SEI INSTITUTIONAL MANAGED TRUST, 497, 1999-02-09

SEI INSTITUTIONAL MANAGED TRUST
497, 1999-02-09

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<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 Shares of the Core
Fixed Income and High Yield Bond Funds that you should know before investing.
Please read this prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS GENERAL
INFORMATION YOU SHOULD KNOW ABOUT INVESTING IN THE FUNDS. FOR MORE DETAILED
INFORMATION ABOUT THE FUNDS, PLEASE SEE:

CORE FIXED INCOME FUND...............................................2
HIGH YIELD BOND FUND.................................................4
THE FUNDS' OTHER INVESTMENTS.........................................6
INVESTMENT ADVISER AND SUB-ADVISERS..................................6
PURCHASING, SELLING AND EXCHANGING FUND SHARES.......................7
DIVIDENDS, DISTRIBUTIONS AND TAXES...................................9
FINANCIAL HIGHLIGHTS................................................10
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.

In managing the Funds, 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>
PROSPECTUS 1

INTRODUCTION

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

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of SIMC, and one or more
Sub-Advisers manage portions of each Fund's assets and invest those assets in a
way they believe will help each Fund achieve its goal. SIMC acts as "manager of
managers" for each Fund, and attempts to ensure 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, investing in the Funds involves risks, and there is no guarantee that a
Fund will achieve its goal. SIMC's and the Sub-Advisers' (the "Advisers")
judgments about the markets, the economy, or companies, may not anticipate
actual market movements, economic conditions or company performance, and these
judgements may affect the return on your investment. 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 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 a Fund owns and the
markets in which they trade. The estimated level of volatility for each Fund is
set forth in the Fund summaries that follow. The effect on a Fund'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, the Funds are taking steps to protect Fund
investors. These include efforts to ensure that the Funds' own systems are
prepared to make the transition to the year 2000, and to determine that the
problem will not affect the systems used by the Funds' major service providers.
Whether these steps will be effective can only be known for certain in the year
2000. In addition, year 2000 problems may ultimately negatively affect the
companies and governments whose securities the Funds purchase, which may have an
impact on the value of the Funds' shares. There is additional information on
these risks in the Statement of Additional Information.
<PAGE>
2 PROSPECTUS

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 4.5 years).

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The prices the Fund's 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, the
Fund's fixed income securities will decrease in value if interest rates rise and
vice versa, and the volatility of lower rated securities is even greater than
that of higher rated securities. Also, longer-term securities are generally more
volatile, so the average maturity or duration of these securities affects risk.

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

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 that must be reinvested at lower rates. Prepayment risk may
make it difficult to calculate the average maturity of the Fund of
mortgage-backed securities and, therefore, to assess the volatility risk of the
Fund.

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>
PROSPECTUS 3

CORE FIXED INCOME FUND

PERFORMANCE INFORMATION

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
6.78% -3.98%
(6/30/95) (3/31/94)
</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 Lehman Brothers Aggregate Bond Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(MAY 1,
1 YEAR 5 YEARS 10 YEARS 1987)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
CORE FIXED INCOME FUND 8.53% 7.07% 8.38% 8.14%
- --------------------------------------------------------------------
LEHMAN BROTHERS BOND AGGREGATE
INDEX* 8.67% 7.27% 9.26% 9.02%**
- --------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
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.

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C> <C> <C>
Investment Advisory Fees 0.28%
Distribution (12b-1) Fees None
Other Expenses 0.32%
-------
Total Annual Fund Operating
Expenses 0.60%*
</TABLE>

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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>
Core Fixed Income Fund Class A $61 $192 $335 $750
</TABLE>

<PAGE>
4 PROSPECTUS

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. In managing
the Funds assets, the Sub-Adviser selects 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 may vary, and
will generally not exceed 10 years. There is no limit on the maturity or on the
credit quality of any security.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The prices of the Fund's 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, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.

Junk bonds involve greater risks of default or downgrade and are more volatile
than investment grade securities. Junk bonds involve a greater risk of 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 value 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>
PROSPECTUS 5

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
5.62% -4.98%
(9/30/97) (9/30/98)
</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 CS First Boston High Yield Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(JANUARY 11,
1 YEAR 1995)
<S> <C> <C>
- --------------------------------------------------------------
HIGH YIELD BOND FUND 1.40% 11.79%
- --------------------------------------------------------------
CS FIRST BOSTON HIGH YIELD INDEX* 0.58% 10.81%**
- --------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

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

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER 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>
HIGH YIELD BOND FUND-- CLASS A SHARES .85%
</TABLE>

For more information about these fees, see "Investment Adviser 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 Class A $91 $284 $493 $1,096
</TABLE>

<PAGE>
6 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

THE FUNDS' OTHER INVESTMENTS
- --------------------------------------------------------------------------------
This prospectus describes the Fund's primary strategies, and the Funds will
normally invest at least 65% of their assets in the types of securities
described in this prospectus. However, each Fund also may invest in other
securities, use other strategies and engage in other investment practices. These
investments and strategies, as well as those described in this prospectus, are
described in detail in the Funds' Statement of Additional Information (SAI). Of
course, there is no guarantee that any Fund will achieve its investment goal.

The investments listed above and the investments and strategies described
throughout this prospectus are those that the Sub-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
- --------------------------------------------------------------------------------

SEI INVESTMENTS MANAGEMENT CORPORATION (SIMC) ACTS AS THE MANAGER OF MANAGERS OF
THE FUNDS, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE FUNDS 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. Each Sub-Adviser makes
investment decisions for the assets it manages and continuously reviews,
supervises and administers its investment program. SIMC oversees the
Sub-Advisers to ensure compliance with the Funds' investment policies and
guidelines, and monitors each Sub-Adviser's adherence to its investment style.
The Board of Trustees supervises the Advisers 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).

SIMC, an SEC-registered adviser, serves as the Adviser to each Fund. As of
October 31, 1998, SIMC had approximately $41 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>
CORE FIXED INCOME FUND............................ .275%
HIGH YIELD BOND FUND.............................. .4875%
</TABLE>

SUB-ADVISERS AND PORTFOLIO MANAGERS

CORE FIXED INCOME FUND

BLACKROCK, INC.: Keith Anderson and Andrew Phillips of BlackRock, Inc.
("BlackRock") serve as portfolio managers of a portion of the assets of 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 of
Firstar Investment Research & Management Company, LLC ("FIRMCO"), serves as
portfolio manager of a portion of the assets of 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 manages a portion of the assets of the Core
Fixed Income Fund.

HIGH YIELD BOND FUND

CREDIT SUISSE ASSET MANAGEMENT: Richard J. Lindquist, C.F.A., of Credit
Suisse Asset Management ("Credit Suisse") serves as portfolio manager of the
High Yield Bond Fund. Mr. Lindquist joined Credit Suisse in 1995 as a result
of Credit Suisse'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>
PROSPECTUS 7

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.

The Funds offer Class A Shares only to financial institutions for their own or
their customers' accounts. For information on how to open an account and set up
procedures for placing transactions, call 1-800-DIAL-SEI.

PURCHASING FUND SHARES

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

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

To purchase shares directly from the Funds, please call 1-800-DIAL-SEI. The
Funds may reject any purchase order if they determine that accepting the order
would not be in the best interests of the Funds or their shareholders.

Certain 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 the Funds), 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 the Funds. For more information about how to purchase, sell or
exchange Fund shares through your financial institution, you should contact your
financial institution directly. Your financial institution may charge you fees
for its services.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. Each Fund
calculates its NAV once each Business Day at the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time). So, if you want to receive the current Business Day's NAV, generally the
Funds must receive your purchase order before 4:00 p.m. Eastern time.

HOW THE FUNDS CALCULATE NAV
NAV for one Fund share is the value of that share's portion of all of the net
assets in a Fund. In calculating NAV, each Fund generally values its investment
portfolio at market price. If market prices are unavailable or the Funds think
that they are unreliable, fair value prices may be determined in good faith
using methods approved by the Board of Trustees. The Funds may hold portfolio
securities that are listed on foreign exchanges. These securities may trade on
weekends or other days when the Funds do not calculate their NAV. As a result,
the value of these 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. The Funds may accept investments of smaller amounts at their
discretion.

SELLING FUND SHARES

HOW TO SELL YOUR FUND SHARES
Holders of Class A Shares may sell shares by following procedures established
when they opened their account or accounts. If you have questions, call
1-800-DIAL-SEI. If you own your shares through an account with a broker or other
institution, contact that broker or institution to sell your shares.
<PAGE>
8 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

If you own shares directly, you may sell your shares on any Business Day by
contacting the Funds 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 the Funds receive your request.

RECEIVING YOUR MONEY
Normally, the Funds will send your sale proceeds within three Business Days
after the Funds receive your request, but it may take up to seven Business Days.
Your proceeds can be wired to your bank account 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).

REDEMPTIONS IN KIND
The Funds generally pay sale proceeds in cash. However, under unusual conditions
that make the payment of cash unwise (and for the protection of the Funds'
remaining shareholders) the Funds might pay all or part of your redemption
proceeds in liquid securities with a market value equal to the redemption price
(redemption in kind). 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.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES
A Fund may suspend your right to sell your shares if the NYSE restricts trading,
the SEC declares an emergency or for other reasons. More information about this
is in the SAI.

EXCHANGING FUND SHARES

HOW TO EXCHANGE YOUR SHARES
You may exchange Class A Shares of any Fund for Class A Shares of any other Fund
on any Business Day by contacting the Funds directly by mail or telephone. You
may also exchange shares through your financial institution or intermediary 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 the Funds receive
your exchange request.

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

DISTRIBUTION OF FUND SHARES

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

For Class A Shares, shareholder servicing fees, as a percentage of average daily
net assets, may be up to .25%.
<PAGE>
PROSPECTUS 9

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The Core Fixed Income and High Yield Bond Funds distribute their investment
income quarterly 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 the Funds in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Funds
receive your written notice. To cancel your election, simply send the Funds
written notice.

TAXES

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

Each Fund will distribute substantially all of its 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. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE
EVENT.

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

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

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about Class A 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 the annual report that accompanies the Funds' SAI. You can obtain the
Funds' annual report, which contains more performance information, at no charge
by calling 1-800-DIAL-SEI.

CORE FIXED INCOME FUND-- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED
SEPTEMBER 30
----------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 10.40 $ 10.23 $ 10.46 $ 9.65 $ 10.87

Net Investment Income
(Loss)................. 0.61 0.63 0.64 0.65 0.56
Net Realized and
Unrealized Gains
(losses on
Securities)............ 0.54 0.33 (0.18) 0.82 (1.12)
---------- ---------- -------- -------- --------

Dividends from Net
Investment Income...... (0.61) (0.63) (0.69) (0.66) (0.55)
Distributions from
Realized Capital
Gains.................. (0.02) (0.16) -- -- (0.11)
---------- ---------- -------- -------- --------
Net Asset Value, End of
Period................. 10.92 10.40 10.23 10.46 9.65
---------- ---------- -------- -------- --------
TOTAL RETURN............. 11.42% 9.80% 4.51% 15.87% (5.36)%
---------- ---------- -------- -------- --------
Net Assets, End of Period
(000).................. $1,465,285 $1,063,335 $655,300 $419,959 $311,955
---------- ---------- -------- -------- --------
---------- ---------- -------- -------- --------

Ratio of Expenses to
Average Net Assets..... 0.60% 0.60% 0.57% 0.55% 0.55%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... 5.77% 6.17% 6.24% 6.60% 5.57%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 0.60% 0.61% 0.64% 0.68% 0.62%
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... 5.77% 6.16% 6.17% 6.47% 5.50%
Portfolio Turnover
Rate................... 344% 216% 311% 294% 370%
</TABLE>

<PAGE>
PROSPECTUS 11

FINANCIAL HIGHLIGHTS

HIGH YIELD BOND FUND-- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED
SEPTEMBER 30
-------------------------------------
1998 1997 1996 1995(1)
-------- -------- -------- -------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 11.66 $ 11.14 $ 10.64 $ 10.00

Net Investment Income
(Loss)...................... 1.04 1.04 0.94 0.67
Net Realized and Unrealized
Gains (losses on
Securities)................. (0.75) 0.57 0.62 0.55
-------- -------- -------- -------

Dividends from Net Investment
Income...................... (1.04) (1.04) (1.03) (0.58)
Distributions from Realized
Capital Gains............... (0.10) (0.05) (0.03) --
-------- -------- -------- -------
Net Asset Value, End of
Period...................... 10.81 11.66 11.14 10.64
-------- -------- -------- -------
TOTAL RETURN.................. 2.25% 15.30% 15.46% 17.72%
-------- -------- -------- -------
Net Assets, End of Period
(000)....................... $314,937 $236,457 $107,545 $23,724
-------- -------- -------- -------
-------- -------- -------- -------

Ratio of Expenses to Average
Net Assets.................. 0.85% 0.86% 0.87% 0.67%
Ratio of Net Investment Income
(Loss) to Average Net
Assets...................... 8.94% 9.33% 9.01% 10.02%
Ratio of Expenses to Average
Net Assets (Excluding
Waivers).................... 0.89% 0.91% 0.94% 0.86%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)......... 8.90% 9.28% 8.94% 9.83%
Portfolio Turnover Rate....... 56% 68% 55% 56%
</TABLE>

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

(1) High Yield Bond shares were offered beginning January 11, 1995. All ratios
including total return have been annualized.
<PAGE>

SEI
INVESTMENTS

The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated January 31, 1999, includes more detailed information about SEI
Institutional Managed Trust. The SAI is on file with the SEC and is
incorporated by reference into this prospectus. This means that the SAI, for
legal purposes, is part of this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

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

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-DIAL-SEI
By Mail: Write to the Funds at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

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

The Funds' Investment Company Act registration number is 811-4878.>

SEI-F-102-05

SEI
INVESTMENTS

PROSPECTUS AS OF JANUARY 31, 1999

FIXED INCOME

Core Fixed Income Fund

High Yield Bond Fund

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 Shares of the Funds
that you should know before investing. Please read this prospectus and keep it
for future reference.

LARGE CAP VALUE FUND.................................................2
LARGE CAP GROWTH FUND................................................4
TAX-MANAGED LARGE CAP FUND...........................................6
SMALL CAP VALUE FUND.................................................8
SMALL CAP GROWTH FUND...............................................10
MID-CAP FUND........................................................12
CAPITAL APPRECIATION FUND...........................................14
EQUITY INCOME FUND..................................................16
BALANCED FUND.......................................................18
THE FUNDS' OTHER INVESTMENTS........................................20
INVESTMENT ADVISER AND SUB-ADVISERS.................................20
PURCHASING, SELLING AND EXCHANGING FUND SHARES......................24
DIVIDENDS, DISTRIBUTIONS AND TAXES..................................26
FINANCIAL HIGHLIGHTS................................................27
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
for certain clients, 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 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.

INTRODUCTION -- INFORMATION COMMON TO ALL FUNDS

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

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of SIMC, and one or more
Sub-Advisers manage portions of each Fund's assets and invest those assets in a
way they believe will help each Fund achieve its goal. SIMC acts as "manager of
managers" for each Fund, and attempts to ensure 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, investing in the Funds involves risks, and there is no guarantee that a
Fund will achieve its goal. SIMC and the Sub-Advisers (the "Advisers") judgments
about the markets, the economy, or companies, may not anticipate actual market
movements, economic conditions or company performance, and these judgements may
affect the return on your investment. 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 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. These price movements, sometimes called volatility, will
vary depending on the types of securities a Fund owns and the markets in which
they trade. The estimated level of volatility for each Fund is set forth in the
Fund Summaries that follows. 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

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 is diversified as to issuers and industries.

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. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk 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>
PROSPECTUS 3

LARGE CAP VALUE 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Large Cap Value Portfolio
1995 37.75%
1996 20.45%
1997 36.74%
1998 11.35%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.58% -13.61%
(12/31/98) (9/30/98)
</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 Frank Russell 1000 Value Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
(OCTOBER 31,
1 YEAR 1994)*
<S> <C> <C>
- -------------------------------------------------------------------
LARGE CAP VALUE FUND 11.35% 24.01%
- -------------------------------------------------------------------
FRANK RUSSELL 1000 VALUE INDEX** 15.63% 25.65%***
- -------------------------------------------------------------------
</TABLE>

* PRIOR TO OCTOBER 31, 1994, THE FUND WAS ADVISED BY A DIFFERENT INVESTMENT
ADVISER AND PERFORMANCE FOR THAT PERIOD IS NOT SHOWN.
** AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE FRANK RUSSELL 1000 VALUE INDEX IS A WIDELY-RECOGNIZED,
CAPITALIZATION-WEIGHTED (COMPANIES WITH LARGER MARKET CAPITALIZATIONS HAVE MORE
INFLUENCE THAN THOSE WITH SMALLER MARKET CAPITALIZATION) INDEX OF THE 1000
LARGEST U.S. COMPANIES WITH LOWER GROWTH RATES AND PRICE-TO-BOOK RATIOS.
*** THE INCEPTION DATE FOR THE INDEX IS OCTOBER 31, 1994.

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

ANNUAL FUND OPERATING EXPENSES

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

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Value Fund Class A $87 $271 $471 $1,049
</TABLE>

<PAGE>
4 PROSPECTUS

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 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 thus lower performance) 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>
PROSPECTUS 5

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Large Cap Growth
1995 35.50%
1996 22.70%
1997 34.76%
1998 38.80%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
29.31% -11.56%
(12/31/98) (9/30/98)
</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 Frank Russell 1000 Growth Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(DECEMBER 20,
1 YEAR 1994)
<S> <C> <C>
- --------------------------------------------------------------------
LARGE CAP GROWTH FUND 38.80% 32.74%
- --------------------------------------------------------------------
FRANK RUSSELL 1000 GROWTH INDEX* 38.71% 32.78%**
- --------------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
LARGE CAP GROWTH FUND-- CLASS A SHARES .85%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Growth Fund Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
6 PROSPECTUS

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 U.S.
companies with market capitalizations of more than $1 billion 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. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. However, efforts to protect against market declines may not
succeed because hedging activities also involve risk. These factors contribute
to price volatility, which is the principal risk of investing in the Fund.

The Fund is managed to minimize tax consequences to investors, but will likely
earn taxable income and gains from time to time.
<PAGE>
PROSPECTUS 7

TAX-MANAGED LARGE CAP FUND

PERFORMANCE INFORMATION

The table compares the Fund's total return for the period from inception (March
4, 1998) through December 31, 1998, to those of the Frank Russell 1000 Index:

<TABLE>
<S> <C>
TAX-MANAGED LARGE CAP FUND 19.85%
- ----------------------------------------------------------
FRANK RUSSELL 1000 INDEX* 17.69%**
- ----------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS MARCH 31, 1998.

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

ANNUAL FUND OPERATING EXPENSES

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

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

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Tax-Managed Large Cap Fund
Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
8 PROSPECTUS

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 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. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
<PAGE>
PROSPECTUS 9

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Small Cap Value
1995 18.21%
1996 22.13%
1997 35.11%
1998 -2.84%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.33% -19.78%
(6/30/97) (9/30/98)
</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 Frank Russell 2000 Value Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(DECEMBER 20,
1 YEAR 1994)
<S> <C> <C>
- ---------------------------------------------------------------
SMALL CAP VALUE FUND (2.84%) 18.00%
- ---------------------------------------------------------------
FRANK RUSSELL 2000 VALUE INDEX* (6.45%) 17.99%**
- ---------------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS DECEMBER 31, 1994.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 Class A $112 $350 $606 $1,340
</TABLE>

<PAGE>
10 PROSPECTUS

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 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 thus lower performance) 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 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. These securities may be traded
over-the-counter or listed on an exchange and may or may not pay dividends.
<PAGE>
PROSPECTUS 11

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Small Cap Growth Portfolio
1993 13.32%
1994 1.74%
1995 39.93%
1996 19.14%
1997 8.38%
1998 5.59%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
28.29% -24.08%
(12/31/98) (9/30/98)
</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 Frank Russell 2000
Growth Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
5 (APRIL 20,
1 YEAR YEARS 1992)
<S> <C> <C> <C>
- ---------------------------------------------------------------
SMALL CAP GROWTH FUND 5.59% 14.19% 17.34%
- ---------------------------------------------------------------
FRANK RUSSELL 2000 GROWTH INDEX* 1.23% 10.22% 10.40%**
- ---------------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS APRIL 30, 1992.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 $112 $350 $606 $1,340
</TABLE>

<PAGE>
12 PROSPECTUS

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 core
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, selects
stocks of companies that have low price-earnings and price-book ratios, but that
also have high sustainable growth levels and the probability of high positive
earnings revisions. The Fund 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 thus lower performance) 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>
PROSPECTUS 13

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Mid-Cap Portfolio
1994 -10.79%
1995 23.04%
1996 26.66%
1997 31.88%
1998 3.30%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
21.81% -22.08%
(12/31/98) (9/30/98)
</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 Frank Russell Mid-Cap Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(FEBRUARY 16,
1 YEAR 5 YEARS 1993)
<S> <C> <C> <C>
- --------------------------------------------------------------------
MID-CAP FUND 3.30% 13.63% 15.08%
- --------------------------------------------------------------------
FRANK RUSSELL MID-CAP INDEX* 10.10% 17.34% 16.96%**
- --------------------------------------------------------------------
</TABLE>

** THE INCEPTION DATE FOR THE INDEX IS FEBRUARY 28, 1993.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 Class A $102 $318 $552 $1,225
</TABLE>

<PAGE>
14 PROSPECTUS

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 managing the Fund, the
Sub-Adviser selects 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 thus lower performance) 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.

The smaller capitalization companies the Fund invested 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.
These securities may be traded over-the-counter or listed on an exchange and may
or may not pay dividends.
<PAGE>
PROSPECTUS 15

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Capital Appreciation
Portfolio
1989 35.47%
1990 0.01%
1991 35.11%
1992 7.74%
1993 9.20%
1994 -7.53%
1995 30.78%
1996 20.93%
1997 31.69%
1998 28.72%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
23.57% -13.16%
(12/31/98) (9/30/90)
</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 S&P 500 Composite Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH 1,
1 YEAR 5 YEARS 10 YEARS 1988)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
CAPITAL APPRECIATION FUND 28.72% 19.91% 18.23% 17.32%
- ---------------------------------------------------------------------
S&P 500 COMPOSITE INDEX* 28.60% 24.05% 19.19% 18.48%**
- ---------------------------------------------------------------------
</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. THE S&P 500 COMPOSITE INDEX IS A WIDELY-RECOGNIZED, MARKET-WEIGHTED
(HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS)
INDEX OF THE 500 STOCKS DESIGNED TO MIMIC THE OVERALL MARKET'S INDUSTRY
WEIGHTINGS. MOST, BUT NOT ALL, LARGE CAPITALIZATION STOCKS ARE IN THE INDEX.
THERE ARE ALSO SOME SMALL CAPITALIZATION STOCKS IN THE INDEX. STOCKS INCLUDED IN
THE INDEX ARE MOSTLY NYSE LISTED COMPANIES, WITH SOME AMEX AND NASDAQ STOCK
MARKET STOCKS.
** THE INCEPTION DATE FOR THE INDEX IS MARCH 31, 1988.

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
CAPITAL APPRECIATION FUND-- CLASS A SHARES .84%
</TABLE>

For more information about these fees, see "Investment Adviser 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
Class A $91 $284 $493 $1,096
</TABLE>

<PAGE>
16 PROSPECTUS

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. In managing the assets of the fund, the Sub-Adviser selects
stocks that meet its dividend and yield criteria. The Fund 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,
dividend-paying U.S. stocks, may underperform other equity market segments or
the equity markets as a whole.
<PAGE>
PROSPECTUS 17

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Equity Income Portfolio
1989 25.08%
1990 -8.94%
1991 30.63%
1992 10.02%
1993 13.16%
1994 -0.23%
1995 36.07%
1996 16.61%
1997 27.96%
1998 16.12%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.43% -15.00%
(3/31/91) (9/30/90)
</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 Frank Russell 1000 Value Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(JUNE 2,
1 YEAR 5 YEARS 10 YEARS 1988)
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------
EQUITY INCOME FUND 16.12% 18.66% 15.86% 15.68%
- ---------------------------------------------------------------------
FRANK RUSSELL 1000 VALUE
INDEX* 15.63% 20.86% 17.42% 17.42%**
- ---------------------------------------------------------------------
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
EQUITY INCOME FUND-- CLASS A SHARES .85%
</TABLE>

For more information about these fees, see "Investment Adviser 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 Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
18 PROSPECTUS

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 investment between U.S. common stocks
and fixed income securities.
- ------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Balanced Fund invests primarily in a balanced portfolio of 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 a combination of common stocks that produce
income and fixed income securities, and will attempt to minimize price declines
during equity market downturns by reallocating assets to fixed income securities
of varying maturities. Under normal market conditions, the Fund's fixed income
securities will have an average maturity of approximately 5 years.

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that the Adviser's asset allocation
decisions will not anticipate market trends successfully. 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. In fact, since the Fund will always have a portion of its assets
in fixed income securities, it may not perform as well during periods of stock
market appreciation as funds that invest only in stocks.
<PAGE>
PROSPECTUS 19

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Balanced Portfolio
1991 15.85%
1992 13.34%
1993 7.91%
1994 -6.59%
1995 24.34%
1996 13.49%
1997 20.98%
1998 19.52%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.81% -4.62%
(12/31/98) (9/30/98)
</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 S&P 500 Composite Index and the Lehman
Government/Corporate Bond Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
(AUGUST 7,
1 YEAR 5 YEARS 1990)
<S> <C> <C> <C>
- ----------------------------------------------------------------
BALANCED FUND 19.52% 13.77% 12.93%
- ----------------------------------------------------------------
S&P 500 COMPOSITE INDEX* 28.60% 24.05% 19.06%**
- ----------------------------------------------------------------
LEHMAN BROTHERS GOVERNMENT/
CORPORATE BOND INDEX* 9.47% 7.30% 9.07%**
- ----------------------------------------------------------------
</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. THE S&P 500 COMPOSITE INDEX IS A WIDELY RECOGNIZED, MARKET-WEIGHTED
(HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS)
INDEX OF THE 500 STOCKS DESIGNED TO MIMIC THE OVERALL MARKET'S INDUSTRY
WEIGHTINGS. THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX IS A
WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER MARKET VALUE BONDS HAVE MORE
INFLUENCE THAN LOWER MARKET VALUE BONDS) INDEX OF U.S. TREASURY SECURITIES, U.S.
GOVERNMENT AGENCY OBLIGATIONS, CORPORATE DEBT SECURITIES, YANKEE BONDS, AND
NON-CONVERTIBLE DEBT SECURITIES ISSUED BY OR GUARANTEED BY FOREIGN GOVERNMENTS
AND AGENCIES. ALL SECURITIES IN THE INDEX ARE RATED INVESTMENT GRADE (BBB) OR
HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR.
** THE INCEPTION DATE FOR THE S&P 500 COMPOSITE INDEX AND THE LEHMAN BROTHERS
GOVENMENT/CORPORATE BOND INDEX IS AUGUST 31, 1990.

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.40%
----------
Total Annual Fund Operating Expenses 0.80%*
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
BALANCED FUND-- CLASS A SHARES .75%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Balanced Fund Class A $82 $255 $444 $990
</TABLE>

<PAGE>
20 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

THE FUNDS' OTHER INVESTMENTS
This prospectus describes the Funds' primary strategies, and the Funds will
normally invest at least 65% of their assets in the types of securities
described in this prospectus. However, each Fund also may invest in other
securities, use other strategies and engage in other investment practices. These
investments and strategies, as well as those described in this prospectus, are
described in detail in the Funds Statement of Additional Information (SAI). Of
course, there is no guarantee that any Fund will achieve its investment goal.

The investments and strategies described in this prospectus are those that the
Sub-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
- --------------------------------------------------------------------------------

SEI INVESTMENTS MANAGEMENT CORPORATION (SIMC) ACTS AS THE MANAGER OF MANAGERS OF
THE FUNDS, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE FUNDS, 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. Each Sub-Adviser makes
investment decisions for the assets it manages and continuously reviews,
supervises and administers its investment program. SIMC oversees the
Sub-Advisers to ensure compliance with the Funds' investment policies and
guidelines, and monitors each Sub-Adviser's adherence to its investment style.
The Board of Trustees supervises the Advisers 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).

<TABLE>
<S> <C>
LARGE CAP VALUE FUND.............................. .35%
LARGE CAP GROWTH FUND............................. .35%
TAX-MANAGED LARGE CAP FUND........................ .40%
SMALL CAP VALUE FUND.............................. .65%
SMALL CAP GROWTH FUND............................. .65%
MID-CAP FUND...................................... .40%
CAPITAL APPRECIATION FUND......................... .35%
EQUITY INCOME FUND................................ .35%
BALANCED FUND..................................... .35%
</TABLE>

SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP VALUE FUND

LSV ASSET MANAGEMENT, L.P.: Josef Lakonishok, Andrei Shleifer and Robert
Vishny of LSV Asset Management, L.P. ("LSV"), serve as portfolio managers of
a portion of the assets of the Large Cap Value Fund. They are officers and
partners of LSV. An affiliate of SIMC owns an 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 of
Mellon Equity Associates, LLP ("Mellon Equity"), serve as portfolio managers
of a portion of the assets of 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.
<PAGE>
PROSPECTUS 21

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

SANFORD C. BERNSTEIN & CO., INC.: Lewis A. Sanders and Marilyn Goldstein
Fedak of Sanford C. Bernstein & Co., Inc. ("Bernstein"), serve as portfolio
managers of a portion of the assets of 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. manages a portion of the assets of the
Large Cap Growth Fund.

PROVIDENT INVESTMENT COUNSEL, INC.: George E. Handtmann III and Jeffrey J.
Miller of Provident Investment Counsel, Inc. ("Provident"), serve as
portfolio managers of a portion of the assets of 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 of TCW Funds Management Inc.
("TCW") serves as portfolio manager of a portion of the assets of 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.

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 of
Mellon Equity Associates, LLP ("Mellon Equity"), serve as portfolio managers
for a portion of 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 of Sanford C. Bernstein & Co., Inc. ("Bernstein"), serve as portfolio
managers for a portion of 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 of 1838 Investment Advisors, L.P. ("1838"), serve as portfolio
managers of a portion of the assets of 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., of Boston
Partners Asset Management, L.P. ("BPAM"), serves as portfolio manager of a
portion of the assets of 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.
<PAGE>
22 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

LSV ASSET MANAGEMENT, L.P.: Josef Lakonishok, Andrei Shleifer and Robert
Vishny of LSV Asset Management, L.P. ("LSV"), serve as portfolio managers of
a portion of the assets of the Small Cap Value Fund. 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 of
Mellon Equity Associates, LLP ("Mellon Equity"), serve as portfolio managers
of a portion of the assets of 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.

SMALL CAP GROWTH FUND

FURMAN SELZ CAPITAL MANAGEMENT, LLC: Matthew S. Price and David C. Campbell
of Furman Selz Capital Management, LLC ("Furman Selz"), serve as portfolio
managers of a portion of the assets of 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 of
Nicholas-Applegate Capital Management ("Nicholas-Applegate"), serve as
portfolio managers of a portion of the assets of 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 of Robertson,
Stephens Investment Management, L.P. ("Robertson"), serves as portfolio
manager of a portion of the assets of 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 of
Spyglass Asset Management, Inc. ("Spyglass"), serve as portfolio managers of
a portion of the assets of 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 of Wall Street Associates ("WSA") serve as portfolio managers of a
portion of the assets of the Small Cap Growth Fund. Each owns 1/3 of, and is
a principal of, WSA. They have an average of 27 years of investment
management experience.

MID-CAP FUND

MARTINGALE ASSET MANAGEMENT, L.P.: William Jacques of Martingale Asset
Management, L.P. ("Martingale"), serves as portfolio manager for the Mid-Cap
Fund. Mr. Jacques is an Executive Vice President and has been with
Martingale since 1987.
<PAGE>
PROSPECTUS 23

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

CAPITAL APPRECIATION FUND

STI CAPITAL MANAGEMENT, N.A.: Anthony Gray of STI Capital Management, N.A.
("STI"), serves as portfolio manager for 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.

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 of STI Capital Management, N.A.
("STI"), serves as portfolio manager for 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.
<PAGE>
24 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.

PURCHASING FUND SHARES

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).

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. Each Fund
calculates its NAV once each Business Day at the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time). So, for you to receive the current Business Day's NAV, generally the
Funds must receive your purchase order before 4:00 p.m. Eastern time.

HOW THE FUNDS CALCULATE NAV
NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund. In calculating NAV, each Fund generally values its
investment portfolio at market price. If market prices are unavailable or the
Funds think that they are unreliable, fair value prices may be determined in
good faith using methods approved by the Board of Trustees. Some Funds may 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 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. The Funds may accept investments of smaller amounts at the Funds
discretion.

SELLING FUND SHARES

PURCHASING, SELLING AND EXCHANGING FUND SHARES

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

EXCHANGING FUND SHARES

DISTRIBUTION OF FUND SHARES

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

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The Funds distribute their investment income quarterly as a dividend to
shareholders. The Funds make distributions of capital gains, if any, at least
annually.

TAXES

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
PROSPECTUS 27

FINANCIAL HIGHLIGHTS

LARGE CAP VALUE FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED SEPTEMBER 30:
--------------------------------------------------
1998 1997 1996 1995 1994
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 19.37 $ 14.78 $ 13.00 $ 10.71 $ 11.54

Net Investment Income
(Loss)................. 0.25 0.28 0.32 0.33 0.28
Net Realized and
Unrealized Gains
(losses on
Securities)............ (0.42) 5.77 2.01 2.44 (0.46)

Dividends from Net
Investment Income...... (0.26) (0.29) (0.26) (0.33) (0.27)
Distributions from
Realized Capital
Gains.................. (1.63) (1.17) (0.29) (0.15) (0.38)
---------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 17.31 $ 19.37 $ 14.78 $ 13.00 $ 10.71
---------- -------- -------- -------- --------
TOTAL RETURN............. (1.40)% 44.12% 18.33% 26.83% (1.64)%
---------- -------- -------- -------- --------
Net Assets, End of Period
(000).................. $1,410,903 $866,826 $515,011 $331,692 $133,178
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------

Ratio of Expenses to
Average Net Assets..... 0.85% 0.85% 0.83% 0.76% 0.75%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... 1.42% 1.74% 2.31% 2.92% 2.51%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 0.85% 0.85% 0.83% 0.82% 0.75%
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... 1.42% 1.74% 2.31% 2.86% 2.51%
Portfolio Turnover
Rate................... 79% 67% 75% 99% 67%
</TABLE>

<PAGE>
28 PROSPECTUS

FINANCIAL HIGHLIGHTS

LARGE CAP GROWTH FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED SEPTEMBER 30:
----------------------------------------
1998 1997 1996 1995(1)
---------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period...................... $ 20.40 $ 15.03 $ 12.75 $ 10.00

Net Investment Income
(Loss)...................... 0.03 0.03 0.07 0.11
Net Realized and Unrealized
Gains (losses on
Securities)................. 1.62 6.33 2.51 2.72

Dividends from Net Investment
Income...................... (0.04) (0.05) (0.08) (0.08)
Distributions from Realized
Capital Gains............... (1.00) (0.94) (0.22) --
---------- -------- -------- --------
Net Asset Value, End of
Period...................... $ 21.01 $ 20.40 $ 15.03 $ 12.75
---------- -------- -------- --------
TOTAL RETURN.................. 8.35% 44.35% 20.59% 37.90%
---------- -------- -------- --------
Net Assets, End of Period
(000)....................... $1,379,199 $800,479 $482,079 $297,377
---------- -------- -------- --------
---------- -------- -------- --------

Ratio of Expenses to Average
Net Assets.................. 0.85% 0.85% 0.82% 0.85%
Ratio of Net Investment Income
(Loss) to Average Net
Assets...................... 0.11% 0.22% 0.50% 1.15%
Ratio of Expenses to Average
Net Assets (Excluding
Waivers).................... 0.90% 0.90% 0.87% 0.89%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)......... 0.06% 0.17% 0.45% 1.11%
Portfolio Turnover Rate....... 80% 73% 90% 44%
</TABLE>

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

(1) Large Cap Growth shares were offered beginning December 20, 1994. All
ratios including total return for that period have been annualized.

<PAGE>
PROSPECTUS 29

FINANCIAL HIGHLIGHTS

TAX-MANAGED LARGE CAP FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30
1998(1)
-------------
<S> <C>
Net Asset Value, Beginning of Period.............. $ 10.00

Net Investment Income (Loss)...................... 0.04
Net Realized and Unrealized Gains (losses on
Securities)..................................... (0.42)
-------------

Dividends from Net Investment Income.............. (0.01)
Distributions from Realized Capital Gains......... --
-------------
Net Asset Value, End of Period.................... 9.61
-------------
TOTAL RETURN...................................... (3.82)%
-------------
Net Assets, End of Period (000)................... $170,097
-------------
-------------

Ratio of Expenses to Average Net Assets........... 0.85%
Ratio of Net Investment Income (Loss) to Average
Net Assets...................................... 1.18%
Ratio of Expenses to Average Net Assets (Excluding
Waivers)........................................ 0.90%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers).................. 1.13%
Portfolio Turnover Rate........................... 12%
</TABLE>

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

(1) Tax-Managed Large Cap Class A shares were offered beginning March 4, 1998.
All ratios have been annualized.

<PAGE>
30 PROSPECTUS

FINANCIAL HIGHLIGHTS

SMALL CAP VALUE FUND -- CLASS A SHARES

Net Investment Income
(Loss)...................... 0.05 0.05 0.02 0.03
Net Realized and Unrealized
Gains (losses on
Securities)................. (2.22) 5.74 1.27 2.19

Dividends from Net Investment
Income...................... (0.04) (0.05) (0.01) (0.03)
Distributions from Realized
Capital Gains............... (1.97) (1.06) (0.30) --
---------- -------- -------- --------
Net Asset Value, End of
Period...................... $ 13.67 $ 17.85 $ 13.17 $ 12.19
---------- -------- -------- --------
TOTAL RETURN.................. (13.68)% 47.16% 10.86% 29.38%
---------- -------- -------- --------
Net Assets, End of Period
(000)....................... $ 430,010 $323,337 $163,177 $102,975
---------- -------- -------- --------
---------- -------- -------- --------

Ratio of Expenses to Average
Net Assets.................. 1.10% 1.11% 1.11% 1.10%
Ratio of Net Investment Income
(Loss) to Average Net
Assets...................... 0.34% 0.37% 0.15% 0.26%
Ratio of Expenses to Average
Net Assets (Excluding
Waivers).................... 1.10% 1.11% 1.11% 1.12%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)......... 0.34% 0.37% 0.15% 0.24%
Portfolio Turnover Rate....... 77% 98% 121% 64%
</TABLE>

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

(1) Small Cap Value shares were offered beginning December 20, 1994. All ratios
including total return for that period have been annualized.

<PAGE>
PROSPECTUS 31

FINANCIAL HIGHLIGHTS

SMALL CAP GROWTH FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED SEPTEMBER 30:
--------------------------------------------------
1998 1997 1996 1995 1994(1)
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 19.32 $ 20.51 $ 19.88 $ 14.04 $ 14.67

Net Investment Income
(Loss)................. (0.08) 0.02 (0.08) (0.14) (0.05)
Net Realized and
Unrealized Gains
(losses on
Securities)............ (4.92) 2.64 4.37 5.98 0.07

Dividends from Net
Investment Income...... -- -- -- -- --
Distributions from
Realized Capital
Gains.................. (0.64) (3.85) (3.66) -- (0.65)
---------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 13.68 $ 19.32 $ 20.51 $ 19.88 $ 14.04
---------- -------- -------- -------- --------
TOTAL RETURN............. (26.53)% 17.23% 26.56% 41.65% 0.23%
---------- -------- -------- -------- --------
Net Assets, End of Period
(000).................. $ 536,393 $561,414 $380,525 $310,238 $300,296
---------- -------- -------- -------- --------
---------- -------- -------- -------- --------

Ratio of Expenses to
Average Net Assets..... 1.10% 1.10% 1.10% 1.10% 1.01%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... (0.56)% (0.60)% (0.63)% (0.60)% (0.51)%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 1.10% 1.10% 1.11% 1.13% 1.11%
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... (0.56)% (0.60)% (0.64)% (0.63)% (0.61)%
Portfolio Turnover
Rate................... 128% 107% 167% 113% 97%
</TABLE>

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

(1) Small Cap Growth Class A shares were offered beginning April 20, 1992.

<PAGE>
32 PROSPECTUS

FINANCIAL HIGHLIGHTS

MID-CAP FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED SEPTEMBER 30:
--------------------------------------------
1998 1997 1996 1995 1994(1)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 19.56 $ 14.96 $ 13.04 $ 10.89 $ 12.10

Net Investment Income
(Loss)................. 0.13 0.13 0.18 0.01 0.01
Net Realized and
Unrealized Gains
(losses on
Securities)............ (2.67) 5.86 1.89 2.14 (0.98)

Dividends from Net
Investment Income...... (0.15) (0.14) (0.15) -- (0.01)
Distributions from
Realized Capital
Gains.................. (2.87) (1.25) -- -- (0.23)
------- ------- ------- ------- --------
Net Asset Value, End of
Period................. $ 14.00 $ 19.56 $ 14.96 $ 13.04 $ 10.89
------- ------- ------- ------- --------
TOTAL RETURN............. (15.41)% 43.13% 16.03% 19.78% (8.10)%
------- ------- ------- ------- --------
Net Assets, End of Period
(000).................. $35,160 $35,047 $24,954 $27,898 $108,002
------- ------- ------- ------- --------
------- ------- ------- ------- --------

Ratio of Expenses to
Average Net Assets..... 1.00% 0.93% 0.77% 0.94% 0.93%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... 0.93% 0.79% 1.28% 0.04% 0.03%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 1.00% 0.94% 0.88% 1.09% 1.06%
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... 0.93% 0.78% 1.17% (0.11)% (0.10)%
Portfolio Turnover
Rate................... 106% 92% 101% 108% 89%
</TABLE>

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

(1) Mid-Cap Class A shares were offered beginning February 16, 1993.

<PAGE>
PROSPECTUS 33

FINANCIAL HIGHLIGHTS

CAPITAL APPRECIATION FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED SEPTEMBER 30:
------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 18.20 $ 18.14 $ 16.70 $ 15.18 $ 16.36

Net Investment Income
(Loss)................. 0.16 0.21 0.20 0.22 0.24
Net Realized and
Unrealized Gains
(losses on
Securities)............ 0.92 4.65 3.18 2.42 (0.22)

Dividends from Net
Investment Income...... (0.16) (0.22) (0.17) (0.23) (0.25)
Distributions from
Realized Capital
Gains.................. (5.11) (4.58) (1.77) (0.89) (0.95)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 14.01 $ 18.20 $ 18.14 $ 16.70 $ 15.18
-------- -------- -------- -------- --------
TOTAL RETURN............. 7.08% 34.02% 22.14% 19.03% (0.11)%
-------- -------- -------- -------- --------
Net Assets, End of Period
(000).................. $118,741 $164,238 $236,581 $310,693 $729,100
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

Ratio of Expenses to
Average Net Assets..... 0.84% 0.84% 0.84% 0.84% 0.79%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... 1.03% 1.20% 1.20% 1.39% 1.45%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 0.89% 0.89% 0.86% 0.89% 0.84%
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... 0.98% 1.15% 1.18% 1.34% 1.40%
Portfolio Turnover
Rate................... 238% 178% 153% 107% 109%
</TABLE>

<PAGE>
34 PROSPECTUS

FINANCIAL HIGHLIGHTS

EQUITY INCOME FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.41 0.39 0.49 0.55 0.51
Net Realized and
Unrealized Gains
(losses on
Securities)............ (0.09) 4.33 2.20 2.48 (0.38)

Dividends from Net
Investment Income...... (0.38) (0.42) (0.41) (0.55) (0.50)
Distributions from
Realized Capital
Gains.................. (3.35) (2.68) (1.95) (0.47) (0.57)
-------- -------- -------- -------- --------
Net Asset Value, End of
Period................. $ 14.61 $ 18.02 $ 16.40 $ 16.07 $ 14.06
-------- -------- -------- -------- --------
TOTAL RETURN............. 1.51% 33.46% 18.17% 23.00% 1.05%
-------- -------- -------- -------- --------
Net Assets, End of Period
(000).................. $116,576 $173,766 $202,823 $250,609 $418,207
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

Ratio of Expenses to
Average Net Assets..... 0.85% 0.85% 0.83% 0.82% 0.78%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... 1.85% 2.38% 3.00% 3.72% 3.68%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 0.90% 0.90% 0.86% 0.88% 0.84%
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... 1.80% 2.33% 2.97% 3.66% 3.62%
Portfolio Turnover
Rate................... 66% 40% 43% 47% 28%
</TABLE>

<PAGE>
PROSPECTUS 35

FINANCIAL HIGHLIGHTS

BALANCED FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIODS ENDED SEPTEMBER 30:
-------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $ 14.06 $ 13.94 $ 12.76 $ 11.52 $ 12.24

Net Investment Income
(Loss)................. 0.41 0.41 0.42 0.34 0.23
Net Realized and
Unrealized Gains
(losses on
Securities)............ 0.80 2.27 1.44 1.34 (0.62)

Dividends from Net
Investment Income...... (0.40) (0.42) (0.34) (0.34) (0.22)
Distributions from
Realized Capital
Gains.................. (1.70) (2.14) (0.34) (0.10) (0.11)
------- ------- ------- ------- -------
Net Asset Value, End of
Period................. $ 13.17 $ 14.06 $ 13.94 $ 12.76 $ 11.52
------- ------- ------- ------- -------
TOTAL RETURN............. 9.49% 22.38% 15.01% 15.05% (3.25)%
------- ------- ------- ------- -------
Net Assets, End of Period
(000).................. $56,256 $51,195 $57,915 $70,464 $65,480
------- ------- ------- ------- -------
------- ------- ------- ------- -------

Ratio of Expenses to
Average Net Assets..... 0.75% 0.75% 0.75% 0.75% 0.75%
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... 2.90% 3.15% 2.98% 2.92% 2.05%
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 0.80% 0.81% 0.84% 0.90% 0.91%
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... 2.85% 3.09% 2.89% 2.77% 1.89%
Portfolio Turnover
Rate................... 183% 197% 143% 159% 149%
</TABLE>
<PAGE>

SEI
INVESTMENTS

The Art of People. The Science of Results.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

ANNUAL AND SEMI-ANNUAL REPORTS

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-8OO-DIAL-SEI
By Mail: Write to the Funds at:
One Freedom Valley Drive
Oaks, PA 19456

By Internet: http://www.seic.com

The Funds' Investment Company Act registration number is 811-4878.

SEI-F-101-05

SEI
INVESTMENTS

PROSPECTUS AS OF JANUARY 31, 1999

EQUITY

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

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 Shares of the Funds
that you should know before investing. Please read this prospectus and keep it
for future reference.

- --------------------------------------------------------------------------------
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
for certain clients, 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 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.

INTRODUCTION -- INFORMATION COMMON TO ALL FUNDS

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

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of SIMC, and one or more
Sub-Advisers manage portions of each Fund's assets and invest those assets in a
way they believe will help each Fund achieve its goal. SIMC acts as "manager of
managers" for each Fund, and attempts to ensure 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, investing in the Funds involves risks, and there is no guarantee that a
Fund will achieve its goal. SIMC and the Sub-Advisers (the "Advisers") judgments
about the markets, the economy, or companies, may not anticipate actual market
movements, economic conditions or company performance, and these judgements may
affect the return on your investment. 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 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. These price movements, sometimes called volatility, will
vary depending on the types of securities a Fund owns and the markets in which
they trade. The estimated level of volatility for each Fund is set forth in the
Fund Summaries that follows. 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

LARGE CAP VALUE FUND

FUND SUMMARY

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

LARGE CAP VALUE 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Large Cap Value Portfolio
1995 37.75%
1996 20.45%
1997 36.74%
1998 11.35%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.58% -13.61%
(12/31/98) (9/30/98)
</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 Frank Russell 1000 Value Index.

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

ANNUAL FUND OPERATING EXPENSES

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

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Value Fund Class A $87 $271 $471 $1,049
</TABLE>

<PAGE>
4 PROSPECTUS

LARGE CAP GROWTH FUND

FUND SUMMARY

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Large Cap Growth
1995 35.50%
1996 22.70%
1997 34.76%
1998 38.80%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
29.31% -11.56%
(12/31/98) (9/30/98)
</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 Frank Russell 1000 Growth Index.

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
LARGE CAP GROWTH FUND-- CLASS A SHARES .85%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Growth Fund Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
6 PROSPECTUS

TAX-MANAGED LARGE CAP FUND

FUND SUMMARY

INVESTMENT STRATEGY

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. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. However, efforts to protect against market declines may not
succeed because hedging activities also involve risk. These factors contribute
to price volatility, which is the principal risk of investing in the Fund.

The Fund is managed to minimize tax consequences to investors, but will likely
earn taxable income and gains from time to time.
<PAGE>
PROSPECTUS 7

TAX-MANAGED LARGE CAP FUND

PERFORMANCE INFORMATION

The table compares the Fund's total return for the period from inception (March
4, 1998) through December 31, 1998, to those of the Frank Russell 1000 Index:

** THE INCEPTION DATE FOR THE INDEX IS MARCH 31, 1998.

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

ANNUAL FUND OPERATING EXPENSES

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

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

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Tax-Managed Large Cap Fund
Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
8 PROSPECTUS

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Small Cap Value
1995 18.21%
1996 22.13%
1997 35.11%
1998 -2.84%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.33% -19.78%
(6/30/97) (9/30/98)
</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 Frank Russell 2000 Value Index.

** THE INCEPTION DATE FOR THE INDEX IS DECEMBER 31, 1994.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 Class A $112 $350 $606 $1,340
</TABLE>

<PAGE>
10 PROSPECTUS

SMALL CAP GROWTH FUND

FUND SUMMARY

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Small Cap Growth Portfolio
1993 13.32%
1994 1.74%
1995 39.93%
1996 19.14%
1997 8.38%
1998 5.59%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
28.29% -24.08%
(12/31/98) (9/30/98)
</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 Frank Russell 2000
Growth Index.

** THE INCEPTION DATE FOR THE INDEX IS APRIL 30, 1992.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 $112 $350 $606 $1,340
</TABLE>

<PAGE>
12 PROSPECTUS

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 core
style, the Fund invests in mid-cap U.S. common
stocks.
- ------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Mid-Cap Portfolio
1994 -10.79%
1995 23.04%
1996 26.66%
1997 31.88%
1998 3.30%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
21.81% -22.08%
(12/31/98) (9/30/98)
</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 Frank Russell Mid-Cap Index.

** THE INCEPTION DATE FOR THE INDEX IS FEBRUARY 28, 1993.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 Class A $102 $318 $552 $1,225
</TABLE>

<PAGE>
14 PROSPECTUS

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

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs (and thus lower performance) 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.

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Capital Appreciation
Portfolio
1989 35.47%
1990 0.01%
1991 35.11%
1992 7.74%
1993 9.20%
1994 -7.53%
1995 30.78%
1996 20.93%
1997 31.69%
1998 28.72%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
23.57% -13.16%
(12/31/98) (9/30/90)
</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 S&P 500 Composite Index.

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
CAPITAL APPRECIATION FUND-- CLASS A SHARES .84%
</TABLE>

For more information about these fees, see "Investment Adviser 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
Class A $91 $284 $493 $1,096
</TABLE>

<PAGE>
16 PROSPECTUS

EQUITY INCOME FUND

FUND SUMMARY

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Equity Income Portfolio
1989 25.08%
1990 -8.94%
1991 30.63%
1992 10.02%
1993 13.16%
1994 -0.23%
1995 36.07%
1996 16.61%
1997 27.96%
1998 16.12%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.43% -15.00%
(3/31/91) (9/30/90)
</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 Frank Russell 1000 Value Index.

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
EQUITY INCOME FUND-- CLASS A SHARES .85%
</TABLE>

For more information about these fees, see "Investment Adviser 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 Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
18 PROSPECTUS

BALANCED FUND

FUND SUMMARY

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Balanced Portfolio
1991 15.85%
1992 13.34%
1993 7.91%
1994 -6.59%
1995 24.34%
1996 13.49%
1997 20.98%
1998 19.52%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.81% -4.62%
(12/31/98) (9/30/98)
</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 S&P 500 Composite Index and the Lehman
Government/Corporate Bond Index.

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE S&P 500 COMPOSITE INDEX IS A WIDELY RECOGNIZED, MARKET-WEIGHTED
(HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS)
INDEX OF THE 500 STOCKS DESIGNED TO MIMIC THE OVERALL MARKET'S INDUSTRY
WEIGHTINGS. THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX IS A
WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER MARKET VALUE BONDS HAVE MORE
INFLUENCE THAN LOWER MARKET VALUE BONDS) INDEX OF U.S. TREASURY SECURITIES, U.S.
GOVERNMENT AGENCY OBLIGATIONS, CORPORATE DEBT SECURITIES, YANKEE BONDS, AND
NON-CONVERTIBLE DEBT SECURITIES ISSUED BY OR GUARANTEED BY FOREIGN GOVERNMENTS
AND AGENCIES. ALL SECURITIES IN THE INDEX ARE RATED INVESTMENT GRADE (BBB) OR
HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR.
** THE INCEPTION DATE FOR THE S&P 500 COMPOSITE INDEX AND THE LEHMAN BROTHERS
GOVENMENT/CORPORATE BOND INDEX IS AUGUST 31, 1990.

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.40%
----------
Total Annual Fund Operating Expenses 0.80%*
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
BALANCED FUND-- CLASS A SHARES .75%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Balanced Fund Class A $82 $255 $444 $990
</TABLE>

<PAGE>
20 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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

SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP VALUE FUND

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP GROWTH FUND

ALLIANCE CAPITAL MANAGEMENT L.P.: A committee of investment professionals at
Alliance Capital Management L.P. manages a portion of the assets of the
Large Cap Growth Fund.

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.

SMALL CAP VALUE FUND

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

LSV ASSET MANAGEMENT, L.P.: Josef Lakonishok, Andrei Shleifer and Robert
Vishny of LSV Asset Management, L.P. ("LSV"), serve as portfolio managers of
a portion of the assets of the Small Cap Value Fund. 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 of
Mellon Equity Associates, LLP ("Mellon Equity"), serve as portfolio managers
of a portion of the assets of 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.

SMALL CAP GROWTH FUND

MID-CAP FUND

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

CAPITAL APPRECIATION FUND

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

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.

PURCHASING FUND SHARES

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).

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. Each Fund
calculates its NAV once each Business Day at the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time). So, for you to receive the current Business Day's NAV, generally the
Funds must receive your purchase order before 4:00 p.m. Eastern time.

MINIMUM PURCHASES
To purchase Class A Shares for the first time, you must invest at least $100,000
in any Fund. The Funds may accept investments of smaller amounts at the Funds
discretion.

SELLING FUND SHARES

PURCHASING, SELLING AND EXCHANGING FUND SHARES

EXCHANGING FUND SHARES

DISTRIBUTION OF FUND SHARES

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

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The Funds distribute their investment income quarterly as a dividend to
shareholders. The Funds make distributions of capital gains, if any, at least
annually.

TAXES

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
PROSPECTUS 27

FINANCIAL HIGHLIGHTS

LARGE CAP VALUE FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.25 0.28 0.32 0.33 0.28
Net Realized and
Unrealized Gains
(losses on
Securities)............ (0.42) 5.77 2.01 2.44 (0.46)

<PAGE>
28 PROSPECTUS

FINANCIAL HIGHLIGHTS

LARGE CAP GROWTH FUND -- CLASS A SHARES

Net Investment Income
(Loss)...................... 0.03 0.03 0.07 0.11
Net Realized and Unrealized
Gains (losses on
Securities)................. 1.62 6.33 2.51 2.72

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

(1) Large Cap Growth shares were offered beginning December 20, 1994. All
ratios including total return for that period have been annualized.

<PAGE>
PROSPECTUS 29

FINANCIAL HIGHLIGHTS

TAX-MANAGED LARGE CAP FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30
1998(1)
-------------
<S> <C>
Net Asset Value, Beginning of Period.............. $ 10.00

Net Investment Income (Loss)...................... 0.04
Net Realized and Unrealized Gains (losses on
Securities)..................................... (0.42)
-------------

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

(1) Tax-Managed Large Cap Class A shares were offered beginning March 4, 1998.
All ratios have been annualized.

<PAGE>
30 PROSPECTUS

FINANCIAL HIGHLIGHTS

SMALL CAP VALUE FUND -- CLASS A SHARES

Net Investment Income
(Loss)...................... 0.05 0.05 0.02 0.03
Net Realized and Unrealized
Gains (losses on
Securities)................. (2.22) 5.74 1.27 2.19

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

(1) Small Cap Value shares were offered beginning December 20, 1994. All ratios
including total return for that period have been annualized.

<PAGE>
PROSPECTUS 31

FINANCIAL HIGHLIGHTS

SMALL CAP GROWTH FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. (0.08) 0.02 (0.08) (0.14) (0.05)
Net Realized and
Unrealized Gains
(losses on
Securities)............ (4.92) 2.64 4.37 5.98 0.07

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

(1) Small Cap Growth Class A shares were offered beginning April 20, 1992.

<PAGE>
32 PROSPECTUS

FINANCIAL HIGHLIGHTS

MID-CAP FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.13 0.13 0.18 0.01 0.01
Net Realized and
Unrealized Gains
(losses on
Securities)............ (2.67) 5.86 1.89 2.14 (0.98)

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

(1) Mid-Cap Class A shares were offered beginning February 16, 1993.

<PAGE>
PROSPECTUS 33

FINANCIAL HIGHLIGHTS

CAPITAL APPRECIATION FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.16 0.21 0.20 0.22 0.24
Net Realized and
Unrealized Gains
(losses on
Securities)............ 0.92 4.65 3.18 2.42 (0.22)

<PAGE>
34 PROSPECTUS

FINANCIAL HIGHLIGHTS

EQUITY INCOME FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.41 0.39 0.49 0.55 0.51
Net Realized and
Unrealized Gains
(losses on
Securities)............ (0.09) 4.33 2.20 2.48 (0.38)

<PAGE>
PROSPECTUS 35

FINANCIAL HIGHLIGHTS

BALANCED FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.41 0.41 0.42 0.34 0.23
Net Realized and
Unrealized Gains
(losses on
Securities)............ 0.80 2.27 1.44 1.34 (0.62)

This Fund is offered in conjunction with

The Achievement Funds to afford a convenient range of investment choices to
investors.

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

Additional information about the Fund's investments is available in the
Fund's annual and semi-annual reports to shareholders. In the Fund's annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected the Fund's performance during the last
fiscal year. You can obtain a free copy of the Fund's Statement of Additional
Information and/or free copies of the Fund's most recent annual or
semi-annual report by calling 800-472-0577. You may also call 800-472-0577 to
request other information about the Fund or to make shareholder inquiries.

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

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

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

The Fund's Investment Company Act registration number is 811-4878.

Distributed by
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
800-472-4818

ACH-F-007-05

[LOGO]

The Achievement Funds SEI
Institutional Managed Trust Institutional Prospectus

INSTITUTIONAL
PROSPECTUS

Small Cap Growth Fund

January 31, 1999

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 D Shares of the Small
Cap Growth Fund that you should know before investing. Please read this
prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS GENERAL
INFORMATION YOU SHOULD KNOW ABOUT INVESTING IN THE FUND. FOR MORE DETAILED
INFORMATION ABOUT THE FUND, PLEASE SEE:

SMALL CAP GROWTH FUND................................................2
THE FUND'S OTHER INVESTMENTS.........................................4
INVESTMENT ADVISER AND SUB-ADVISERS..................................4
PURCHASING, SELLING AND EXCHANGING FUND SHARES.......................6
DIVIDENDS, DISTRIBUTIONS AND TAXES..................................11
FINANCIAL HIGHLIGHTS................................................12
HOW TO OBTAIN MORE INFORMATION ABOUT SEI INSTITUTIONAL MANAGED
TRUST.......................................................Back Cover

- --------------------------------------------------------------------------------
THE FUND AND GLOBAL ASSET ALLOCATION

STRATEGIES: The Fund has its own distinct risk and reward characteristics,
investment objective, policies, and strategies. SEI Investments Management
Corporation (SIMC) constructs and maintains global asset allocation strategies,
and the Fund is designed in part to implement those strategies. 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.

In managing the Fund, 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
the 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 this
Fund to ensure that they do not deviate from their stated investment philosophy
or process.
<PAGE>
PROSPECTUS 1

INTRODUCTION

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

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

The value of your investment in the Fund is based on the market value 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 estimated level of volatility of the Fund is
set forth in the Fund Summary that follows. The effect on the 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 Fund
could be affected by computer problems related to the transition to the year
2000. While no one knows if these problems will have any impact on the Fund or
on the financial markets in general, the Fund is taking steps to protect Fund
investors. These include efforts to ensure that the Fund's own systems are
prepared to make the transition to the year 2000, and to determine that the
problem will not affect the systems used by the Fund's major service providers.
Whether these steps will be effective can only be known for certain in the year
2000. In addition, year 2000 problems may ultimately negatively affect the
companies and governments whose securities the Fund purchases, which may have an
impact on the value of the Fund's shares. There is additional information on
these risks in the Statement of Additional Information.
<PAGE>
2 PROSPECTUS

SMALL CAP GROWTH FUND

FUND SUMMARY

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

SMALL CAP GROWTH FUND

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Small Cap Growth Portfolio
1993 13.32%
1994 1.46%
1995 39.41%
1996 18.75%
1997 7.86%
1998 5.46%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
28.28% -24.12%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE CHART
DOES NOT REFLECT SALES CHARGES. IF SALES CHARGES HAD BEEN REFLECTED, RETURNS
WOULD BE LESS THAN THOSE SHOWN ABOVE.

This table compares the Fund's average annual total returns for Class D Shares
for the periods ending December 31, 1998, to those of the Frank Russell 2000
Growth Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (APRIL 29, 1994)
<S> <C> <C> <C>
- ----------------------------------------------------------------------
SMALL CAP GROWTH FUND 0.17% 12.67% 14.10%
- ----------------------------------------------------------------------
FRANK RUSSELL 2000 GROWTH INDEX* 1.23% 10.22% 10.40%**
- ----------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
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 D SHARES
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price).* 5.00%
</TABLE>

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS D
<S> <C>
Investment Advisory Fees 0.65%
Distribution (12b-1) Fees 0.30%
Other Expenses 0.22%
-------
Total Annual Fund Operating Expenses 1.46%*
</TABLE>

*FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 D $641 $939 $1,258 $2,159
</TABLE>

<PAGE>
4 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

THE FUND'S OTHER INVESTMENTS
- --------------------------------------------------------------------------------
This prospectus describes the Fund's primary strategies, and the Fund will
normally invest at least 65% of its assets in the types of securities described
in this prospectus. However, the Fund also may invest in other securities, use
other strategies and engage in other investment practices. These investments and
strategies, as well as those described in this prospectus, are described in
detail in the Fund's Statement of Additional Information (SAI). Of course, there
is no guarantee that the Fund will achieve its investment goal.

The investments and strategies described in this prospectus are those that the
Sub-Advisers use under normal conditions. During unusual economic or market
conditions or for temporary defensive or liquidity purposes, the Fund may invest
up to 100% of its assets in cash, money market instruments, repurchase
agreements and short-term obligations that would not ordinarily be consistent
with the Fund's objectives. The 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 ADVISERS AND SUB-ADVISERS
- --------------------------------------------------------------------------------

SEI INVESTMENTS MANAGEMENT CORPORATION (SIMC) ACTS AS THE MANAGER OF MANAGERS OF
THE FUND, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE FUND SINCE IT
ALLOCATES THE FUND'S ASSETS TO ONE OR MORE SUB-ADVISERS AND RECOMMENDS HIRING OR
CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES. Each Sub-Adviser makes
investment decisions for the assets it manages and continuously reviews,
supervises and administers its investment program. SIMC oversees the
Sub-Advisers to ensure compliance with the Fund's investment policies and
guidelines, and monitors each Sub-Adviser's adherence to its investment style.
The Board of Trustees supervises the Advisers 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).

SIMC, an SEC-registered adviser, serves as the Adviser to the Fund. As of
October 31, 1998, SIMC had approximately $41 billion in assets under management.
For the fiscal year ended September 30, 1998, the Fund paid SIMC investment
advisory fees as follows:

<TABLE>
<S> <C>
SMALL CAP GROWTH FUND............................. .65%
</TABLE>

SUB-ADVISERS AND PORTFOLIO MANAGERS

SMALL CAP GROWTH FUND

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Fund.

Class D Shares are available to individual investors, and have the following
characteristics:

- 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 ($25 per
month for the Systematic Investment Plan).

PURCHASING FUND SHARES

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).

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

To purchase shares directly from the Fund, please call 1-800-DIAL-SEI. The Fund
may reject any purchase order if it determines that accepting the order would
not be in the best interests of the Fund or its shareholders.

Certain investors who deal directly with a financial institution or financial
intermediary will have to follow the institution's or intermediary's procedures
for transacting with the Fund. If you purchase, sell or exchange Fund shares
through a financial institution (rather than directly from the Fund), 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 the Fund. For more information about how to purchase, sell or
exchange Fund shares through your financial institution, you should contact your
financial institution directly. Your financial institution may charge you fees
for its services.

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Fund receives your purchase order plus the
applicable front-end sales charge. The Fund calculates its NAV once each
Business Day at the regularly-scheduled close of normal trading on the New York
Stock Exchange (normally, 4:00 p.m. Eastern time). So, for you to receive the
current Business Day's NAV, generally the Fund must receive your purchase order
before 4:00 p.m. Eastern time.

HOW THE FUND CALCULATES NAV
NAV for one Fund share is the value of that share's portion of all of the net
assets in the Fund. In calculating NAV, the Fund generally values its investment
portfolio at market price. If market prices are unavailable or the Fund thinks
that they are unreliable, fair value prices may be determined in good faith
using methods approved by the Board of Trustees. The Fund may hold portfolio
securities that are listed on foreign exchanges. These securities may trade on
weekends or other days
<PAGE>
PROSPECTUS 7

PURCHASING, SELLING AND EXCHANGING FUND SHARES

when the Fund does not calculate its NAV. As a result, the value of these
investments may change on days when you cannot purchase or sell Fund shares.

MINIMUM PURCHASES
To purchase Class D Shares of the Fund for the first time, you must invest at
least $1,000 in the Fund ($500 for retirement plans). To purchase additional
Class D Shares of the Fund, you must invest at least $100. The Fund may accept
investments of smaller amounts at its 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. You
may make regularly scheduled investments from $25 up to $100,000 once or twice a
month. The Systematic Investment Plan is subject to minimum initial purhcase
amounts and the Distributor may close your account if you do not maintain a
minimum balance.

SALES CHARGES

FRONT-END SALES CHARGES
The offering price of Class D Shares is the NAV next calculated after the Fund
receives your request, plus the front-end sales load. 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>

WAIVER OF FRONT-END SALES CHARGE
The front-end sales charge will be waived on Class D Shares of the Small Cap
Growth Fund purchased:
- - issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Trust is a party;
- - 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;
- - sold to present employees of SEI or one of its affiliates, or of any entity
which is a current service provider to the Trust;
- - 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;
<PAGE>
8 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

- - sold to fee-based clients of banks, financial planners and investment
advisers;
- - sold to clients of trust companies and bank trust departments;
- - sold to trustees and officers of the Trust;
- - 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");
- - 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 a regulatory authorities'
interpretation of applicable law);
- - 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
- - sold to persons participating in certain financial services programs offered
by the bank affiliates of First Security Corporation.

The Fund may also enter into waiver arrangements with various other financial
intermediaries who sell Class D Shares of the Fund.

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

REPURCHASE OF CLASS D SHARES
You may purchase any amount of Class D Shares of the Fund at NAV (without the
normal front-end sales charge), up to the limit of the value of any amount of
Class D Shares (other than those which were purchased with reinvested dividends
and distributions) that you redeemed within the past 60 days. In effect, this
allows you to reacquire shares that you may have had to redeem, without
re-paying the front-end sales charge.

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

REDUCED SALES CHARGES

RIGHTS OF ACCUMULATION. In calculating the appropriate sales charge rate,
this right allows you to add the value of the Class D Shares you already own
to the amount that you are currently purchasing. The Fund 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. The Fund
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 THE FUND FOR THE REDUCTION AT
THE TIME OF PURCHASE. You must provide the Fund with your account number(s)
and, if applicable, the account numbers for your spouse and/or children (and
provide the children's ages). The Fund 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 the Fund over a 13-month period and receive the same sales
charge as if you had purchased all the shares at the same time. The Fund
will only consider the value of Class D Shares sold subject to a sales
charge. As a result, Class D Shares purchased with dividends of
distributions will not be included in the calculation. To be entitled to a
<PAGE>
PROSPECTUS 9

PURCHASING, SELLING AND EXCHANGING FUND SHARES

reduced sales charge based on shares you intend to purchase over the
13-month period, you must send the Fund 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 the Fund 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, the Fund 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
If you own shares directly, you may sell your shares on any Business Day by
contacting the Fund 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
the Fund receives your request.

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 the 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, the Fund will send your sale proceeds within three Business Days after
the Fund receives 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).

REDEMPTIONS IN KIND
The Fund generally pays 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) the Fund 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.
<PAGE>
10 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

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
The Fund may suspend your right to sell your shares if the NYSE restricts
trading, the SEC declares an emergency or for other reasons. More information
about this is in the SAI.

EXCHANGING FUND SHARES

HOW TO EXCHANGE YOUR SHARES
You may exchange Class D Shares of the Fund for Class D Shares of any other SEI
Fund on any Business Day by contacting the Fund directly by mail or telephone.
You may also exchange shares through your financial institution or intermediary
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 the Fund receives
your exchange request.

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.

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

DISTRIBUTION OF FUND SHARES

SEI Investments Distribution Co. (SIDCo.) is the distributor of the shares of
the Fund.

The Fund has adopted a distribution plan that allows the Fund to pay SIDCo.
distribution fees for the sale and distribution of its Class D Shares. 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, the distribution (Rule 12b-1)
fee is .30% of the average daily net assets of the Fund.

The Distributor may, from time to time in its sole discretion, institute one or
more promotional incentive programs for dealers, which will be paid for by the
Distributor from any sales charge it receives or from any other source available
to it. Under any such program, the Distributor may provide incentives, in the
form of cash or other compensation, including merchandise, airline vouchers,
trips and vacation packages, to dealers selling Class D Shares of the Fund.
<PAGE>
PROSPECTUS 11

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The Fund distributes its investment income quarterly as a dividend to
shareholders. The Fund makes 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 the Fund in writing prior to the date of the distribution. Your
election will be effective for dividends and distributions paid after the Fund
receives your written notice. To cancel your election, simply send the Fund
written notice.

TAXES

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

The Fund will distribute substantially all of its 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 the Fund holds
its portfolio securities. EACH SALE OR EXCHANGE OF FUND SHARES IS A TAXABLE
EVENT.

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

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

FINANCIAL HIGHLIGHTS

The table that follows presents performance information about the Class D Shares
of the Fund. This information is intended to help you understand the Fund's
financial performance for the past five years. 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 the
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 the Fund's financial statements,
appears in the annual report that accompanies the Fund's SAI. You can obtain the
Fund's annual report, which contains more performance information, at no charge
by calling 1-800-DIAL-SEI.

SMALL CAP GROWTH FUND-- CLASS D SHARES

<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30
----------------------------------------
1998 1997 1996 1995 1994(1)
------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period.... $18.99 $20.29 $19.78 $13.99 $14.04

Net Investment Income
(Loss)................. (0.14) (0.11) (0.07) (0.09) (0.02)
Net Realized and
Unrealized Gains
(losses on
Securities)............ (4.81) 2.66 4.24 5.88 (0.03)

Dividends from Net
Investment Income...... -- -- -- -- --
Distributions from
Realized Capital
Gains.................. (0.64) (3.85) (3.66) -- --
------ ------ ------ ------ --------
Net Asset Value, End of
Period................. 13.40 18.99 20.29 19.78 13.99
------ ------ ------ ------ --------
TOTAL RETURN*............ (26.74)% 16.80 26.01 41.44 (3.02)
------ ------ ------ ------ --------
Net Assets, End of Period
(000).................. $1,951 $2,202 $1,826 $ 786 $ 171
------ ------ ------ ------ --------
------ ------ ------ ------ --------

Ratio of Expenses to
Average Net Assets..... 1.46% 1.46 1.49 1.50 1.49
Ratio of Net Investment
Income (Loss) to
Average Net Assets..... (0.92)% (0.95) (1.02) (1.03) (0.92)
Ratio of Expenses to
Average Net Assets
(Excluding Waivers).... 1.46% 1.46 1.49 1.55 1.52
Ratio of Net Investment
Income (Loss) to
Average Net Assets
(Excluding Waivers).... (0.92)% (0.95) (1.02) (1.08) (0.95)
Portfolio Turnover
Rate................... 128% 107 167 113 97
</TABLE>

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

* Sales load is not reflected in total return.
(1) Small Cap Growth Fund Class D shares were offered beginning May 2, 1994.
All ratios including total returns for that period have been annualized.
<PAGE>

This Fund is offered in conjunction with
The Achievement Funds to afford a convenient range
of investment choices to investors.

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

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

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

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

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

The Fund's Investment Company Act registration
number is 811-4878.

Distributed by
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
800-472-0577

ACH-F-010-05

THE
ACHIEVEMENT
FUNDS -Registered Trademark-
For Your Life's Journey

THE ACHIEVEMENT FUNDS
SEI INSTITUTIONAL MANAGED TRUST

RETAIL
PROSPECTUS

Small Cap Growth Fund

January 31, 1999

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 Shares of the Funds
that you should know before investing. Please read this prospectus and keep it
for future reference.

- --------------------------------------------------------------------------------
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
for certain clients, 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 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.

INTRODUCTION -- INFORMATION COMMON TO ALL FUNDS

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

Each Fund has its own investment goal and strategies for reaching that goal.
Each Fund's assets are managed under the direction of SIMC, and one or more
Sub-Advisers manage portions of each Fund's assets and invest those assets in a
way they believe will help each Fund achieve its goal. SIMC acts as "manager of
managers" for each Fund, and attempts to ensure 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, investing in the Funds involves risks, and there is no guarantee that a
Fund will achieve its goal. SIMC and the Sub-Advisers (the "Advisers") judgments
about the markets, the economy, or companies, may not anticipate actual market
movements, economic conditions or company performance, and these judgements may
affect the return on your investment. 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 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. These price movements, sometimes called volatility, will
vary depending on the types of securities a Fund owns and the markets in which
they trade. The estimated level of volatility for each Fund is set forth in the
Fund Summaries that follows. 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

LARGE CAP VALUE FUND

FUND SUMMARY

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

LARGE CAP VALUE 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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Large Cap Value Portfolio
1995 37.75%
1996 20.45%
1997 36.74%
1998 11.35%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.58% -13.61%
(12/31/98) (9/30/98)
</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 Frank Russell 1000 Value Index.

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

ANNUAL FUND OPERATING EXPENSES

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

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Value Fund Class A $87 $271 $471 $1,049
</TABLE>

<PAGE>
4 PROSPECTUS

LARGE CAP GROWTH FUND

FUND SUMMARY

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Large Cap Growth
1995 35.50%
1996 22.70%
1997 34.76%
1998 38.80%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
29.31% -11.56%
(12/31/98) (9/30/98)
</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 Frank Russell 1000 Growth Index.

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
LARGE CAP GROWTH FUND-- CLASS A SHARES .85%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Growth Fund Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
6 PROSPECTUS

TAX-MANAGED LARGE CAP FUND

FUND SUMMARY

INVESTMENT STRATEGY

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. Individual companies may
report poor results or be negatively affected by industry and/or economic trends
and developments. The prices of securities issued by such companies may suffer a
decline in response. However, efforts to protect against market declines may not
succeed because hedging activities also involve risk. These factors contribute
to price volatility, which is the principal risk of investing in the Fund.

The Fund is managed to minimize tax consequences to investors, but will likely
earn taxable income and gains from time to time.
<PAGE>
PROSPECTUS 7

TAX-MANAGED LARGE CAP FUND

PERFORMANCE INFORMATION

The table compares the Fund's total return for the period from inception (March
4, 1998) through December 31, 1998, to those of the Frank Russell 1000 Index:

** THE INCEPTION DATE FOR THE INDEX IS MARCH 31, 1998.

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

ANNUAL FUND OPERATING EXPENSES

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

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

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Tax-Managed Large Cap Fund
Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
8 PROSPECTUS

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Small Cap Value
1995 18.21%
1996 22.13%
1997 35.11%
1998 -2.84%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
16.33% -19.78%
(6/30/97) (9/30/98)
</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 Frank Russell 2000 Value Index.

** THE INCEPTION DATE FOR THE INDEX IS DECEMBER 31, 1994.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 Class A $112 $350 $606 $1,340
</TABLE>

<PAGE>
10 PROSPECTUS

SMALL CAP GROWTH FUND

FUND SUMMARY

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Small Cap Growth Portfolio
1993 13.32%
1994 1.74%
1995 39.93%
1996 19.14%
1997 8.38%
1998 5.59%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
28.29% -24.08%
(12/31/98) (9/30/98)
</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 Frank Russell 2000
Growth Index.

** THE INCEPTION DATE FOR THE INDEX IS APRIL 30, 1992.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 $112 $350 $606 $1,340
</TABLE>

<PAGE>
12 PROSPECTUS

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 core
style, the Fund invests in mid-cap U.S. common
stocks.
- ------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Mid-Cap Portfolio
1994 -10.79%
1995 23.04%
1996 26.66%
1997 31.88%
1998 3.30%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
21.81% -22.08%
(12/31/98) (9/30/98)
</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 Frank Russell Mid-Cap Index.

** THE INCEPTION DATE FOR THE INDEX IS FEBRUARY 28, 1993.

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

ANNUAL FUND OPERATING EXPENSES

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

* FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER 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 Class A $102 $318 $552 $1,225
</TABLE>

<PAGE>
14 PROSPECTUS

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

Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs (and thus lower performance) 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.

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Capital Appreciation
Portfolio
1989 35.47%
1990 0.01%
1991 35.11%
1992 7.74%
1993 9.20%
1994 -7.53%
1995 30.78%
1996 20.93%
1997 31.69%
1998 28.72%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
23.57% -13.16%
(12/31/98) (9/30/90)
</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 S&P 500 Composite Index.

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
CAPITAL APPRECIATION FUND-- CLASS A SHARES .84%
</TABLE>

For more information about these fees, see "Investment Adviser 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
Class A $91 $284 $493 $1,096
</TABLE>

<PAGE>
16 PROSPECTUS

EQUITY INCOME FUND

FUND SUMMARY

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Equity Income Portfolio
1989 25.08%
1990 -8.94%
1991 30.63%
1992 10.02%
1993 13.16%
1994 -0.23%
1995 36.07%
1996 16.61%
1997 27.96%
1998 16.12%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
17.43% -15.00%
(3/31/91) (9/30/90)
</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 Frank Russell 1000 Value Index.

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

ANNUAL FUND OPERATING EXPENSES

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

<TABLE>
<CAPTION>
<S> <C>
EQUITY INCOME FUND-- CLASS A SHARES .85%
</TABLE>

For more information about these fees, see "Investment Adviser 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 Class A $92 $287 $498 $1,108
</TABLE>

<PAGE>
18 PROSPECTUS

BALANCED FUND

FUND SUMMARY

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
SIMT Balanced Portfolio
1991 15.85%
1992 13.34%
1993 7.91%
1994 -6.59%
1995 24.34%
1996 13.49%
1997 20.98%
1998 19.52%
</TABLE>

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
11.81% -4.62%
(12/31/98) (9/30/98)
</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 S&P 500 Composite Index and the Lehman
Government/Corporate Bond Index.

* AN INDEX MEASURES THE MARKET PRICE OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER AND DOES NOT PAY ANY
COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS PERFORMANCE WOULD BE
LOWER. THE S&P 500 COMPOSITE INDEX IS A WIDELY RECOGNIZED, MARKET-WEIGHTED
(HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER MARKET VALUE STOCKS)
INDEX OF THE 500 STOCKS DESIGNED TO MIMIC THE OVERALL MARKET'S INDUSTRY
WEIGHTINGS. THE LEHMAN BROTHERS GOVERNMENT/CORPORATE BOND INDEX IS A
WIDELY-RECOGNIZED, MARKET VALUE-WEIGHTED (HIGHER MARKET VALUE BONDS HAVE MORE
INFLUENCE THAN LOWER MARKET VALUE BONDS) INDEX OF U.S. TREASURY SECURITIES, U.S.
GOVERNMENT AGENCY OBLIGATIONS, CORPORATE DEBT SECURITIES, YANKEE BONDS, AND
NON-CONVERTIBLE DEBT SECURITIES ISSUED BY OR GUARANTEED BY FOREIGN GOVERNMENTS
AND AGENCIES. ALL SECURITIES IN THE INDEX ARE RATED INVESTMENT GRADE (BBB) OR
HIGHER, WITH MATURITIES OF AT LEAST 1 YEAR.
** THE INCEPTION DATE FOR THE S&P 500 COMPOSITE INDEX AND THE LEHMAN BROTHERS
GOVENMENT/CORPORATE BOND INDEX IS AUGUST 31, 1990.

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

ANNUAL FUND OPERATING EXPENSES

<TABLE>
<CAPTION>
CLASS A
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.40%
----------
Total Annual Fund Operating Expenses 0.80%*
</TABLE>

<TABLE>
<CAPTION>
<S> <C>
BALANCED FUND-- CLASS A SHARES .75%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Balanced Fund Class A $82 $255 $444 $990
</TABLE>

<PAGE>
20 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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

SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP VALUE FUND

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP GROWTH FUND

ALLIANCE CAPITAL MANAGEMENT L.P.: A committee of investment professionals at
Alliance Capital Management L.P. manages a portion of the assets of the
Large Cap Growth Fund.

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.

SMALL CAP VALUE FUND

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

LSV ASSET MANAGEMENT, L.P.: Josef Lakonishok, Andrei Shleifer and Robert
Vishny of LSV Asset Management, L.P. ("LSV"), serve as portfolio managers of
a portion of the assets of the Small Cap Value Fund. 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 of
Mellon Equity Associates, LLP ("Mellon Equity"), serve as portfolio managers
of a portion of the assets of 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.

SMALL CAP GROWTH FUND

MID-CAP FUND

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

CAPITAL APPRECIATION FUND

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

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to buy, sell (sometimes called "redeem") or exchange
shares of the Funds.

PURCHASING FUND SHARES

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).

The price per share (the offering price) will be the net asset value per share
(NAV) next determined after the Funds receive your purchase order. Each Fund
calculates its NAV once each Business Day at the regularly-scheduled close of
normal trading on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time). So, for you to receive the current Business Day's NAV, generally the
Funds must receive your purchase order before 4:00 p.m. Eastern time.

MINIMUM PURCHASES
To purchase Class A Shares for the first time, you must invest at least $100,000
in any Fund. The Funds may accept investments of smaller amounts at the Funds
discretion.

SELLING FUND SHARES

PURCHASING, SELLING AND EXCHANGING FUND SHARES

EXCHANGING FUND SHARES

DISTRIBUTION OF FUND SHARES

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

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

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The Funds distribute their investment income quarterly as a dividend to
shareholders. The Funds make distributions of capital gains, if any, at least
annually.

TAXES

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
PROSPECTUS 27

FINANCIAL HIGHLIGHTS

LARGE CAP VALUE FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.25 0.28 0.32 0.33 0.28
Net Realized and
Unrealized Gains
(losses on
Securities)............ (0.42) 5.77 2.01 2.44 (0.46)

<PAGE>
28 PROSPECTUS

FINANCIAL HIGHLIGHTS

LARGE CAP GROWTH FUND -- CLASS A SHARES

Net Investment Income
(Loss)...................... 0.03 0.03 0.07 0.11
Net Realized and Unrealized
Gains (losses on
Securities)................. 1.62 6.33 2.51 2.72

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

(1) Large Cap Growth shares were offered beginning December 20, 1994. All
ratios including total return for that period have been annualized.

<PAGE>
PROSPECTUS 29

FINANCIAL HIGHLIGHTS

TAX-MANAGED LARGE CAP FUND -- CLASS A SHARES

<TABLE>
<CAPTION>
PERIOD ENDED
SEPTEMBER 30
1998(1)
-------------
<S> <C>
Net Asset Value, Beginning of Period.............. $ 10.00

Net Investment Income (Loss)...................... 0.04
Net Realized and Unrealized Gains (losses on
Securities)..................................... (0.42)
-------------

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

(1) Tax-Managed Large Cap Class A shares were offered beginning March 4, 1998.
All ratios have been annualized.

<PAGE>
30 PROSPECTUS

FINANCIAL HIGHLIGHTS

SMALL CAP VALUE FUND -- CLASS A SHARES

Net Investment Income
(Loss)...................... 0.05 0.05 0.02 0.03
Net Realized and Unrealized
Gains (losses on
Securities)................. (2.22) 5.74 1.27 2.19

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

(1) Small Cap Value shares were offered beginning December 20, 1994. All ratios
including total return for that period have been annualized.

<PAGE>
PROSPECTUS 31

FINANCIAL HIGHLIGHTS

SMALL CAP GROWTH FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. (0.08) 0.02 (0.08) (0.14) (0.05)
Net Realized and
Unrealized Gains
(losses on
Securities)............ (4.92) 2.64 4.37 5.98 0.07

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

(1) Small Cap Growth Class A shares were offered beginning April 20, 1992.

<PAGE>
32 PROSPECTUS

FINANCIAL HIGHLIGHTS

MID-CAP FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.13 0.13 0.18 0.01 0.01
Net Realized and
Unrealized Gains
(losses on
Securities)............ (2.67) 5.86 1.89 2.14 (0.98)

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

(1) Mid-Cap Class A shares were offered beginning February 16, 1993.

<PAGE>
PROSPECTUS 33

FINANCIAL HIGHLIGHTS

CAPITAL APPRECIATION FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.16 0.21 0.20 0.22 0.24
Net Realized and
Unrealized Gains
(losses on
Securities)............ 0.92 4.65 3.18 2.42 (0.22)

<PAGE>
34 PROSPECTUS

FINANCIAL HIGHLIGHTS

EQUITY INCOME FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.41 0.39 0.49 0.55 0.51
Net Realized and
Unrealized Gains
(losses on
Securities)............ (0.09) 4.33 2.20 2.48 (0.38)

<PAGE>
PROSPECTUS 35

FINANCIAL HIGHLIGHTS

BALANCED FUND -- CLASS A SHARES

Net Investment Income
(Loss)................. 0.41 0.41 0.42 0.34 0.23
Net Realized and
Unrealized Gains
(losses on
Securities)............ 0.80 2.27 1.44 1.34 (0.62)

<PAGE>
SEI INSTITUTIONAL MANAGED TRUST

Manager:

SEI Investments Fund Management

Distributor:

SEI Investments Distribution Co.

Investment Adviser and Sub-Advisers:

1838 Investment Advisors, L.P.
Alliance Capital Management L.P.
BlackRock, Inc.
Boston Partners Asset Management, L.P.
Credit Suisse Asset Management
Firstar Investment Research &
Management Company, LLC
Furman Selz Capital Management LLC
HighMark Capital Management, Inc.
LSV Asset Management, L.P.
Martingale Asset Management, L.P.
Mellon Equity Associates, LLP
Nicholas-Applegate Capital Management
Provident Investment Counsel, Inc.
Robertson Stephens Investment
Management, L.P.
Sanford C. Bernstein & Co., Inc.
SEI Investments Management Corporation
Spyglass Asset Management, Inc.
STI Capital Management, N.A.
TCW Funds Management Inc.
Wall Street Associates
Western Asset Management Company

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, 1999. Prospectuses may be obtained by writing the Trust's
distributor, SEI Investments Distribution Co., at Oaks, Pennsylvania 19456, or
by calling 1-800-342-5734.

TABLE OF CONTENTS

<TABLE>
<S> <C>
The Trust............................................................................. S-2
Investment Objectives and Policies.................................................... S-2
Description of Permitted Investments and Risk Factors................................. S-6
Investment Limitations................................................................ S-21
Description of Ratings................................................................ S-23
The Manager........................................................................... S-27
The Adviser and Sub-Advisers.......................................................... S-28
Distribution and Shareholder Servicing................................................ S-33
Trustees and Officers of the Trust.................................................... S-34
Performance........................................................................... S-37
Purchase and Redemption of Shares..................................................... S-39
Shareholder Services (Class D Shares)................................................. S-40
Taxes................................................................................. S-41
Portfolio Transactions................................................................ S-43
Description of Shares................................................................. S-46
Limitation of Trustees' Liability..................................................... S-46
Voting................................................................................ S-47
Shareholder Liability................................................................. S-47
Control Persons and Principal Holders of Securities................................... S-47
Custodian............................................................................. S-50
Experts............................................................................... S-50
Legal Counsel......................................................................... S-50
Financial Statements.................................................................. S-50

January 31, 1999
</TABLE>
<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. Shareholders may purchase shares in certain
portfolios through two separate classes, Class A and Class D, which provide for
variations in sales charges, distribution costs, transfer agent fees, voting
rights and dividends. Except for differences between the Class A shares and/or
Class D shares pertaining to sales charges, distribution and shareholder
servicing, 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, Capital Appreciation, Equity Income, High Yield Bond, Core
Fixed Income, Large Cap Growth, Large Cap Value, Tax-Managed Large Cap, Mid-Cap,
Small Cap Growth and Small Cap Value Funds (each a "Fund" and, together, the
"Funds"), and any different classes of the Funds.

INVESTMENT OBJECTIVES AND POLICIES

LARGE CAP VALUE FUND--The investment objective of the Large Cap Value Fund
is long-term growth of capital and income. There can be no assurance that the
Fund will achieve its investment objective.

Under normal market conditions, the Fund 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 more
than $1 billion) which, in the opinion of the advisers, 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 other equity securities and in investment grade fixed income
securities. Investment grade fixed income securities are securities that are
rated at least BBB by Standard & Poor's Corporation ("S&P") or Baa by Moody's
Investors Service, Inc. ("Moody's"). The Fund may also borrow money, invest in
illiquid securities, when-issued and delayed-delivery securities, shares of real
estate investment trusts ("REITs"), and shares of other investment companies,
and lend its securities to qualified buyers.

LARGE CAP GROWTH FUND--The investment objective of the Large Cap Growth Fund
is capital appreciation. There can be no assurance that the Fund will achieve
its investment objective.

Under normal market conditions, the Fund 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 opinion of the
advisers, possess significant growth potential. Any remaining assets may be
invested in investment grade fixed income securities or in equity securities of
smaller companies that the Fund's advisers believe are appropriate in light of
the Fund's objective. The Fund may also borrow money, invest in illiquid
securities, when-issued and delayed-delivery securities, shares of REITs, and
shares of other investment companies, and lend its securities to qualified
buyers.

TAX-MANAGED LARGE CAP FUND--The Tax-Managed Large Cap Fund's investment
objective is to achieve high long-term after-tax returns for its shareholders.
The investment objective of the Fund is fundamental, and may not be changed
unless authorized by a vote of the Fund's shareholders.

Under normal market conditions, the Fund will invest at least 80% of its
total assets in equity securities of large companies (I.E., companies with
market capitalizations of more than $1 billion at the time of purchase). Any
remaining assets may be invested in investment grade fixed income securities,
including tax-exempt securities and variable and floating rate securities, or in
equity securities of smaller

S-2
<PAGE>
companies that the Fund's advisers believe are appropriate in light of the
Fund's objective. The Fund may acquire shares of other investment companies,
when-issued and delayed-delivery securities and zero coupon obligations, and may
invest in securities that are illiquid. The Fund may also borrow money and lend
its securities to qualified borrowers.

The Fund is designed for long-term taxable investors, including high net
worth individuals. While the Fund seeks to minimize taxes associated with the
Fund's investment income and realized capital gains, the Fund is very likely to
have taxable investment income and will likely realize taxable gains from time
to time.

The Fund seeks to achieve favorable after-tax returns for its shareholders
in part by minimizing the taxes they incur in connection with the Fund's
realization of investment income and capital gains. Taxable investment income
will be minimized by investing primarily in lower yielding securities. If this
strategy is carried out, the Fund can be expected to distribute relatively low
levels of taxable investment income.

Realized capital gains will be minimized in part by investing primarily in
established companies with the expectation of holding these securities for a
period of years. The Fund's advisers will generally seek to avoid realizing
short-term capital gains, thereby minimizing portfolio turnover. When a decision
is made to sell a particular appreciated security, the Portfolio will attempt to
select for sale those share lots with holding periods sufficient to qualify for
long-term capital gains treatment and among those, the share lots with the
highest cost basis. The Fund may, when prudent, sell securities to realize
capital losses that can be used to offset realized capital gains.

To protect against price declines affecting securities with large unrealized
gains, the Fund may use hedging techniques such as the purchase of put options,
short sales "against the box," the sale of stock index futures contracts, and
equity swaps. By using these techniques rather than selling such securities, the
Fund will attempt to reduce its exposure to price declines without realizing
substantial capital gains under the current tax law. Although the Fund may
utilize certain hedging strategies in lieu of selling appreciated securities,
the Fund's exposure to losses during stock market declines may nonetheless be
higher than that of other funds that do not follow a general policy of avoiding
sales of highly-appreciated securities.

SMALL CAP VALUE FUND--The investment objective of the Small Cap Value Fund
is capital appreciation. There can be no assurance that the Fund will achieve
its investment objective.

Under normal market conditions, the Fund 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 $2 billion) which, in the opinion of the
advisers, 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 investment grade fixed income securities or equity
securities of larger, more established companies that the Fund's advisers
believe are appropriate in light of the Fund's objective. The Fund may also
borrow money, invest in illiquid securities, when-issued and delayed-delivery
securities, shares of REITs, and shares of other investment companies, and lend
its securities to qualified buyers.

SMALL CAP GROWTH FUND--The investment objective of the Small Cap Growth Fund
is long-term capital appreciation. There can be no assurance that the Fund will
achieve its investment objective.

Under normal market conditions, the Fund 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 $2 billion) which, in the
opinion of the advisers, are in an early stage or transitional point in their
development and have demonstrated or have the potential for above average
capital growth. 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.

For temporary defensive purposes, the Fund may invest all or a portion of
its assets in common stocks or larger, more established companies and in
investment grade fixed income securities. The Fund may also

S-3
<PAGE>
borrow money, invest in illiquid securities, when-issued and delayed-delivery
securities, shares of REITs, and shares of other investment companies, and lend
its securities to qualified buyers.

The Fund's annual turnover rate may exceed 100%. Such a turnover rate may
result in higher transaction costs and in additional taxes for shareholders.

MID-CAP FUND--The investment objective of the Mid-Cap Fund is long-term
capital appreciation. There can be no assurance that the Fund will achieve its
investment objective.

Under normal market conditions, the Fund 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.

Any remaining assets may be invested in equity securities of larger, more
established companies, investment grade fixed income securities or money market
securities. For temporary defensive purposes, when the advisers determine that
market conditions warrant, the Fund may invest all or a portion of its assets in
equity securities of larger companies. The Fund may also borrow money, invest in
illiquid securities, when-issued and delayed-delivery securities, shares of
REITs, and shares of other investment companies, and lend its securities to
qualified buyers.

The Fund's annual turnover rate may exceed 100%. Such a turnover rate may
result in higher transaction costs and in additional taxes for shareholders.

CAPITAL APPRECIATION FUND--The investment objective of the Capital
Appreciation Fund is capital appreciation. There can be no assurance that the
Fund will achieve its investment objective.

Under normal market conditions, at least 65% of the Fund's assets will be
invested in a diversified portfolio of common stocks (and securities convertible
into common stock) which, in the opinion of the advisers, 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
Fund, 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 Fund holdings between various
market sectors based on economic analysis of the overall business cycle. Any
remaining assets may be invested in investment grade fixed income securities and
other types of equity securities. The Fund may also borrow money, invest in
illiquid securities, when-issued and delayed-delivery securities, shares of
REITs, and shares of other investment companies, and lend its securities to
qualified buyers.

The Fund's annual turnover rate may exceed 100%. Such a turnover rate may
result in higher transaction costs and in additional taxes for shareholders.

EQUITY INCOME FUND--The investment objective of the Equity Income Fund is to
provide current income and, as a secondary objective, moderate capital
appreciation. There can be no assurance that the Fund will achieve its
investment objectives.

Under normal market conditions, at least 65% of the Fund's assets 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. Any remaining assets may be
invested in investment grade fixed income securities. The Fund may also borrow
money, invest in illiquid securities, when-issued and delayed-delivery
securities, shares of REITs, and shares of other investment companies, and lend
its securities to qualified buyers.

S-4
<PAGE>
BALANCED FUND--The investment objective of the Balanced Fund is total return
consistent with the preservation of capital. There can be no assurance that the
Fund will achieve its investment objective.

The Fund invests in a combination of undervalued common stocks and fixed
income securities or in other investment companies that invest in such
securities. The Fund seeks strong total return in all market conditions, with a
special emphasis on minimizing interim declines during falling equity markets.
The Fund primarily invests in large capitalization equity securities,
intermediate-maturity fixed income securities and money market instruments. The
Fund may also borrow money, invest in illiquid securities, when-issued and
delayed-delivery securities, and shares of REITs, and shares of other investment
companies, and lend its securities to qualified buyers.

The average maturity of the fixed income securities in the Fund will, under
normal circumstances, be approximately five years, although this will vary with
changing market conditions.

CORE FIXED INCOME FUND--The investment objective of the Core Fixed Income
Fund is current income consistent with the preservation of capital. There can be
no assurance that the Fund will achieve its investment objective.

Under normal market conditions, the Fund 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 in which the Fund 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. The Fund may also borrow money,
invest in illiquid securities and shares of other investment companies, and lend
its securities to qualified buyers.

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 special dates prior to maturity. Duration
incorporates yield, coupon interest payments, final maturity and call features
into a single measure. The advisers therefore consider duration 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 Fund 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 the bond market indices which they
believe to be representative. The advisers currently use the Lehman Aggregate
Bond Index for this purpose.

The Fund'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.

HIGH YIELD BOND FUND--The investment objective of the High Yield Bond Fund
is to maximize total return. There can be no assurance that the Fund will
achieve its investment objective.

S-5
<PAGE>
Under normal market conditions, the Fund 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 Fund 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 Fund 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 Fund
may purchase or write options, futures and options on futures. The Fund may also
borrow money, invest in illiquid securities and shares of other investment
companies, and lend its securities to qualified buyers.

The advisers may vary the average maturity of the securities in the Fund
without limit, and there is no restriction on the maturity of any individual
security.

The "Appendix" to this Statement of Additional Information sets forth a
description of the bond rating categories of several NRSROs. The ratings
established by 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 Fund.

The achievement of the Fund's investment objective may be more dependent on
the adviser's own credit analysis than would be the case if the Fund 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 Fund.

DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

ALL FUNDS MAY INVEST IN THE FOLLOWING INVESTMENTS UNLESS SPECIFICALLY NOTED
OTHERWISE.

AMERICAN DEPOSITORY RECEIPTS ("ADRS")--The Balanced, Capital Appreciation,
Equity Income, High Yield Bond, Large Cap Growth, Large Cap Value and Small Cap
Value Funds may invest in ADRs traded on registered exchanges or on NASDAQ. The
Large Cap Growth Fund may also invest in ADRs not traded on an established
exchange. ADRs are securities, typically issued by a U.S. financial institution
(a "depositary"), that evidence ownership interests in a security or a pool or
securities issued by a 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.
While the Funds typically invest in sponsored ADRs, joint arrangements 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 Core Fixed Income and High Yield Bond Funds may
invest in asset-backed securities. Asset-backed securities are securities
secured by non-mortgage assets such as

S-6
<PAGE>
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. 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.

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.

BANKERS' ACCEPTANCES--A bankers' 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 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.

CONSTRUCTION LOANS--In general, construction loans are mortgages on
multifamily homes that are insured by the Federal Housing Administration (FHA)
under various federal programs of the National Housing Act of 1934 and its
amendments. Several FHA programs have evolved to ensure the construction
financing and permanent mortgage financing on multifamily residences, nursing
homes, elderly residential facilities, and health care units. Project loans
typically trade in two forms: either as FHA- or GNMA-insured pass-through
securities. In this case, a qualified issuer issues the pass-through securities
while holding the underlying mortgage loans as collateral. Regardless of form,
all projects are government-guaranteed by the U.S. Department of Housing and
Urban Development (HUD) through the FHA insurance fund. The credit backing of
all FHA and GNMA projects derives from the FHA insurance fund, and so projects
issued in either form enjoy the full faith and credit backing of the U.S.
Government.

Most project pools consist of one large mortgage loan rather than numerous
smaller mortgages, as is typically the case with agency single-family mortgage
securities. As such, prepayments on projects are driven by the incentives most
mortgagors have to refinance, and are very project-specific in nature. However,
to qualify for certain government programs, many project securities contain
specific prepayment restrictions and penalties.

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Under multifamily insurance programs, the government insures the
construction financing of projects as well as the permanent mortgage financing
on the completed structures. This is unlike the single-family mortgage market,
in which the government only insures mortgages on completed homes. Investors
purchase new projects by committing to fund construction costs on a monthly
basis until the project is built. Upon project completion, an investors
construction loan commitments are converted into a proportionate share of the
final permanent project mortgage loan. The construction financing portion of a
project trades in the secondary market as an insured Construction Loan
Certificate (CLC). When the project is completed, the investor exchanges all the
monthly CLCs for an insured Permanent Loan Certificate (PLC). The PLC is an
insured pass-through security backed by the final mortgage on the completed
property. As such, PLCs typically have a thirty-five to forty year maturity,
depending on the type of final project. There are vastly more PLCs than CLCs in
the market, owing to the long economic lives of the project structures. While
neither CLCs or PLCs are as liquid as agency single-family mortgage securities,
both are traded on the secondary market and would generally not be considered
illiquid. The benefit to owning these securities is a relatively high yield
combined with significant prepayment protection, which generally makes these
types of securities more attractive when prepayments are expected to be high in
the mortgage market. CLCs typically offer a higher yield due to the fact that
they are somewhat more administratively burdensome to account for. The Core
Fixed Income Fund may invest in construction loans.

CONVERTIBLE SECURITIES--Convertible securities are corporate securities that
are exchangeable for a set number of another security at a prestated price.
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 Capital Appreciation, Equity Income, High Yield Bond,
Mid-Cap, Large Cap Growth, Large Cap Value, Tax-Managed Large Cap, Small Cap
Growth and Small Cap Value Funds may invest in convertible securities.

EQUITY SECURITIES--Each Fund (except the Core Fixed Income Fund) may
purchase equity securities. 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. The Large
Cap Value, Small Cap Growth, Capital Appreciation and Equity Income Funds may
only invest in such securities if they are listed on registered exchanges or
actively traded in the over-the-counter market.

Equity securities represent ownership interests in a company or corporation,
and include common stock, preferred stock, and warrants and other rights to
acquire such instruments. Investments in equity securities in general are
subject to market risks that may cause their prices to fluctuate over time. The
value of convertible equity securities is also affected by prevailing interest
rates, the credit quality of the issuer and any call provisions. Fluctuations in
the value of equity securities in which a Fund invests will cause the net asset
value of the Fund to fluctuate.

Investments in small or middle capitalization companies involve 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 or medium-sized companies are often traded
over-the-counter, and may not be traded in volumes typical of securities traded
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 companies
or the market averages in general.

FIXED INCOME SECURITIES--Fixed income securities are debt obligations issued
by corporations, municipalities and other borrowers. The market value of a
Fund's fixed income investments will change in response to interest rate changes
and other factors. During periods of falling interest rates, the values of
outstanding fixed income securities generally rise. Conversely, during periods
of rising interest rates, the values of such securities generally decline.
Securities with longer maturities are subject to greater

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fluctuations in value than securities with shorter maturities. Fixed income
securities rated in the fourth highest rating category lack outstanding
investment characteristics, and have speculative characteristics as well.
Changes by an NRSRO in the rating of any fixed income security and in the
ability of an issuer to make payments of interest and principal also affect the
value of these investments. Changes in the value of a Fund's securities will not
affect cash income derived from these securities but will affect the Fund's net
asset value.

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

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

FOREIGN SECURITIES--The Balanced, Capital Appreciation, Equity Income, High
Yield Bond, Small Cap Growth, Small Cap Value, Large Cap Growth and Large Cap
Value Funds may invest in U.S. dollar denominated obligations or securities of
foreign issuers. In addition, the Core Fixed Income and High Yield Bond Funds
may invest in Yankee Obligations. 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, Yankee Certificates of Deposit and investments in Canadian Commercial
Paper, foreign securities and Europaper. These instruments may subject the Fund
to investment risks that differ in some respects from those related to
investments in obligations of U.S. issuers. Investing in the securities of
foreign companies and the utilization of forward foreign currency contracts
involve special risks and considerations not typically associated with investing
in U.S. companies. These risks and 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. 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.

FORWARD FOREIGN CURRENCY CONTRACTS--A forward contract involves an
obligation to purchase or sell a specific currency amount at a future date,
agreed upon by the parties, at a price set at the time of the contract. A Fund
may 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 Fund's securities denominated in such foreign currency.

By entering into forward foreign currency contracts, a Fund 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. At the maturity
of a forward contract, a Fund 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 Fund may
realize a gain or loss from currency transactions. A Fund will place assets in a
segregated account to assure that its obligations under forward foreign currency
contracts are covered.

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FUTURES AND OPTIONS ON FUTURES--Futures contracts provide for the future
sale by one party and purchase by another party of a specified amount of a
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 Fund 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 Fund
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.

An 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 bonds comprising the index is
made; generally contracts are closed out prior to the expiration date of the
contract.

In order to avoid leveraging and related risks, when a Fund invests in
futures contracts, it will cover its position by depositing an amount of cash or
liquid securities equal to the market value of the futures positions held, less
margin deposits, in a segregated account and that amount will be marked to
market on a daily basis.

A Fund 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 Fund's net assets.

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 Fund 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. In addition, some
strategies reduce a 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 a
Portfolio's return.

ILLIQUID SECURITIES--Illiquid securities are securities that cannot be
disposed of within seven business days at approximately the price at which they
are being carried on the Fund's books. Illiquid securities include demand
instruments with demand notice periods exceeding seven days, securities for
which there is no active secondary market, and repurchase agreements with
maturities over seven days in length.

LOWER RATED SECURITIES--The High Yield Bond Fund 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
Fund. In addition, the Fund may invest in unrated securities. Fixed income
securities are subject to the risk 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 rated 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

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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 Fund'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 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 Fund's net asset value.

Prices for high yield securities may be affected by legislative and
regulatory developments. These laws could adversely affect the Fund'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.

Lower rated or unrated debt obligations also present risks based on payment
expectations. If an issuer calls the obligations for redemption, the Fund may
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. If the Fund 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 Fund's investment portfolio and
increasing the exposure of the Fund to the risks of high yield securities.

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 Fund 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 Fund'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 Fund 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 Fund's assets. If the Fund 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 Fund's rate of
return.

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TAXES. The Fund 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 Fund and
therefore is subject to the distribution requirements of the tax code. Because
the original issue discount earned by the Fund in a taxable year may not be
represented by cash income, the Fund may have to dispose of other securities and
use the proceeds to make distributions to shareholders.

MONEY MARKET SECURITIES--Each Fund may hold cash reserves and invest in
money market instruments (including securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, repurchase agreements,
certificates of deposit and bankers' acceptances issued by banks or savings and
loan associations having net assets of at least $500 million as of the end of
their most recent fiscal year, high-grade commercial paper and other short-term
debt securities) rated at the time of purchase in the top two categories by an
NRSRO, or, if not rated, determined by the advisers to be of comparable quality
at the time of purchase.

MORTGAGE-BACKED SECURITIES--The Balanced, Core Fixed Income, and High Yield
Bond Funds may, consistent with their respective investment objectives and
policies, invest in mortgage-backed securities.

Mortgage-backed securities in which the Funds 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 Fannie Mae and the Federal Home Loan
Mortgage Corporation ("FHLMC"), as well as by non-governmental issuers such as
commercial banks, savings and loan institutions, mortgage bankers, and private
mortgage insurance companies. Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional fifteen- and thirty-year fixed-rate mortgages, graduated
payment mortgages, adjustable rate mortgages and balloon mortgages. During
periods of declining interest rates, prepayment of mortgages underlying
mortgage-backed securities can be expected to accelerate. 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. 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 Fund
purchases a mortgage-backed security at a premium, that portion may be lost if
there is a decline in the market value of the security whether resulting from
changes in interest rates or prepayments in the underlying mortgage collateral.
As with other interest-bearing securities, the prices of such securities are
inversely affected by changes in interest rates. However, though the value of a
mortgage-backed security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. When the mortgage-backed
securities held by a Fund are prepaid, the Fund must reinvest the proceeds in
securities the yield of which reflects prevailing interest rates, which may be
lower than the prepaid security. 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 Fund. In addition, regular payments received in
respect of mortgage-backed securities include both interest and principal. No
assurance can be given as to the return a Fund will receive when these amounts
are reinvested.

A Fund may also invest in mortgage-backed securities that are collateralized
mortgage obligations structured on pools of mortgage pass-through certificates
or mortgage loans. For purposes of determining the average maturity of a
mortgage-backed security in its investment portfolio, the Core Fixed Income Fund
will utilize the expected average life of the security, as estimated in good
faith by the Fund's advisers. Unlike most single family residential mortgages,
commercial real estate property loans often contain provisions which
substantially reduce the likelihood that such securities will be prepaid. The
provisions

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generally impose significant prepayment penalties on loans and, in some cases
there may be prohibitions on principal prepayments for several years following
origination.

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 Government National Mortgage Association ("GNMA"), Fannie Mae and
the Federal Home Loan Mortgage Corporation ("FHLMC"). GNMA, Fannie Mae and FHLMC
guarantee timely distributions of interest to certificate holders. GNMA and
Fannie Mae also guarantee timely distributions of scheduled principal. FHLMC
generally guarantees only the ultimate collection of principal of the underlying
mortgage loan. Fannie Mae and FHLMC obligations are not backed by the full faith
and credit of the U.S. Government as GNMA certificates are, but Fannie Mae and
FHLMC securities are supported by the instrumentalities' right to borrow from
the U.S. Treasury. Government and private guarantees do not extend to the
securities' value, which is likely to vary inversely with fluctuations in
interest rates.

There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-backed securities
and among the securities that they issue. Mortgage-backed securities issued by
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 under its guarantee.
Mortgage-backed securities issued by Fannie Mae include Fannie Mae Guaranteed
Mortgage Pass-Through Certificates (also known as "Fannie Maes") that are solely
the obligations of Fannie Mae and are not backed by or entitled to the full
faith and credit of the United States. Fannie Mae is a government-sponsored
organization owned entirely by private stockholders. Fannie Maes are guaranteed
as to timely payment of the principal and interest by Fannie Mae.
Mortgage-backed securities issued by 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. 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. Fannie Mae REMIC Certificates are issued and guaranteed as to
timely distribution of principal and interest by Fannie Mae.

PRIVATE PASS-THROUGH SECURITIES: These are mortgage-backed securities
issued by a non-governmental entity, such as a trust. 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.

COMMERCIAL MORTGAGE-BACKED SECURITIES ("CMBS"): CMBS are generally
multi-class or pass-through securities backed by a mortgage loan or a pool of
mortgage loans secured by commercial property, such as industrial and warehouse
properties, office buildings, retail space and shopping malls, multifamily
properties and cooperative apartments. The commercial mortgage loans that
underlie CMBS are generally not amortizing or not fully amortizing. That is, at
their maturity date, repayment of the remaining principal balance or "balloon"
is due and is repaid through the attainment of an additional loan of sale of the
property.

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COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"): CMOs are debt obligations of
multiclass pass-through certificates issued by agencies or instrumentalities of
the U.S. Government or by private originators or investors in mortgage loans.
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. Each class of a
CMO is issued with a specific fixed or floating coupon rate and has a stated
maturity or final distribution date.

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

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

STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS"): SMBs are usually structured
with two classes that receive specified proportions of the monthly interest and
principal payments from a pool of mortgage securities. One class may receive all
of the interest payments, while the other class may receive all of the principal
payments. The market for SMBs is not as fully developed as other markets; SMBs,
therefore, may be illiquid.

MORTGAGE DOLLAR ROLLS--Mortgage "dollar rolls" are transactions in which
mortgage-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. The difference between the sale price and the
purchase price (plus any interest earned on the cash proceeds of the sale) 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 a 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 a Fund to buy a security. If the broker-dealer to
whom a Fund sells the security becomes insolvent, the Fund'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 a Fund
is required to repurchase may be worth less than the security that the Fund
originally held.

To avoid any leveraging concerns, a Fund will place U.S. Government or other
liquid securities in a segregated account in an amount sufficient to cover its
repurchase obligation.

MUNICIPAL SECURITIES--The Core Fixed Income Fund and High Yield Bond Fund
may invest in municipal securities. Municipal securities consist of (i) debt
obligations issued 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

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obtain funds to provide for the construction, equipment, repair or improvement
of privately operated facilities. The two principal classifications of Municipal
Securities are "general obligation" and "revenue" issues. General obligation
issues are issues involving the credit of an issuer possessing taxing power and
are payable from the issuer's general unrestricted revenues, although the
characteristics and method of enforcement of general obligation issues may vary
according to the law applicable to the particular issuer. Revenue issues are
payable only from the revenues derived from a particular facility or class of
facilities or other specific revenue source. A Fund may also invest in "moral
obligation" issues, which are normally issued by special purpose authorities.
Moral obligation issues are not backed by the full faith and credit of the state
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 Fund 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

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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.

OPTIONS--A Fund may purchase and write put and call options on indices and
enter into related closing transactions. A put option on a security 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 on a security 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.

A Fund 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 Fund
will be "covered," which means that the Fund will own an equal amount of the
underlying foreign currency.

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.

All options written on indices or securities must be covered. When a Fund
writes an option or security on an index or a foreign currency, it will
establish a segregated account containing cash or liquid securities 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.

Each Fund may trade put and call options on securities and securities
indices, as the advisers determine is appropriate in seeking the Fund's
investment objective, and except as restricted by each Fund'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, a Fund 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. If a Fund 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 Fund
delivers the security upon exercise.

A Fund may purchase put and call options on securities 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 Fund may seek to purchase
in the future. A Fund 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 Fund loss of the premium paid may be
offset by an increase in the value of the Fund's securities or by a decrease in
the cost of acquisition of securities by the Fund.

A Fund may write covered call options on securities as a means of increasing
the yield on its fund and as a means of providing limited protection against
decreases in its market value. When a Fund writes 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 Fund will realize as profit the
premium received for such option. When a call option of which a Fund is the
writer is exercised, the Fund 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.

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When a put option of which a Fund is the writer is exercised, the Fund will be
required to purchase the underlying securities at a price in excess of the
market value of such securities.

A Fund 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.

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.

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 Fund 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.

PAY-IN-KIND BONDS--Investments of the Core Fixed Income and High Yield Bond
Funds in fixed-income securities may include pay-in-kind bonds. These are
securities which, at the issuer's option, pay interest in either cash or
additional securities 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.

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"),
"Liquid Yield Option Notes" ("LYONs") and "Certificates of Accrual on Treasury
Securities" ("CATS"). LYONs, 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, 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 securities. The
Capital Appreciation, Core Fixed Income, Equity Income, and Large Cap Value
Funds may invest in receipts.

REITS--REITs are trusts that invest primarily in commercial real estate or
real estate-related loans. A real estate investment trust ("REIT") is not taxed
on income distributed to its shareholders or unitholders if it complies with
regulatory requirements relating to its organization, ownership, assets and
income, and with a regulatory requirement that it distribute to its shareholders
or unitholders at least 95% of its taxable income for each taxable year.
Generally, REITs can be classified as Equity REITs, Mortgage REITs and Hybrid
REITs. Equity REITs invest the majority of their assets directly in real
property and derive their income primarily from rents and capital gains from
appreciation realized through property sales. Mortgage REITs invest the majority
of their assets in real estate mortgages and derive their income primarily from

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interest payments. Hybrid REITs combine the characteristics of both Equity and
Mortgage REITs. By investing in REITs indirectly through a Fund, shareholders
will bear not only the proportionate share of the expenses of the Fund, but
also, indirectly, similar expenses of underlying REITs.

A Fund may be subject to certain risks associated with the direct
investments of the REITs. REITs may be affected by changes in the of their
underlying properties and by defaults by borrowers or tenants. Mortgage REITs
may be affected by the quality of the credit extended. Furthermore, REITs are
dependent on specialized management skills. Some REITs may have limited
diversification and may be subject to risks inherent in financing a limited
number of properties. REITs depend generally on their ability to generate cash
flow to make distributions to shareholders or unitholders, and may be subject to
defaults by borrowers and to self-liquidations. In addition, a REIT may be
affected by its failure to qualify for tax-free pass-through of income under the
Code or its failure to maintain exemption from registration under the 1940 Act.

REPURCHASE AGREEMENTS--Repurchase agreements are agreements under which
securities are acquired from a securities dealer or bank subject to resale on an
agreed upon date and at an agreed upon price which includes principal and
interest. A Fund involved bears a risk of loss in the event that the other party
to a repurchase agreement defaults on its obligations and a Fund 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 Fund to enter into repurchase agreements
only with approved banks and primary securities dealers, as recognized by the
Federal Reserve Bank of New York, which have minimum net capital of $100
million, or with a member bank of the Federal Reserve System. Repurchase
agreements are considered to be loans collateralized by the underlying security.
Repurchase agreements entered into by a Fund 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 Fund, the Custodian or its agent must
take possession of the underlying collateral. However, if the seller defaults, a
Fund could realize a loss on the sale of the underlying security to the extent
the proceeds of the sale are less than the resale price. In addition, even
though the Bankruptcy Code provides protection for most repurchase agreements,
if the seller should be involved in bankruptcy or insolvency proceedings, a Fund
may incur delay and costs in selling the security and may suffer a loss of
principal and interest if the Fund is treated as an unsecured creditor.
Repurchase agreements are considered loans under the 1940 Act.

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 re-sold in reliance on an exemption from registration
provided by Rule 144A under the 1933 Act.

SECURITIES LENDING--Loans are made only to borrowers deemed by the advisers
to be in good standing and when, in the judgment of the advisers, the
consideration that can be earned currently from such loaned securities justifies
the attendant risk. Any loan may be terminated by either party upon reasonable
notice to the other party. Each of the Funds may use the Distributor as a broker
in these transactions.

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 with a withdrawal penalty are
considered to be illiquid securities.

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U.S. GOVERNMENT AGENCY OBLIGATIONS--Obligations issued or guaranteed by
agencies of the U.S. Government, including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by instrumentalities of the
U.S. Government, including, among others, the FHLMC, 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, and others are supported by the right of
the issuer to borrow from the Treasury, while still others are supported only by
the credit of the instrumentality. 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
Funds' shares.

U.S. TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills, notes
and bonds issued by the U.S. Treasury, as well as separately traded interest and
principal component parts of such obligations, known as Separately Traded
Registered Interest and Principal Securities ("STRIPS"), that are transferable
through the Federal book-entry system.

U.S. TREASURY RECEIPTS--U.S. Treasury receipts are interests in separately
traded 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.

VARIABLE OR FLOATING RATE INSTRUMENTS--Certain obligations may carry
variable or floating rates of interest, and may involve a conditional or
unconditional demand feature. Such instruments bear interest at rates which are
not fixed, but which vary with changes in specified market rates or indices. 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.
These 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 a Fund's
advisers, be equivalent to the long-term bond or commercial paper ratings
applicable to permitted investments for each Fund. Each Fund'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. 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.

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.

WARRANTS--Warrants are instruments giving holders the right, but not the
obligation, to buy equity or fixed income securities of a company at a given
price during a specified period.

WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--When-Issued securities are
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. The payment obligation and the interest rate
that will be received on the securities are each fixed at the time the purchaser
enters into

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the commitment. Purchasing when-issued obligations results in 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 Fund will establish a segregated account with the Custodian and maintain
liquid assets in an amount at least equal in value to that Fund's commitments to
purchase when-issued securities. If the value of these assets declines, the Fund
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.

One form of when-issued or delayed-delivery security that a Fund 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 OBLIGATIONS--Yankee obligations ("Yankees") are U.S.
dollar-denominated instruments of foreign issuers who either register with the
Securities and Exchange Commission or issue securities 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. Yankee obligations as obligations of
foreign issuers, are subject to the same types of risks discussed in "Securities
of Foreign Issuers," above.

The yankee obligations selected for the Funds will adhere to the same
quality standards as those utilized for the selection of domestic debt
obligations.

YEAR 2000--The Trust depends on the smooth functioning of computer systems
in almost every aspect of its business. Like other mutual funds, business and
individuals around the world, the Trust could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000 and distinguish between the year 2000 and the year
1900. The Trust has asked its service providers whether they expect to have
their computer systems adjusted for the year 2000 transition, and received
assurances from each that its system is expected to accommodate the year 2000
without material adverse consequences to the Trust. The Trust and its
shareholders may experience losses if these assurances prove to be incorrect or
as a result of year 2000 computer difficulties experienced by issuers of
portfolio securities or third parties, such as custodians, banks, broker-dealers
or others with which the Trust does business.

ZERO COUPON, PAY-IN-KIND AND DEFERRED PAYMENT SECURITIES--Zero coupon
securities are securities that are sold at a discount to par value and
securities on which interest payments are not made during the life of the
security. Upon maturity, the holder is entitled to receive the par value of 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
Fund 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 Fund will have fewer assets with which to
purchase income producing securities. In the event of adverse market conditions,
zero coupon, pay-in-kind and deferred payment securities may be subject to
greater fluctuations in value and may be less liquid than comparably rated
securities paying cash interest at regular interest payment periods. STRIPS and
Receipts (TRs, TIGRs, LYONs and CATS) are sold as zero coupon securities, that
is, fixed income securities that have been stripped of their unmatured interest
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

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greater degree to interest rate changes than are non-zero coupon securities with
similar maturity and credit qualities. The Fund 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 income distribution
requirements. A Fund 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.

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.

INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES

No Fund 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 Fund to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry,
provided that this limitation does not apply to investments in obligations
issued or guaranteed by the United States Government, its agencies or
instrumentalities.

3. 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 Fund to purchase securities or require a
Fund 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.

4. Make loans if, as a result, more than 33 1/3% of its total assets would be
loaned to other parties, except that each Fund 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.

5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund 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.

6. 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").

7. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.

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8. 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 Fund may:

1. Pledge, mortgage or hypothecate assets except to secure borrowings permitted
by the Fund'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 Fund
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 as
permitted by the 1940 Act or an order of exemption therefrom.

5. 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.

6. Purchase securities which are not readily marketable, if, in the aggregate,
more than 15% of its total assets would be invested in such securities.

Under rules and regulations established by the SEC, a Fund is typically
prohibited from acquiring the securities of other investment companies if, as a
result of such acquisition, the Fund owns more than 3% of the total voting stock
of the company; securities issued by any one investment company represent more
than 5% of the total Fund's assets; or securities (other than treasury stock)
issued by all investment companies represent more than 10% of the total assets
of the Fund. However, certain Funds may rely upon SEC exemptive orders issued to
the Trust which permit the Funds to invest in other investment companies beyond
these percentage limitations. A Fund's purchase of such investment company
securities results in the bearing of expenses such that shareholders would
indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.

Each of the foregoing percentage limitations (except with respect to the
limitation on investing in illiquid securities) apply at the time of purchase.
These limitations are non-fundamental and may be changed by the Trust's Board of
Trustees without a vote of shareholders.

S-22
<PAGE>
DESCRIPTION OF RATINGS

DESCRIPTION OF CORPORATE BOND RATINGS

The following descriptions of corporate bond ratings have been published by
Moody's Investor's Service, Inc. ("Moody's"), Standard and Poor's Corporation
("S&P"), Duff and Phelps, Inc. ("Duff"), Fitch Investor's Services, Inc.
("Fitch"), IBCA Limited ("IBCA") and Thomson BankWatch ("Thomson"),
respectively.

DESCRIPTION OF MOODY'S LONG-TERM RATINGS

Aaa Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.

Aa Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high-grade
bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
the Aaa securities.

A Bonds rated A possess many favorable investment attributes and are to be
considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment some time in the future.

Baa Bonds rated Baa are considered as medium-grade obligations (I.E., they are
neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any
great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

DESCRIPTION OF S&P'S LONG-TERM RATINGS

INVESTMENT GRADE

AAA Debt rated "AAA" has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

AA Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.

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.

S-23
<PAGE>
DESCRIPTION OF DUFF'S LONG-TERM RATINGS

AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.

AA+ High credit quality. Protection factors are strong.

AA- Risk is modest but may vary slightly from time to time because of economic
conditions.

A+ Protection factors are average but adequate. However,

A- risk factors are more variable and greater in periods of economic stress.

BBB+ Below average protection factors but still considered

BBB- sufficient for prudent investment. Considerable variability in risk during
economic cycles.

DESCRIPTION OF FITCH'S LONG-TERM RATINGS

INVESTMENT GRADE BOND

AAA Bonds rated AAA are judged to be strictly high grade, broadly marketable,
suitable for investment by trustees and fiduciary institutions liable to
slight market fluctuation other than through changes in the money rate. The
prime feature of an AAA bond is a showing of earnings several times or many
times greater than interest requirements, with such stability of applicable
earnings that safety is beyond reasonable question whatever changes occur
in conditions.

AA Bonds rated AA are judged to be of safety virtually beyond question and are
readily salable, whose merits are not unlike those of the AAA class, but
whose margin of safety is less strikingly broad. The issue may be the
obligation of a small company, strongly secured but influenced as to rating
by the lesser financial power of the enterprise and more local type market.

A Bonds rated A are considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB Bonds rated BBB are considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the ratings
of these bonds will fall below investment grade is higher than for bonds
with higher ratings.

DESCRIPTION OF IBCA'S LONG-TERM RATINGS

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

S-24
<PAGE>
business, economic or financial conditions are more likely to lead to
increased investment risk than for obligations in other categories.

DESCRIPTION OF THOMSON'S LONG-TERM DEBT RATINGS

INVESTMENT GRADE

AAA Bonds rated AAA indicate that the ability to repay principal and interest
on a timely basis is very high.

AA Bonds rated AA indicate a superior ability to repay principal and interest
on a timely basis, with limited incremental risk compared to issues rated
in the highest category.

A Bonds rated A indicate the ability to repay principal and interest is
strong. Issues rated A could be more vulnerable to adverse developments
(both internal and external) than obligations with higher ratings.

BBB Bonds rated BBB indicate an acceptable capacity to repay principal and
interest. Issues rated BBB are, however, more vulnerable to adverse
developments (both internal and external) than obligations with higher
ratings.

DESCRIPTION OF COMMERCIAL PAPER RATINGS

The following descriptions of commercial paper ratings have been published
by Moody's, Standard and Poor's, Duff and Phelps, Fitch, IBCA and Thomson
BankWatch, respectively.

DESCRIPTION OF MOODY'S SHORT-TERM RATINGS

PRIME-1 Issuers rated Prime-1 (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structure with moderate reliance on debt and
ample asset protection.

- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

PRIME-2 Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

S&P'S SHORT-TERM RATINGS

<TABLE>
<S> <C>
A-1 This highest category indicates that the degree of safety regarding timely payment
is strong. Debt determined to possess extremely strong safety characteristics is
denoted with a plus sign (+) designation.

A-2 Capacity for timely payment on issues with this designation is satisfactory.
However, the relative degree of safety is not as high as for issues designated
'A-1'.
</TABLE>

S-25
<PAGE>
<TABLE>
<S> <C>
DESCRIPTION OF DUFF'S SHORT-TERM RATINGS

Duff 1+ Highest certainty of timely payment. Short-term liquidity, including internal
operating factors and/or access to alternative sources of funds, is outstanding,
and safety is just below risk-free U.S. Treasury short-term obligations.

Duff 1 Very high certainty of timely payment. Liquidity factors are excellent and
supported by good fundamental protection factors. Risk factors are minor.

Duff 1- High certainty of timely payment. Liquidity factors are strong and supported by
good fundamental protection factors. Risk factors are very small.

GOOD GRADE

Duff 2 Good certainty of timely payment. Liquidity factors and company fundamentals are
sound. Although ongoing funding needs may enlarge total financing requirements,
access to capital markets is good. Risk factors are small.

DESCRIPTION OF FITCH'S SHORT-TERM RATINGS

F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as
having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an assurance of
timely payment only slightly less in degree than issues rated 'F-1+'

F-2 Good Credit Quality. Issues assigned this rating have a satisfactory degree of
assurance for timely payment, but the margin of safety is not as great as for
issues assigned 'F-1+' and 'F-1' ratings.

LOC The symbol LOC indicates that the rating is based on a letter of credit issued by
a commercial bank.

DESCRIPTION OF IBCA'S SHORT-TERM RATINGS (UP TO 12 MONTHS)

A1+ Obligations supported by the highest capacity for timely repayment.

A1 Obligations supported by a strong capacity for timely repayment.

A2 Obligations supported by a satisfactory capacity for timely repayment, although
such capacity may be susceptible to adverse changes in business, economic, or
financial conditions.

DESCRIPTION OF THOMSON'S SHORT-TERM RATINGS

TBW-1 The highest category; indicates a very high likelihood that principal and interest
will be paid on a timely basis.

TBW-2 The second-highest category; while the degree of safety regarding timely repayment
of principal and interest is strong, the relative degree of safety is not as high
as for issues rated "TBW-1".
</TABLE>

S-26
<PAGE>
THE MANAGER

The Trust and SEI Investments Fund Management ("SEI Management" or the
"Manager") have entered into a Management Agreement ("the Management
Agreement"). The Management Agreement provides that the Manager 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 SEI Management 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 Fund, and (ii) by the vote
of a majority of the Trustees of the Trust who are not parties to the Management
Agreement or an "interested person" (as that term is defined in the 1940 Act) of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval. The Management Agreement is terminable at any time as to any
Fund without penalty by the Trustees of the Trust, by a vote of a majority of
the outstanding shares of the Fund or by SEI Management on not less than 30
days' nor more than 60 days' written notice.

The Manager, a Delaware business trust, has its principal business offices
at Oaks, Pennsylvania 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Manager. SEI Investments and its
subsidiaries and affiliates, including the Manager, are leading providers of
funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors, and
money managers. The Manager and its affiliates also serve as administrator or
sub-administrator to the following other mutual funds: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, Alpha Select Funds, The Arbor Fund, ARK
Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis
Funds, Oak Associates Funds, The PBHG Funds, Inc., PBHG Advisor Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional International Trust,
SEI Institutional Investments Trust, SEI Liquid Asset Trust, SEI Tax Exempt
Trust, STI Classic Funds, STI Classic Variable Trust and TIP Funds.

If operating expenses of any Fund exceed applicable limitations, SEI
Management will pay such excess. SEI Management will not be required to bear
expenses of any Fund 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 of 1986, as amended (the "Code"). The term "expenses" is
defined in such laws or regulations, and generally excludes brokerage
commissions, distribution expenses, taxes, interest and extraordinary expenses.

S-27
<PAGE>
For the fiscal years ended September 30, 1996, 1997 and 1998 the Funds paid
fees to the Manager as follows:

<TABLE>
<CAPTION>
MANAGEMENT FEES
MANAGEMENT FEES PAID (000) WAIVED (000)
--------------------------------- ---------------------------
1996 1997 1998 1996 1997 1998
--------- --------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund................................ $ 171 $ 176 $ 186 $ 55 $ 3 $ 0
Capital Appreciation Fund.................... $ 898 $ 657 $ 511 $ 28 $ 0 $ 0
Core Fixed Income Fund....................... $ 1,266 $ 2,235 $ 3,419 $ 339 $ 108 $ 23
Equity Income Fund........................... $ 780 $ 663 $ 518 $ 40 $ 0 $ 0
High Yield Bond Fund......................... $ 160 $ 501 $ 940 $ 42 $ 82 $ 105
Large Cap Growth Fund........................ $ 1,484 $ 2,156 $ 4,091 $ 0 $ 0 $ 0
Large Cap Value Fund......................... $ 1,598 $ 2,279 $ 4,109 $ 0 $ 0 $ 0
Mid-Cap Fund................................. $ 58 $ 97 $ 141 $ 28 $ 4 $ 0
Small Cap Growth Fund........................ $ 1,102 $ 1,441 $ 2,041 $ 27 $ 0 $ 0
Small Cap Value Fund......................... $ 490 $ 771 $ 1,460 $ 11 $ 0 $ 0
Tax-Managed Large Cap Fund................... $ 162 $ 0
</TABLE>

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

* Not in operation during such period.

THE ADVISERS AND SUB-ADVISERS

SEI Investments Management Corporation ("SIMC" or the "Adviser") is a
wholly-owned subsidiary of SEI Investments, a financial services company. The
principal business address of SIMC and SEI Investments is Oaks, Pennsylvania,
19456. SEI Investments was founded in 1968, and is a leading provider of
investment solutions to banks, institutional investors, investment advisers and
insurance companies. Affiliates of SIMC have provided consulting advice to
institutional investors for more than 20 years, including advice regarding
selection and evaluation of sub-advisers. SIMC currently serves as manager to
more than 46 investment companies, including more than 387 funds, with more than
$128 billion in assets as of October 31, 1998.

SIMC is the investment manager for each of the Funds, and operates as a
"manager of managers." As Adviser, SIMC oversees the investment advisory
services provided to the Funds and manages the cash portion of the Funds'
assets. Pursuant to separate sub-advisory agreements with SIMC, and under the
supervision of the Adviser and the Board of Trustees, a number of sub-advisers
(the "Sub-Advisers") are responsible for the day-to-day investment management of
all or a discrete portion of the assets of the Funds. Sub-Advisers are selected
for the Funds based primarily upon the research and recommendations of SIMC,
which evaluates quantitatively and qualitatively a Sub-Adviser's skills and
investment results in managing assets for specific asset classes, investment
styles and strategies.

Subject to Board review, SIMC allocates and, when appropriate, reallocates
the Funds' assets among Sub-Advisers, monitors and evaluates Sub-Adviser
performance, and oversees Sub-Adviser compliance with the Funds' investment
objectives, policies and restrictions. SIMC HAS ULTIMATE RESPONSIBILITY FOR THE
INVESTMENT PERFORMANCE OF THE FUNDS DUE TO ITS RESPONSIBILITY TO OVERSEE
SUB-ADVISERS AND RECOMMEND THEIR HIRING, TERMINATION AND REPLACEMENT.

SIMC and the Trust have obtained an exemptive order from the Securities and
Exchange Commission (the "SEC") that permits SIMC, with the approval of the
Trust's Board of Trustees, to retain Sub-Advisers unaffiliated with SIMC for the
Funds without submitting the Sub-Adviser agreements to a vote of the Fund's
shareholders. The exemptive relief permits SIMC to disclose only the aggregate
amount payable by SIMC to the Sub-Advisers under all such Sub-Adviser agreements
for each Fund. The Funds will notify shareholders in the event of any addition
or change in the identity of its Sub-Advisers.

S-28
<PAGE>
For the fiscal year ended September 30, 1998, the Large Cap Value, Large Cap
Growth, Tax-Managed Large Cap, Small Cap Value, Small Cap Growth, Mid-Cap,
Capital Appreciation, Equity Income, Balanced, Core Fixed Income and High Yield
Bond Funds paid adviser fees to SIMC, after fee waivers, of .35%, .35%, .35%,
.65%, .65%, .40%, .35%, .35%, .35%, .28%, and .49%, respectively, of their
average daily net assets.
1838 INVESTMENT ADVISORS, L.P.
1838 Investment Advisors, L.P. ("1838") serves as a
Sub-Adviser to a portion of the assets of the Small Cap
Value Fund. 1838 is a Delaware limited partnership
located at 100 Matsonford Road, Radnor, Pennsylvania.
MBIA Inc. owns all of the partnership interests of 1838.
As of March 31, 1998, 1838 managed $5.6 billion in assets
in large and small capitalization equity, fixed income
and balanced account portfolios.
ALLIANCE CAPITAL
MANAGEMENT L.P.
Alliance Capital Management L.P. ("Alliance") serves as a
Sub-Adviser for a portion of the assets of the Large Cap
Growth and Tax Managed Large Cap Funds. 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
June 30, 1998, Alliance managed over $255 billion in
assets. The principal address of Alliance is 1345 Avenue
of the Americas, New York, New York 10105.
BLACKROCK, INC.
BlackRock, Inc. (formerly, BlackRock Financial
Management, Inc.) ("BlackRock") serves as a Sub-Adviser
to a portion of the assets of the Core Fixed Income Fund.
BlackRock, a registered investment adviser, is a Delaware
corporation with its principal business address at 345
Park Avenue, 30th Floor, New York, New York 10154.
BlackRock's predecessor was founded in 1988, and as of
June 30, 1998 BlackRock had $119 billion in assets under
management. BlackRock is an indirect subsidiary of PNC
Bank Corp.
BOSTON PARTNERS ASSET MANAGEMENT, L.P.
Boston Partners Asset Management, L.P. ("BPAM") serves as
a Sub-Adviser for a portion of the assets of the Small
Cap Value Fund. BPAM, a Delaware limited partnership, is
a registered investment adviser whose general partner is
Boston Partners, Inc. BPAM was founded in April, 1995,
and as of August 31, 1998, it had approximately $14.4
billion in assets under management. The principal
business address of BPAM is 28 State Street, 21st Floor,
Boston, Massachusetts 02109.
CREDIT SUISSE ASSET MANAGEMENT
Credit Suisse Asset Management formerly, BEA Associates
("Credit Suisse") serves as the Sub-Adviser for the High
Yield Bond Fund. Credit Suisse 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 more than 50 years.
Credit Suisse, the second largest Swiss bank, is a
subsidiary of CS Holding, a Swiss corporation. As of
December 31, 1998, Credit Suisse managed approximately
$36 billion in assets. Credit Suisse's principal business
address is One Citicorp Center, 153 East 53rd Street, New
York, New York 10022.
FIRSTAR INVESTMENT RESEARCH & MANAGEMENT COMPANY, LLC
Firstar Investment Research & Management Company, LLC
("FIRMCO") serves as a Sub-Adviser for a portion of the
assets of the Core Fixed Income Fund. FIRMCO is a
registered investment adviser with its principal business
address at 777 East Wisconsin Avenue, Suite 800,
Milwaukee, Wisconsin 53202. As of June 30, 1998, it had
approximately $24.4 billion in assets under

S-29
<PAGE>
management. FIRMCO is a wholly-owned subsidiary of
Firstar Corporation, a bank holding company located at
777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
FURMAN SELZ CAPITAL MANAGEMENT LLC
Furman Selz Capital Management LLC ("Furman Selz") serves
as a Sub-Adviser for a portion of the assets of the Small
Cap Growth Fund. Furman Selz, a Delaware limited
liability company whose predecessor was formed in 1977,
is a registered investment adviser that managed
approximately $10.3 billion in assets as of June 30,
1998. The ultimate parent of Furman Selz is ING Groep
N.V., a Dutch financial services company. Furman Selz's
principal business address is 230 Park Avenue, New York,
NY 10169.
LSV ASSET
MANAGEMENT, L.P.
LSV Asset Management, L.P. ("LSV") serves as a
Sub-Adviser to a portion of the assets of the Large Cap
Value Fund and the Small Cap Value Fund. LSV is a
registered investment adviser organized as a Delaware
general partnership. An affiliate of SIMC owns a majority
interest in LSV. The general partners developed a
quantitative value investment philosophy that has been
used to manage assets over the past 7 years. The
principal business address of LSV is 200 W. Madison
Avenue, Chicago, Illinois 60606. LSV manages
approximately $3.2 billion in client assets.

The Adviser pays LSV fees based on a percentage of
the average monthly market value of the assets of the
Large Cap Value Fund and the Small Cap Value Fund managed
by LSV. These fees, which are calculated daily and paid
monthly, are at an annual rate of .20% of the average
monthly market value of the assets of the Large Cap Value
Fund managed by LSV and .50% of the average monthly
market value of the assets of the Small Cap Value Fund
managed by LSV.
MELLON EQUITY
ASSOCIATES, LLP
Mellon Equity Associates, LLP ("Mellon Equity") serves as
a Sub-Adviser to a portion of the assets of each of the
Large Cap Value Fund, Tax Managed Large Cap Fund and the
Small Cap Value Fund. Mellon Equity is a limited
liability partnership founded in 1987. Mellon Bank, N.A.,
is the 99% limited partner and MMIP, Inc. is the 1%
general partner. MMIP, Inc. is a wholly-owned subsidiary
of Mellon Bank, N.A., which itself is a wholly-owned
subsidiary of the Mellon Bank Corporation. Mellon Equity
had discretionary management authority with respect to
approximately $22.5 billion of assets as of June 30,
1998. The business address for Mellon Equity is 500 Grant
Street, Suite 3700, Pittsburgh, Pennsylvania 15258.
NICHOLAS-APPLEGATE
CAPITAL MANAGEMENT
Nicholas-Applegate Capital Management
("Nicholas-Applegate") serves as a Sub-Adviser to a
portion of the assets of the Small Cap Growth Fund. As of
June 30, 1998, Nicholas-Applegate had discretionary
management authority with respect to approximately $31.0
billion of assets. The principal business address of
Nicholas-Applegate is 600 West Broadway, 29th Floor, San
Diego, California 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 a
corporation controlled by Arthur E. Nicholas.
PROVIDENT INVESTMENT COUNSEL, INC.
Provident Investment Counsel, Inc. ("Provident") serves
as a Sub-Adviser for a portion of the assets of the Large
Cap Growth Fund. Provident is a registered investment
adviser with its principal business address at 300 North
Lake Avenue, Pasadena, California 91101, which, through
its predecessors, has

S-30
<PAGE>
been in business since 1951, a wholly-owned subsidiary of
United Asset Management ("UAM"), a publicly traded
investment adviser holding company. UAM is headquartered
at One International Place, Boston, Massachusetts 02110.
As of June 30, 1998, Provident had over $20 billion in
client assets under management.
ROBERTSON, STEPHENS INVESTMENT MANAGEMENT, L.P.
Robertson, Stephens Investment Management, L.P.
("Robertson"), acts as a Sub-Adviser for a portion of the
assets of the Small Cap Growth Fund. Robertson is a
wholly-owned subsidiary of BankAmerica. Robertson is a
registered investment adviser that currently has
approximately $4.0 billion of assets under management,
$240 million of which is in the small cap product. The
principal business address of Robertson is 555 California
Street, Suite 2600, San Francisco, California 94104.
SANFORD C. BERNSTEIN & CO., INC.
Sanford C. Bernstein & Co., Inc. ("Bernstein"), serves as
a Sub-Adviser to a portion of the assets of the Large Cap
Value and Tax Managed Large Cap Funds. Founded in 1967,
Bernstein is a registered investment adviser that managed
approximately $77 billion in assets as of March 31, 1998.
Bernstein is controlled by the members of its Board of
Directors and its principal business address is 767 Fifth
Avenue, New York, New York 10153.
SPYGLASS ASSET
MANAGEMENT, INC.
Spyglass Asset Management, Inc. ("Spyglass") acts as a
Sub-Adviser for a portion of the assets of the Small Cap
Growth Fund. Spyglass, a Delaware Corporation founded in
May, 1998, is a registered investment adviser controlled
by Roger Stamper and Stephen Wisneski. The principal
business address of Spyglass is 3454 Oak Alley Court,
Suite #209, Toledo, Ohio 43606.
TCW FUNDS
MANAGEMENT INC.
TCW Funds Management Inc. ("TCW") acts as a Sub-Adviser
for a portion of the assets of the Large Cap Growth Fund.
TCW is a wholly-owned subsidiary of the TCW Group, Inc.
TCW is a registered investment adviser that currently has
approximately $51 billion of assets under management. The
principal business address of TCW is 865 S. Figueroa,
Suite 1800, Los Angeles, California 90017.
WALL STREET ASSOCIATES
Wall Street Associates ("WSA") serves as a Sub-Adviser
for a portion of the assets of the Small Cap Growth Fund.
WSA was founded in 1987, and as of June 30, 1998, had
approximately $1.4 billion in assets under management.
The principal business address of WSA is at 1200 Prospect
Street, Suite 100, La Jolla, California 92037.
WESTERN ASSET
MANAGEMENT COMPANY
Western Asset Management Company ("Western") serves as a
Sub-Adviser for a portion of the assets of the Core Fixed
Income Fund. Western is a wholly-owned subsidiary of Legg
Mason, Inc., a financial services company located in
Baltimore, Maryland. Western was founded in 1971 and
specializes in the management of fixed income funds. As
of June 30, 1998, Western managed approximately $41.5
billion in client assets, including $8.2 billion of
investment company assets. The principal business address
of Western is 117 East Colorado Boulevard, Pasadena,
California 91105.

The Advisory Agreement and certain of the Sub-Advisory Agreements provide
that SIMC (or any Sub-Adviser) shall not be protected against any liability to
the Trust or its shareholders by reason of willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties, or from reckless
disregard of its obligations or duties thereunder. In addition, certain of the
Sub-Advisory Agreements provide that the Sub-Adviser shall not be protected
against any liability to the Trust or its shareholders by

S-31
<PAGE>
reason of willful misfeasance, bad faith or 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 Fund 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 Fund, by
a majority of the outstanding shares of that Fund, on not less than 30 days' nor
more than 60 days' written notice to the Adviser (or Sub-Adviser) or by the
Adviser (or Sub-Adviser) on 90 days' written notice to the Trust.

SIMC has obtained an exemptive order from the SEC that permits SIMC, with
the approval of the Trust's Board of Trustees, to retain unaffiliated
sub-advisers for a Fund without submitting the sub-advisory agreement to a vote
of the Fund's shareholders. The exemptive relief permits the non-disclosure of
amounts payable by SIMC under such sub-advisory agreements. The Trust will
notify shareholders in the event of any change in the identity of the
sub-adviser for a Fund.

For the fiscal years ended September 30, 1996, 1997 and 1998, the Funds paid
advisory fees as follows:

<TABLE>
<CAPTION>
ADVISORY FEES
ADVISORY FEES PAID (000) WAIVED (000)
--------------------------------- -------------------------------
1996(1) 1997 1998 1996 1997 1998
--------- --------- --------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balanced Fund................................ $ 253 $ 178 $ 213 $ 6 $ 26 $ 27
Capital Appreciation Fund.................... $ 1,033 $ 657 $ 585 $ 25 $ 94 $ 73
Core Fixed Income Fund....................... $ 1,424 $ 2,301 $ 3,358 $ 0 $ 0 $ 0
Equity Income Fund........................... $ 915 $ 662 $ 592 $ 22 $ 95 $ 74
High Yield Bond Fund......................... $ 282 $ 812 $ 1,309 $ 0 $ 0 $ 0
Large Cap Growth Fund........................ $ 1,498 $ 2,157 $ 4,676 $ 198 $ 308 $ 584
Large Cap Value Fund......................... $ 1,598 $ 2,279 $ 4,109 $ 0 $ 0 $ 0
Mid-Cap Fund................................. $ 98 $ 115 $ 162 $ 0 $ 0 $ 0
Small Cap Growth Fund........................ $ 2,098 $ 2,675 $ 3,791 $ 0 $ 0 $ 0
Small Cap Value Fund......................... $ 930 $ 1,432 $ 2,711 $ 0 $ 0 $ 0
Tax-Managed Large Cap Fund................... * * $ 185 * * $ 23
</TABLE>

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

* Not in operation during such period.

For the fiscal years ended September 30, 1996, 1997 and 1998, SIMC paid
sub-advisory fees as follows:

<TABLE>
<CAPTION>
SUB-ADVISORY FEES PAID (000)
----------------------------------------
1996 1997 1998
---------- ------------ ------------
<S> <C> <C> <C>
Balanced Fund..................................... $ 157 $ 102 $ 104
Capital Appreciation Fund......................... $ 621 $ 359 $ 274
Core Fixed Income Fund............................ $ 614 $ 950 $ 1,508
Equity Income Fund................................ $ 548 $ 369 $ 277
High Yield Bond Fund.............................. $ 195 $ 585 $ 892
Large Cap Growth Fund............................. $ 832 $ 1,263 $ 1,762
Large Cap Value Fund.............................. $ 894 $ 1,284 $ 2,230
Mid-Cap Fund...................................... $ 62 $ 71 $ 96
Small Cap Growth Fund............................. $ 1,574 $ 1,966 $ 2,386
Small Cap Value Fund.............................. $ 595 $ 1,061 $ 2,030
Tax-Managed Large Cap Fund........................ * * $ 72
</TABLE>

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

* Not applicable during such period.

S-32
<PAGE>
DISTRIBUTION AND SHAREHOLDER SERVICING

The Trust has adopted a Distribution Agreement for the Funds. The Trust has
also adopted a Distribution Plan (the "Class D Plan") for the Class D shares of
the Small Cap Growth Fund 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 Class D Plan and
the Distribution Agreement are in the best interests of the shareholders.
Continuance of the Class D Plan must be approved annually by a majority of the
Trustees of the Trust and by a majority of the Qualified Trustees, as defined in
the Plan. The Class D Plan requires that quarterly written reports of amounts
spent under the Class D Plan and the purposes of such expenditures be furnished
to and reviewed by the Trustees. The Class D Plan 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 Fund or class affected. All material
amendments of the Class D Plan will require approval by a majority of the
Trustees of the Trust and of the Qualified Trustees.

The Class D Plan provides that the Trust will pay a fee of up to .30% of the
average daily net assets of the Small Cap Growth Fund's Class D shares that the
Distributor can use to compensate broker-dealers and service providers,
including SEI Investments Distribution Co. and its affiliates, which provide
distribution-related services to the Small Cap Growth Fund Class D shareholders
or their customers who beneficially own Class D shares.

The distribution-related services that may be provided under the Plan
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; and automatically investing
customer account cash balances.

Except to the extent that the Manager and 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 Plan or related
agreements.

The Funds have also adopted a shareholder servicing plan for their Class A
shares (the "Service Plan"). Under the Service Plan, the Distributor may
perform, or may compensate other service providers for performing, the following
shareholder services: maintaining client accounts; arranging for bank wires;
responding to client inquiries concerning services provided on investments;
assisting clients in changing dividend options, account designations and
addresses; sub-accounting; providing information on share positions to clients;
forwarding shareholder communications to clients; processing purchase, exchange
and redemption orders; and processing dividend payments. Under the Service Plan,
the Distributor may retain as a profit any difference between the fee it
receives and the amount it pays to third parties.

Although banking laws and regulations prohibit banks from distributing
shares of open-end investment companies such as the Trust, according to an
opinion issued to the staff of the Securities and Exchange Commission ("SEC") by
the Office of the Comptroller of the Currency, financial institutions are not
prohibited from acting in other capacities for investment companies, such as
providing shareholder services. Should future legislative, judicial or
administrative action prohibit or restrict the activities of financial
institutions in connection with providing shareholder services, the Trust may be
required to alter materially or discontinue its arrangements with such financial
institutions.

S-33
<PAGE>
For the fiscal year ended September 30, 1998, the Funds incurred the
following distribution expenses:

<TABLE>
<CAPTION>
AMOUNT PAID
TO 3RD
PARTIES BY
THE PROSPECTUS
DISTRIBUTOR PRINTING AND
FOR MAILING
DISTRIBUTION COSTS (NEW
RELATED SALES SHAREHOLDERS COSTS ASSOCIATED
TOTAL SERVICES EXPENSES ADVERTISING ONLY) WITH REGISTRATION
FUND/CLASS ($AMOUNT) ($AMOUNT) ($AMOUNT) ($AMOUNT) ($AMOUNT) FEES ($AMOUNT)
- ------------------------- --------- ----------- --------- ----------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
CLASS D
Small Cap Growth
Fund................. $ 5,880 $ 5,880 $ 0 $ 0 $ 0 $ 0
</TABLE>

TRUSTEES AND OFFICERS OF THE TRUST

The management and affairs of the Trust are supervised by the Trustees under
the laws of the Commonwealth of Massachusetts. The Trustees have approved
contracts under which, as described above, certain companies provide essential
management services to the Trust.

The Trustees and Executive Officers of the Trust, their respective dates of
birth, and their principal occupations for the last five years are set forth
below. Each may have held other positions with the named companies during that
period. Unless otherwise noted, the business address of each Trustee and each
Executive Officer is SEI Investments Company, Oaks, Pennsylvania 19456. Certain
officers of the Trust also serve as officers of some or all of the following:
The Achievement Funds Trust, The Advisors' Inner Circle Fund, Alpha Select
Funds, The Arbor Fund, ARK Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CrestFunds, Inc., CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, Marquis
Funds-Registered Trademark-, The Nevis Fund, Inc., Oak Associates Funds, The
PBHG Funds, Inc., PBHG Advisor Funds, Inc., PBHG Insurance Series Fund, Inc.,
The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional International Trust, SEI Institutional Investments
Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI
Classic Variable Trust and TIP Funds, each of which is an open-end management
investment company managed by SEI Investments Fund Management or its affiliates
and, except for PBHG Advisor Funds, Inc., distributed by SEI Investments
Distribution Co.

ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Adviser, the Manager and
the Distributor, 1981-1994. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, Boston 1784 Funds-Registered Trademark-, The Expedition Funds,
Marquis Funds-Registered Trademark-, Oak Associates Funds, Pillar Funds, SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional International Trust, SEI
Liquid Asset Trust and SEI Tax Exempt Trust.

WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--1701 Market Street, Philadelphia,
PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to the Trust,
SEI Investments, the Adviser, the Manager and the Distributor. Director and
Secretary of SEI Investments and Secretary of the Adviser, the Manager and the
Distributor. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, The
Expedition Funds, Marquis Funds-Registered Trademark-, Oak Associates Funds, SEI
Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Investments Trust, SEI Institutional International Trust, SEI
Liquid Asset Trust and SEI Tax Exempt Trust.

F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--President, Orange County
Publishing Co., Inc., Publisher, Paoli News and Paoli Republican; and Editor,
Paoli Republican, October 1981-January 1997. President H&W Distribution, Inc.,
since July 1984. Executive Vice President, Trust Department, Harris Trust and
Savings Bank and Chairman of the Board of Directors of The Harris Trust Company
of Arizona

S-34
<PAGE>
before January 1981. Trustee of SEI Asset Allocation Trust, SEI Daily Income
Trust, SEI Index Funds, SEI Institutional Investments Trust, SEI Institutional
International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic
Funds and STI Classic Variable Trust.

JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads,
from September 1987-December 1993. Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional International
Trust, SEI Liquid Asset Trust, and SEI Tax Exempt Trust.

GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991-December 1996; Chief Financial Officer, Noble Partners, L.P.,
March 1991-December 1996; Treasurer and Clerk, Peak Asset Management, Inc.,
since 1991; Trustee, Navigator Securities Lending Trust, since 1995. Trustee of
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid
Asset Trust, SEI Institutional Investments Trust, SEI Institutional
International Trust, and SEI Tax Exempt Trust.

EDWARD D. LOUGHLIN (DOB 03/07/51)--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments, the Adviser and the Manager since 1994. Senior Vice President,
SEI Investments, 1986-1991; Vice President, SEI Investments, 1981-1986.

TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, the
Adviser, the Manager and the Distributor since 1995. Associate, Dewey Ballantine
(law firm), 1994-1995. Associate, Winston & Strawn (law firm), 1991-1994.

JAMES R. FOGGO (DOB 06/30/64)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Associate, Paul Weiss, Rifkind, Wharton & Garrison (law firm), 1998.
Associate, Baker & McKenzie (law firm), 1995-1998. Associate, Battle Fowler
L.L.P. (law firm), 1993-1995. Operations Manager, The Shareholder Services
Group, Inc., 1986-1990.

LYDIA A. GAVALIS (DOB 06/05/64--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and the Distributor since
1998. Assistant General Counsel and Director of Arbitration, Philadelphia Stock
Exchange, 1989-1998.

KATHY HEILIG (DOB 12/21/58)--Vice President and Assistant
Secretary--Treasurer of SEI Investments Company since 1997; Assistant Controller
of SEI Investments Company since 1995; Vice President of SEI Investments Company
since 1991; Director of Taxes of SEI Investments Company 1987 to 1991. Tax
Manager, Arthur Anderson LLP prior to 1987.

JOSEPH M. O'DONNELL (DOB 11/13/54)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Vice President and General Counsel, FPS Services, Inc.,
1993-1997. Staff Counsel and Secretary, Provident Mutual Family of Funds,
1990-1993.

SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant
Secretary--Secretary of the Distributor since 1998; Vice President of the
Distributor since 1988. Vice President and Assistant Secretary the Manager, the
Adviser and the Distributor since 1988.

CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, the
Adviser, the Manager and the Distributor since August 1997. Branch Chief,
Division of Enforcement, U.S. Securities and Exchange Commission, January
1995-August 1997. Senior Counsel--Division of Enforcement, U.S. Securities and
Exchange Commission, September 1992-January 1995. Staff Attorney--Division of
Enforcement, U.S. Securities and Exchange Commission, January 1995-August 1997.

S-35
<PAGE>
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, the
Adviser, the Manager and the Distributor since 1994. Assistant Secretary of SEI
Investments since 1992; Secretary of the Adviser and the Manager since 1994.
Vice President, General Counsel and Assistant Secretary of the Adviser, the
Manager and the Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius LLP
(law firm), 1988-1992.

LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.
(1997-1998). Partner, Groom & Nordberg, Chartered, 1996-1997. Associate General
Counsel, Riggs Bank, N.A., 1991-1995.

RICHARD W. GRANT (DOB 10/25/45)--Secretary--1701 Market Street,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, the Adviser, the Manager and the Distributor.

MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Fund Resources and Vice
President of the Manager since 1996. Vice President of the Distributor since
December 1997. Vice President, Fund Accounting, BISYS Fund Services, September
1995 to November 1996. Senior Vice President and Site Manager, Fidelity
Investments 1981 to September 1995.

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

* 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. Gooch, Storey, Morris and Sullivan 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, 1998, the Trust paid the
following amounts to the Trustees.

<TABLE>
<CAPTION>
AGGREGATE PENSION OR
COMPENSATION FROM RETIREMENT BENEFITS ESTIMATED ANNUAL TOTAL COMPENSATION FROM REGISTRANT
REGISTRANT FOR FYE ACCRUED AS PART OF BENEFITS UPON AND FUND COMPLEX PAID TO DIRECTORS
NAME OF PERSON AND POSITION 9/30/98 FUND EXPENSES RETIREMENT FOR FYE 9/30/98
- --------------------------------- ------------------ ------------------- ---------------- -----------------------------------
<S> <C> <C> <C> <C>
Robert A. Nesher, Trustee........ $ 0 $0 $0 $0 for services on 8 boards
William M. Doran, Trustee........ $ 0 $0 $0 $0 for services on 8 boards
F. Wendell Gooch, Trustee........ $26,715 $0 $0 $102,000 for services on 8 boards
Frank E. Morris, Trustee......... $26,715 $0 $0 $102,000 for services on 8 boards
James M. Storey, Trustee......... $26,715 $0 $0 $102,000 for services on 8 boards
George J. Sullivan, Trustee...... $26,715 $0 $0 $102,000 for services on 8 boards
</TABLE>

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

Mr. Edward W. Binshadler serves as a consultant to the Audit Committee and
receives as compensation $5,000 per Audit Committee meeting attended.

S-36
<PAGE>
PERFORMANCE

From time to time, each Fund may advertise yield and/or total return. These
figures will be based on historical earnings and are not intended to indicate
future performance. The yield of a Fund refers to the annualized income
generated by an investment in such Fund over a specified 30-day period. The
yield is calculated by assuming that the income generated by the investment
during that period is generated each period over one year and is shown as a
percentage of the investment. In particular, yield will be calculated according
to the following formula:

6
Yield =2[((a-b)/cd) + 1) -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 for the Funds for the 30-day period
ended September 30, 1998 were as follows:

<TABLE>
<CAPTION>
FUND 30-DAY YIELD
- -------------------------------------------------------------------------------- -------------
<S> <C>
CLASS A
Balanced Fund................................................................. 2.76%
Capital Appreciation Fund..................................................... 1.07%
Core Fixed Income Fund........................................................ 5.08%
Equity Income Fund............................................................ 1.89%
High Yield Bond Fund.......................................................... 7.87%
Large Cap Growth Fund......................................................... 0.13%
Large Cap Value Fund.......................................................... 2.05%
Mid-Cap Fund.................................................................. 0.84%
Small Cap Growth Fund......................................................... 0.00%
Small Cap Value Fund.......................................................... 0.75%
Tax-Managed Large Cap Fund.................................................... 2.03%
CLASS D
Small Cap Growth Fund......................................................... 0.00%
</TABLE>

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

The total return of a Fund 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 Fund commenced operations through the
specified date), assuming that the entire investment is redeemed at the end of
each period. In particular, total return will be calculated according to the
following formula:

n
P(1 + T) = 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.

S-37
<PAGE>
Based on the foregoing, the average annual total returns for the Funds from
inception through September 30, 1998 and for the one, five and ten year periods
ended September 30, 1998, were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
---------------------------------------
ONE FIVE TEN SINCE
FUND CLASS YEAR YEAR YEAR INCEPTION
- -------------------------- ------------------------ ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Balanced Fund Class A(1).............. 9.49% 11.40% * 11.82%

Capital Appreciation Fund Class A(2).............. 7.08% 15.82% 16.18% 15.43%

Core Fixed Income Fund Class A(3).............. 11.42% 6.99% 8.45% 8.30%

Equity Income Fund Class A(4).............. 1.51% 14.76% 14.31% 14.30%

High Yield Bond Fund Class A(5).............. 2.25% * * 12.13%

Large Cap Growth Fund Class A(6).............. 8.35% * * 26.38%

Large Cap Value Fund Class A(7).............. (1.40)% * * 20.97%

Mid-Cap Fund Class A(8).............. (15.41)% 9.11% * 11.81%

Small Cap Growth Fund Class A(9).............. (26.53)% 9.13% * 13.60%
Class D(10) (no load)... % % * %
Class D(10) (load)...... (26.74)% 8.78% * 13.32%
(30.40)% 7.67% 12.42%

Small Cap Value Fund Class A(11)............. (13.68)% * * 15.45%

Tax-Managed Large Cap Fund Class A(12)............. * * * (6.58)%
</TABLE>

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

* Not in operation during period.

(1) Commenced operations August 7, 1990.

(2) Commenced operations March 1, 1988.

(3) Commenced operations May 4, 1987.

(4) Commenced operations June 2, 1988.

(5) Commenced operations January 11, 1995.

(6) Commenced operations December 20, 1994.

(7) Commenced operations April 20, 1987.

(8) Commenced operations February 16, 1993.

(9) Commenced operations April 20, 1992.

(10) Commenced operations May 2, 1994.

(11) Commenced operations December 20, 1995.

(12) Commenced operations March 4, 1998.

The Funds 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.

S-38
<PAGE>
PURCHASE AND REDEMPTION OF SHARES

The purchase and redemption price of shares is the net asset value of each
share. A Fund's securities are valued by SEI Management pursuant to valuations
provided by an independent pricing service (generally the last quoted sale
price). Fund 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.

Information about the market value of each portfolio security may be
obtained by SEI Management from an independent pricing service. The pricing
service relies primarily on prices of actual market transactions as well as
trader quotations. However, the pricing service may use a matrix system to
determine valuations of 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.

Securities with remaining maturities of 60 days or less will be valued by
the amortized cost method, which involves valuing a security at its cost on the
date of purchase and thereafter (absent unusual circumstances) assuming a
constant amortization to maturity of any discount or premium, regardless of the
impact of fluctuations in general market rates of interest on the value of the
instrument. While this method provides certainty in valuation, it may result in
periods during which value, as determined by this method, is higher or lower
than the price the Trust would receive if it sold the instrument. During periods
of declining interest rates, the daily yield of a Fund may tend to be higher
than a like computation made by a company with identical investments utilizing a
method of valuation based upon market prices and estimates of market prices for
all of its portfolio securities. Thus, if the use of amortized cost by a Fund
resulted in a lower aggregate portfolio value on a particular day, a prospective
investor in a Fund would be able to obtain a somewhat higher yield that would
result from investment in a company utilizing solely market values, and existing
shareholders in the Fund would experience a lower yield. The converse would
apply during a period of rising interest rates.

It is currently the Trust's policy to pay all redemptions in cash. The Trust
retains the right, however, to alter this policy to provide for redemptions in
whole or in part by a distribution in kind of readily marketable securities held
by a Fund in lieu of cash. Shareholders may incur brokerage charges on the sale
of any such securities so received in payment of redemptions. However, a
shareholder will at all times be entitled to aggregate cash redemptions from all
Funds 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 Funds 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, Martin Luther King, Jr. 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 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

S-39
<PAGE>
the right to suspend sales of shares of the Funds 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
NAME OF GROUP DISCOUNT STARTS
- ---------------------------------------------------------------------- --------------- ----------
<S> <C> <C>
BHC Securities, Inc. ................................................. 10% 12/29/94
First Security Investor Services, Inc. ............................... 10% 12/29/94
</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 (CLASS D SHARES)

The following is a description of plans and privileges by which the sale
charges imposed on the Class D shares of the Small Cap Growth Fund 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 Prospectus 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 (i) does not legally bind the signer to purchase any set number
of shares and (ii) 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 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 Funds may be automatically invested in shares of one of the
Funds if shares of the Fund 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 Funds and consider the differences in
objectives and policies before making any investment.

REINSTATEMENT PRIVILEGE: A shareholder who has redeemed shares of the Fund
has a one-time right to reinvest the redemption proceeds in shares of the Funds
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

S-40
<PAGE>
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 the Fund's Class D shares for which
payment has been received (I.E., an established account), may be exchanged for
Class D shares of SEI Liquid Asset Trust, SEI Tax Exempt Trust and SEI
Institutional 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 the Fund'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 the Fund (the "Old Fund") 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 Fund"). Any gain or loss on the redemption of the shares
exchanged is 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 Funds, and thus the purchase of
shares of the New Fund, 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 Funds may also communicate a Shareholder's Exchange Request to the Fund
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 Funds and their shareholders that are not
described in the Funds' prospectuses. No attempt is made to present a detailed
explanation of the federal, state or local tax treatment of the Funds or their
shareholders and the discussion here and in the Funds' prospectuses is not
intended as a substitute for careful tax planning.

This discussion of federal income tax consequences is based on the 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 Fund is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other Funds. Each Fund intends to qualify
as a regulated investment company ("RIC") under

S-41
<PAGE>
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 Fund must distribute annually to its shareholders at
least 90% of its net interest income excludable from net income, 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
Fund's gross income each taxable year must be derived from dividends, interest,
payments with respect to securities loans, and gains from the sale or other
disposition of stock or securities, or other income derived with respect to its
business of investing in such stock or securities; (ii) at the close of each
quarter of a Fund's taxable year, at least 50% of the value of its total assets
must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities, with such other securities
limited, in respect of any one issuer, to an amount that does not exceed 5% of
the value of a Fund's assets and that does not represent more than 10% of the
outstanding voting securities of such issuer; and (iii) at the close of each
quarter of a Fund's taxable year, not more than 25% of the value of its assets
may be invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer or of two or more issuers engaged in
the same, similar, or related trades or businesses if the Fund owns at least 20%
of the voting power of such issuers.

Notwithstanding the Distribution Requirement described above, which only
requires a Fund to distribute at least 90% of its annual investment company
taxable income and does not require any minimum distribution of net capital
gain, a Fund will be subject to a nondeductible 4% 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 Fund intends to make sufficient distributions to avoid
liability for the federal excise tax. A Fund 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 Fund to satisfy the requirements for
qualification as a RIC.

Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than twelve months and otherwise will be treated
as short-term capital gain or loss. However, if shares on which a shareholder
has received a net capital gain distribution are subsequently sold, exchanged or
redeemed and such shares have been held for six months or less, any loss
recognized will be treated as a long-term capital loss to the extent of the net
capital gain distribution. Long-term capital gains are currently taxed at a
maximum rate of 20% and short-term capital gains are currently taxed at ordinary
income tax rates.

A Fund 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 Fund that such shareholder is not subject to backup
withholding.

With respect to investments in STRIPS, TR's, TIGR's, LYONs, CATS and other
Zero Coupon securities which are sold at original issue discount and thus do not
make periodic cash interest payments, a Fund will be required to include as part
of its current income the imputed interest on such obligations even though the
Fund has not received any interest payments on such obligations during that
period. Because each Fund distributes all of its net investment income to its
shareholders, a Fund may have to sell Fund 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.

S-42
<PAGE>
STATE TAXES

A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by the Fund to
shareholders and the ownership of shares may be subject to state and local
taxes. Shareholders should consult their 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 broker-dealer or group of
brokers or 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 Fund transactions. In placing orders, it is the
Trust's policy to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the advisers generally seek reasonably competitive spreads or
brokerage 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 Funds may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission in conformity with the 1940 Act, the Securities Exchange Act of 1934,
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 Fund on an exchange if a written contract is in
effect between the Distributor and the Trust expressly permitting the
Distributor to receive and retain such compensation. These provisions further
require that commissions paid to the Distributor by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and 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
Portfolios 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 Funds' 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 connection with transactions effected for Funds operating within the
"Manager of Managers" structure, SIMC and the various firms that serve as
sub-advisers to certain Funds of the Trust, in the exercise of joint investment
discretion over the assets of a Fund, may direct a substantial portion of a
Fund's brokerage to the Distributor. 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.

S-43
<PAGE>
For the fiscal year ended September 30, 1998, the Funds paid the following
brokerage fees:

<TABLE>
<CAPTION>
TOTAL $ AMOUNT
OF BROKERAGE % OF TOTAL % OF TOTAL
TOTAL $ AMOUNT COMMISSIONS BROKERAGE BROKERED
OF BROKERAGE PAID TO COMMISSIONS TRANSACTIONS
COMMISSIONS AFFILIATED PAID TO EFFECTED THROUGH
PAID IN FYE BROKERS IN AFFILIATED AFFILIATED
FUND 9/30/98 FYE 9/30/98 BROKERS BROKERS
- ----------------------------------- --------------- --------------- ------------ ----------------
<S> <C> <C> <C> <C>
Balanced Fund...................... $ 114,561 $ 0 0% 0%
Capital Appreciation Fund.......... $ 592,551 $ 0 0% 0%
Core Fixed Income Fund............. $ 0 $ 0 0% 0%
Equity Income Fund................. $ 260,476 $ 0 0% 0%
High Yield Bond Fund............... $ 0 $ 0 0% 0%
Large Cap Growth Fund.............. $ 1,876,706 $ 879,453 20.21% 4.59%
Large Cap Value Fund............... $ 2,179,458 $ 274,296 12.59% 0.27%
Mid-Cap Fund....................... $ 199,773 $ 0 0% 0%
Small Cap Growth Fund.............. $ 1,035,121 $ 0 0% 0%
Small Cap Value Fund............... $ 1,159,153 $ 0 0% 0%
Tax-Managed Large Cap Fund......... $ 171,586 $ 49,479 28.84% 27.10%
</TABLE>

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

* Not in operation during such period.

For the fiscal years ended September 30, 1996 and 1997, the Funds paid the
following brokerage fees:

<TABLE>
<CAPTION>
TOTAL $ AMOUNT OF
TOTAL $ AMOUNT OF BROKERAGE
BROKERAGE COMMISSIONS COMMISSIONS PAID TO
PAID AFFILIATES
---------------------- --------------------
<S> <C> <C> <C> <C>
FUND 1996 1997 1996 1997
- --------------------------------------------- ---------- ---------- -------- ----------
Balanced Fund................................ $ 117,731 $ 89,948 $ 14,167 $ 7,443
Capital Appreciation Fund.................... $ 901,374 $ 720,618 $ 30,830 $ 50,855
Core Fixed Income Fund....................... $ 125,097 $ 0 $ 18,090 $ 0
Equity Income Fund........................... $ 387,891 $ 273,210 $ 5,760 $ 119,347
High Yield Bond Fund......................... $ 0 $ 0 $ 0 $ 0
Large Cap Growth Fund........................ $ 737,152 $ 853,946 $ 65,986 $ 383,294
Large Cap Value Fund......................... $ 784,758 $ 967,297 $186,841 $ 235,717
Mid-Cap Fund................................. $ 40,892 $ 41,511 $ 22,811 $ 0
Small Cap Growth Fund........................ $ 551,149 $ 803,002 $ 15,867 $ 77,385
Small Cap Value Fund......................... $ 500,459 $ 639,229 $ 25,669 $ 40,859
Tax-Managed Large Cap Fund................... -- -- -- --
</TABLE>

Class D shareholders paid the following sales charges:

<TABLE>
<CAPTION>
DOLLAR AMOUNT OF CHARGES
DOLLAR AMOUNT OF CHARGES RETAINED BY SFS
------------------------------- -----------------------------
FUND/CLASS 1996 1997 1998 1996 1997 1998
- --------------------------------------------- ---------- ---------- ------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Fund--Class D............... N/A N/A $30,295 N/A N/A $ 4,170
</TABLE>

For certain of the Funds, the reason for the 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 for the most
recent fiscal year versus the previous fiscal year is the increase in assets for
those funds.

S-44
<PAGE>
The portfolio turnover rate for each Fund for the fiscal years ending
September 30, 1997 and 1998 was as follows:

<TABLE>
<CAPTION>
TURNOVER
RATE
-----------
FUND 1997 1998
- ------------------------------------------------------------ ---- ----
<S> <C> <C>
Balanced Fund............................................... 197% 183%
Capital Appreciation Fund................................... 178% 238%
Core Fixed Income Fund...................................... 216% 344%
Equity Income Fund.......................................... 40% 66%
High Yield Bond Fund........................................ 68% 56%
Large Cap Growth Fund....................................... 73% 80%
Large Cap Value Fund........................................ 67% 79%
Mid-Cap Fund................................................ 92% 106%
Small Cap Growth Fund....................................... 107% 128%
Small Cap Value Fund........................................ 98% 77%
Tax-Managed Large Cap Fund.................................. NA 12%
</TABLE>

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, a Fund'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.

The Trust does not expect to use one particular broker or dealer, but a
Fund's advisers or sub-advisers may, consistent with the interests of the Fund,
select brokers on the basis of the research services they provide to the Fund'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 Fund's advisers under the Advisory
and Sub-Advisory Agreements. If in the judgement of a Fund's advisers, the Fund,
or other accounts managed by the Fund's advisers, will be benefitted by
supplemental research services, the Fund's advisers are 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 Fund's advisers will not necessarily be reduced
as a result of the receipt of such supplemental information.

S-45
<PAGE>
The Trust is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the 1940 Act) which the Trust has acquired
during its most recent fiscal year. As of September 30, 1998, the Trust held the
following securities:

<TABLE>
<CAPTION>
FUND TYPE OF SECURITY NAME OF ISSUER AMOUNT
- ------------------------------ -------------------------- -------------------------- ----------------
<S> <C> <C> <C>

Large Cap Value............... Repurchase Agreement J.P. Morgan 15,053,000.00
Equity Bear Stearns 3,717,000.00
Equity Lehman Bros. 3,212,000.00
Equity Morgan Stanley 5,107,000.00

Large Cap Growth.............. Equity Merrill Lynch 15,321,000.00
Equity Morgan Stanley 12,561,000.00
Repurchase Agreement Morgan Stanley 10,503,000.00

Tax-Managed Large Cap......... Equity Bear Stearns 331,000.00
Equity Merrill Lynch 711,000.00
Equity Morgan Stanley 1,434,000.00
Repurchase Agreement Morgan Stanley 6,830,000.00

Small Cap Value............... Repurchase Agreement Morgan Stanley 35,491,000.00

Small Cap Growth.............. Repurchase Agreement J.P. Morgan 37,995,000.00

Mid-Cap....................... Equity Bear Stearns 384,000.00
Repurchase Agreement J.P. Morgan 2,264,000.00

Capital Appreciation.......... Repurchase Agreement Lehman Bros. 18,077,000.00

Equity Income................. Repurchase Agreement J.P. Morgan 11,580,000.00

Balanced...................... Debt Bear Stearns 862,000.00
Debt Merrill Lynch 729,000.00
Debt Salomon Bros. 1,083,000.00
Repurchase Agreement J.P. Morgan 5,533,000.00

Core Fixed Bond............... Debt Bear Stearns 6,039,000.00
Repurchase Agreement J.P. Morgan 219,666,000.00
Debt J.P. Morgan 2,120,000.00
Debt Lehman Bros. 7,479,000.00
Debt Merrill Lynch 11,013,000.00
Debt Paine Webber 1,278,000.00
Debt Salomon Bros. 7,183,000.00

High Yield Bond............... N/A N/A N/A
</TABLE>

DESCRIPTION OF SHARES

The Declaration of Trust authorizes the issuance of an unlimited number of
shares of each Fund, each of which represents an equal proportionate interest in
that Fund. Each share upon liquidation entitles a shareholder to a PRO RATA
share in the net assets of that Fund, 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 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

S-46
<PAGE>
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

Each share held entitles the shareholder of record to one vote. The
shareholders of each Fund or class will vote separately on matters pertaining
solely to that Fund 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.

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 Fund's shares present at a meeting if the holders of more than 50% of
the outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the affected Fund's outstanding shares, whichever is less.

SHAREHOLDER LIABILITY

The Trust is an entity of the type commonly known as a "Massachusetts
business trust." Under Massachusetts law, shareholders of 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 January 4, 1999, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Funds. The Trust believes that most of the shares
referred to below were held by the below persons in accounts for their
fiduciary, agency, or custodial customers.

<TABLE>
<CAPTION>
ADDRESS NUMBER OF SHARES PERCENTAGE
- --------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>

LARGE CAP VALUE FUND

SEI Trust Company 67,116,108 72.97%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

LARGE CAP GROWTH FUND

SEI Trust Company 50,568,786 71.80%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610
</TABLE>

S-47
<PAGE>
<TABLE>
<CAPTION>
ADDRESS NUMBER OF SHARES PERCENTAGE
- --------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
TAX MANAGED LARGE CAP FUND

SEI Trust Company 22,991,583 96.97%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

SMALL CAP VALUE FUND

SEI Trust Company 22,030,611 65.27%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

SMALL CAP GROWTH FUND

SEI Trust Company 22,495,971 55.50%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

CAPITAL APPRECIATION FUND

SEI Trust Company 2,618,563 27.60%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

NABANK & Co. 943,823 9.94%
Attn: Record Keeping
P.O. Box 2180
Tulsa, OK 74101-2180

Valle 529,722 5.48%
c/o Mayhall & Iisky
1000 North Water Street-
TR11
Milwaukee, WI 53202-6648

EQUITY INCOME FUND

SEI Trust Company 798,061 9.27%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

NABANK & Co. 568,477 6.61%
c/o Bank of Oklahoma, N.A.
Attn: Lisa Marrs
P.O. Box 2300
Tulsa, OK 74192-0001
</TABLE>

S-48
<PAGE>
<TABLE>
<CAPTION>
ADDRESS NUMBER OF SHARES PERCENTAGE
- --------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Sheldon & Co. (Integra) 462,189 5.37%
c/o National City
Attn: Trust Mutual Funds
P.O. Box 94777, LOC 5312
Cleveland, OH 44101-4777

BALANCED FUND

SEI Trust Company 2,724,315 56.56%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

NABANK & Co. 612,164 12.71%
Attn: Record Keeping
P.O. Box 2180
Tulsa, OK 74101-2180

ACNB Company 443,374 9.21%
Adams County National Bank
P.O. Box 4566
Gettysburg, PA 17325-4566

NABANK & Co. 294,774 6.12%
c/o Bank of Oklahoma, N.A.
Attn: Lisa Marrs
P.O. Box 2300
Tulsa, OK 74192-0001

CORE FIXED INCOME FUND

SEI Trust Company 107,475,974 70.74%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

HIGH YIELD BOND FUND

SEI Trust Company 25,690,353 75.07%
Attn: Jaqueline Esposito
680 East Swedesford Road
Wayne, PA 19087-1610

Fleet National Bank 2,007,191 5.87%
Mutual Fund Specialist
P.O. Box 92800
Rochester, NY 14692-8900
</TABLE>

S-49
<PAGE>
CUSTODIAN

First Union National Bank, Broad and Chestnut Streets, P.O. Box 7618,
Philadelphia, Pennsylvania 19101 (the "Custodian"), acts as custodian and wire
agent of the assets. The Custodian holds cash, securities and other assets of
the Trust as required by the 1940 Act.

EXPERTS

The financial statements incorporated by reference into this Statement of
Additional Information have been incorporated by reference in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

LEGAL COUNSEL

Morgan, Lewis & Bockius LLP serves as counsel to the Trust.

FINANCIAL STATEMENTS

The Trust's financial statements for the fiscal year ended September 30,
1998, including notes thereto and the report of PricewaterhouseCoopers LLP
thereon, are herein incorporated by reference from the Trust's 1998 Annual
Report. A copy of the 1998 Annual Report must accompany the delivery of this
Statement of Additional Information.

S-50
<PAGE>
APPENDIX--DESCRIPTION OF CORPORATE BOND RATINGS ________________________________

MOODY'S RATINGS 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.

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.

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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.

(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

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not likely to have the capacity to pay interest and repay principal. 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.

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*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 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

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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. RATINGS 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.
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.

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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. RATINGS 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.

IBCA LIMITED RATINGS 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

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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 RATINGS 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
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.

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