SEI INSTITUTIONAL MANAGED TRUST, 497, 2000-02-03

SEI INSTITUTIONAL MANAGED TRUST
497, 2000-02-03

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<PAGE>
SEI
Institutional
Managed Trust
ABOUT THIS PROSPECTUS
- ------------------------------------------------------------------------

The SEI Institutional Managed Trust is a mutual fund family that offers a number
of 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 Class A Shares of the 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 SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT THE FUNDS, PLEASE SEE:

LARGE CAP VALUE FUND.................................................4
LARGE CAP GROWTH FUND................................................6
TAX-MANAGED LARGE CAP FUND...........................................8
SMALL CAP VALUE FUND................................................10
SMALL CAP GROWTH FUND...............................................12
MID-CAP FUND........................................................14
CAPITAL APPRECIATION FUND...........................................16
EQUITY INCOME FUND..................................................18
BALANCED FUND.......................................................20
MORE INFORMATION ABOUT FUND INVESTMENTS.............................22
INVESTMENT ADVISER AND SUB-ADVISERS.................................23
PURCHASING, SELLING AND EXCHANGING FUND SHARES......................27
DIVIDENDS AND DISTRIBUTIONS.........................................29
TAXES...............................................................29
FINANCIAL HIGHLIGHTS................................................30
HOW TO OBTAIN MORE INFORMATION ABOUT SEI INSTITUTIONAL MANAGED
TRUST.......................................................Back Cover

- --------------------------------------------------------------------------------
GLOBAL ASSET ALLOCATION

Each Fund has its own distinct risk and reward characteristics, investment
objectives, policies, and strategies. In addition to managing the Funds, SEI
Investments Management Corporation (SIMC) constructs and maintains global asset
allocation strategies for certain clients, and 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 Fund. Some Funds may have extremely volatile returns. Because of the
historical lack of correlation among various asset classes, an investment in a
portfolio of Funds representing a range of asset classes 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 further 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

RISK/RETURN INFORMATION COMMON TO THE 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 who manage the Funds' assets in a way that they believe will help
the Funds achieve their goal. SIMC acts as "manager of managers" for the Funds,
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 make judgments about the securities markets, the
economy, and companies, but these judgments may not anticipate actual market
movements or the impact of economic conditions on company performance. In fact,
no matter how good a job the Sub-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 prices 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 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.
<PAGE>
2 PROSPECTUS

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 specialist 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 with differing
investment philosophies to manage portions of the Fund's portfolio under the
general supervision of SIMC. Each Sub-Adviser, in managing its portion of the
Fund's assets, selects stocks it believes are undervalued in light of such
fundamental characteristics as earnings, book value or return on equity. The
Fund's portfolio is diversified as to issuers and industries.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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 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.

The Fund is also subject to the risk that large capitalization value stocks may
underperform other segments of the equity market or the equity markets as a
whole.
<PAGE>
PROSPECTUS 3

LARGE CAP VALUE 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 five years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
16.58% -13.61%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND
COMMENCED OPERATIONS ON APRIL 20, 1987.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Frank Russell 1000 Value Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS (10/31/94)
<S> <C> <C> <C>
- -----------------------------------------------------------
LARGE CAP VALUE FUND 4.93% 21.53% 20.11%*
- -----------------------------------------------------------
FRANK RUSSELL 1000 VALUE
INDEX** 7.34% 23.08% 21.55%***
- -----------------------------------------------------------
</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 PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. UNLIKE A MUTUAL FUND, 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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<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

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 and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same and you
reinvest all dividends and distributions. Although your actual costs and returns
might be different, your approximate costs of investing $10,000 in the Fund
would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Value Fund -- Class A Shares $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 specialist 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 with differing
investment philosophies to manage portions of the Fund's portfolio under the
general supervision of SIMC. Each Sub-Adviser, in managing its portion of the
Fund's assets, selects stocks it believes have significant growth potential in
light of such characteristics as revenue and earnings growth and positive
earnings surprises. The Fund's portfolio is diversified as to issuers and
industries.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that large capitalization growth stocks may
underperform other segments of the equity market 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 five years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the Frank Russell 1000 Growth Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS (12/20/94)
<S> <C> <C> <C>
- ---------------------------------------------------------
LARGE CAP GROWTH FUND 34.20% 33.07% 33.01%
- ---------------------------------------------------------
FRANK RUSSELL 1000
GROWTH INDEX* 33.16% 32.41% 32.41%**
- ---------------------------------------------------------
</TABLE>

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.50%
------
Total Annual Fund Operating Expenses 0.90%*
</TABLE>

* THE FUND'S TOTAL ACTUAL ANNUAL FUND OPERATING EXPENSES FOR THE MOST RECENT
FISCAL YEAR WERE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE ADVISER IS
VOLUNTARILY WAIVING A PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING
EXPENSES AT A SPECIFIED LEVEL. THESE FEE WAIVERS REMAIN IN PLACE AS OF THE DATE
OF THIS PROSPECTUS, BUT THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS
AT ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES
ARE EXPECTED TO BE AS FOLLOWS:

<TABLE>
<S> <C>
LARGE CAP GROWTH FUND -- CLASS A SHARES 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 Growth Fund -- Class A Shares $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
on 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 or more. 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.
Generally, the Sub-Advisers attempt to minimize taxes by using a "buy and hold"
strategy, but they will also utilize 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 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 also subject to the risk that large capitalization stocks may
underperform other segments of the equity market or the equity markets as a
whole.

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

This bar chart shows the performance of the Fund's Class A Shares for one year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.34% -7.95%
(12/31/99) (9/30/99)
</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
ended December 31, 1999, to those of the Frank Russell 1000 Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR (3/4/98)
<S> <C> <C>
- -----------------------------------------------------
TAX-MANAGED LARGE CAP FUND 18.48% 21.19%
- -----------------------------------------------------
FRANK RUSSELL 1000 INDEX* 20.91% 18.95%**
- -----------------------------------------------------
</TABLE>

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

* 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 WAIVED A
PORTION OF THE FEES IN ORDER TO KEEP TOTAL OPERATING EXPENSES AT A SPECIFIED
LEVEL. THESE FEE WAIVERS REMAIN IN PLACE AS OF THE DATE OF THIS PROSPECTUS, BUT
THE ADVISER MAY DISCONTINUE ALL OR PART OF THESE WAIVERS AT ANY TIME. WITH THESE
FEE WAIVERS, THE FUND'S ACTUAL TOTAL OPERATING EXPENSES ARE EXPECTED TO BE AS
FOLLOWS:

<TABLE>
<S> <C>
TAX-MANAGED LARGE CAP FUND -- CLASS A SHARES 0.85%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER OR 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 Shares $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's portfolio is diversified as to issuers and
industries.

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that small capitalization value stocks may
underperform other segments of the equity market 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.
<PAGE>
PROSPECTUS 9

SMALL 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 five years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the Frank Russell 2000 Value Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS (12/20/94)
<S> <C> <C> <C>
- ----------------------------------------------------------------
SMALL CAP VALUE FUND -6.99% 12.00% 12.54%
- ----------------------------------------------------------------
FRANK RUSSELL 2000
VALUE INDEX* -1.49% 13.13% 13.13%**
- ----------------------------------------------------------------
</TABLE>

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<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 Shares $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 additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that small capitalization growth stocks may
underperform other segments of the equity market or the equity markets as a
whole.

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 seven years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
45.02% -24.08%
(12/31/99) (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
ended December 31, 1999, to those of the Frank Russell 2000 Growth Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS (4/20/92)
<S> <C> <C> <C>
- ----------------------------------------------------------
SMALL CAP GROWTH FUND 75.22% 27.30% 23.61%
- ----------------------------------------------------------
FRANK RUSSELL 2000
GROWTH INDEX* 43.10% 18.99% 15.09%**
- ----------------------------------------------------------
</TABLE>

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

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 Shares $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 additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that mid-cap common stocks may underperform
other segments of the equity market 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 six years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the Frank Russell Mid-Cap Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS (2/16/93)
<S> <C> <C> <C>
- ---------------------------------------------------------
MID-CAP FUND 8.95% 18.26% 14.16%
- ---------------------------------------------------------
FRANK RUSSELL MID-
CAP INDEX* 18.23% 21.86% 17.12%**
- ---------------------------------------------------------
</TABLE>

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<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 Shares $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 selecting investments for
the Fund, the Sub-Adviser chooses stocks and convertible securities of companies
it sees as undervalued based on their background, industry position, historical
returns, and management. The Sub-Adviser will rotate the Fund's holdings between
various market sectors based on its view of economic factors and the overall
business cycle.

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

In addition, the Fund is subject to the risk that U.S. value stocks may
underperform other segments of the equity markets 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.
<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>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the S&P 500 Composite Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS (3/1/88)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------
CAPITAL APPRECIATION
FUND 10.13% 24.17% 15.81% 16.68%
- -----------------------------------------------------------------
S&P 500 COMPOSITE
INDEX* 21.04% 28.55% 18.20% 19.01%**
- -----------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------
- ------------------------------------------------------------------------
FUND FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.51%
------
Total Annual Fund Operating Expenses 0.91%*
</TABLE>

<TABLE>
<S> <C>
CAPITAL APPRECIATION FUND -- CLASS A SHARES 0.84%
</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 Shares $93 $290 $504 $1,120
</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 yields, 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?

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.

The Fund is also subject to the risk that dividend-paying U.S. stocks may
underperform other segments of the equity market 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>
BEST QUARTER WORST QUARTER
17.43% -15.00%
(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
ended December 31, 1999, to those of the Frank Russell 1000 Value Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS 10 YEARS (6/2/88)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------
EQUITY INCOME FUND 2.52% 19.30% 13.57% 14.47%
- -----------------------------------------------------------------
FRANK RUSSELL 1000
VALUE INDEX* 7.34% 23.08% 15.62% 16.04%**
- -----------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.51%
------
Total Annual Fund Operating Expenses 0.91%*
</TABLE>

<TABLE>
<S> <C>
EQUITY INCOME FUND -- CLASS A SHARES 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>
Equity Income Fund -- Class A Shares $93 $290 $504 $1,120
</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 three to seven years.

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.

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.

The Fund is also subject to the risk that the Sub-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 nine years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.81% -6.07%
(12/31/98) (9/30/99)
</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
ended December 31, 1999, to those of the S&P 500 Composite Index and the Lehman
Brothers Government/Corporate Bond Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS A SHARES 1 YEAR 5 YEARS (8/7/90)
<S> <C> <C> <C>
- ------------------------------------------------------------
BALANCED FUND 5.15% 16.50% 12.07%
- ------------------------------------------------------------
S&P 500 COMPOSITE
INDEX* 21.04% 28.55% 20.49%**
- ------------------------------------------------------------
LEHMAN BROTHERS
GOVERNMENT/
CORPORATE BOND
INDEX* -2.15% 7.60% 7.97%**
- ------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. UNLIKE A MUTUAL FUND, 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 VALUE-WEIGHTED (HIGHER MARKET VALUE STOCKS HAVE MORE INFLUENCE THAN LOWER
MARKET VALUE STOCKS) INDEX OF 500 STOCKS DESIGNED TO MIMIC THE OVERALL EQUITY
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 BACKED BY THE
U.S. GOVERNMENT, FIXED-RATE NONCONVERTIBLE CORPORATE DEBT SECURITIES, YANKEE
BONDS, AND NONCONVERTIBLE 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 EACH INDEX IS AUGUST 31, 1990.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<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>
<S> <C>
BALANCED FUND -- CLASS A SHARES 0.75%
</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 Shares $82 $255 $444 $990
</TABLE>

<PAGE>
20 PROSPECTUS

MORE INFORMATION ABOUT FUND 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 Fund's Statement of Additional Information (SAI).

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-Advisers believe that the risk of loss outweighs the opportunity for capital
gains or higher income. Of course, there is no guarantee that any Fund will
achieve its investment goal.

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 SIMC and the 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 Funds. As of
October 31, 1999, SIMC had approximately $53.4 billion in assets under
management. For the fiscal year ended September 30, 1999, SIMC received
investment advisory fees, after fee waivers, as follows:

<TABLE>
<S> <C>
Large Cap Value Fund 0.35%
Large Cap Growth Fund 0.35%
Tax-Managed Large Cap Fund 0.35%
Small Cap Value Fund 0.65%
Small Cap Growth Fund 0.65%
Mid-Cap Fund 0.40%
Capital Appreciation Fund 0.35%
Equity Income Fund 0.35%
Balanced Fund 0.35%
</TABLE>

<PAGE>
PROSPECTUS 21

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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 0.20% 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 Melon 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
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 a 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 19
years of investment experience dedicated to investing in 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:

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 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 Melon 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
of a portion of the assets 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.
<PAGE>
22 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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

SMALL CAP VALUE FUND:

ARTISAN PARTNERS LIMITED PARTNERSHIP: Scott Satterwhite of Artisan Partners
Limited Partnership ("Artisan") serves as portfolio manager of a portion of the
assets of the Small Cap Value Fund. Mr. Satterwhite, a managing director of
Artisan, has been with Artisan since 1996. Prior to joining Artisan, Mr.
Satterwhite was a portfolio manager at Wachovia Bank, N.A.

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 15 years experience investing in equities. Prior
to joining BPAM, Mr. Archambo was employed at The Boston Company Asset
Management, Inc. ("TBCAM"), from 1989 through April 1995. He created TBCAM's
small cap value product in 1992.

LSV ASSET MANAGEMENT, L.P.: Josef Lakonishok, Andrei Shleifer, and Robert Vishny
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 an interest in LSV. SIMC pays LSV a fee, which is
calculated and paid monthly, based on an annual rate of 0.50% of the average
monthly market value of the assets of the Fund managed by LSV.
<PAGE>
PROSPECTUS 23

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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.

SECURITY CAPITAL GLOBAL CAPITAL MANAGEMENT GROUP INCORPORATED: Anthony R. Manno,
Jr., Kenneth D. Statz, and Kevin W. Bedell comprise the Portfolio Management
Committee of Security Capital Global Capital Management Group Incorporated
("Security Capital"). The Portfolio Management Committee is responsible for
determining the portfolio composition for the Fund's assets allocated to
Security Capital. The members of the Portfolio Management Committee have an
average of 18 years of investment experience.

SMALL CAP GROWTH FUND

MAZAMA CAPITAL MANAGEMENT, LLC: Ronald A. Sauer, a founder, President and Senior
Portfolio Manager of Mazama Capital Management, LLC ("Mazama") and Stephen C.
Brink, CFA, Vice President, Director of Research and Portfolio Manager at
Mazama, serve as Portfolio Manager of the portion of the Fund's assets managed
by Mazama. Prior to founding Mazama in October 1997, Mr. Sauer was President and
Director of Research at Black & Company Asset Management. Mr. Sauer has over 19
years of investment experience. Prior to joining Mazama in 1997, Mr. Brink was
Chief Investment Officer at US Trust's Pacific Northwest office. Mr. Brink has
over 22 years of investment experience.

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 a portion 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.

RS INVESTMENT MANAGEMENT, L.P.: Jim Callinan of RS Investment Management, L.P.
(formerly, Robertson Stephens Investment Management, L.P.) ("RSIM"), serves as
portfolio manager of a portion of the assets of the Small Cap Growth Fund. Mr.
Callinan is a managing director of RSIM. He joined RSIM 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.

SAWGRASS ASSET MANAGEMENT, LLC: Dean McQuiddy of Sawgrass Asset Management, LLC
("Sawgrass"), serves as portfolio manager of a portion of the assets of the
Small Cap Growth Fund. Mr. McQuiddy, a founding Principal of Sawgrass, has 12
years of investment experience. Prior to joining Sawgrass, he was a portfolio
manager at Barnett Capital Advisors.

WALL STREET ASSOCIATES: William Jeffery III and Kenneth F. McCain of Wall Street
Associates ("WSA") serve as portfolio managers of a portion of the assets of the
Small Cap Growth Fund. Each is a controlling principal of WSA. They each have
over 27 years of investment management experience. David Baratta, who joined WSA
in 1999, also serves as a portfolio manager of a portion of the assets of the
Small Cap Growth Fund. Prior to joining WSA, Mr. Baratta was a portfolio manager
of Morgan Grenfell, Inc. for 5 years. He has over 19 years of investment
experience.
<PAGE>
24 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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.

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>
PROSPECTUS 25

PURCHASING, SELLING AND EXCHANGING FUND SHARES

This section tells you how to purchase, sell (sometimes called "redeem") and
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.

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange (NYSE) 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 their authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Funds' wire agent by the close of business on
the day after the order is placed. 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.

When you purchase, sell, or exchange Fund shares through certain financial
institutions (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 your
financial institution time to process your requests and transmit them to the
Funds.

Certain other intermediaries, including certain broker-dealers and shareholder
organizations, are authorized to accept purchase, redemption, and exchange
requests for Fund shares. These requests are normally executed at the net asset
value (NAV) next determined after the intermediary receives the request. These
authorized intermediaries are responsible for transmitting requests and
delivering funds on a timely basis.

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with the Funds. For more information about how to purchase or sell
Fund shares through your financial institution, you should contact your
financial institution directly. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain of these
broker-dealers or other financial intermediaries.

The price per share (the offering price) will be the NAV next determined after
the Funds receive your purchase order. Each Fund's NAV is calculated once each
Business Day at the regularly-scheduled close of normal trading on the NYSE
(normally, 4:00 p.m. Eastern time). So, for you to receive the current Business
Day's NAV, generally the Funds (or an authorized agent) 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 the net assets of
the Fund. In calculating NAV, each Fund generally values its portfolio
securities at their 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 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
market value of these Funds' investments may change on days when you cannot
purchase or sell Fund shares.

MINIMUM PURCHASES

To purchase shares for the first time, you must invest at least $100,000 in any
Fund, with minimum subsequent investments of at least $1,000. The Funds may
accept investments of smaller amounts at their discretion.
<PAGE>
26 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

HOW TO SELL YOUR FUND SHARES

If you hold Class A Shares, you may sell your shares on any Business Day by
following the procedures established when you opened your 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. Your financial institution or intermediary may charge you a
fee for its services. The sale price of each share will be the next NAV
determined after the Funds (or authorized intermediary) receive your request.

RECEIVING YOUR MONEY

Normally, the Funds will make payment on your sale of shares on the Business Day
following the day on which they receive your request, but it may take up to
seven days. Your proceeds can be wired to your bank account.

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 Fund's
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 of your shares as with any redemption.

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Funds 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.

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
telephone. 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 and selling 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 0.25%.
<PAGE>
PROSPECTUS 27

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.

You will receive dividends and distributions in cash unless otherwise stated.

TAXES

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

Each Fund will distribute substantially all of its 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. Income distributions are generally
taxable at ordinary income tax rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. 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>
28 PROSPECTUS

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the 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
Funds' operations. Some of this information reflects financial information for a
single Fund share. The total returns in the table 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 Funds' annual report that accompanies the SAI. You can obtain the
Funds' annual report, which contains more performance information, at no charge
by calling 1-800-DIAL-SEI.

SEI INSTITUTIONAL MANAGED TRUST
FOR THE PERIODS ENDED SEPTEMBER 30.
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED DISTRIBUTIONS NET
NET ASSET NET GAINS/ DIVIDENDS FROM ASSET
VALUE, INVESTMENT (LOSSES) FROM NET REALIZED VALUE, NET ASSETS
BEGINNING INCOME ON INVESTMENT CAPITAL END TOTAL END OF
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD RETURN PERIOD (000)
--------- ---------- ---------- ---------- ------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
LARGE CAP VALUE FUND
- -------------------
CLASS A
1999.............. $17.31 $ 0.24 $ 2.67 $(0.24) $(1.01) $18.97 17.13% $2,452,540
1998.............. 19.37 0.25 (0.42) (0.26) (1.63) 17.31 (1.40) 1,410,903
1997.............. 14.78 0.28 5.77 (0.29) (1.17) 19.37 44.12 866,826
1996.............. 13.00 0.32 2.01 (0.26) (0.29) 14.78 18.33 515,011
1995.............. 10.71 0.33 2.44 (0.33) (0.15) 13.00 26.83 331,692
- ------------------------
LARGE CAP GROWTH FUND
- ---------------------
CLASS A
1999.............. $21.01 $(0.05) $ 7.92 $ -- $(0.30) $28.58 37.74% $2,626,807
1998.............. 20.40 0.03 1.62 (0.04) (1.00) 21.01 8.35 1,379,199
1997.............. 15.03 0.03 6.33 (0.05) (0.94) 20.40 44.35 800,479
1996.............. 12.75 0.07 2.51 (0.08) (0.22) 15.03 20.59 482,079
1995(1)........... 10.00 0.11 2.72 (0.08) -- 12.75 37.90 297,377
- ------------------------------
TAX-MANAGED LARGE CAP FUND
- ---------------------------
CLASS A
1999.............. $ 9.61 $ 0.08 $ 3.04 $(0.08) $ -- $12.65 32.60% $ 710,136
1998(2)........... 10.00 0.04 (0.42) (0.01) -- 9.61 (3.82) 170,097
- -----------------------
SMALL CAP VALUE FUND
- --------------------
CLASS A
1999.............. $13.67 $ 0.05 $ 0.57 $(0.05) $(0.18) $14.06 4.47% $ 572,125
1998.............. 17.85 0.05 (2.22) (0.04) (1.97) 13.67 (13.68) 430,010
1997.............. 13.17 0.05 5.74 (0.05) (1.06) 17.85 47.16 323,337
1996.............. 12.19 0.02 1.27 (0.01) (0.30) 13.17 10.86 163,177
1995(3)........... 10.00 0.03 2.19 (0.03) -- 12.19 29.38 102,975
- ------------------------
SMALL CAP GROWTH FUND
- ---------------------
CLASS A
1999.............. $13.68 $(0.12) $ 7.62 $ -- $(0.06) $21.12 55.00% $ 931,024
1998.............. 19.32 (0.08) (4.92) -- (0.64) 13.68 (26.53) 536,393
1997.............. 20.51 0.02 2.64 -- (3.85) 19.32 17.23 561,414
1996.............. 19.88 (0.08) 4.37 -- (3.66) 20.51 26.56 380,525
1995.............. 14.04 (0.14) 5.98 -- -- 19.88 41.65 310,238

<CAPTION>
RATIO OF
RATIO OF NET
NET RATIO OF INVESTMENT
INVESTMENT EXPENSES INCOME (LOSS)
RATIO OF INCOME TO AVERAGE TO AVERAGE
EXPENSES (LOSS) TO NET ASSETS NET ASSETS PORTFOLIO
TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING TURNOVER
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
---------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
- ----------------------
LARGE CAP VALUE FUND
- -------------------
CLASS A
1999.............. 0.85% 1.26% 0.85% 1.26% 49%
1998.............. 0.85 1.42 0.85 1.42 79
1997.............. 0.85 1.74 0.85 1.74 67
1996.............. 0.83 2.31 0.83 2.31 75
1995.............. 0.76 2.92 0.82 2.86 99
- ----------------------
LARGE CAP GROWTH FUND
- ---------------------
CLASS A
1999.............. 0.85% (0.24)% 0.90% (0.29)% 45%
1998.............. 0.85 0.11 0.90 0.06 80
1997.............. 0.85 0.22 0.90 0.17 73
1996.............. 0.82 0.50 0.87 0.45 90
1995(1)........... 0.85 1.15 0.89 1.11 44
- ----------------------
TAX-MANAGED LARGE CAP
- ----------------------
CLASS A
1999.............. 0.85% 0.71% 0.90% 0.66% 21%
1998(2)........... 0.85 1.18 0.90 1.13 12
- ----------------------
SMALL CAP VALUE FUND
- --------------------
CLASS A
1999.............. 1.10% 0.38% 1.10% 0.38% 130%
1998.............. 1.10 0.34 1.10 0.34 77
1997.............. 1.11 0.37 1.11 0.37 98
1996.............. 1.11 0.15 1.11 0.15 121
1995(3)........... 1.10 0.26 1.12 0.24 64
- ----------------------
SMALL CAP GROWTH FUND
- ---------------------
CLASS A
1999.............. 1.10% (0.72)% 1.10% (0.72)% 141%
1998.............. 1.10 (0.56) 1.10 (0.56) 128
1997.............. 1.10 (0.60) 1.10 (0.60) 107
1996.............. 1.10 (0.63) 1.11 (0.64) 167
1995.............. 1.10 (0.60) 1.13 (0.63) 113
</TABLE>

<PAGE>
PROSPECTUS 29

FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED DISTRIBUTIONS NET
NET ASSET NET GAINS/ DIVIDENDS FROM ASSET
VALUE, INVESTMENT (LOSSES) FROM NET REALIZED VALUE, NET ASSETS
BEGINNING INCOME ON INVESTMENT CAPITAL END TOTAL END OF
OF PERIOD (LOSS) SECURITIES INCOME GAINS OF PERIOD RETURN PERIOD (000)
--------- ---------- ---------- ---------- ------------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------
MID-CAP FUND
- -------------
CLASS A.............
1999.............. $14.00 $ 0.07 $ 2.21 $(0.07) $(1.02) $15.19 16.53% $ 34,995
1998.............. 19.56 0.13 (2.67) (0.15) (2.87) 14.00 (15.41) 35,160
1997.............. 14.96 0.13 5.86 (0.14) (1.25) 19.56 43.13 35,047
1996.............. 13.04 0.18 1.89 (0.15) -- 14.96 16.03 24,954
1995.............. 10.89 0.01 2.14 -- -- 13.04 19.78 27,898
- --------------------------
CAPITAL APPRECIATION FUND
- -----------------------
CLASS A
1999.............. $14.01 $ 0.07 $ 2.92 $(0.09) $(3.68) $13.23 23.13% $ 84,597
1998.............. 18.20 0.16 0.92 (0.16) (5.11) 14.01 7.08 118,741
1997.............. 18.14 0.21 4.65 (0.22) (4.58) 18.20 34.02 164,238
1996.............. 16.70 0.20 3.18 (0.17) (1.77) 18.14 22.14 236,581
1995.............. 15.18 0.22 2.42 (0.23) (0.89) 16.70 19.03 310,693
- ---------------------
EQUITY INCOME FUND
- ------------------
CLASS A
1999.............. $14.61 $ 0.24 $ 1.87 $(0.24) $(3.89) $12.59 15.35% $ 80,835
1998.............. 18.02 0.41 (0.09) (0.38) (3.35) 14.61 1.51 116,576
1997.............. 16.40 0.39 4.33 (0.42) (2.68) 18.02 33.46 173,766
1996.............. 16.07 0.49 2.20 (0.41) (1.95) 16.40 18.17 202,823
1995.............. 14.06 0.55 2.48 (0.55) (0.47) 16.07 23.00 250,609
- ----------------
BALANCED FUND
- --------------
CLASS A
1999.............. $13.17 $ 0.31 $ 1.10 $(0.34) $(1.75) $12.49 11.22% $ 54,487
1998.............. 14.06 0.41 0.80 (0.40) (1.70) 13.17 9.49 56,256
1997.............. 13.94 0.41 2.27 (0.42) (2.14) 14.06 22.38 51,195
1996.............. 12.76 0.42 1.44 (0.34) (0.34) 13.94 15.01 57,915
1995.............. 11.52 0.34 1.34 (0.34) (0.10) 12.76 15.05 70,464

<CAPTION>
RATIO OF
RATIO OF NET
NET RATIO OF INVESTMENT
INVESTMENT EXPENSES INCOME (LOSS)
RATIO OF INCOME TO AVERAGE TO AVERAGE
EXPENSES (LOSS) TO NET ASSETS NET ASSETS PORTFOLIO
TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING TURNOVER
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
---------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
- ---------------
MID-CAP FUND
- -------------
CLASS A.............
1999.............. 1.00% 0.40% 1.00% 0.40% 139%
1998.............. 1.00 0.93 1.00 0.93 106
1997.............. 0.93 0.79 0.94 0.78 92
1996.............. 0.77 1.28 0.88 1.17 101
1995.............. 0.94 0.04 1.09 (0.11) 108
- ----------------------
CAPITAL APPRECIATION F
- ----------------------
CLASS A
1999.............. 0.84% 0.47% 0.91% 0.41% 147%
1998.............. 0.84 1.03 0.89 0.98 238
1997.............. 0.84 1.20 0.89 1.15 178
1996.............. 0.84 1.20 0.86 1.18 153
1995.............. 0.84 1.39 0.89 1.34 107
- ---------------------
EQUITY INCOME FUND
- ------------------
CLASS A
1999.............. 0.85% 1.66% 0.91% 1.60% 75%
1998.............. 0.85 1.85 0.90 1.80 66
1997.............. 0.85 2.38 0.90 2.33 40
1996.............. 0.83 3.00 0.86 2.97 43
1995.............. 0.82 3.72 0.88 3.66 47
- ----------------
BALANCED FUND
- --------------
CLASS A
1999.............. 0.75% 2.39% 0.80% 2.39% 188%
1998.............. 0.75 2.90 0.80 2.85 183
1997.............. 0.75 3.15 0.81 3.09 197
1996.............. 0.75 2.98 0.84 2.89 143
1995.............. 0.75 2.92 0.90 2.77 159
</TABLE>

(1) Large Cap Growth shares were offered beginning December 20, 1994. All
ratios including total return for that period have been annualized.
(2) Tax Managed Large Cap Class A shares were offered beginning March 4, 1998.
All ratios have been annualized.
(3) Small Cap Value shares were offered beginning December 20, 1994. All ratios
including total return for that period have been annualized.
* Sales load is not reflected in total return.
Amounts designated as "--" are zero or have been rounded to zero.
<PAGE>
(This page has been left blank intentionally.)
<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, 2000, 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 EDGAR Database on 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 on the operation of the Public Reference Room, call
1-202-942-8090). 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 20549-0102. You may also obtain this
information, upon payment of a duplicating fee, by e-mailing the SEC at the
following address: [email protected].

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

SEI-F-101-06

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF JANUARY 31, 2000

EQUITY

[PHOTO]

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

These Securities have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission cast upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal offense.
<PAGE>
SEI
Institutional
Managed Trust
ABOUT THIS PROSPECTUS
- ------------------------------------------------------------------------

The SEI Institutional Managed Trust is a mutual fund family that offers a number
of 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.

CORE FIXED INCOME FUND...............................................2
HIGH YIELD BOND FUND.................................................4
MORE INFORMATION ABOUT FUND INVESTMENTS..............................6
INVESTMENT ADVISER AND SUB-ADVISERS..................................6
PURCHASING, SELLING AND EXCHANGING FUND SHARES.......................8
DIVIDENDS AND DISTRIBUTIONS.........................................10
TAXES...............................................................10
FINANCIAL HIGHLIGHTS................................................11
HOW TO OBTAIN MORE INFORMATION ABOUT SEI INSTITUTIONAL MANAGED
TRUST.......................................................Back Cover

- --------------------------------------------------------------------------------
GLOBAL ASSET ALLOCATION

Each Fund has its own distinct risk and reward characteristics, investment
objectives, policies, and strategies. In addition to managing the Funds, SEI
Investments Management Corporation (SIMC) constructs and maintains global asset
allocation strategies for certain clients, and 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 Fund. Some Funds, especially the High Yield Bond Fund, may have extremely
volatile returns. Because of the historical lack of correlation among various
asset classes, an investment in a portfolio of Funds representing a range of
asset classes 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
the Funds) is the central theme of SIMC's investment philosophy. SIMC seeks to
reduce risk further 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

RISK/RETURN INFORMATION COMMON TO THE 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 who manage the Funds' assets in a way that they believe will help
the Funds achieve their goal. SIMC acts as "manager of managers" for the Funds,
and attempts to ensure that the Sub-Advisers 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 make judgments about the securities markets, the
economy, and companies, but these judgments may not anticipate actual market
movements or the impact of economic conditions on company performance. In fact,
no matter how good a job the Sub-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.

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 specialist 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
with differing investment philosophies 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
4.9 years).

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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. Mortgage-backed securities 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 interest
rates. Prepayment risk may make it difficult to calculate the average maturity
of the Fund's mortgage-backed securities and, therefore, to assess the
volatility risk of the Fund.

The privately issued mortgage-backed securities that the Fund invests in are not
issued or guaranteed by the U.S. government or its agencies or instrumentalities
and may bear a greater risk of nonpayment than securities that are backed by the
U.S. Treasury. However, the timely payment of principal and interest normally is
supported, at least partially, by various credit enhancements by banks and other
financial institutions. There can be no assurance, however, that such credit
enhancements will support full payment of the principal and interest on such
obligations. In addition, changes in the credit quality of the entity which
provides credit enhancement could cause losses to the Fund and affect its share
price.

The Fund is also subject to the risk that U.S. fixed income securities may
underperform other segments of the fixed income market 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 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>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the Lehman Brothers Aggregate Bond Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR 5 YEARS 10 YEARS (5/4/87)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------
CORE FIXED INCOME
FUND -1.79% 7.76% 7.00% 7.33%
- --------------------------------------------------------------------
LEHMAN BROTHERS
AGGREGATE BOND
INDEX* -0.83% 7.73% 7.70% 8.23%**
- --------------------------------------------------------------------
</TABLE>

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
<S> <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 and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same, and you
reinvest all dividends and distributions. 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 Shares $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 multiple specialist sub-advisers that have high
yield investment expertise, the Fund invests in high yield,
high risk securities
</TABLE>

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

INVESTMENT STRATEGY

The High Yield Bond Fund invests primarily in fixed income securities rated
below investment grade ("junk bonds"), including corporate bonds and debentures,
convertible and preferred securities, and zero coupon obligations. The Fund uses
a multi-manager approach, relying on a number of Sub-Advisers with differing
investment philosophies to manage portions of the Fund's portfolio under the
general supervision of SIMC. In managing the Fund's assets, the Sub-Advisers
select 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 ten
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?

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 high yield securities may underperform
other segments of the fixed income market 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 four years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the CS First Boston High Yield Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
1 YEAR (1/11/95)
<S> <C> <C>
- -------------------------------------------------------
HIGH YIELD BOND FUND 3.61% 10.09%
- -------------------------------------------------------
CS FIRST BOSTON HIGH YIELD INDEX* 3.31% 9.01%**
- -------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OF SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. UNLIKE A MUTUAL FUND, AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER
AND DOES NOT PAY ANY COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS
MARKET PERFORMANCE WOULD BE LOWER. THE CS FIRST BOSTON HIGH YIELD INDEX IS AN
UNMANAGED, TRADER-PRICED PORTFOLIO CONSTRUCTED TO MIRROR THE PUBLIC HIGH YIELD
DEBT MARKET. REVISIONS TO THE INDEX ARE EFFECTED WEEKLY. THE INDEX REFLECTS THE
REINVESTMENT OF DIVIDENDS.
** THE INCEPTION DATE FOR THE INDEX IS JANUARY 31, 1995.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)
<S> <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 CURRENT FISCAL
YEAR ARE EXPECTED TO BE LESS THAN THE AMOUNT SHOWN ABOVE BECAUSE THE
ADMINISTRATOR IS VOLUNTARILY WAIVING A PORTION OF ITS FEES IN ORDER TO KEEP
TOTAL OPERATING EXPENSES AT A SPECIFIED LEVEL. THE ADMINISTRATOR MAY DISCONTINUE
ALL OR PART OF ITS WAIVERS AT ANY TIME. WITH THESE FEE WAIVERS, THE FUND'S
ACTUAL TOTAL OPERATING EXPENSES ARE EXPECTED TO BE AS FOLLOWS:

<TABLE>
<S> <C>
HIGH YIELD BOND FUND 0.85%
</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 and that you sell your
shares at the end of the period. The Example also assumes that each year your
investment has a 5% return, Fund operating expenses remain the same, and you
reinvest all dividends and distributions. 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>
High Yield Bond Fund -- Class A Shares $91 $284 $493 $1,096
</TABLE>

<PAGE>
6 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

INVESTMENT ADVISER AND SUB-ADVISERS

<TABLE>
<S> <C>
CORE FIXED INCOME FUND 0.28%
HIGH YIELD BOND FUND 0.49%
</TABLE>

<PAGE>
PROSPECTUS 7

INVESTMENT ADVISER AND SUB-ADVISERS

SUB-ADVISERS AND PORTFOLIO MANAGERS

CORE FIXED INCOME FUND:

BLACKROCK FINANCIAL MANAGEMENT, INC.: Keith Anderson and Andrew Phillips of
BlackRock Financial Management, 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 15
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, and has been employed by FIRMCO
or its affiliates since 1983. He has 17 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 LLC/AMERICAS: Richard J. Lindquist, C.F.A., of
Credit Suisse Asset Management LLC/ Americas ("CSAM") serves as portfolio
manager of the High Yield Bond Fund. Mr. Lindquist joined CSAM in 1995 as a
result of CSAM's acquisition of CS First Boston Investment Management, and has
had 16 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.

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.: Robert Levine, CFA,
President and Chief Executive Officer of Nomura Corporate Research and Asset
Management Inc. ("Nomura") and Richard A. Buch, Managing Director and Senior
Portfolio Manager of Nomura, are responsible for the management of Nomura's high
yield bond portfolios and research analysis. Prior to joining Nomura, Mr. Levine
was President of Kidder, Peabody High Yield Asset Management, Inc. and Managing
Director of Kidder, Peabody & Co., where he created their first high yield bond
mutual fund. Prior to joining Nomura, Mr. Buch was with Kidder, Peabody & Co.
where he served as Senior Vice President of the Kidder, Peabody Asset
Management, Inc. Mr. Levine and Mr. Buch each have over 21 years of investment
experience.
<PAGE>
8 PROSPECTUS

PURCHASING, SELLING, AND EXCHANGING FUND SHARES

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

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange (NYSE) 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 their authorized agent). Institutions
and intermediaries that use certain SEI proprietary systems may place orders
electronically through those systems. Cash investments must be transmitted or
delivered in federal funds to the Funds' wire agent by the close of business on
the day after the order is placed. 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.

When you purchase, sell, or exchange Fund shares through certain financial
institutions (rather than directly from the Funds), you may have to transmit
your purchase, sale, and exchange requests to these financial institutions at an
earlier time for your transaction to become effective that day. This allows
these financial institutions time to process your requests and transmit them to
the Funds.

HOW THE FUNDS CALCULATE NAV

MINIMUM PURCHASES

PURCHASING, SELLING, AND EXCHANGING FUND SHARES

HOW TO SELL YOUR FUND SHARES

RECEIVING YOUR MONEY

Normally, the Funds will make payment on your sale of shares on the Business Day
following the day on which they receive your request, but it may take up to
seven days. Your proceeds will be wired to your bank account.

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Funds 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.

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
telephone. 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

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 0.25%.
<PAGE>
10 PROSPECTUS

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND DISTRIBUTIONS

The Core Fixed Income and High Yield Bond Funds declare their net investment
income daily and distribute it monthly as a dividend to shareholders. The Funds
make distributions of capital gains, if any, at least annually.

You will receive dividends and distributions in cash unless otherwise stated.

TAXES

MORE INFORMATION ABOUT TAXES IS IN THE FUNDS' SAI.
<PAGE>
PROSPECTUS 11

FINANCIAL HIGHLIGHTS

(1) High Yield Bond shares were offered beginning January 11, 1995. All ratios
including total return for that period have been annualized. Amounts designated
as "--" are zero or have been rounded to zero.
<PAGE>
(This page has been left blank intentionally.)
<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-102-06

<PAGE>

SEI
INVESTMENTS

PROSPECTUS AS OF JANUARY 31, 2000

FIXED
INCOME

[PHOTO]

- ---------------------------
Core Fixed
Income Fund
- ---------------------------
High Yield
Bond Fund

The Achievement Funds
Retail Shares

PROSPECTUS
January 31, 2000

Small Cap Growth Fund

The Securities and Exchange Commission has not approved or disapproved any
Fund shares or determined whether this prospectus is accurate or complete. It
is a crime for anyone to tell you otherwise.

[LOGO]

<PAGE>
SEI
Institutional
Managed Trust
ABOUT THIS PROSPECTUS
- ------------------------------------------------------------------------

The SEI Institutional Managed Trust is a mutual fund family that offers a number
of separate investment portfolios (Funds). The Small Cap Growth Fund has
individual investment goals and strategies and is designed primarily for
institutional investors and financial institutions and their clients. This
prospectus gives you important information about Class D Shares of the 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 SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN. FOR MORE DETAILED INFORMATION
ABOUT THE FUND, PLEASE SEE:

PRINCIPAL INVESTMENT STRATEGIES AND RISKS............................2
PERFORMANCE INFORMATION AND EXPENSES.................................3
MORE INFORMATION ABOUT FUND INVESTMENTS..............................4
INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS..............5
PURCHASING, SELLING, AND EXCHANGING FUND SHARES......................6
DIVIDENDS AND DISTRIBUTIONS.........................................11
TAXES...............................................................11
FINANCIAL HIGHLIGHTS................................................12
HOW TO OBTAIN MORE INFORMATION ABOUT SEI INSTITUTIONAL MANAGED
TRUST.......................................................Back Cover
<PAGE>
PROSPECTUS 1

RISK/RETURN INFORMATION

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 SEI Investments Management
Corporation (SIMC) and one or more Sub-Advisers who manage the Fund's assets in
a way that 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-Advisers
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 and the Sub-Advisers make judgments about the
securities markets, the economy, and companies, but these judgments may not
anticipate actual market movements or the impact of economic conditions on
company performance. In fact, no matter how good a job the Sub-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 prices 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 for 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.
<PAGE>
2 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 specialist sub-advisers that manage in a
growth style, the Fund invests in common stocks of smaller
U.S. companies
</TABLE>

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

INVESTMENT STRATEGY

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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.

The Fund is also subject to the risk that small capitalization growth stocks may
underperform other segments of the equity market or the equity markets as a
whole.

SMALL CAP GROWTH FUND

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
BEST QUARTER WORST QUARTER
<S> <C>
44.92% -24.12%
(12/31/99) (9/30/98)
</TABLE>

*THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE BAR
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 the periods
ended December 31, 1999, to those of the Frank Russell 2000 Growth Index.

<TABLE>
<CAPTION>
SINCE
INCEPTION
CLASS D SHARES 1 YEAR 5 YEARS (4/20/92)*
<S> <C> <C> <C>
- ---------------------------------------------------------
SMALL CAP GROWTH FUND 65.91% 25.59% 22.47%
- ---------------------------------------------------------
FRANK RUSSELL 2000
GROWTH INDEX** 43.10% 18.99% 15.09%***
- ---------------------------------------------------------
</TABLE>

* FOR PERIODS PRIOR TO 1995, RETURNS SHOWN ARE FOR CLASS A SHARES WHICH HAVE
LOWER EXPENSES.
** 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 2000 GROWTH INDEX IS A WIDELY RECOGNIZED,
CAPITALIZATION-WEIGHTED (COMPANIES WITH LARGER MARKET CAPITALIZATIONS HAVE MORE
INFLUENCE THAN THOSE WITH SMALLER MARKET CAPITALIZATIONS) INDEX OF THE 2000
SMALLEST U.S. COMPANIES OUT OF THE 3000 LARGEST U.S. COMPANIES WITH HIGHER
GROWTH RATES AND PRICE-TO-BOOK RATIOS.
*** THE INCEPTION DATE FOR THE INDEX IS APRIL 30, 1992.

<TABLE>
<CAPTION>
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT) 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 UPON HOW MUCH YOU INVEST. SEE "PURCHASING
FUND SHARES."

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS D SHARES
<S> <C>
Investment Advisory Fees 0.65%
Distribution (12b-1) Fees 0.30%
Other Expenses 0.52%
-----
Total Annual Fund Operating Expenses 1.47%*
</TABLE>

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

<TABLE>
<S> <C>
SMALL CAP GROWTH FUND 1.42%
</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
Fundwith the cost of investing in other mutual funds. The Example assumes that
you invest $10,000 in the Fund for the time periods indicated and that you sell
your shares at the end of the period. The Example also assumes that each year
your investment has a 5% return, Fund expenses remain the same, and you reinvest
all dividends and distributions. 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>
Small Cap Growth Fund -- Class D Shares $642 $942 $1,263 $2,170
</TABLE>

<PAGE>
4 PROSPECTUS

MORE INFORMATION ABOUT FUND 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).

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, 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-Advisers believe that the risk of loss outweighs the opportunity for
capital gains or higher income. Of course, there is no guarantee that any Fund
will achieve its investment goal.

INVESTMENT ADVISER 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 SIMC and the 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, 1999, SIMC had approximately $53.4 billion in assets under
management. For the fiscal year ended September 30, 1999, SIMC received
investment advisory fees from the Small Cap Growth Fund of 0.65%.
<PAGE>
PROSPECTUS 5

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

SUB-ADVISERS AND PORTFOLIO MANAGERS

SMALL CAP GROWTH FUND

RS INVESTMENT MANAGEMENT, L.P.: Jim Callinan of RS Investment Management, L.P.
(formerly, Robertson Stephens Investment Management, L.P.) ("RSIM"), serves as
portfolio manager of a portion of the assets of the Small Cap Growth Fund.
Mr. Callinan is a managing director of RSIM. He joined RSIM 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.

PURCHASING, SELLING AND EXCHANGING FUND SHARES

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

Class D Shares are available to individual investors, and have the following
characteristics:
- - Front-end sales charge
- - Rule 12b-1 fees
- - $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).

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

You may purchase Class D shares by placing orders with the Fund's Transfer Agent
(or their authorized agent). Institutions and intermediaries that use certain
SEI proprietary systems may place orders electronically through those systems.
Cash investments must be transmitted or delivered in federal funds to the Fund's
wire agent by the close of business on the day after the order is placed. The
Fund may reject any purchase order if they determine that accepting the order
would not be in the best interests of the Fund or its shareholders.

When you purchase, sell, or exchange Fund shares through certain financial
institutions (rather than directly from the Fund), you may have to transmit your
purchase, sale, and exchange requests to these financial institutions at an
earlier time for your transaction to become effective that day. This allows
these financial institutions time to process your requests and transmit them to
the Fund.

If you deal directly with a financial institution or financial intermediary, you
will have to follow the institution's or intermediary's procedures for
transacting with 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. Investors may be charged a fee for purchase
and/or redemption transactions effectuated through certain of these
broker-dealers or other financial intermediaries.

The price per share (the offering price) will be the NAV next determined after
the Fund receives your purchase order, plus the applicable sales charge. The
Fund's NAV is calculated once each Business Day at the regularly-scheduled close
of normal trading on the NYSE (normally, 4:00 p.m. Eastern time). So, for you to
receive the current Business Day's NAV, generally the Fund (or an authorized
agent) 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 the net assets of
the Fund. In calculating NAV, the Fund generally values its portfolio securities
at their 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 NAV. As a result, the market value of the
Fund's 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 purchase
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 charge. 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 AS A YOUR SALES CHARGE AS A
PERCENTAGE OF PERCENTAGE OF
IF YOUR INVESTMENT IS: 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 -- CLASS D SHARES

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;
<PAGE>
8 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND SHARES

- - 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;
- - 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
rate 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 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
<PAGE>
PROSPECTUS 9

PURCHASING, SELLING AND EXCHANGING FUND SHARES

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.

HOW TO SELL YOUR FUND SHARES

If you hold Class D Shares, you may sell your shares on any Business Day by
following the procedures established when you opened your 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. Your financial institution or intermediary may charge you a
fee for its services. The sale price of each share will be the next NAV
determined after the Fund (or authorized intermediary) 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 make payment on your sale of shares the Business Day
following the day on which it receives your request, but it may take up to seven
days. Your proceeds will be wired to your bank account.

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 of your shares as with any redemption.

INVOLUNTARY SALES OF YOUR SHARES

If your account balance drops below the required minimum of $1,000 for Class D
Shares as a result of redemption, 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.
<PAGE>
10 PROSPECTUS

PURCHASING, SELLING AND EXCHANGING FUND 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.

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 telephone. 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 and selling 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 fee (Rule
12b-1 fee) is 0.30% 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 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. Income distributions are generally
taxable at ordinary income tax rates. Capital gains distributions are generally
taxable at the rates applicable to long-term capital gains. 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 Small Cap Growth Fund. This information is intended to help you
understand the 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 table
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 Fund's annual report that accompanies the SAI. You can obtain the
Fund's annual report, which contains more performance information, at no charge
by calling 1-800-DIAL-SEI.

* Sales load is not reflected in total return.
Amounts designated as "--" are zero or have been rounded to zero.
<PAGE>
(This page has been left blank intentionally.)
<PAGE>

The Achievement Funds

This Fund is a portfolio of the SEI Institutional Managed Trust and 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., or from the EDGAR
Database on the SEC's website (http://www.sec.gov). Information on the
operation of the Public Reference Room may be obtained by calling the
Commission at 1-202-942-8090. Copies of this information may be obtained,
upon payment of a duplicating fee, by writing to: Securities and Exchange
Commission, Public Reference Section, Washington, D.C. 20549-0102. You may
also obtain this information, upon payment of a duplicating fee, by e-mailing
the SEC at the following address: [email protected].

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

[LOGO]

DISTRIBUTED BY
SEI INVESTMENTS
DISTRIBUTION CO.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
800-472-0577

NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE

ACH-F-010-06
<PAGE>

The Achievement Funds
Institutional Class Shares

PROSPECTUS
January 31, 2000

Small Cap Growth Fund

The Securities and Exchange Commission has not approved or disapproved any
Fund shares or determined whether this prospectus is accurate or complete. It
is a crime for anyone to tell you otherwise.

[LOGO]

<PAGE>
SEI
Institutional
Managed Trust
ABOUT THIS PROSPECTUS
- ------------------------------------------------------------------------

- --------------------------------------------------------------------------------
GLOBAL ASSET ALLOCATION

RISK/RETURN INFORMATION COMMON TO THE FUNDS

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

LARGE CAP VALUE FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that large capitalization value stocks may
underperform other segments of the equity market 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 five years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
16.58% -13.61%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE FUND
COMMENCED OPERATIONS ON APRIL 20, 1987.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Frank Russell 1000 Value Index.

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

This table describes the fees and expenses that you may pay if you buy and hold
Fund shares.

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 Shares $87 $271 $471 $1,049
</TABLE>

<PAGE>
4 PROSPECTUS

LARGE CAP GROWTH FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that large capitalization growth stocks may
underperform other segments of the equity market 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 five years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the Frank Russell 1000 Growth Index.

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

<TABLE>
<S> <C>
LARGE CAP GROWTH FUND -- CLASS A SHARES 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 Growth Fund -- Class A Shares $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 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 also subject to the risk that large capitalization stocks may
underperform other segments of the equity market or the equity markets as a
whole.

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

This bar chart shows the performance of the Fund's Class A Shares for one year.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.34% -7.95%
(12/31/99) (9/30/99)
</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
ended December 31, 1999, to those of the Frank Russell 1000 Index.

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

<TABLE>
<S> <C>
TAX-MANAGED LARGE CAP FUND -- CLASS A SHARES 0.85%
</TABLE>

FOR MORE INFORMATION ABOUT THESE FEES, SEE "INVESTMENT ADVISER OR 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 Shares $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

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that small capitalization value stocks may
underperform other segments of the equity market or the equity markets as a
whole.

SMALL 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 five years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the Frank Russell 2000 Value Index.

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

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 Shares $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 additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that small capitalization growth stocks may
underperform other segments of the equity market or the equity markets as a
whole.

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 seven years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
45.02% -24.08%
(12/31/99) (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
ended December 31, 1999, to those of the Frank Russell 2000 Growth Index.

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

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 Shares $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 additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that mid-cap common stocks may underperform
other segments of the equity market or the equity markets as a whole.

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 six years.*

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the Frank Russell Mid-Cap Index.

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

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
FUND SHARES.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<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 Shares $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 additional capital gains tax
liabilities.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

In addition, the Fund is subject to the risk that U.S. value stocks may
underperform other segments of the equity markets 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>
BEST QUARTER WORST QUARTER
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
ended December 31, 1999, to those of the S&P 500 Composite Index.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.51%
------
Total Annual Fund Operating Expenses 0.91%*
</TABLE>

<TABLE>
<S> <C>
CAPITAL APPRECIATION FUND -- CLASS A SHARES 0.84%
</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 Shares $93 $290 $504 $1,120
</TABLE>

<PAGE>
16 PROSPECTUS

EQUITY INCOME 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. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.

The Fund is also subject to the risk that dividend-paying U.S. stocks may
underperform other segments of the equity market 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>
BEST QUARTER WORST QUARTER
17.43% -15.00%
(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
ended December 31, 1999, to those of the Frank Russell 1000 Value Index.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.51%
------
Total Annual Fund Operating Expenses 0.91%*
</TABLE>

<TABLE>
<S> <C>
EQUITY INCOME FUND -- CLASS A SHARES 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>
Equity Income Fund -- Class A Shares $93 $290 $504 $1,120
</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 additional capital gains tax
liabilities.

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.

BALANCED FUND

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.81% -6.07%
(12/31/98) (9/30/99)
</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
ended December 31, 1999, to those of the S&P 500 Composite Index and the Lehman
Brothers Government/Corporate Bond Index.

<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS) CLASS A SHARES
<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>
<S> <C>
BALANCED FUND -- CLASS A SHARES 0.75%
</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 Shares $82 $255 $444 $990
</TABLE>

<PAGE>
20 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

INVESTMENT ADVISER AND SUB-ADVISERS

<PAGE>
PROSPECTUS 21

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP VALUE FUND:

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:

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 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 Melon 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
of a portion of the assets 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.
<PAGE>
22 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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

SMALL 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 Small 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 0.50% of the average
monthly market value of the assets of the Fund managed by LSV.
<PAGE>
PROSPECTUS 23

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

MID-CAP FUND

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 purchase, sell (sometimes called "redeem") and
exchange shares of the Funds.

HOW TO PURCHASE FUND SHARES

You may purchase shares on any day that the New York Stock Exchange (NYSE) is
open for business (a Business Day).

HOW THE FUNDS CALCULATE NAV

MINIMUM PURCHASES

PURCHASING, SELLING AND EXCHANGING FUND SHARES

HOW TO SELL YOUR FUND SHARES

RECEIVING YOUR MONEY

REDEMPTIONS IN KIND

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

The Funds 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.

HOW TO EXCHANGE YOUR SHARES

TELEPHONE TRANSACTIONS

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 0.25%.
<PAGE>
PROSPECTUS 27

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.

You will receive dividends and distributions in cash unless otherwise stated.

TAXES

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

FINANCIAL HIGHLIGHTS

<PAGE>
PROSPECTUS 29

<CAPTION>
RATIO OF
RATIO OF NET
NET RATIO OF INVESTMENT
INVESTMENT EXPENSES INCOME (LOSS)
RATIO OF INCOME TO AVERAGE TO AVERAGE
EXPENSES (LOSS) TO NET ASSETS NET ASSETS PORTFOLIO
TO AVERAGE AVERAGE (EXCLUDING (EXCLUDING TURNOVER
NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
---------- ---------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
- ---------------
MID-CAP FUND
- -------------
CLASS A.............
1999.............. 1.00% 0.40% 1.00% 0.40% 139%
1998.............. 1.00 0.93 1.00 0.93 106
1997.............. 0.93 0.79 0.94 0.78 92
1996.............. 0.77 1.28 0.88 1.17 101
1995.............. 0.94 0.04 1.09 (0.11) 108
- ----------------------
CAPITAL APPRECIATION F
- ----------------------
CLASS A
1999.............. 0.84% 0.47% 0.91% 0.41% 147%
1998.............. 0.84 1.03 0.89 0.98 238
1997.............. 0.84 1.20 0.89 1.15 178
1996.............. 0.84 1.20 0.86 1.18 153
1995.............. 0.84 1.39 0.89 1.34 107
- ---------------------
EQUITY INCOME FUND
- ------------------
CLASS A
1999.............. 0.85% 1.66% 0.91% 1.60% 75%
1998.............. 0.85 1.85 0.90 1.80 66
1997.............. 0.85 2.38 0.90 2.33 40
1996.............. 0.83 3.00 0.86 2.97 43
1995.............. 0.82 3.72 0.88 3.66 47
- ----------------
BALANCED FUND
- --------------
CLASS A
1999.............. 0.75% 2.39% 0.80% 2.39% 188%
1998.............. 0.75 2.90 0.80 2.85 183
1997.............. 0.75 3.15 0.81 3.09 197
1996.............. 0.75 2.98 0.84 2.89 143
1995.............. 0.75 2.92 0.90 2.77 159
</TABLE>

The Achievement Funds

This Fund is a portfolio of the SEI Institutional Managed Trust and 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.

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

[LOGO]

DISTRIBUTED BY
SEI INVESTMENTS
DISTRIBUTION CO.
One Freedom Valley Drive
Oaks, Pennsylvania 19456
800-472-0577

NOT FDIC INSURED
NO BANK GUARANTEE
MAY LOSE VALUE

ACH-F-007-06
<PAGE>
SEI INSTITUTIONAL MANAGED TRUST

Administrator:

SEI Investments Fund Management

Distributor:

SEI Investments Distribution Co.

Adviser:

SEI Investments Management Corporation

Sub-Advisers:

Alliance Capital Management L.P.
Artisan Partners Limited Partnership
BlackRock Financial Management, Inc.
Boston Partners Asset Management, L.P.
Credit Suisse Asset Management LLC/
Americas
Firstar Investment Research &
Management Company, LLC
HighMark Capital Management, Inc.
LSV Asset Management, L.P.
Martingale Asset Management, L.P.
Mazama Capital Management, LLC
Mellon Equity Associates, LLP

Nicholas-Applegate Capital Management
Nomura Corporate Research
and Asset Management Inc.
Provident Investment Counsel, Inc.
RS Investment Management, L.P.
Sanford C. Bernstein & Co., Inc.
Sawgrass Asset Management, LLC
Security Capital Global Capital
Management Group Incorporated
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, 2000. 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.
<PAGE>
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 Administrator and Transfer Agent........................ S-27
The Adviser and Sub-Advisers................................ S-28
Distribution and Shareholder Servicing...................... S-32
Trustees and Officers of the Trust.......................... S-33
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
5% Shareholders............................................. S-47
Custodian................................................... S-51
Experts..................................................... S-51
Legal Counsel............................................... S-51
Financial Statements........................................ S-51

January 31, 2000
</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: 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 (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 S&P 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.

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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 "to be announced" ("TBA") mortgage-backed securities, (iv) warrants,
(v) money market securities, (vi) construction loans and (vii) Yankee
obligations. In addition, the Fund 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 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.

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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

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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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<PAGE>
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 Fund'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 Balanced, 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--The Balanced, 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 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

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<PAGE>
response to interest rate changes and other factors. During periods of falling
interest rates, the values of outstanding fixed income securities generally
rise. Conversely, during periods of rising interest rates, the values of such
securities generally decline. Securities with longer maturities are subject to
greater fluctuations in value than securities with shorter maturities. 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

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<PAGE>
transactions. A Fund will place assets in a segregated account to assure that
its obligations under forward foreign currency contracts are covered.

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 Fund'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 Fund'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 an 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

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than are more highly rated securities, which primarily react to movements in the
general level of interest rates. The market values of fixed-income securities
tend to vary inversely with the level of interest rates. Yields and market
values of high yield securities will fluctuate over time, reflecting not only
changing interest rates but the market's perception of credit quality and the
outlook for economic growth. When economic conditions appear to be
deteriorating, medium to lower rated securities may decline in value due to
heightened concern over credit quality, regardless of prevailing interest rates.
Investors should carefully consider the relative risks of investing in high
yield securities and understand that such securities are not generally meant for
short-term investing.

The high yield market is relatively new and its growth has paralleled a long
period of economic expansion and an increase in merger, acquisition and
leveraged buyout activity. Adverse economic developments can disrupt the market
for high yield securities, and severely affect the ability of issuers,
especially highly leveraged issuers, to service their debt obligations or to
repay their obligations upon maturity which may lead to a higher incidence of
default on such securities. In addition, the secondary market for high yield
securities, which is concentrated in relatively few market makers, may not be as
liquid as the secondary market for more highly rated securities. As a result,
the 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,

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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.

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

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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 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 GNMA, Fannie Mae and the 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 HUD. 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

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balance or "balloon" is due and is repaid through the attainment of an
additional loan of sale of the property.

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

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authorities to obtain funds to be used for various public facilities, for
refunding outstanding obligations, for general operating expenses, and for
lending such funds to other public institutions and facilities, and
(ii) certain private activity and industrial development bonds issued by or on
behalf of public authorities to obtain funds to provide for the construction,
equipment, repair or improvement of privately operated facilities. 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 HUD. 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.

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However, certain lease obligations contain "non-appropriation" clauses, which
provide that the municipality has no obligation to make lease or installment
purchase payments in future years unless money is appropriated for such purpose
in the relevant years. Municipal lease obligations are a relatively new form of
financing, and the market for such obligations is still developing. Municipal
leases will be treated as liquid only if they satisfy criteria set forth in
guidelines established by the Board of Trustees, and there can be no assurance
that a market will exist or continue to exist for any municipal lease
obligation.

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

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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. 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 Separately Traded Registered Interest and Principal
Securities ("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 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

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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 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
Internal Revenue Code of 1986, as amended ("Code") or its failure to maintain
exemption from registration under the Investment Company Act of 1940, as amended
("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.

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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.

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 FHA 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 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.

S-19
<PAGE>
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 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 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
1933 Act, 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 TRANSITION--The Fund and its service providers do not appear to
have been adversely affected by computer problems related to the transition to
the year 2000. However, there remains a risk that such problems could arise or
be discovered in the future. Year 2000 related problems also may negatively
affect issuers whose securities the Fund purchases, which could have an impact
on the value of your investment.

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 greater degree
to interest rate changes than are non-zero coupon securities with similar
maturity and credit

S-20
<PAGE>
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 REITs),
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.

8. Invest in interests in oil, gas, or other mineral exploration or development
programs and oil, gas or mineral leases.

S-21
<PAGE>
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, 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

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

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 ADMINISTRATOR AND TRANSFER AGENT

SEI Investments Fund Management ("SEI Management" or the "Administrator")
provides the Trust with overall administrative services, regulatory reporting,
all necessary office space, equipment, personnel and facilities, and acts as
dividend disbursing agent. SEI Management also serves as transfer agent (the
"Transfer Agent") for the Funds.

The Trust and SEI Management has entered into an Administration Agreement
("the Administration Agreement"). The Administration 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
Administration 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 Administration 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 Administration 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 Administration 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 Administrator, 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 Administrator. SEI
Investments and its subsidiaries and affiliates, including the Administrator,
are leading providers of funds evaluation services, trust accounting systems,
and brokerage and information services to financial institutions, institutional
investors, and money managers. The Administrator 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,
Amerindo Funds, Inc., The Arbor Fund, ARK Funds, Armada Funds, Bishop Street
Funds, Boston 1784 Funds-Registered Trademark-, CNI Charter Funds, 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 Parkstone Advantage Fund, The PBHG 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 Insurance Products Trust, SEI
Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds, STI Classic
Variable Trust, TIP Funds and U.A.M. Funds, Inc. II each of which is distributed
by SEI Investments Distribution Co. (Distributor).

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
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, 1997, 1998 and 1999, the Funds paid
fees to the Administrator as follows:

<TABLE>
<CAPTION>
ADMINISTRATION FEES ADMINISTRATION FEES
PAID (000) WAIVED (000)
------------------------------ ------------------------------
1997 1998 1999 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Value Fund..................... $2,279 $4,109 $7,270 $ 0 $ 0 $ 0
Large Cap Growth Fund.................... $2,156 $4,091 $7,399 $ 0 $ 0 $ 0
Tax-Managed Large Cap Fund............... * $ 162 $1,467 * $ 0 $ 0
Small Cap Value Fund..................... $ 771 $1,460 $1,787 $ 0 $ 0 $ 0
Small Cap Growth Fund.................... $1,441 $2,041 $2,546 $ 0 $ 0 $ 0
Mid-Cap Fund............................. $ 97 $ 141 $ 132 $ 4 $ 0 $ 0
Capital Appreciation Fund................ $ 657 $ 511 $ 416 $ 0 $ 0 $ 0
Equity Income Fund....................... $ 663 $ 518 $ 365 $ 0 $ 0 $ 0
Balanced Fund............................ $ 176 $ 186 $ 208 $ 3 $ 0 $ 0
Core Fixed Income Fund................... $2,235 $3,419 $5,324 $108 $ 23 $ 0
High Yield Bond Fund..................... $ 501 $ 940 $1,287 $ 82 $105 $159
</TABLE>

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

* Not in operation during such period.

THE ADVISER 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 and its affiliates currently
serves as adviser or administrator to more than 46 investment companies,
including more than 387 funds, SIMC had more than $56 billion in assets as of
December 31, 1999.

SIMC is the investment Adviser 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.

S-28
<PAGE>
For its advisory services, SIMC is entitled to a fee, which is calculated
daily and paid monthly, at the following annual rates (shown as a percentage of
the average daily net assets of each Fund):

<TABLE>
<S> <C>
Large Cap Value Fund........................................ 0.35%
Large Cap Growth Fund....................................... 0.35%
Tax-Managed Large Cap Fund.................................. 0.35%
Small Cap Value Fund........................................ 0.65%
Small Cap Growth Fund....................................... 0.65%
Mid-Cap Fund................................................ 0.40%
Capital Appreciation Fund................................... 0.35%
Equity Income Fund.......................................... 0.35%
Balanced Fund............................................... 0.35%
Core Fixed Income Fund...................................... 0.28%
High Yield Bond Fund........................................ 0.49%
</TABLE>

SIMC pays the Sub-Advisers a fee out of its advisory fee which is based on a
percentage of the average monthly market value of the assets managed by each
Sub-Advisor.

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 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 and the Trust have obtained an exemptive order from the SEC that
permits SIMC, with the approval of the Trust's Board of Trustees, to retain
Sub-Advisers 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-29
<PAGE>
For the fiscal years ended September 30, 1997, 1998 and 1999, the Funds paid
advisory fees as follows:

<TABLE>
<CAPTION>
ADVISORY FEES
ADVISORY FEES PAID (000) WAIVED (000)
------------------------------ ------------------------------
1997 1998 1999 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Value Fund................... $2,279 $4,109 $7,270 $ 0 $ 0 $ 0
Large Cap Growth Fund.................. $2,157 $4,676 $7,399 $308 $584 $1,057
Tax-Managed Large Cap Fund............. * $ 185 $1,468 * $ 23 $ 209
Small Cap Value Fund................... $1,432 $2,711 $3,319 $ 0 $ 0 $ 0
Small Cap Growth Fund.................. $2,675 $3,791 $4,729 $ 0 $ 0 $ 0
Mid-Cap Fund........................... $ 115 $ 162 $ 151 $ 0 $ 0 $ 0
Capital Appreciation Fund.............. $ 657 $ 585 $ 393 $ 94 $ 73 $ 82
Equity Income Fund..................... $ 662 $ 592 $ 355 $ 95 $ 74 $ 63
Balanced Fund.......................... $ 178 $ 213 $ 208 $ 26 $ 27 $ 30
Core Fixed Income Fund................. $2,301 $3,358 $5,229 $ 0 $ 0 $ 0
High Yield Bond Fund................... $ 812 $1,309 $2,014 $ 0 $ 0 $ 0
</TABLE>

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

* Not in operation during such period.

For the fiscal years ended September 30, 1997, 1998 and 1999, SIMC paid
sub-advisory fees as follows:

<TABLE>
<CAPTION>
SUB-ADVISORY FEES PAID (000)
------------------------------
1997 1998 1999
-------- -------- --------
<S> <C> <C> <C>
Large Cap Value Fund........................................ $1,284 $2,230 $4,283
Large Cap Growth Fund....................................... $1,263 $1,762 $4,380
Tax-Managed Large Cap Fund.................................. * $ 72 $ 850
Small Cap Value Fund........................................ $1,061 $2,030 $2,381
Small Cap Growth Fund....................................... $1,966 $2,386 $3,533
Mid-Cap Fund................................................ $ 71 $ 96 $ 94
Capital Appreciation Fund................................... $ 359 $ 274 $ 223
Equity Income Fund.......................................... $ 369 $ 277 $ 195
Balanced Fund............................................... $ 102 $ 104 $ 119
Core Fixed Income Fund...................................... $ 950 $1,508 $2,350
High Yield Bond Fund........................................ $ 585 $ 892 $1,372
</TABLE>

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

* Not applicable during such period.

THE SUB-ADVISERS

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 Fund. As of November 30, 1999, Alliance managed over $344.3 billion
in assets.

ARTISAN PARTNERS LIMITED PARTNERSHIP--Artisan Partners Limited Partnership
("Artisan") serves as a Sub-Adviser for a portion of the assets of the Small Cap
Value Fund. As of November 30, 1999, Artisan had approximately $5.1 billion in
assets under management.

BLACKROCK FINANCIAL MANAGEMENT, INC.--BlackRock Financial Management, Inc.
("BlackRock") serves as a Sub-Adviser for a portion of the assets of the Core
Fixed Income Fund. As of November 30, 1999, BlackRock had $160.4 billion in
assets under management.

S-30
<PAGE>
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. As of November 30, 1999, BPAM had approximately $10.2 billion in
assets under management.

CREDIT SUISSE ASSET MANAGEMENT, LLC/AMERICAS--Credit Suisse Asset
Management, LLC/Americas ("Credit Suisse") serves as the Sub-Adviser for the
High Yield Bond Fund. Credit Suisse together with its predecessor firms, has
been engaged in the investment advisory business for more than 50 years. As of
November 30, 1999, Credit Suisse managed approximately $196 billion in assets.

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. As of November 30, 1999, it
had approximately $25.5 billion in assets under management.

HIGHMARK CAPITAL MANAGEMENT, INC.--HighMark Capital Management, Inc.
("HighMark") serves as a Sub-Adviser to a portion of the assets of the Equity
Income Fund. As of September 30, 1999, HighMark had approximately $18.9 billion
in assets under management.

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 and Small Cap
Value Funds. The general partners of LSV developed a quantitative value
investment philosophy that has been used to manage assets over the past
7 years. As of December 31, 1999, LSV managed approximately $6 billion in client
assets.

MARTINGALE ASSET MANAGEMENT, L.P.--Martingale Asset Management, L.P.
("Martingale") serves as a Sub-Adviser to the Mid-Cap Fund. As of November 30,
1999, Martingale had approximately $34.6 in assets under management.

MAZAMA CAPITAL MANAGEMENT, LLC--Mazama Capital Management, LLC ("Mazama"),
serves as a Sub-Adviser for a portion of the assets of the Small Cap Growth
Fund. Mazama is a limited liability company that is registered as an investment
adviser. As of November 30, 1999, Mazama currently had approximately
$132.3 million in assets under management.

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 and Small Cap Value Funds. Mellon Equity had discretionary management
authority with respect to approximately $35.7 billion of assets as of
November 30, 1999.

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 November 30, 1999, Nicholas-Applegate had
discretionary management authority with respect to approximately $32.8 billion
in assets.

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.--Nomura Corporate
Research and Asset Management Inc. ("Nomura") serves as a Sub-Adviser to a
portion of the assets of the High Yield Bond Fund. As of November 30, 1999,
Nomura had approximately $2.6 billion in assets under management.

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. As of November 30, 1999, Provident had over $18 billion in
client assets under management.

RS INVESTMENT MANAGEMENT, L.P.--RS Investment Management, L.P. ("RSIM"),
acts as a Sub-Adviser for a portion of the assets of the Small Cap Growth Fund.
As of November 30, 1999, RSIM had approximately $6.48 billion in assets under
management.

S-31
<PAGE>
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 Fund. Bernstein was founded in 1967, and as of September 30, 1999, had
approximately $84.82 billion in assets under management.

SAWGRASS ASSET MANAGEMENT, LLC--Sawgrass Asset Management, L.L.C.
("Sawgrass") serves as a Sub-Adviser for a portion of the assets of the Small
Cap Growth Fund. As of November 30, 1999, Sawgrass had approximately
$563 million in assets under management.

SECURITY CAPITAL GLOBAL CAPITAL MANAGEMENT GROUP INCORPORATED--Security
Capital Global Capital Management Group Incorporated ("Security Capital") serves
as a Sub-Adviser to a portion of the assets of the Small Cap Value Fund. As of
November 30, 1999, Security Capital had approximately $1.32 billion in assets
under management.

STI CAPITAL MANAGEMENT, N.A.--STI Capital Management, L.P. ("STI") serves as
a Sub-Adviser to a portion of the assets of the Capital Appreciation Fund. As of
December 31, 1999, STI had approximately $14.1 in assets under management.

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. As of
November 30, 1999, TCW had approximately $66.2 billion of assets under
management.

WALL STREET ASSOCIATES--Wall Street Associates ("WSA") serves as a
Sub-Adviser for a portion of the assets of the Small Cap Growth Fund. As of
November 30, 1999, WSA had approximately $1.8 billion in assets under
management.

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. As of December 31, 1999, Western managed approximately
$59.46 billion in client assets.

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 Class D 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 Class D
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.

S-32
<PAGE>
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 SEC by the Office of the Comptroller of the
Currency, financial institutions are not prohibited from acting in other
capacities for investment companies, such as providing shareholder services.
Should future legislative, judicial or administrative action prohibit or
restrict the activities of financial institutions in connection with providing
shareholder services, the Trust may be required to alter materially or
discontinue its arrangements with such financial institutions.

For the fiscal year ended September 30, 1999, the Funds incurred the
following distribution expenses:

<TABLE>
<CAPTION>
AMOUNT PAID TO
3RD PARTIES BY
THE DISTRIBUTOR
FOR DISTRIBUTION
TOTAL RELATED SERVICES
FUND/CLASS ($AMOUNT) ($AMOUNT)
- ---------- --------- ----------------
<S> <C> <C>
CLASS D
Small Cap Growth Fund.................................... $5,365.73 $5,365.73
</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-, CNI Charter Funds, CUFUND, The Expedition Funds,
First American Funds, Inc., First American Investment Funds, Inc., First
American Strategy Funds, Inc., HighMark Funds, Huntington Funds, The Nevis Fund,
Inc., Oak Associates Funds, The Parkstone Advantage Fund, The Parkstone Group of
Funds, The PBHG 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
Insurance Products 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.

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

S-33
<PAGE>
President of SEI Investments, 1986-1994. Director and Executive Vice President
of the Adviser, the Administrator and the Distributor, 1981-1994. Trustee of The
Advisors' Inner Circle Fund, The Arbor Fund, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, The Expedition Funds, Oak Associates Funds, Pillar
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional International Trust, SEI Institutional Investments Trust, SEI
Institutional Managed 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 Administrator and the Distributor. Director of
SEI Investments since 1974; Secretary of SEI Investments since 1978. Trustee of
The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition Funds, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional International Trust, SEI Institutional Investments
Trust, SEI Institutional Managed 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 before January 1981. Trustee of SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI
Institutional Investments Trust, SEI Institutional Managed 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,
September 1987-December 1993. Trustee of The Advisors' Inner Circle Fund, The
Arbor Fund, The Expedition Funds, Oak Associates Funds, SEI Asset Allocation
Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional International
Trust, SEI Institutional Investments Trust, SEI Institutional Managed 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
The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition Funds, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional International Trust, SEI Institutional Investments
Trust, SEI Institutional Managed Trust, SEI Liquid Asset 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 since 1993. Executive Vice President of the Adviser and the
Administrator since 1994. Senior Vice President of the Distributor, 1986-1991;
Vice President of the Distributor, 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 Administrator and the Distributor since 1995. Associate, Dewey
Ballantine (law firm), 1994-1995. Associate, Winston & Strawn (law firm),
1991-1994.

CHRISTINE M. MCCULLOUGH (DOB 12/05/60)--Vice President and Assistant
Secretary--Employed by SEI Investments since November 1, 1999. Vice President
and Assistant Secretary of the Administrator and Distributor since December
1999. Associate, Montgomery, Walker and Rhoads (law firm), 1990-1991.

JAMES R. FOGGO (DOB 06/30/64)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI Investments since January 1998. Vice
President of the Administrator and Distributor since May 1999. 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.

S-34
<PAGE>
LYDIA A. GAVALIS (DOB 06/05/64)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, the
Adviser, 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 since 1997; Vice President of SEI
Investments since 1991. Vice President and Treasurer of the Adviser and the
Administrator since 1997. Assistant Controller of SEI Investments and Vice
President of the Distributor since 1995. Director of Taxes of SEI Investments,
1987-1991. Tax Manager, Arthur Andersen LLP prior to 1987.

CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, the
Adviser, the Administrator 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.

TIMOTHY D. BARTO (DOB 3/28/68)--Vice President and Assistant
Secretary--Employed by SEI Investments since October 1999. Vice President and
Assistant Secretary of the Administrator and Distributor since December 1999.
Associate at Dechert Price & Rhoads, 1997-1999. Associate at Richer, Miller &
Finn, 1994-1997.

EDWARD T. SEARLE (DOB 04/03/54)--Vice President and Associate
Secretary--Employed by SEI Investments since August 1999. Vice President and
Assistant Secretary of the Administrator and Distributor since December 1999.
Associate at Drinker Biddle & Reath LLP, 1998-1999. Associate at Ballard, Spahr,
Andrews & Ingersoll, LLP, 1995-1998.

KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, the
Adviser, the Administrator and the Distributor since 1994. Assistant Secretary
of SEI Investments since 1992; Secretary of the Adviser and the Administrator
since 1994. Vice President, General Counsel and Assistant Secretary of the
Adviser, the Administrator 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 SEI Investments, the
Adviser, the Administrator and the Distributor since 1998. Senior Asset
Management Counsel, Barnett Banks, Inc., 1997-1998. Partner, Groom and 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 Administrator and the
Distributor.

MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial
Officer--President of the Administrator and Senior Vice President of SEI
Investments Mutual Funds Services Operations Group since 1998. Vice President of
the Administrator and Vice President of Fund Accounting and Administration of
SEI Investments Mutual Funds Services, 1996-1998. Vice President of the
Distributor since December 1997. Senior Vice President, Fund Administration,
BISYS Fund Services, September 1995-November 1996. Senior Vice President and
Site Manager, Fidelity Investments 1981-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 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.

S-35
<PAGE>
Compensation of officers and affiliated Trustees of the Trust is paid by the
Administrator. The Trust pays the fees for unaffiliated Trustees. For the fiscal
year ended September 30, 1999, the Trust paid the following amounts to the
Trustees.

<TABLE>
<CAPTION>
AGGREGATE PENSION OR TOTAL COMPENSATION FROM
COMPENSATION RETIREMENT BENEFITS ESTIMATED ANNUAL REGISTRANT AND FUND
FROM REGISTRANT ACCRUED AS PART OF BENEFITS UPON COMPLEX PAID TO TRUSTEES
NAME OF PERSON AND POSITION FOR FYE 9/30/98 FUND EXPENSES RETIREMENT FOR FYE 9/30/99
- --------------------------- ----------------- ------------------- ---------------- --------------------------
<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**...... $29,190 $0 $0 $108,250 for services on
8 boards
James M. Storey, Trustee**....... $28,502 $0 $0 $108,250 for services on
8 boards
Frank E. Morris, Trustee***...... $ 6,808 $0 $0 $25,750 for services on
8 boards
George J. Sullivan, Trustee**.... $28,483 $0 $0 $108,250 for services on
8 boards
</TABLE>

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

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

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

* 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 and Sullivan serve as members of the Audit Committee
of the Trust.

*** Mr. Morris retired on December 31, 1998.

The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust.

Compensation of officers and affiliated Trustees of the Trust is paid by the
Administrator. The Trust pays the fees for unaffiliated Trustees. For the
fiscal year ended September 30, 1999, the Trust paid the following amounts
to the Trustees.

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:

Yield =2[((a-b)/cd) + 1) RAISED TO THE POWER OF 6-1], where a =
dividends and interest earned during the period; b = expenses accrued
for the period (net of reimbursement); c = the current daily number of
shares outstanding during the period that were entitled to receive
dividends; and d = the maximum offering price per share on the last day
of the period.

Based on the foregoing, the 30-day yield for the Funds for the 30-day period
ended September 30, 1999 were as follows:

<TABLE>
<CAPTION>
FUND 30-DAY YIELD
- ---- ------------
<S> <C>
CLASS A
Large Cap Value Fund...................................... 1.29%
Large Cap Growth Fund..................................... 0.00%
Tax-Managed Large Cap Fund................................ 0.76%
Small Cap Value Fund...................................... 0.55%
Small Cap Growth Fund..................................... 0.00%
Mid-Cap Fund.............................................. 0.52%
Capital Appreciation Fund................................. 0.41%
Equity Income Fund........................................ 2.05%
Balanced Fund............................................. 2.48%
Core Fixed Income Fund.................................... 5.66%
High Yield Bond Fund...................................... 8.77%
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:

P(1 + T) RAISED TO THE POWER OF n = ERV, where P = a hypothetical
initial payment of $1,000; T = average annual total return; n = number
of years; and ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the designated time period as of the
end of such period.

S-37
<PAGE>
Based on the foregoing, the average annual total returns for the Funds from
inception through and for the one, five and ten year periods ended
September 30, 1999, 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>
Large Cap Value Fund Class A(7)................. 17.13% 20.09% 12.27% 11.80%

Large Cap Growth Fund Class A(6)................. 37.74% * * 28.68%

Tax-Managed Large Cap Fund Class A(11)................ 32.60% * * 16.73%

Small Cap Value Fund Class A(6)................. 4.47% * * 13.06%

Small Cap Growth Fund Class A(9)................. 55.00% 19.07% * 18.44%
Class D(10) (no load)...... 54.58% 18.71% * 17.07%
Class D(10) (load)......... 46.80% 17.49% * 15.96%

Mid-Cap Fund Class A(8)................. 16.53% 14.42% * 12.51%

Capital Appreciation Fund Class A(2)................. 23.13% 20.77% 14.91% 16.08%

Equity Income Fund Class A(4)................. 15.35% 17.83% 13.08% 14.39%

Balanced Fund Class A(1)................. 11.22% 14.55% * 11.75%

Core Fixed Income Fund Class A(3)................. (0.96)% 7.97% 7.38% 7.52%

High Yield Bond Fund Class A(5)................. 3.51% * * 10.24%
</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 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 Fund
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 one year 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.

If a Fund fails to qualify as a RIC for any year, all of its taxable income
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and its distributions (including capital gains
distributions) out of its accumulated or current earnings and profits generally
will be taxable as ordinary income dividends to its shareholders, subject to the
dividends received deduction for corporate shareholders.

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 Fund 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

S-42
<PAGE>
securities to distribute such imputed income which may occur at a time when the
advisers would not have chosen to sell such securities and which may result in
taxable gain or loss.

STATE TAXES

A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Rules of state and local
taxation of dividend and capital gains distributions from RICs often differ from
the rules for federal income taxation described above. Depending upon state and
local law, distributions by the Fund to shareholders and the ownership of shares
may be subject to state and local taxes. Shareholders are urged to 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, ("1934 Act") 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 Funds
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, 1999, the Funds paid the following
brokerage fees:

<TABLE>
<CAPTION>
TOTAL $ AMOUNT
TOTAL $ AMOUNT OF BROKERAGE % OF TOTAL % OF TOTAL
OF BROKERAGE COMMISSIONS BROKERAGE BROKERED
COMMISSIONS PAID TO COMMISSIONS TRANSACTIONS
PAID IN AFFILIATED BROKERS IN PAID TO EFFECTED THROUGH
FUND FYE 9/30/99 FYE 9/30/99 AFFILIATED BROKERS AFFILIATED BROKERS
- ---- -------------- --------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Large Cap Value Fund............... $2,571,587.93 $432,748.14 17% 52%
Large Cap Growth Fund.............. $1,972,752.12 $ 33,534.85 2% 36%
Tax-Managed Large Cap Fund......... $ 665,890.93 $ 79,982.22 12% 54%
Small Cap Value Fund............... $2,418,713.85 $ 16,573.83 1% 44%
Small Cap Growth Fund.............. $1,489,350.21 $ 15,074.02 1% 60%
Mid-Cap Fund....................... $ 177,134.09 $ 373.58 0% 20%
Capital Appreciation Fund.......... $ 368,075.53 $ 33,546.68 9% 44%
Equity Income Fund................. $ 229,485.34 $ 26,983.57 12% 45%
Balanced Fund...................... $ 103,153.80 $ 9,262.60 9% 54%
Core Fixed Income Fund............. $ 190,402.15 $190,402.15 100% 100%
High Yield Bond Fund............... -- -- N/A N/A
</TABLE>

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

* Not in operation during such period.

For the fiscal years ended September 30, 1997 and 1998, the Funds paid the
following brokerage fees:

<TABLE>
<CAPTION>
TOTAL $ AMOUNT
TOTAL $ AMOUNT OF BROKERAGE
OF BROKERAGE COMMISSIONS PAID
COMMISSIONS PAID TO AFFILIATES
--------------------- -------------------
FUND 1997 1998 1997 1998
- ---- -------- ---------- -------- --------
<S> <C> <C> <C> <C>
Large Cap Value Fund............................... $967,297 $2,179,458 $235,717 $274,296
Large Cap Growth Fund.............................. $853,946 $1,876,706 $383,294 $879,453
Tax-Managed Large Cap Fund......................... -- $ 171,586 -- $ 49,479
Small Cap Value Fund............................... $639,229 $1,159,153 $ 40,859 $ 0
Small Cap Growth Fund.............................. $803,002 $1,035,121 $ 77,385 $ 0
Mid-Cap Fund....................................... $ 41,511 $ 199,773 $ 0 $ 0
Capital Appreciation Fund.......................... $720,618 $ 592,551 $ 50,855 $ 0
Equity Income Fund................................. $273,210 $ 260,476 $119,347 $ 0
Balanced Fund...................................... $ 89,948 $ 114,561 $ 7,443 $ 0
Core Fixed Income Fund............................. $ 0 $ 0 $ 0 $ 0
High Yield Bond Fund............................... $ 0 $ 0 $ 0 $ 0
</TABLE>

Class D shareholders paid the following sales charges:

<TABLE>
<CAPTION>
DOLLAR AMOUNT
DOLLAR AMOUNT OF CHARGES
OF CHARGES RETAINED BY SIDCO
------------------------------ ------------------------------
FUND/CLASS 1997 1998 1999 1997 1998 1999
- ---------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Fund--Class D.................. N/A $30,295 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.

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<PAGE>
The portfolio turnover rate for each Fund for the fiscal years ending
September 30, 1998 and 1999 was as follows:

<TABLE>
<CAPTION>
TURNOVER RATE
-----------------------
FUND 1998 1999
- ---- -------- --------
<S> <C> <C>
Large Cap Value Fund........................................ 79% 49%
Large Cap Growth Fund....................................... 80% 45%
Tax-Managed Large Cap Fund.................................. 12% 21%
Small Cap Value Fund........................................ 77% 130%
Small Cap Growth Fund....................................... 128% 141%
Mid-Cap Fund................................................ 106% 139%
Capital Appreciation Fund................................... 238% 147%
Equity Income Fund.......................................... 66% 75%
Balanced Fund............................................... 183% 188%
Core Fixed Income Fund...................................... 344% 334%
High Yield Bond Fund........................................ 56% 17%
</TABLE>

Consistent with their duty to obtain best execution, the Trust's
Sub-Advisers may allocate brokerage or principal business to certain
broker-dealers in recognition of the sale of Fund shares. In addition, 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, 1999, the Trust held the
following securities:

<TABLE>
<CAPTION>
AMOUNT
FUND TYPE OF SECURITY NAME OF ISSUER (000)
- ---- ---------------- --------------------- ------
<S> <C> <C> <C>

Large Cap Value................ Debt J.P. Morgan $ 46,994
Equity Bear Stearns $ 10,724
Equity Lehman Brothers $ 10,071
Equity Morgan Stanley $ 11,728

Large Cap Growth............... Equity Morgan Stanley $ 30,431
Debt Morgan Stanley $ 56,182
Equity Goldman Sachs $ 1,263

Tax-Managed Large Cap.......... Equity Morgan Stanley $ 9,008
Debt Morgan Stanley $ 23,077

Small Cap Value................ Debt Morgan Stanley $ 25,005
Debt Merrill Lynch $ 879

Small Cap Growth............... Debt J.P. Morgan $ 38,948

Mid-Cap........................ Equity Bear Stearns $ 238
Debt J.P. Morgan $ 219
Equity Lehman Brothers $ 198
Equity Paine Webber $ 149

Capital Appreciation........... Debt J.P. Morgan $ 3,052

Equity Income.................. Debt J.P. Morgan $ 6,535
Equity Merrill Lynch $ 894
Equity Morgan Stanley $ 314

Balanced....................... Debt Merrill Lynch $ 807
Debt J.P. Morgan $ 601
Debt Paine Webber $ 392

Core Fixed Income.............. Debt Bear Stearns $ 2,222
Debt J.P. Morgan $406,372
Debt Lehman Brothers $ 22,242
Debt Merrill Lynch $ 4,771
Debt Paine Webber $ 12,146
Debt Salomon Bros. $ 5,536
Debt Goldman Sachs $ 4,600

High Yield Bond................ Debt Merrill Lynch $ 32,999
</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,

S-46
<PAGE>
shall not be liable for any neglect or wrongdoing of any such person. The
Declaration of Trust also provides that the Trust will indemnify its Trustees
and officers against liabilities and expenses incurred in connection with actual
or threatened litigation in which they may be involved because of their offices
with the Trust unless it is determined in the manner provided in the Declaration
of Trust that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Trust. However, nothing in the
Declaration of Trust shall protect or indemnify a Trustee against any liability
for his 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.

5% SHAREHOLDERS

As of January 3, 2000, 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>
PERCENTAGE OF
FUND NAME AND ADDRESS OF BENEFICIAL OWNER FUND'S SHARES
- ---- ------------------------------------------ -------------
<S> <C> <C>
LARGE CAP VALUE FUND--CLASS A SEI Trust Company 75.15%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

LARGE CAP GROWTH FUND--CLASS A SEI Trust Company 73.09%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087
</TABLE>

S-47
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF
FUND NAME AND ADDRESS OF BENEFICIAL OWNER FUND'S SHARES
- ---- ------------------------------------------ -------------
<S> <C> <C>
TAX-MANAGED LARGE CAP FUND--CLASS A SEI Trust Company 89.14%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

SEI Trust Company 8.80%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

SMALL CAP VALUE FUND--CLASS A SEI Trust Company 72.41%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

SMALL CAP GROWTH FUND--CLASS A SEI Trust Company 57.31%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

SMALL CAP GROWTH FUND--CLASS D MAC & Co. 5.86%
APSF 1852692
Mutual Fund Operations
PO Box 3198
Pittsburgh, PA 15230-3198

MAC & Co. A/C HMPF1852762 6.93%
ATTN: Marsha Ondo
Mutual Fund Operations
PO Box 3198
Pittsburgh, PA 15230-3198

SEI Trust Company 47.25%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

Wachovia Bank NA 9.63%
ATTN: Theresa Almond
301 North Church Street
MC-NC 31013
Winsotn-Salem, NC 27101-3820

Mellon Trust 6.39%
Herculus-STD
One Mellon Bank Center
Pittsburgh, PA 15258-0001
</TABLE>

S-48
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF
FUND NAME AND ADDRESS OF BENEFICIAL OWNER FUND'S SHARES
- ---- ------------------------------------------ -------------
<S> <C> <C>
Bankers Trust TTEE of the Cincinnati Bell 11.15%
Pension Plan Trust
ATTN: Mike Stack
100 Plaza One
Jersey City, NJ 07311-3999

MID-CAP FUND--CLASS A Ingersoll and Company 7.37%
C/O Brenton Bank
ATTN: Laurie Konrad
PO Box 10478
Des Moines, IA 50306-0478

Charles Schwab & Co., Inc. 5.30%
ATTN: Steve Sears, Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122

SEI Trust Company 24.03%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

BMS & Co. 6.46%
C/O Central Trust Bank
ATTN: Wanda McGlade
PO Box 779
Jefferson City, MO 65102-0779

Farmers & Merchants Company 17.08%
C/O FNB of Abilene
ATTN: Wanda Richard
PO Box 701
Abilene, TX 79604-0701

Farmers & Merchants Company 9.56%
C/O FNB of Abilene
ATTN: Wanda Richard
PO Box 701
Abilene, TX 79604-0701

CAPITAL APPRECIATION FUND--CLASS A Charles Schwab & Co., Inc. 5.65%
ATTN: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122

Carn & Co. 02252-01 7.38%
Cole Parmer Employees' P/S Plan
Attn: Mutual Funds--Star
PO Box 96211
Washington, DC 20090-6211
</TABLE>

S-49
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF
FUND NAME AND ADDRESS OF BENEFICIAL OWNER FUND'S SHARES
- ---- ------------------------------------------ -------------
<S> <C> <C>
SEI Trust Company 16.35%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

Nabank & Co 5.47%
ATTN: Record Keeping
PO Box 2180
Tulsa, OK 74101-2180

EQUITY INCOME FUND--CLASS A Dingle & Co. 7.56%
C/O Commercia Bank
ATTN: Mutual Funds Unity M/C 3446
PO Box 75000
Detroit, MI 48275-0001

Charles Schwab & Co., Inc. 5.10%
ATTN: Mutual Funds Dept.
101 Montgomery St.
San Francisco, CA 94104-4122

Carn & Co. 02252-01 5.52%
Cole Parmer Employees' P/S Plan
Attn: Mutual Funds--Star
PO Box 96211
Washington, DC 20090-6211

SEI Trust Company 9.61%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

Nabank & Co 7.84%
ATTN: Record Keeping
PO Box 2180
Tulsa, OK 74101-2180

BALANCED FUND--CLASS A Co-Bank Company 7.85%
PO Box 42
Clearfield, PA 16830-0042

SEI Trust Company 8.82%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

Nabank & Co 12.01%
ATTN: Record Keeping
PO Box 2180
Tulsa, OK 74101-2180
</TABLE>

S-50
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE OF
FUND NAME AND ADDRESS OF BENEFICIAL OWNER FUND'S SHARES
- ---- ------------------------------------------ -------------
<S> <C> <C>
CORE FIXED INCOME FUND--CLASS A SEI Trust Company 76.13%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087

HIGH YIELD BOND FUND--CLASS A SEI Trust Company 76.05%
Attn: Jacqueline Esposito
680 East Swedesford Road
Wayne, PA 19087
</TABLE>

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, 1701 Market Street, Philadelphia, Pennsylvania
19103, serves as counsel to the Trust.

FINANCIAL STATEMENTS

The Trust's financial statements for the fiscal year ended September 30,
1999, including notes thereto and the report of PricewaterhouseCoopers LLP
thereon, are herein incorporated by reference from the Trust's 1999 Annual
Report. A copy of the 1999 Annual Report must accompany the delivery of this
Statement of Additional Information.

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