase, sell or exchange Fund shares through your
financial institution, you should contact your financial institution directly.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after we receive your purchase order plus, in the case of
Class D Shares of the Small Cap Growth Fund, the applicable front-end sales
charge. NAV for one Fund share is the value of that share's portion of all of
the assets in the Fund. We calculate each Fund's NAV once each Business Day at
the regularly-scheduled close of normal trading on the New York Stock Exchange
(normally, 4:00 p.m. Eastern time). So, if you want to receive the current
Business Day's NAV, generally we must receive your purchase order before 4:00
p.m. Eastern time.

<PAGE>

HOW WE CALCULATE NAV
In calculating NAV, we generally value a Fund's portfolio securities at their
market price. If market prices are unavailable or we think that they are
unreliable, we may determine fair value prices using methods approved by the
Board of Trustees. Some Funds hold portfolio securities that are listed on
foreign exchanges. These securities may trade on weekends or other days when the
Funds do not calculate NAV. As a result, the value of these Funds' investments
may change on days when you cannot purchase or sell Fund shares.

MINIMUM PURCHASES
To purchase Class A Shares for the first time, you must invest at least $100,000
in any Fund. To purchase Class D Shares for the first time, you must invest at
least $1,000 in any Fund ($500 for retirement plans). To purchase additional
Class D Shares of the Small Cap Growth Fund, you must invest at least $100. We
may accept investments of smaller amounts at our discretion.

ADDITIONAL CLASS D PURCHASE INFORMATION
- -------------------------------------------------------------------------------

SYSTEMATIC INVESTMENT PLAN
If you have a checking or savings account with certain banks, you may purchase
Class D Shares automatically through regular deductions from your account.
Please call 1-800-DIAL-SEI for information regarding participating banks. With a
$250 minimum initial investment, you may begin regularly scheduled investments
from $50 up to $250 once or twice a month. The Distributor may close your
account if you do not maintain a minimum investment of [$1,000] at the end of
two years.

SALES CHARGES

FRONT-END SALES CHARGES -- CLASS D SHARES OF THE SMALL CAP GROWTH FUND
The amount of any front-end sales charge included in your offering price varies,
depending on the amount of your investment, as shown in the following table:

<TABLE>
<CAPTION>
YOUR SALES CHARGE YOUR SALES CHARGE
AS A PERCENTAGE AS A PERCENTAGE OF
IF YOUR INVESTMENT IS: OF OFFERING PRICE YOUR NET INVESTMENT
<S> <C> <C>
LESS THAN $50,000....................... 5.00% 5.26%
$50,000 BUT LESS THAN $100,000.......... 4.50% 4.71%
$100,000 BUT LESS THAN $250,000......... 3.50% 3.63%
$250,000 BUT LESS THAN $500,000......... 2.50% 2.56%
$500,000 BUT LESS THAN $1,000,000....... 2.00% 2.04%
$1,000,000 BUT LESS THAN $2,000,000..... 1.00% 1.01%
$2,000,000 BUT LESS THAN $4,000,000..... .50% .50%
$4,000,000 AND OVER..................... NONE NONE
</TABLE>

<PAGE>

WAIVER OF FRONT-END SALES CHARGE-- CLASS D SHARES

The front-end sales charge will be waived on Class D Shares of the Small Cap
Growth Fund purchased: (i) 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 Section
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 (within 60 days) of shares of Class D shares of SEI Tax Exempt
Trust, SEI International Trust or SEI Liquid Asset Trust (each an "SEI
Fund"); (ix) purchased with the proceeds from the recent redemption of shares
of a mutual fund with similar investment objectives and policies 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); (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; or
(xi) sold to persons participating in certain financial services programs
offered by the bank affiliates of First Security Corporation. The Funds may
also enter into waiver arrangements with various other financial
intermediaries who sell Class D Shares of the Funds.

Purchases of Class D Shares of different SEI Funds will be aggregated for
purposes of determining sales charge reductions.

REPURCHASE OF CLASS D SHARES

To exercise this privilege, we must receive your purchase order within 60
days of your redemption. IN ADDITION, YOU MUST NOTIFY US WHEN YOU SEND IN
YOUR PURCHASE ORDER THAT YOU ARE REPURCHASING SHARES.

REDUCED SALES CHARGES -- CLASS D SHARES

RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate,
you may add the value of the Class D Shares you already own to the amount
that you are currently purchasing. We will combine the value of your current
purchases with the current value of any Class D Shares you purchased
previously for: (i) your account, (ii) your spouse's account, (iii) a joint
account with your spouse, or (iv) your minor children's trust or custodial
accounts. A fiduciary purchasing shares for the same fiduciary account,
trust or estate may also use this right of accumulation. We will only
consider the value of Class D Shares purchased previously for which you paid
a sales charge. TO BE ENTITLED TO A REDUCED SALES CHARGE BASED ON SHARES
ALREADY OWNED, YOU MUST ASK US FOR THE REDUCTION AT THE TIME OF PURCHASE.
You must provide us with your account number(s) and, if applicable, the
account numbers for your spouse and/or children (and provide the children's
ages). We may amend or terminate this right of accumulation at any time.

LETTER OF INTENT. You may purchase Class D Shares at the sales charge rate
applicable to the total amount of the purchases you intend to make over a
13-month period. In other words, a Letter of Intent allows you to purchase
Class D Shares of a Fund over a 13-month period and receive the same sales
charge as if you had purchased all the shares at the same time. We will only
consider the value of Class D Shares sold

<PAGE>

subject to a sales charge. To be entitled to a reduced sales charge based
on shares you intend to purchase over the 13-month period, you must send us
a Letter of Intent. Class D Shares purchased with dividends or
distributions will not be included in the calculation. In calculating
the total amount of purchases you may include in your letter purchases
made up to 90 days before the date of the Letter. The 13-month period
begins on the date of the first purchase, including those purchases
made in the 90-day period before the date of the Letter. Please note
that the purchase price of these prior purchases will not be adjusted.

You are not legally bound by the terms of your Letter of Intent to purchase
the amount of your shares stated in the Letter. The Letter does, however,
authorize us to hold in escrow 5% of the total amount you intend to
purchase. If you do not complete the total intended purchase at the end of
the 13-month period, the transfer agent will redeem the necessary portion of
the escrowed shares to make up the difference between the reduced rate sales
charge (based on the amount you intended to purchase) and the sales charge
that would normally apply (based on the actual amount you purchased).

COMBINED PURCHASE/QUANTITY DISCOUNT PRIVILEGE. When calculating the
appropriate sales charge rate, we will combine same day purchases of Class D
Shares (that are subject to a sales charge) made by you, your spouse and
your minor children (under age 21). This combination also applies to Class D
Shares you purchase with a Letter of Intent.

SELLING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO SELL YOUR FUND SHARES

You may sell (sometimes called "redeem") your shares on any Business Day by
contacting us directly by mail or telephone. You may also sell your shares by
contacting your financial institution or financial intermediary by mail or
telephone. The sale price of each share will be the next NAV determined after
we receive your request.

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

SYSTEMATIC WITHDRAWAL PLAN
If you have at least $10,000 in your account, you may use the systematic
withdrawal plan. Under the plan you may arrange monthly, quarterly, semi-annual
or annual automatic withdrawals of at least $50 from any Fund. The proceeds of
each withdrawal will be mailed to you by check or, if you have an account with
certain banks, electronically transferred to your account. Please call
1-800-DIAL-SEI for information regarding banks that participate in the
Systematic Withdrawal Plan.

RECEIVING YOUR MONEY
Normally, we will send your sale proceeds within three Business Days after we
receive your request, but it may take up to seven Business Days. Your proceeds
can be wired to your bank account (subject to a $10 wire fee) or sent to you by
check. IF YOU RECENTLY PURCHASED YOUR SHARES BY CHECK OR THROUGH ACH, REDEMPTION
PROCEEDS MAY NOT BE AVAILABLE UNTIL YOUR CHECK HAS CLEARED (WHICH MAY TAKE UP TO
15 BUSINESS DAYS).

<PAGE>

REDEMPTIONS IN KIND
We generally pay sale proceeds in cash. However, under unusual conditions that
make the payment of cash unwise (and for the protection of the Fund's remaining
shareholders) we might pay all or part of your redemption proceeds in liquid
securities with a market value equal to the redemption price (redemption in
kind). Although it is highly unlikely that your shares would ever be redeemed in
kind, you would probably have to pay brokerage costs to sell the securities
distributed to you, as well as taxes on any capital gains from the sale as with
any redemption.

INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below the required minimum of $1,000 for Class D
Shares, you may be required to sell your shares. You will always be given at
least 60 days' written notice to give you time to add to your account and avoid
selling your shares.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
We may suspend your right to sell your shares if the NYSE restricts trading, the
SEC declares an emergency or for other reasons. More information about this is
in our Statement of Additional Information.

EXCHANGING FUND SHARES
- --------------------------------------------------------------------------------

HOW TO EXCHANGE YOUR SHARES
You may exchange your shares on any Business Day by contacting us directly by
mail or telephone. You may also exchange shares through your financial
institution by mail or telephone. IF YOU RECENTLY PURCHASED SHARES BY CHECK OR
THROUGH ACH, YOU MAY NOT BE ABLE TO EXCHANGE YOUR SHARES UNTIL YOUR CHECK HAS
CLEARED (WHICH MAY TAKE UP TO 15 BUSINESS DAYS). This exchange privilege may be
changed or canceled at any time upon 60 days' notice. When you exchange shares,
you are really selling your shares and buying other Fund shares. So, your sale
price and purchase price will be based on the NAV next calculated after we
receive your exchange request.

CLASS A SHARES
You may exchange Class A Shares of any Fund for Class A Shares of any other
Fund.

CLASS D SHARES
You may exchange Class D Shares of any Fund for Class D Shares of any other SEI
Fund. If you exchange shares that you purchased without a sales charge or with a
lower sales charge into a Fund with a sales charge or with a higher sales
charge, the exchange is subject to an incremental sales charge (e.g., the
difference between the lower and higher applicable sales charges). If you
exchange shares into a Fund with the same, lower or no sales charge there is no
incremental sales charge for the exchange.

DISTRIBUTION OF FUND SHARES
SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Funds. SIDCo. receives no compensation for distributing the Funds' Class A
Shares.

<PAGE>

The Small Cap Growth Fund has adopted a distribution plan that allows the Fund
to pay SIDCo. distribution and service fees for the sale and distribution of its
Class D Shares, and for services provided to shareholders. Because these fees
are paid out of the Fund's assets continuously, over time these fees will
increase the cost of your investment and may cost you more than paying other
types of sales charges. For Class D Shares of the Small Cap Growth Fund, the
distribution fee is .30% of the average daily net assets of each Fund.

For Class A Shares, shareholder servicing fees, as a percentage of average daily
net assets, may be up to .25%.

DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------

DIVIDENDS AND DISTRIBUTIONS
The Large Cap Value, Large Cap Growth, Tax-Managed Large Cap, Small Cap Value,
Small Cap Growth, Capital Appreciation, Equity Income and Balanced Funds
distribute their investment income quarterly as a dividend to shareholders. The
Core Fixed Income and High Yield Bond Funds distribute investment income monthly
as a dividend to shareholders. The Funds make distributions of capital gains, if
any, at least annually.

You will receive dividends and distributions in the form of additional Fund
shares unless you elect to receive payment in cash. To elect cash payment, you
must notify us in writing prior to the date of the distribution. Your election
will be effective for dividends and distributions paid after we receive your
written notice. To cancel your election, simply send us written notice.

TAXES
PLEASE CONSULT YOUR TAX ADVISOR REGARDING YOUR SPECIFIC QUESTIONS ABOUT FEDERAL,
STATE AND LOCAL INCOME TAXES. Below we have summarized some important tax issues
that affect the Funds and their shareholders. This summary is based on current
tax laws, which may change.

Each Fund will distribute substantially all of its investment income and capital
gains, if any. The dividends and distributions you receive may be subject to
federal, state and local taxation, depending upon your tax situation. If so,
they are taxable whether or not you reinvest them. Capital gains distributions
may be taxable at different rates depending on the length of time a Fund holds
its portfolio securities. YOU MAY BE TAXED ON EACH SALE OR EXCHANGE OF FUND
SHARES.

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

MORE INFORMATION ABOUT TAXES IS IN OUR SAI.
<PAGE>

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the shares of
each Fund. This information is intended to help you understand each Fund's
financial performance for the past five years, or, if shorter, the period of the
Fund's operations. Some of this information reflects financial information for a
single Fund share. The total returns in the tables represent the rate that you
would have earned [or lost] on an investment in a Fund, assuming you reinvested
all of your dividends and distributions.

This information has been audited by PricewaterhouseCoopers LLP, independent
public accountants. Their report, along with each Fund's financial statements,
appears in our annual report that accompanies our Statement of Additional
Information. You can obtain our annual report, which contains more performance
information, at no charge by calling 1-800-DIAL-SEI.

LARGE CAP VALUE FUND
- --------------------------------------------------------
<TABLE>
<S> <C>
Net Asset Value, Beginning of Period..............

INCOME FROM INVESTMENT OPERATIONS
Net Investment Income.............................
Net Gains or Losses on Securities (both realized
and unrealized).................................
--------
Total From Investment Operations..................
--------

LESS DISTRIBUTIONS
Dividends (from net investment income)............
Distributions (from capital gains)................
Returns of Capital................................
--------
Total Distributions...............................
--------
Net Asset Value, End of Period....................
--------
TOTAL RETURN......................................
--------
--------
- --------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Period.........................
Ratio of Expenses to Average Net Assets...........
Ratio of Net Income to Average Net Assets.........
Portfolio Turnover Rate...........................
</TABLE>

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