<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 25, 1998
FILE NO. 33-58041
FILE NO. 811-7257
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 3 /X/
AND
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 5 /X/
------------------------
SEI INSTITUTIONAL INVESTMENTS TRUST
(Exact Name of Registrant as Specified in Charter)
C/O THE CT CORPORATION SYSTEM
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code 610-989-1000
EDWARD D. LOUGHLIN
C/O SEI Investments Company
Oaks, Pennsylvania 19456
(Name and Address of Agent for Service)
COPIES TO:
Richard W. Grant, Esquire John H. Grady, Jr., Esquire
Morgan, Lewis & Bockius LLP Morgan, Lewis & Bockius LLP
2000 One Logan Square 2000 One Logan Square
Philadelphia, Pennsylvania 19103 Philadelphia, Pennsylvania 19103
------------------------
Title of Securities Being Registered .............. Units of Beneficial Interest
It is proposed that this filing will become effective (check appropriate box):
<TABLE>
<C> <S>
/X/ immediately upon filing pursuant to paragraph (b)
/ / on [date] pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)
/ / on [date] pursuant to paragraph (a)(1) of Rule 485
/ / 75 days after filing pursuant to paragraph (a)(2)
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SEI INSTITUTIONAL INVESTMENTS TRUST
CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 3
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- -------------------------------------------------
<S> <C> <C>
PART A--LARGE CAP, SMALL CAP, CORE FIXED INCOME, HIGH YIELD BOND, INTERNATIONAL FIXED INCOME, EMERGING MARKETS
EQUITY AND INTERNATIONAL EQUITY FUNDS
Item 1. Cover Page....................................... Cover Page
Item 2. Synopsis......................................... Annual Operating Expenses
Item 3. Condensed Financial Information.................. Financial Highlights
Item 4. General Description of Registrant................ The Trust; Investment Objectives and Policies;
General Investment Policies and Risk Factors;
Description of Permitted Investments and Risk
Factors
Item 5. Management of the Fund........................... General Information--General Management of the
Funds; The Money Managers
Item 5a. Management's Discussion of Fund Performance...... **
Item 6. Capital Stock & Other Securities................. General Information--Voting Rights, Shareholder
Inquiries, Dividends; Taxes
Item 7. Purchase of Securities Being Offered............. Purchase and Redemption of Shares
Item 8. Redemption or Repurchase......................... Purchase and Redemption of Shares
Item 9. Pending Legal Proceedings........................ *
PART B--ALL FUNDS
Item 10. Cover Page....................................... Cover Page
Item 11. Table of Contents................................ Table of Contents
Item 12. General Information & History.................... The Trust
Item 13. Investment Objectives & Policies................. Description of Permitted Investments; Investment
Limitations
Item 14. Management of the Registrant..................... Trustees and Officers of the Trust; The Manager
and The Money Managers
Item 15. Control Persons & Principal Holders of
Securities..................................... Trustees and Officers of the Trust; 5%
Shareholders
Item 16. Investment Advisory & Other Services............. The Administrator and Transfer Agent; The Manager
and The Money Managers; Distribution; Experts
Item 17. Brokerage Allocation............................. Fund Transactions
Item 18. Capital Stock & Other Securities................. Description of Shares
Item 19. Purchase, Redemption, & Pricing of Securities
Being Offered.................................. Purchase and Redemption of Shares; Description of
Shares; Determination of Net Asset Value
Item 20. Tax Status....................................... Taxes
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
N-1A ITEM NO. LOCATION
- -------------------------------------------------------------- -------------------------------------------------
<S> <C> <C>
Item 21. Underwriters..................................... Distribution
Item 22. Calculation of Yield Quotation................... Performance
Item 23. Financial Statements............................. Financial Statements
</TABLE>
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
- ------------------------
* Not Applicable
** Information required by this Item 5a is contained in the Annual Report for
the fiscal year ending May 31, 1998.
(ii)
<PAGE>
SEI INSTITUTIONAL INVESTMENTS TRUST
SEPTEMBER 30, 1998
- --------------------------------------------------------------------------------
LARGE CAP FUND
SMALL CAP FUND
INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
CORE FIXED INCOME FUND
HIGH YIELD BOND FUND
INTERNATIONAL FIXED INCOME FUND
- --------------------------------------------------------------------------------
This Prospectus concisely sets forth information about the above-referenced
funds that an investor needs to know before investing. Please read this
Prospectus carefully, and keep it on file for future reference.
A Statement of Additional Information dated September 30, 1998 has been filed
with the Securities and Exchange Commission (the "SEC") and is available upon
request and without charge by writing the distributor, SEI Investments
Distribution Co., Oaks, Pennsylvania 19456, or by calling 1-800-342-5734. The
Statement of Additional Information is incorporated by reference into this
Prospectus.
SEI Institutional Investments Trust ("SIIT" or the "Trust") is an open-end
management investment company that offers certain institutions with investable
pools of assets that have signed an Investment Management Agreement with SEI
Investments Management Corporation a convenient means of investing in
professionally managed diversified and non-diversified portfolios of securities.
THE HIGH YIELD BOND FUND INVESTS PRIMARILY, AND MAY INVEST ALL OF ITS ASSETS, IN
LOWER RATED BONDS, COMMONLY REFERRED TO AS "JUNK BONDS." THESE SECURITIES ARE
SPECULATIVE AND ARE SUBJECT TO GREATER RISK OF LOSS OF PRINCIPAL AND INTEREST
THAN ARE INVESTMENTS IN HIGHER RATED BONDS. BECAUSE INVESTMENT IN SUCH
SECURITIES ENTAILS GREATER RISKS, INCLUDING RISK OF DEFAULT, AN INVESTMENT IN
THE HIGH YIELD BOND FUND SHOULD NOT CONSTITUTE A COMPLETE INVESTMENT PROGRAM AND
MAY NOT BE APPROPRIATE FOR ALL INVESTORS. INVESTORS SHOULD CAREFULLY CONSIDER
THE RISKS POSED BY AN INVESTMENT IN THE HIGH YIELD BOND FUND BEFORE INVESTING.
SEE "INVESTMENT OBJECTIVES AND POLICIES," "GENERAL INVESTMENT POLICIES AND RISK
FACTORS -- RISK FACTORS RELATING TO INVESTING IN LOWER RATED SECURITIES" AND THE
"APPENDIX."
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE TRUST'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. THE TRUST'S SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
GOVERNMENT AGENCY. INVESTMENT IN THE SHARES INVOLVES RISK, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
TABLE OF CONTENTS
_________________________________________________________________
<TABLE>
<S> <C>
Annual Operating Expenses........................ 3
Financial Highlights............................. 4
The Trust........................................ 5
Eligible Investors............................... 5
General Management of the Funds.................. 5
The Money Managers............................... 8
Investment Objectives and Policies............... 18
General Investment Policies and Risk Factors..... 22
Investment Limitations........................... 26
Purchase and Redemption of Shares................ 27
Performance...................................... 28
Taxes............................................ 29
General Information.............................. 30
Description of Permitted Investments and Risk
Factors......................................... 32
Appendix......................................... A-1
</TABLE>
2
<PAGE>
ANNUAL OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EMERGING
INTERNATIONAL MARKETS CORE FIXED HIGH YIELD INTERNATIONAL
LARGE CAP SMALL CAP EQUITY EQUITY INCOME BOND FIXED INCOME
FUND FUND FUND FUND FUND FUND FUND
----------- ----------- ------------ ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Management/Administration Fees
(AFTER FEE WAIVERS) (1)(2)(5) .23% .51% .35% .94% .14% .38% .34%
Other Expenses (3) .05% .05% .13% .46% .06% .09% .27%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Fund Operating Expenses (AFTER
FEE WAIVERS) (4) .28% .56% .48% 1.40% .20% .47% .61%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) EACH SHAREHOLDER MUST ALSO ENTER INTO AN INVESTMENT MANAGEMENT AGREEMENT
WITH SEI INVESTMENTS MANAGEMENT CORPORATION ("SIMC") FOR INVESTMENT
STRATEGIES AND PROGRAMS AND ASSET ALLOCATION SERVICES, AND PAY AN ANNUAL FEE
THEREUNDER CALCULATED AS A SPECIFIED PERCENTAGE OF THE SHAREHOLDER'S ASSETS
MANAGED BY SIMC.
(2) SIMC AND SEI INVESTMENTS FUND MANAGEMENT ("SEI MANAGEMENT") HAVE AGREED TO
WAIVE, ON A VOLUNTARY BASIS, A PORTION OF THEIR FEES, AND THE
MANAGEMENT/ADMINISTRATION FEES SHOWN REFLECT THESE VOLUNTARY WAIVERS. EACH
OF SIMC AND SEI MANAGEMENT RESERVES THE RIGHT TO TERMINATE ITS WAIVER AT ANY
TIME IN ITS SOLE DISCRETION. ABSENT SUCH FEE WAIVERS,
MANAGEMENT/ADMINISTRATION FEES WOULD BE: LARGE CAP FUND, .40% AND .05%,
RESPECTIVELY; SMALL CAP FUND, .65% AND .05%, RESPECTIVELY; INTERNATIONAL
EQUITY FUND, .51% AND .05%, RESPECTIVELY; EMERGING MARKETS EQUITY FUND,
1.05% AND .05%, RESPECTIVELY; CORE FIXED INCOME FUND, .30% AND .05%,
RESPECTIVELY; HIGH YIELD BOND FUND, .49% AND .05%, RESPECTIVELY; AND
INTERNATIONAL FIXED INCOME FUND, .45% AND .05%, RESPECTIVELY.
(3) THE HIGH YIELD BOND, INTERNATIONAL FIXED INCOME AND EMERGING MARKETS EQUITY
FUNDS HAD NOT COMMENCED OPERATIONS AS OF MAY 31, 1998. "OTHER EXPENSES" FOR
THESE FUNDS ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.
(4) EACH OF SIMC AND SEI MANAGMENT RESERVES THE RIGHT TO TERMINATE ITS VOLUNTARY
WAIVER AT ANY TIME IN ITS SOLE DISCRETION. ABSENT THE FEE WAIVERS DESCRIBED
ABOVE, TOTAL OPERATING EXPENSES WOULD BE: LARGE CAP FUND, .50%, SMALL CAP
FUND, .75%, INTERNATIONAL EQUITY FUND, .69%, EMERGING MARKETS EQUITY FUND,
1.56%, CORE FIXED INCOME FUND, .41%, HIGH YIELD BOND FUND, .63%.
(5) MANAGEMENT/ADMINISTRATION FEES HAVE BEEN RESTATED TO REFLECT CURRENT
EXPENSES.
EXAMPLE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
----- ------ ------ -------
<S> <C> <C> <C> <C>
An investor in a Fund would pay the following
expenses on a $1,000 investment assuming
(1) a 5% annual return and (2) redemption at
the end of each time period:
Large Cap Fund $ 3 $ 9 $16 $36
Small Cap Fund $ 6 $18 $31 $70
International Equity Fund $ 5 $15 $27 $60
Emerging Markets Equity Fund $14 $44 -- --
Core Fixed Income Fund $ 2 $ 6 $11 $26
High Yield Bond Fund $ 5 $15 -- --
International Fixed Income Fund $ 6 $20 -- --
- --------------------------------------------------------------------------------
</TABLE>
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE PURPOSE
OF THE EXPENSE TABLE AND EXAMPLE IS TO ASSIST THE INVESTOR IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT MAY BE DIRECTLY OR INDIRECTLY BORNE BY INVESTORS
IN THE FUNDS. ADDITIONAL INFORMATION MAY BE FOUND UNDER "GENERAL MANAGEMENT OF
THE FUNDS" AND "THE MONEY MANAGERS."
3
<PAGE>
FINANCIAL HIGHLIGHTS
______________________________________________________________
The following information has been derived from the financial statements audited
by PricewaterhouseCoopers LLP, the Trust's independent accountants, as indicated
in their report dated July 16, 1998 on the Trust's financial statements as of
May 31, 1998, which are incorporated by reference into the Trust's Statement of
Additional Information. The Trust's financial statements and additional
performance information are set forth in the 1998 Annual Report to Shareholders,
which is available upon request and without charge by calling 1-800-342-5734.
This table should be read in conjunction with the Trust's financial statements
and notes thereto. The High Yield Bond, International Fixed Income and Emerging
Markets Equity Funds had not commenced operations as of the date of this
Prospectus.
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
DISTRIBUTIONS
NET ASSET NET REALIZED DISTRIBUTIONS FROM NET ASSET
VALUE NET AND UNREALIZED FROM NET REALIZED VALUE
BEGINNING INVESTMENT GAINS ON INVESTMENT CAPITAL END OF TOTAL
OF PERIOD INCOME SECURITIES INCOME GAINS PERIOD RETURN
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
-----------------------------------------------
LARGE CAP FUND(1)
-----------------------------------------------
1998 $ 12.66 $0.18 $3.98 $ (0.18) $ (0.29) $ 16.35 33.36%
1997 10.00 0.17 2.63 (0.14) -- 12.66 28.22
-----------------------------------------------
SMALL CAP FUND(1)
-----------------------------------------------
1998 $ 10.86 $0.07 $2.78 $ (0.07) $ (0.52) $ 13.12 26.68%
1997 10.00 0.06 0.85 (0.05) -- 10.86 9.18
-----------------------------------------------
INTERNATIONAL EQUITY FUND(1)
-----------------------------------------------
1998 $ 10.69 $0.19 $0.86 $ (0.16) $ (0.23) $ 11.35 10.40%
1997 10.00 0.14 0.61 (0.05) (0.01) 10.69 7.56
-----------------------------------------------
CORE FIXED INCOME FUND(1)
-----------------------------------------------
1998 $ 10.13 $0.64 $0.50 $ (0.64) $ (0.06) $ 10.57 11.60%
1997 10.00 0.64 0.17 (0.64) (0.04) 10.13 8.28
<CAPTION>
RATIO OF
EXPENSES RATIO OF NET
TO AV- INVESTMENT
RATIO OF NET ERAGE INCOME
RATIO OF INVESTMENT NET ASSETS TO AVERAGE
NET ASSETS EXPENSES INCOME (EX- NET ASSETS PORTFOLIO AVERAGE
END OF TO AVERAGE TO AVERAGE CLUDING (EXCLUDING TURNOVER COMMISSION
PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE RATE+
<S> <C> <C> <C> <C> <C> <C> <C>
- ------ --------------------------------------------------------------------------------------------------
-----------------------------------------
LARGE CAP FUND(1)
-----------------------------------------
1998 $ 1,149,337 0.32% 1.28% 0.50% 1.10% 72% 0.050
1997 438,818 0.34 1.65 0.53 1.46 71 0.049
-----------------------------------------
SMALL CAP FUND(1)
-----------------------------------------
1998 $ 302,355 0.59% 0.61% 0.75% 0.45% 120% 0.055
1997 123,941 0.60 0.70 0.79 0.51 163 0.052
-----------------------------------------
INTERNATIONAL EQUITY FUND(1)
-----------------------------------------
1998 $ 554,421 0.53% 2.21% 0.70% 2.04% 109% 0.012
1997 384,663 0.63 1.73 0.82 1.54 120 0.017
-----------------------------------------
CORE FIXED INCOME FUND(1)
-----------------------------------------
1998 $ 763,236 0.20% 6.13% 0.41% 5.92% 324% n/a
1997 349,304 0.21 6.60 0.42 6.39 194 n/a
</TABLE>
AMOUNTS DESIGNATED AS "--" ARE EITHER $0 OR HAVE BEEN ROUNDED TO $0.
+ AVERAGE COMMISSION RATE PAID PER SHARE FOR EQUITY SECURITY PURCHASES AND
SALES DURING THE PERIOD. GENERALLY, NON-U.S. COMMISSIONS ARE LOWER THAN U.S.
COMMISSIONS WHEN EXPRESSED AS CENTS PER SHARE, BUT HIGHER WHEN EXPRESSED AS
A PERCENTAGE OF TRANSACTIONS BECAUSE OF THE LOWER PER-SHARE PRICES OF MANY
NON-U.S. SECURITIES.
(1) THE FUNDS COMMENCED OPERATIONS ON JUNE 14, 1996. ALL RATIOS EXCEPT TOTAL
RETURN HAVE BEEN ANNUALIZED.
4
<PAGE>
THE TRUST
__________________________________________________________________________
SEI INSTITUTIONAL INVESTMENTS TRUST ("SIIT" or the "Trust") is an open-end
management investment company organized as a Massachusetts business trust under
a Declaration of Trust dated March 1, 1995. The Declaration of Trust permits the
Trust to offer separate series ("funds") of units of beneficial interest
("shares") and different classes of each fund. Currently, the Trust does not
intend to issue additional classes of shares.
This Prospectus relates to the following funds: Large Cap, Small Cap,
International Equity, Emerging Markets Equity, Core Fixed Income, High Yield
Bond and International Fixed Income Funds (each a "Fund" and, together, the
"Funds"). All of these Funds are diversified funds except for the International
Fixed Income Fund, which is a non-diversified fund. Additional information
pertaining to the Trust may be obtained by writing SEI Investments Distribution
Co., Oaks, Pennsylvania 19456, or by calling 1-800-342-5734.
ELIGIBLE INVESTORS
_________________________________________________________________
Eligible investors are principally institutions that have
investable pools of assets, including defined benefit
plans, defined contribution plans, health care defined
benefit plans and board-designated funds, insurance
operating funds, foundations, endowments, public plans and
Taft-Hartley plans and have entered into an Investment
Management Agreement (the "Agreement") with SEI Investments
Management Corporation ("SIMC")(collectively, "Eligible
Investors").
Pursuant to the Agreement, SIMC will consult with
each Eligible Investor to define its investment objectives,
desired returns and tolerance for risk, and to develop a
plan for the allocation of assets among different asset
classes. The Agreement sets forth the fee to be paid to
SIMC, which is ordinarily expressed as a percentage of the
Eligible Investor's assets managed by SIMC. This fee, which
is negotiated by the Eligible Investor and SIMC, may
include a performance based fee or a fixed-dollar fee for
certain specified services. Either the Eligible Investor or
SIMC may terminate the Agreement upon written notice as
provided in the Agreement.
GENERAL MANAGEMENT OF
THE FUNDS ______________________________________________________________________
SIMC (the "Manager") is a wholly-owned subsidiary of SEI
Investments Company ("SEI Investments"), a financial
services company. The principal business address of SIMC
and SEI Investments is Oaks, Pennsylvania, 19456. SEI
Investments was founded in 1968, and is a leading provider
of investment solutions to banks, institutional investors,
investment advisers and insurance companies. Affiliates of
SIMC have provided consulting advice to institutional
investors for more than 20 years, including advice
regarding selection and evaluation of money managers. SIMC
currently serves as manager to more than 46 investment
companies, including more than 387 funds, with more than
$128 billion in assets as of May 31, 1998.
SIMC is the investment Manager for each of the Funds,
and operates as a "manager of managers." As Manager, SIMC
oversees the investment advisory services
5
<PAGE>
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 Manager and the
Board of Trustees, a number of sub-advisers (the "Money
Managers") are responsible for the day-to-day investment
management of all or a discrete portion of the assets of
the Funds. Money Managers are selected for the Funds based
primarily upon the research and recommendations of SIMC,
which evaluates quantitatively and qualitatively a Money
Manager'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 Money
Managers, monitors and evaluates Money Manager performance,
and oversees Money Manager 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 MONEY
MANAGERS AND RECOMMEND THEIR HIRING, TERMINATION AND
REPLACEMENT.
SIMC and the Trust have obtained an exemptive order
from the Securities and Exchange Commission (the "SEC")
that permits SIMC, with the approval of the Trust's Board
of Trustees, to retain Money Managers unaffiliated with
SIMC for the Funds without submitting the Money Manager
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 Money Managers
under all such Money Manager agreements for each Fund. The
Funds will notify shareholders in the event of any addition
or change in the identity of its Money Managers.
For its management 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): Large Cap Fund,
.40%; Small Cap Fund, .65%; International Equity Fund,
.51%; Emerging Markets Equity Fund, 1.05%; Core Fixed
Income Fund, .30%; High Yield Bond Fund, .49%; and
International Fixed Income Fund, .45%. SIMC pays the Money
Managers a fee out of its advisory fee, which fee is based
on a percentage of the average monthly market value of the
assets managed by each Money Manager.
For the fiscal year ended May 31, 1998, the Large
Cap, Small Cap, International Equity and Core Fixed Income
Funds paid management fees to SIMC, after fee waivers, of
.26%, .52%, .49% and .13%, respectively, of their average
daily net assets. The High Yield Bond, International Fixed
Income and Emerging Markets Equity Funds had not commenced
operations as of May 31, 1998.
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. For these administrative services,
SEI Management is entitled to a fee, which is calculated
daily and paid monthly, at an annual rate of .05% of the
average daily net assets of each Fund.
6
<PAGE>
SIMC and SEI Management have agreed, on a voluntary basis,
to waive a portion of their Management/Administration Fees
and/or reimburse Other Expenses to the extent necessary to
keep Total Operating Expenses from exceeding current
levels. The Total Operating Expenses reflect current fee
waivers.
For the fiscal year ended May 31, 1998, the Large
Cap, Small Cap, International Equity and Core Fixed Income
Funds paid administrative fees, after fee waivers, of .01%,
.01%, .04% and .01%, respectively, of their average daily
net assets. The High Yield Bond, International Fixed Income
and Emerging Markets Equity Funds had not commenced
operations as of May 31, 1998.
SEI Investments Distribution Co. (The "Distributor")
serves as each Fund's distributor pursuant to a
distribution agreement (the "Distribution Agreement") with
the Trust. No compensation is paid to the Distributor under
the Distribution Agreement for distribution services for
the shares of any Fund.
The Fund may execute brokerage or other agency
transactions through the Distributor, for which the
Distributor may receive compensation.
The Distributor may, from time to time and at its own
expense, provide promotional incentives, in the form of
cash or other compensation, to certain financial
institutions whose representatives have sold or are
expected to sell significant amounts of the Funds' shares.
7
<PAGE>
THE MONEY MANAGERS ____________________________________________________________
The assets of each Fund will be allocated among the Money
Managers listed below. However, SIMC may change the
allocation of a Fund's assets among Money Managers at any
time.
The following table sets forth information about the
Money Managers selected for the Funds by the Boards of
Trustees (as of September 30, 1998).
<TABLE>
<CAPTION>
FUND MONEY MANAGERS
<S> <C>
- ---------------------------------------------------------------------------------------
Large Cap Alliance Capital Management L.P.
LSV Asset Management, L.P.
Mellon Equity Associates, LLP
Provident Investment Counsel, Inc.
Sanford C. Bernstein & Co., Inc.
TCW Funds Management, Inc.
- ---------------------------------------------------------------------------------------
Small Cap 1838 Investment Advisors, L.P.
Boston Partners Asset Management, L.P.
Furman Selz Capital Management LLC
LSV Asset Management, L.P.
Mellon Equity Associates, LLP
Nicholas-Applegate Capital Management, Inc.
Polynous Capital Management, Inc.
Robertson Stephens Investment Management, L.P.
Spyglass Asset Management, Inc.
Wall Street Associates
- ---------------------------------------------------------------------------------------
International Equity Acadian Asset Management, Inc.
Capital Guardian Trust Company
Scottish Widows Investment Management Limited
SG Pacific Asset Management, Inc.,
SGY Pacific Asset Management (Singapore) Limited and
SG Yamaichi Asset Management Co., Ltd.
- ---------------------------------------------------------------------------------------
Emerging Markets Equity Coronation Asset Management (Proprietary) Limited
Credit Suisse Asset Management, Limited
Morgan Stanley Asset Management Inc.
Nicholas-Applegate Capital Management
Parametric Portfolio Associates
SG Pacific Asset Management, Inc., and
SGY Asset Management (Singapore) Limited
- ---------------------------------------------------------------------------------------
Core Fixed Income BlackRock, Inc
Firstar Investment Research & Management Company, LLC
Western Asset Management Company
- ---------------------------------------------------------------------------------------
High Yield Bond BEA Associates
- ---------------------------------------------------------------------------------------
International Fixed Strategic Fixed Income, LLC
Income
- ---------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
1838 INVESTMENT ADVISORS, L.P.
1838 Investment Advisors, L.P. ("1838") serves as a Money
Manager to a portion of the assets of the Small Cap Fund.
1838 is a Delaware limited partnership located at 100
Matsonford Road, Radnor, Pennsylvania. As of March 31,
1998, 1838 managed $5.6 billion in assets in large and
small capitalization equity, fixed income and balanced
account portfolios.
Edwin B. Powell, J. Kelly Flynn and Cynthia R.
Axelrod are the fund managers for the portion of the Small
Cap Fund's assets allocated to 1838. These individuals work
as a team and share responsibility. Mr. Powell managed
small cap equity funds for Provident Capital Management
from 1987 to 1994. Mr. Flynn, a Director of 1838, has over
five years of experience in the investment business. Prior
to joining 1838 in 1997, Mr. Flynn was in the Investment
Banking Division at CS First Boston and was an Associate of
the Edgewater Private Equity Fund. Mr. Flynn has also
worked in the Equities Division of Goldman, Sachs & Co.
Prior to joining 1838 in 1995, Ms. Axelrod was with Friess
Associates from 1992 to 1995. Prior to that, she was with
Provident Capital Management from 1987 to 1992.
ACADIAN ASSET MANAGEMENT, INC.
Acadian Asset Management, Inc. ("Acadian") serves as a
Money Manager for a portion of the assets of the
International Equity Fund. Acadian, a wholly-owned
subsidiary of United Asset Management Corporation ("UAM"),
was founded in 1977, and manages approximately $5 billion
in assets invested globally as of May 31, 1998. The
principal address of Acadian is Two International Place,
26th floor, Boston, Massachusetts 02110.
A committee of investment professionals at Acadian is
responsible for managing the portion of the International
Equity Fund's assets allocated to Acadian.
ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance Capital Management L.P. ("Alliance") serves as a
Money Manager for a portion of the assets of the Large Cap
Fund. Alliance is a registered investment adviser organized
as a Delaware limited partnership, which originated as
Alliance Capital Management Corporation in 1971. Alliance
Capital Management Corporation, an indirect wholly-owned
subsidiary of The Equitable Life Assurance Society of the
United States, is the general partner of Alliance. As of
March 31, 1998, Alliance managed over $248 billion in
assets. The principal address of Alliance is 1345 Avenue of
the Americas, New York, New York 10105.
A committee of investment professionals at Alliance
manages the portion of the Large Cap Fund's assets
allocated to Alliance.
BEA ASSOCIATES
BEA Associates ("BEA") serves as the Money Manager for the
High Yield Bond Fund. BEA is a general partnership
organized under the laws of the State of New York and,
together with its predecessor firms, has been engaged in
the investment advisory business for more than 50 years.
BEA is a wholly-owned subsidiary of Credit Suisse, the
second largest Swiss bank, which, in turn, is a subsidiary
of CS Holding, a Swiss corporation. BEA is a diversified
asset manager, handling global equity, balanced, fixed
income and derivative securities accounts for private
individuals, as well as corporate pension and
profit-sharing
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plans, state pension funds, union funds, endowments and
other charitable institutions. As of March 31, 1998, BEA
managed approximately $36 billion in assets. BEA's
principal business address is One Citicorp Center, 153 East
53rd Street, New York, New York 10022.
The High Yield Bond Fund's assets are managed by
Richard J. Lindquist, C.F.A. Mr. Lindquist joined BEA in
1995 as a result of BEA's acquisition of CS First Boston
Investment Management, and has had 15 years of investment
management experience, all 15 years of experience working
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 totalling
approximately $1.3 billion. Prior to joining Prudential,
Mr. Lindquist was managing high yield funds at T. Rowe
Price.
BLACKROCK, INC.
BlackRock, Inc. (formerly, BlackRock Financial Management,
Inc.("BlackRock") serves as a Money Manager to a portion of
the assets of the Core Fixed Income Fund. BlackRock, a
registered investment adviser, is a Delaware corporation
with its principal business address at 345 Park Avenue,
30th Floor, New York, New York 10154. BlackRock's
predecessor was founded in 1988, and as of March 31, 1998,
BlackRock had $115 billion in assets under management.
BlackRock is an indirect subsidiary of PNC Bank Corp.
BlackRock employs a team approach in managing the
Fund assets allocated to BlackRock; however, the portfolio
managers who have day-to-day responsibility for the Fund
are Keith Anderson and Andrew Phillips. Mr. Anderson is a
Managing Director and Co-Head of Portfolio Management at
BlackRock, and has 14 years' experience investing in fixed
income securities. Mr. Phillips is a Principal and
portfolio manager with primary responsibility for the
management of the firm's investment activities in
fixed-rate mortgage securities.
BOSTON PARTNERS ASSET MANAGEMENT, L.P.
Boston Partners Asset Management, L.P. ("BPAM") serves as a
Money Manager for a portion of the assets of the Small Cap
Fund. BPAM, a Delaware limited partnership, is a registered
investment adviser, and its general partner is Boston
Partners, Inc. BPAM was founded in April, 1995, and as of
May 31, 1998, it had approximately $16 billion in assets
under management. BPAM's clients include corporations,
endowments, foundations, pension and profit sharing plans,
and investment companies. The principal business address of
BPAM is 28 State Street, 21st Floor, Boston, Massachusetts
02109.
The portion of the Small Cap Fund's assets allocated
to BPAM is managed by Wayne J. Archambo, C.F.A. Mr.
Archambo has been employed by BPAM since its organization,
and has more than 14 years experience investing in
equities. Prior to joining BPAM, Mr. Archambo was employed
at The Boston Company Asset Management, Inc. ("TBCAM") from
1989 through April, 1995. Mr. Archambo created TBCAM's
small cap value product in 1992. Prior to joining TBCAM in
1989, Mr. Archambo spent six years as a fund
manager/analyst for Boston-based Systematic Investors.
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CAPITAL GUARDIAN TRUST COMPANY
Capital Guardian Trust Company ("CGTC") serves as a Money
Manager to a portion of the assets of the International
Equity Fund. CGTC, a California trust company founded in
1968, is a wholly-owned subsidiary of The Capital Group
Companies, Inc. CGTC has managed international portfolios
since 1978, and as of March 31, 1998, managed a total of
over $77 billion primarily for institutional clients. The
principal business address of CGTC and The Capital Group
Companies, Inc. is 333 South Hope Street, Los Angeles,
California 90071.
Capital Guardian utilizes a multiple portfolio
management system under which a group of portfolio managers
each will have investment discretion over a portion of the
assets of the Fund managed by Capital Guardian. Capital
Guardian utilizes a research driven, value-oriented
investment philosophy.
CORONATION ASSET MANAGEMENT (PROPRIETARY) LIMITED
Coronation Asset Management (Proprietary) Limited
("Coronation") serves as a Money Manager for a portion of
the assets of the Emerging Markets Equity Fund. Coronation,
a registered investment adviser organized under the laws of
the Republic of South Africa, was founded in 1993, and as
of March 31, 1998, managed $4.7 billion in assets. The
principal business address of Coronation is 80 Strand
Street, Cape Town, South Africa, 8001.
Investment decisions for Coronation's portion of the
assets of the Fund are made by Anthony Gibson and Louis
Stassen. Prior to joining Coronation in 1993, Mr. Gibson,
the head of Coronation's Investment Committee, and Mr.
Stassen, the head of Coronation's research department,
worked at Syfrets Managed Assets for seven years and one
year, respectively. Prior to joining Syfrets Managed
Assets, Mr. Stassen worked as an Investment Analyst for
Allan Gray Investment Counsel.
CREDIT SUISSE ASSET MANAGEMENT LIMITED
Credit Suisse Asset Management Limited ("Credit Suisse")
acts as a Money Manager for a portion of the assets of the
Emerging Markets Equity Fund. Credit Suisse, a UK limited
liability company formed in 1982, is a registered
investment adviser that managed approximately $37.1 billion
as of March 31, 1998. Credit Suisse is a wholly-owned
subsidiary of the Credit Suisse Group, a financial services
conglomerate headquartered in Zurich, Switzerland. Credit
Suisse's principal business address is Beaufort House, 15
St. Botolph Street, London, EC3A 7JJ.
Glenn Wellman, a Managing Director of Credit Suisse,
and Isabel Knight, a Director of Credit Suisse, are
primarily responsible for the day-to-day management and
investment decisions made with respect to the assets of the
Fund. Prior to joining Credit Suisse in 1993, Mr. Wellman
was a Director and Senior Vice President at Alliance
Capital Limited. Before joining Credit Suisse in 1997, Ms.
Knight was Senior Fund Manager at Foreign and Colonial from
1995 to 1997. From 1992 to 1995, Ms. Knight was a Portfolio
Manager for Morgan Stanley Asset Management.
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FIRSTAR INVESTMENT RESEARCH & MANAGEMENT COMPANY, LLC
Firstar Investment Research & Management Company, LLC
("FIRMCO") serves as a Money Manager for a portion of the
assets of the Core Fixed Income Fund. FIRMCO is a
registered investment adviser with its principal business
address at 777 East Wisconsin Avenue, Suite 800, Milwaukee,
Wisconsin 53202. As of March 31, 1998, it had approximately
$24.4 billion in assets under management. FIRMCO is a
wholly-owned subsidiary of Firstar Corporation, a bank
holding company located at 777 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202. FIRMCO's clients include
pension and profit sharing plans, trusts and estates and
one other investment company.
Mr. Charles Groeschell, a Senior Vice President of
FIRMCO, has been employed by FIRMCO or its affiliates since
1983, and has 16 years experience in fixed income
investment management. Mr. Groeschell manages the portion
of the Core Fixed Income Fund's assets allocated to FIRMCO.
FURMAN SELZ CAPITAL MANAGEMENT LLC
Furman Selz Capital Management LLC ("Furman Selz") serves
as a Money Manager for a portion of the assets of the Small
Cap Fund. Furman Selz, a Delaware limited liability company
whose predecessor was formed in 1977, is a registered
investment adviser that managed approximately $10.5 billion
in assets as of March 31, 1998. The ultimate parent of
Furman Selz is ING Groep N.V., a Dutch financial services
company. Furman Selz's principal business address is 230
Park Avenue, New York, NY 10169.
Matthew S. Price and David C. Campbell, Managing
Directors/Portfolio Managers, have been with Furman Selz
for over 5 and 7 years, respectively, and are primarily
responsible for the day-to-day management and investment
decisions made with respect to the assets of the Fund.
Prior to joining Furman Selz, Mr. Price and Mr. Campbell
were Senior Portfolio Managers at Value Line Asset
Management.
LSV ASSET MANAGEMENT, L.P.
LSV Asset Management, L.P. ("LSV") serves as a Money
Manager to a portion of the assets of the Large Cap Fund
and the Small Cap Fund. LSV is a registered investment
adviser organized as a Delaware general partnership. An
affiliate of the Adviser owns a majority interest in LSV.
The general partners developed a quantitative value
investment philosophy that has been used to manage assets
over the past 7 years. The principal business address of
LSV is 200 W. Madison Avenue, Chicago, Illinois 60606. As
of March 31, 1998, LSV managed approximately $2.7 billion
in client assets.
The Adviser pays LSV fees based on a percentage of
the average monthly market value of the assets of the Large
Cap Fund and the Small Cap Fund managed by LSV. These fees,
which are calculated daily and paid monthly, are at an
annual rate of .20% of the average monthly market value of
the assets of the Large Cap Fund managed by LSV and .50% of
the average monthly market value of the assets of the Small
Cap Fund managed by LSV.
Josef Lakonishok, Andrei Shleifer and Robert Vishny,
officers and partners of LSV, manage the Funds on an
ongoing basis and make adjustments to the investment model
12
<PAGE>
based on their research and statistical analysis. Through
their investment process, LSV identifies buy and sell
candidates subject to specific tolerances and constraints.
MELLON EQUITY ASSOCIATES, LLP
Mellon Equity Associates, LLP ("Mellon Equity") serves as a
Money Manager to a portion of the assets of each of the
Large Cap Fund and the Small Cap Fund. Mellon Equity is a
limited liability partnership founded in 1987. Mellon Bank,
N.A., is the 99% limited partner and MMIP, Inc. is the 1%
general partner. MMIP, Inc. is a wholly-owned subsidiary of
Mellon Bank, N.A., which itself is a wholly-owned
subsidiary of the Mellon Bank Corporation. Mellon Equity
had discretionary management authority with respect to
approximately $20.6 billion of assets as of May 31, 1998.
The business address for Mellon Equity is 500 Grant Street,
Suite 3700, Pittsburgh, Pennsylvania 15258.
William P. Rydell and Robert A. Wilk manage the
portion of the Large Cap and Small Cap Funds' assets
allocated to Mellon Equity. 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. Prior to joining Mellon Equity, Mr. Wilk
was in charge of portfolio management and conducted
quantitative research for another investment subsidiary of
Mellon Bank Corporation, Triangle Portfolio Associates.
MORGAN STANLEY ASSET MANAGEMENT INC.
Morgan Stanley Asset Management Inc. ("MSAM") acts as a
Money Manager for a portion of the assets of the Emerging
Markets Equity Fund. MSAM is a wholly-owned subsidiary of
Morgan Stanley Dean Witter & Co. MSAM is a registered
investment adviser that currently has approximately $167
billion of assets under management. The principal business
address of MSAM is 1221 Avenue of the Americas, New York,
New York 10020.
Robert L. Meyer, a Managing Director of MSAM, Michael
Perl, a Vice President of MSAM, and Andy Skov, a Principal
of MSAM, are primarily responsible for the day-to-day
management and investment decisions made with respect to
the assets of the Fund. Mr. Meyer joined MSAM in 1989 after
working for the law firm of Irell & Manella. Mr. Perl
joined MSAM in 1998 after 6 years at Bankers Trust
Australia, where he served as a Portfolio Manager. Mr. Skov
joined MSAM in 1994 after 4 years as an Associate at
Bankers Trust.
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, INC.
Nicholas-Applegate Capital Management, Inc.
("Nicholas-Applegate") serves as a Money Manager to a
portion of the assets of each of the Small Cap Fund and the
Emerging Markets Equity Fund. As of March 31, 1998,
Nicholas-Applegate had discretionary management authority
with respect to approximately $31.8 billion of assets. The
principal business address of Nicholas-Applegate is 600
West Broadway, 29th Floor, San Diego, California 92101.
Nicholas-Applegate, pursuant to a partnership agreement, is
controlled
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<PAGE>
by its general partner, Nicholas-Applegate Capital
Management Holdings, L.P., a California limited partnership
controlled by a corporation controlled by Arthur E.
Nicholas.
Nicholas-Applegate manages its portion of the Small
Cap and Emerging Markets Equity Fund's assets through its
systematic-driven management team under the general
supervision of Mr. Nicholas, founder and Chief Investment
Officer of the firm. The U.S. Systematic team is
responsible for the day-to-day management of the Small Cap
Fund's assets. The lead U.S. Systematic portfolio manager
is John Kane, and he is assisted by five other portfolio
manager/analysts for the Fund's U.S. Systematic assets. Mr.
Kane 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.
The Emerging Markets team is responsible for the day-to-day
management of the Emerging Markets Equity Fund's assets.
The Emerging Market team is co-managed by Pedro Marcal and
Eswar Menon. Mr. Marcal joined Nicholas-Applegate in 1984,
and has five years prior investment adviser experience with
A.B. Laffer, V.A. Canto & Associates, and A-Mark Precious
Metals. Mr. Menon joined Nicholas-Applegate in 1995, and
has 5 years prior experience with Koeneman Capital
Management in Singapore.
PARAMETRIC PORTFOLIO ASSOCIATES
Parametric Portfolio Associates ("Parametric") serves as a
Money Manager for a portion of the assets of the Emerging
Markets Equity Fund. Parametric is a general partnership
whose general partners are PIMCO Advisors L.P. ("PIMCO"),
the supervisory general partner, and Parametric Management,
Inc., the managing general partner (a wholly-owned
subsidiary of PIMCO). Parametric's predecessor was founded
in 1987, and as of May 31, 1998, Parametric managed
approximately $3.0 billion in client assets. Parametric's
business address is 701 Fifth Avenue, Suite 7310, Seattle,
WA 98104. PIMCO's address is 800 Newport Center Drive,
Newport Beach, California 92660.
Clifford Quisenberry, CFA, Vice President and
Portfolio Manager, is responsible for managing the portion
of the Fund's assets allocated to Parametric. Mr.
Quisenberry has eleven years experience in portfolio
management. He joined Parametric in 1994.
POLYNOUS CAPITAL MANAGEMENT, INC.
Polynous Capital Management, Inc. ("Polynous"), serves as a
Money Manager for a portion of the assets of the Small Cap
Fund. Polynous, a California corporation formed in 1995, is
a registered investment adviser that managed approximately
$166 million in assets as of March 31, 1998. Polynous is
controlled by Kevin L. Wenck, founder and Principal
Executive Officer of Polynous. Polynous's principle
business address is 88 Kearny Street, Suite 1300, San
Francisco, California 94108.
Mr. Wenck is primarily responsible for the day-to-day
management and investment decisions made with respect to
the assets of the Fund. Prior to forming Polynous, Mr.
Wenck, who was a Portfolio Manager at GT Capital
Management.
14
<PAGE>
PROVIDENT INVESTMENT COUNSEL, INC.
Provident Investment Counsel, Inc. ("Provident") serves as
a Money Manager for a portion of the assets of the Large
Cap Fund. Provident is a registered investment adviser with
its principal business address at 300 North Lake Avenue,
Pasadena, California 91101, which, through its
predecessors, has been in business since 1951, a
wholly-owned subsidiary of United Asset Management ("UAM"),
a publicly traded investment adviser holding company. UAM
is headquartered at One International Place, Boston,
Massachusetts 02110. Provident provides investment advice
to corporations, public entities, foundations and labor
unions, as well as to other investment companies. As of
March 31, 1998, Provident had over $19 billion in client
assets under management.
A team consisting of the senior investment
professionals is responsible for the development of
investment policy and strategy. The implementation of these
decisions for the portion of the Large Cap Fund's assets
allocated to Provident is the responsibility of George E.
Handtmann III and Jeffrey J. Miller, Managing Director. Mr.
Handtmann has been with Provident since 1982 and Mr. Miller
has been with the firm since 1972.
ROBERTSON, STEPHENS INVESTMENT MANAGEMENT, L.P.
Robertson, Stephens Investment Management, L.P.
("Robertson"), acts as a Money Manager for a portion of the
assets of the Small Cap Fund. Robertson is a wholly-owned
subsidiary of BankAmerica. Robertson is a registered
investment adviser that currently has approximately $5.0
billion of assets under management, $240 million of which
is in the small cap product. The principal business address
of Robertson is 555 California Street, Suite 2600, San
Francisco, California 94104.
Jim Callinan, a managing director of Robertson, is
primarily responsible for the day-to-day management and
investment decisions made with respect to the assets of the
Portfolio. He joined Robertson in June 1996 after nine
years at Putnam Investments ("Putnam") in Boston, where he
served as a portfolio manager of the Putnam OTC Emerging
Growth Fund. Mr. Callinan also served as a specialty growth
research analyst and portfolio manager of both the Putnam
Emerging Information Science Trust Fund and the Putnam
Emerging Health Sciences Trust Fund while at Putnam.
SG PACIFIC ASSET MANAGEMENT, INC., AND SGY ASSET MANAGEMENT (SINGAPORE) LIMITED
AND SG YAMAICHI ASSET MANAGEMENT CO., LTD.
SG Pacific Asset Management, Inc. (formerly, Yamaichi
Capital Management, Inc.) ("SG Pacific") and SGY Asset
Management (Singapore) Ltd. (formerly, Yamaichi Capital
Management (Singapore) Limited) ("SGY") jointly serve as
Money Managers for a portion of the assets of the
International Equity and Emerging Markets Equity Funds.
Societe Generale Asset Management (North Pacific), a French
financial services conglomerate, has a controlling interest
in SG Yamaichi Asset Management Co., Ltd. (formerly,
Yamaichi International Capital Management Co., Ltd.) ("SG
Yamaichi"), the parent of SG Pacific and SGY. SG Yamaichi
also serves as a Money Managers for a portion of the assets
of the International Equity Fund. SG Yamaichi was
established in 1971 as a global asset management firm. SG
Pacific and SGY are wholly-owned subsidiaries of SG
Yamaichi. The principal address of SG Pacific is 2 World
Trade Center, Suite 9828, New York, New York 10048. The
principal address of SGY is 138 Robinson Road, #13-01/05,
Hong Leong
15
<PAGE>
Centre, Singapore 068906. The principal address of SG
Yamaichi is 5-1, Nihombashi Kabutocho, Chuo-ku, Tokyo 103,
Japan. SG Yamaichi and its affiliates currently manage over
$17 billion in assets worldwide.
Mr. Marco Wong leads the management team for the
assets of the International Equity and Emerging Markets
Equity Funds allocated to SG Pacific, SGY and SG Yamaichi.
Mr. Wong has been with SG Yamaichi since 1986. Mr.
Hiroyoshi Nakagawa oversees the Japan investment team in
Tokyo, and also serves as a portfolio manager for the
International Equity Fund. Mr. Nakagawa joined SG Yamaichi
in 1977.
SANFORD C. BERNSTEIN & CO., INC.
Sanford C. Bernstein & Co., Inc. ("Bernstein"), serves as a
Money Manager to a portion of the assets of the Large Cap
Fund. Founded in 1967, Bernstein is a registered investment
adviser that managed approximately $77 billion in assets as
of March 31, 1998. Bernstein is controlled by the members
of its Board of Directors and its principal business
address is 767 Fifth Avenue, New York, New York 10153.
Lewis A. Sanders and Marilyn Goldstein Fedak are
primarily responsible for the day-to-day management and
investment decisions with respect to the assets of the
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.
SCOTTISH WIDOWS INVESTMENT MANAGEMENT LIMITED
Scottish Widows Investment Management Limited ("Scottish
Widows") serves as a Money Manager for a portion of the
assets of the International Equity Fund. Scottish Widows is
a wholly-owned subsidiary of the Scottish Widows Group, a
mutual insurance company founded in 1815 and based in
Edinburgh, Scotland. Scottish Widows is a registered
investment adviser that managed approximately $50 billion
among 95 accounts as of March 31, 1998. The principal
business address of Scottish Widows is P.O. Box 17036, 69
Morrison Street, Edinburgh EH3 8YF, Scotland.
Albert Morillo, a Director of Scottish Widows, is
primarily responsible for the day-to-day management and
investment decisions made with respect to the assets of
Scottish Widows' portion of the Fund. Mr. Morillo joined
Scottish Widows as a UK analyst in 1985, and became the
head of the European Team in 1991. Mr. Morillo sits on the
Investment Policy Committee and has asset allocation
responsibilities for the firm's global equity accounts. Mr.
Morillo has been a member of the European Team since 1986.
SPYGLASS ASSET MANAGEMENT, INC.
Spyglass Asset Management, Inc. ("Spyglass") acts as a
Money Manager for a portion of the assets of the Small Cap
Fund. Spyglass, a Delaware Corporation founded in May,
1998, is a registered investment adviser controlled by
Roger Stamper and Stephen Wisneski. The principal business
address of Spyglass is 3454 Oak Alley Court, Suite #209,
Toledo, Ohio 43606.
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<PAGE>
Roger H. Stamper, President of Spyglass, is primarily
responsible for the day-to-day management and investment
decisions made with respect to the assets of the Fund. Mr.
Stamper has 14 years of investment experience. Prior to
founding Spyglass, Mr. Stamper served as Managing Director
of Equities at First of America Investment Management,
where he also served as portfolio manager of the $1 billion
Small Cap Growth equity product. Stephen Wisneski, Chief
Operating Officer, has over 12 years of investment
management experience. Prior to joining Spyglass, Mr.
Wisneski served as the portfolio manager on the large cap
growth products for First of America Investment Management.
STRATEGIC FIXED INCOME, L.L.C.
Strategic Fixed Income, L.L.C. ("Strategic") serves as the
Money Manager for the International Fixed Income Fund.
Strategic is a Delaware limited liability company whose
predecessor was formed in 1991 to manage multi-currency
fixed income portfolios. The managing member of the firm is
Gobi Investment Inc., of which Kenneth Windheim is the sole
shareholder, and the limited partner is Strategic
Investment Management ("SIM"). As of March 31, 1998,
Strategic managed $4.9 billion of client assets. The
principal address of Strategic is 1001 Nineteenth Street
North, Suite 1720, Arlington, Virginia 22209.
Kenneth Windheim, President of Strategic, is the
portfolio manager of the International Fixed Income Fund.
Mr. Windheim is assisted by Gregory Barnett and David
Jallits, Directors of Strategic. Prior to forming
Strategic, Kenneth Windheim was the Chief Investment
Officer and Managing Director of the group which managed
global fixed income portfolios at Prudential Asset
Management. Prior to joining Strategic, Gregory Barnett was
portfolio manager for the Pilgrim Multi-Market Income Fund.
Prior to that he was vice president and senior fixed income
portfolio manager at Lexington Management. Prior to joining
Strategic, David Jallits was Senior Portfolio Manager for a
hedge fund at Teton Partners. From 1992 to 1993, he was
Vice President and Global Fixed Income Portfolio Manager at
The Putnam Companies.
TCW FUNDS MANAGEMENT INC.
TCW Funds Management Inc. ("TCW") acts as a Money Manager
for a portion of the assets of the Large Cap Fund. TCW is a
wholly-owned subsidiary of the TCW Group, Inc. TCW is a
registered investment adviser that currently has
approximately $51 billion of assets under management. The
principal business address of TCW is 865 S. Figueroa, Suite
1800, Los Angeles, California 90017.
Glen E. Bickerstaff, a Managing Director of TCW, is
primarily responsible for the day-to-day management and
investment decisions made with respect to the assets of the
Fund. Mr. Bickerstaff joined TCW in May, 1998 after 10
years at Transamerica Investment Services, where he served
as Vice President and Senior Portfolio Manager. Mr.
Bickerstaff has over 18 years of investment experience
dedicated to investing in large cap growth securities.
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<PAGE>
WALL STREET ASSOCIATES
Wall Street Associates ("WSA") serves as a Money Manager
for a portion of the assets of the Small Cap Fund. WSA was
founded in 1987, and as of May 31, 1998, had approximately
$1.3 billion in assets under management. WSA provides
investment advisory services for institutional clients, an
investment partnership for which it serves as general
partner, a group trust, for which it serves as sole
investment manager, and an offshore fund for foreign
investors for which it serves as the sole investment
manager. The principal business address of WSA is at 1200
Prospect Street, Suite 100, La Jolla, California 92037.
William Jeffery III, Kenneth F. McCain, and Richard
S. Coons, each of whom owns 1/3 of WSA, serve as fund
managers for the portion of the Small Cap Fund's assets
allocated to WSA. Each is a principal of WSA and they have
an average of 27 years of investment management experience.
WESTERN ASSET MANAGEMENT COMPANY
Western Asset Management Company ("Western") serves as a
Money Manager for a portion of the assets of the Core Fixed
Income Fund. Western is a wholly-owned subsidiary of Legg
Mason, Inc., a financial services company located in
Baltimore, Maryland. Western was founded in 1971 and
specializes in the management of fixed income funds. As of
March 31, 1998, Western managed approximately $41.5 billion
in client assets, including $8.2 billion of investment
company assets. The principal business address of Western
is 117 East Colorado Boulevard, Pasadena, California 91105.
The Western Asset Investment Strategy Group is
primarily responsible for the day-to-day management of the
portion of the Core Fixed Income Fund's assets allocated to
Western.
INVESTMENT OBJECTIVES
AND POLICIES
___________________________________________________________________________
Each Fund's investment objective and policies are set forth
below. See "General Investment Policies and Risk Factors"
for information about additional investment practices that
some or all of the Funds may employ.
LARGE CAP FUND
The investment objective of the Large Cap Fund is long-term
growth of capital and income.
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 at the time of
purchase). Any remaining assets may be invested in
investment grade fixed income securities, including
variable and floating rate securities, or in equity
securities of smaller companies that the Fund's Money
Managers believe are appropriate in light of the Fund's
objective. The Fund may also purchase illiquid securities,
shares of other investment companies, when-issued and
delayed-delivery securities and zero coupon obligations.
The Fund may also borrow money and lend its securities to
qualified borrowers.
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<PAGE>
SMALL CAP FUND
The investment objective of the Small Cap Fund is capital
appreciation.
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 at the time of
purchase). Any remaining assets may be invested in
investment grade fixed income securities, including
variable and floating rate securities, or in equity
securities of larger companies that the Fund's Money
Managers believe are appropriate in light of the Fund's
objective. The Fund may also purchase illiquid securities,
shares of other investment companies, when-issued and
delayed-delivery securities and zero coupon obligations.
The Fund may also borrow money and lend its securities to
qualified borrowers.
INTERNATIONAL EQUITY FUND
The International Equity Fund seeks to provide capital
appreciation.
Under normal market conditions, the Fund will invest
at least 65% of its total assets in the equity securities
of non-U.S. issuers located in at least three different
countries. Any remaining assets will be invested in
securities of emerging markets issuers, U.S. or non-U.S.
cash reserves and money market instruments, as well as
variable and floating rate securities. The Fund may also
purchase illiquid securities, shares of other investment
companies, obligations of supranational entities,
when-issued and delayed-delivery securities and zero coupon
obligations. The Fund may also borrow money, enter into
forward foreign currency and swap contracts and lend its
securities to qualified buyers.
Securities of non-U.S. issuers purchased by the Fund
may be purchased on exchanges in foreign markets, on U.S.
registered exchanges or the domestic or foreign
over-the-counter markets.
EMERGING MARKETS EQUITY FUND
The Emerging Markets Equity Fund seeks to provide capital
appreciation.
Under normal market conditions, the Fund will invest
at least 65% of its total assets in the equity securities
of emerging market issuers. The Fund defines an emerging
market country as any country the economy and market of
which the World Bank or the United Nations considers to be
emerging or developing. The Fund's Money Manager considers
emerging market issuers to include companies the securities
of which are principally traded in the capital markets of
emerging market countries; that derive at least 50% of
their total revenue from either goods produced or services
rendered in emerging market countries, regardless of where
the securities of such companies are principally traded; or
that are organized under the laws of and have a principal
office in an emerging market country. Under normal market
conditions, the Fund maintains investments in at least six
emerging market countries and does not invest more than 35%
of its total assets in any one country.
The Fund may invest any remaining assets in
investment grade fixed income securities, including
variable and floating rate securities, of emerging market
governments
19
<PAGE>
and companies, and may invest up to 5% of its total assets
in securities that are rated below investment grade.
Certain securities issued by governments of emerging market
countries are or may be eligible for conversion into
investments in emerging market companies under debt
conversion programs sponsored by such governments. Bonds
rated below investment grade are often referred to as "junk
bonds." Such securities involve greater risk of default or
price volatility than investment grade securities.
When in the Fund's Money Manager's opinion there is
an insufficient supply of suitable securities from emerging
market issuers, the Fund may invest up to 20% of its total
assets in the equity securities of non-emerging market
companies contained in the Morgan Stanley Capital
International Europe, Australia and Far East Index (the
"EAFE Index"). These companies typically have larger
average market capitalizations than the emerging market
companies in which the Fund generally invests.
Securities of non-U.S. issuers purchased by the Fund
may be purchased on exchanges in foreign markets, on U.S.
registered exchanges or the domestic or foreign
over-the-counter markets, and may be purchased in initial
public offerings. The Fund may also purchase illiquid
securities, including "special situation" securities,
shares of other investment companies, obligations of
supranational entities, when-issued and delayed-delivery
securities and zero coupon obligations. The Fund may also
borrow money, enter into forward foreign currency
transactions and swap contracts and lend its securities to
qualified buyers.
CORE FIXED INCOME FUND
The investment objective of the Core Fixed Income Fund is
current income consistent with the preservation of capital.
Under normal market conditions, the Fund will invest
at least 65% of its total assets in investment grade fixed
income securities. The Fund may acquire all types of fixed
income securities issued by domestic and foreign private
and governmental issuers, including mortgage-backed and
asset-backed securities and variable and floating rate
securities. The Fund may invest not only in traditional
fixed income securities, such as bonds and debentures, but
in structured securities that make interest and principal
payments based upon the performance of specified assets or
indices. Structured securities include mortgage-backed
securities such as pass-through certificates,
collateralized mortgage obligations and interest and
principal only components of mortgage-backed securities.
The Fund may also invest in mortgage dollar roll
transactions, construction loans, Yankee obligations,
illiquid securities, shares of other investment companies,
obligations of supranational agencies, warrants,
when-issued and delayed-delivery securities and zero coupon
obligations. The Fund may also borrow money and lend its
securities to qualified borrowers.
The Core Fixed Income Fund invests in a portfolio
with a dollar-weighted average duration that will, under
normal market conditions, stay within plus or minus 20% of
what the Money Managers believe to be the average duration
of the domestic bond market as a
20
<PAGE>
whole. The Money Managers base their analysis of the
average duration of the domestic bond market on bond market
indices which they believe to be representative. The Money
Managers currently use the Lehman Aggregate Bond Index for
this purpose.
HIGH YIELD BOND FUND
The investment objective of the High Yield Bond Fund is to
maximize total return.
Under normal market conditions, the Fund will invest
at least 65% of its total assets in fixed income securities
that are below investment grade, I.E., rated below the top
four rating categories by a NRSRO at the time of purchase,
or, if not rated, determined to be of comparable quality by
the Fund's Money Manager. Below investment grade securities
are commonly referred to as "junk bonds," and generally
entail increased credit and market risk. See "Lower Rated
Securities" in "General Investment Policies and Risk
Factors." The achievement of the Fund's investment
objective may be more dependent on the Money Manager'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 and
held by the Fund. These securities may have predominantly
speculative characteristics or may be in default. Any
remaining assets may be invested in equity, investment
grade fixed income and money market securities that the
Money Manager believes are appropriate in light of the
Fund's objective.
The Fund may acquire all types of fixed income
securities issued by domestic and foreign private and
governmental issuers, including mortgage-backed and
asset-backed securities, and variable and floating rate
securities. The Fund may also invest in Yankee obligations,
illiquid securities, shares of other investment companies,
warrants, when-issued and delayed-delivery securities, zero
coupon obligations, pay-in-kind and deferred payment
securities. The Fund may also borrow money, enter into
forward foreign currency contracts, and lend its securities
to qualified buyers. The Fund's Money Manager 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 Fund's Money Manager will consider ratings, but
it will perform its own analyses and will not rely
principally on ratings. The Fund's Money Manager 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.
INTERNATIONAL FIXED INCOME FUND
The International Fixed Income Fund seeks to provide
capital appreciation and current income.
Under normal market conditions, the Fund will invest
in at least 65% of its total assets in investment grade
fixed income securities of issuers located in at least
three countries other than the United States.
The International Fixed Income Fund may invest its
remaining assets in obligations issued or guaranteed as to
principal and interest by the United States Government, its
agencies or instrumentalities ("U.S. Government
securities") and preferred stocks of U.S. and foreign
issuers. The Fund also may engage in short selling against
the box. The Fund
21
<PAGE>
may also invest in securities of companies located in and
governments of emerging market countries, as defined below.
Investments in emerging markets countries will not exceed
5% of the Fund's total assets at the time of purchase. Such
investments entail different risks than investments in
securities of companies and governments of more developed,
stable nations.
The Fund may acquire all types of fixed income
securities issued by foreign private and governmental
issuers, including mortgage-backed and asset-backed
securities, and variable and floating rate securities. The
Fund may invest in traditional fixed income securities such
as bonds and debentures, and in structured securities that
derive interest and principal payments from specified
assets or indices. All such investments will be in
investment grade securities denominated in various
currencies, including the European Currency Unit. The Fund
may also invest in illiquid securities, shares of other
investment companies, obligations of supranational
entities, warrants, when-issued and delayed-delivery
securities and zero coupon obligations. The Fund may also
borrow money, enter into forward foreign currency
transactions and swap contracts and lend its securities to
qualified buyers.
There are no restrictions on the average maturity of
the Fund or the maturity of any single instrument.
Maturities may vary widely depending on the Fund's Money
Managers' assessment of interest rate trends and other
economic and market factors.
The Fund is a non-diversified fund. Investment in a
non-diversified company may entail greater risk than
investment in a diversified company. The Fund's ability to
focus its investments on a fewer number of issuers means
that economic, political or regulatory developments
affecting the Fund's investment securities could have a
greater impact on the total value of the Fund than would be
the case if the Fund were diversified among more issuers.
The Fund intends to comply with the diversification
requirements of Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"). See "Taxes" for
additional information.
There can be no assurance that the Funds will achieve
their respective investment objectives.
GENERAL INVESTMENT
POLICIES AND RISK
FACTORS
____________________________________________________________________________
EQUITY SECURITIES
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 and convertible securities. Equity securities
also include structured securities whose risk and return
characteristics are similar to those of traditional equity
securities. Changes in the value of portfolio securities
will not necessarily affect cash income derived from these
securities, but will affect a Fund's net asset value.
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<PAGE>
FIXED INCOME SECURITIES
Fixed income securities consist primarily of debt
obligations issued by governments, corporations,
municipalities and other borrowers, but may also include
structured securities that provide for participation
interests in debt obligations. The market value of fixed
income investments will generally change in response to
interest rate changes and other factors. During periods of
falling interest rates, the values of outstanding fixed
income securities generally rise. Conversely, during
periods of rising interest rates, the values of such
securities generally decline. Moreover, while securities
with longer maturities tend to produce higher yields, the
prices of longer maturity securities are also subject to
greater market fluctuations as a result of changes in
interest rates. Changes by recognized agencies 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 these securities will not affect cash income derived
from these securities, but will affect a Fund's net asset
value.
Fixed income securities are considered investment
grade if they are rated in one of the four highest rating
categories by a nationally recognized statistical rating
organization ("NRSRO"), or, if not rated, are determined to
be of comparable quality by the Fund's Money Managers. The
"Appendix" to this Prospectus sets forth a description of
the bond rating categories of several NRSROs. Ratings of
each NRSRO represents its opinion of the safety of
principal and interest payments (and not the market risk)
of bonds and other fixed income securities it undertakes to
rate at the time of issuance. Ratings are not absolute
standards of quality and may not reflect changes in an
issuer's creditworthiness. Fixed income securities rated
BBB or Baa lack outstanding investment characteristics, and
have speculative characteristics as well. In the event a
security owned by a Fund is downgraded, the adviser will
review the situation and take appropriate action with
regard to the security.
FOREIGN CURRENCY TRANSACTIONS
The Funds may enter into forward foreign currency contracts
to manage its foreign currency exposure and as a hedge
against possible variations in foreign exchange rates. The
Funds may enter into forward foreign currency contracts to
hedge a specific security transaction or to hedge a
portfolio position. These contracts may be bought or sold
to protect the Funds, to some degree, against possible
losses resulting from an adverse change in the relationship
between foreign currencies and the U.S. dollar. The Funds
also may invest in foreign currency futures and in options
on currencies.
LOWER RATED SECURITIES
The High Yield Bond and Emerging Markets Equity Funds may
invest in lower rated securities. Fixed income securities
are subject to the risk of an issuer's ability to meet
principal and interest payments on the obligation (credit
risk), and may also be subject to price volatility due to
such factors as interest rate sensitivity, market
perception of the creditworthiness of the issuer and
general market liquidity (market risk). Lower rated or
unrated (I.E., high yield) securities are more likely to
react to developments affecting market and credit risk than
are more highly rated securities, which primarily react to
23
<PAGE>
movements in the general 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
generally are not meant for short-term investing.
The high yield market is relatively new and its
growth 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, a Fund's Money Managers 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, a Fund 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 such Fund's net
asset value. Prices for high yield securities may also be
affected by legislative and regulatory developments.
Lower rated or unrated fixed income obligations also
present risks based on payment expectations. If an issuer
calls the obligations for redemption, a Fund may have to
replace the security with a lower yielding security,
resulting in a decreased return for investors. If a 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.
MONEY MARKET
SECURITIES
Each Fund may hold cash reserves and invest in money market
instruments.
OPTIONS AND FUTURES
Each Fund may purchase or write options (including options
on non-U.S. indices and currencies), futures (including
futures on U.S. Treasury obligations and Eurodollar
instruments) and options on futures. Risks associated with
investing in options and futures may include lack of a
liquid secondary market, trading restrictions which may be
imposed by an exchange, government regulations which may
restrict trading, an imperfect correlation between the
prices of securities held by a Fund and the price of an
option or future and, in the case of non-U.S. futures and
options, the risks of investing in foreign markets
generally.
24
<PAGE>
PORTFOLIO TURNOVER RATE
Each Fund's annual portfolio turnover rate will generally
not exceed 150%, except for the Core Fixed Income Fund's
portfolio turnover rate, which will generally not exceed
300%. Portfolio turnover rates over 100% will result in
higher transaction costs and may result in additional taxes
for shareholders.
SECURITIES OF FOREIGN AND EMERGING MARKET ISSUERS
There are certain risks connected with investing in foreign
securities. These include risks of adverse political and
economic developments (including possible governmental
seizure or nationalization of assets), the possible
imposition of exchange or currency controls or other
governmental restrictions, less uniformity in accounting
and reporting requirements, the possibility that there will
be less information on such securities and their issuers
available to the public, the difficulty of obtaining or
enforcing court judgments abroad, restrictions on foreign
investments in other jurisdictions, difficulties in
effecting repatriation of capital invested abroad and
difficulties in transaction settlements and the effect of
delay on shareholder equity. Foreign securities may be
subject to foreign taxes, and may be less marketable than
comparable U.S. securities. The value of a Fund's
investments denominated in foreign currencies will depend
on the relative strengths of those currencies and the U.S.
dollar, and a Fund may be affected favorably or unfavorably
by changes in the exchange rates or exchange or currency
control regulations between foreign currencies and the U.S.
dollar. Changes in foreign currency exchange rates also may
affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net
investment income and gains if any, to be distributed to
shareholders by a Fund.
A Fund's investments in emerging markets can be
considered speculative, and therefore may offer higher
potential for gains and losses than investments in
developed markets of the world. With respect to any
emerging country, there may be a greater potential for
nationalization, expropriation or confiscatory taxation,
political changes, government regulation, social
instability or diplomatic developments (including war)
which could affect adversely the economies of such
countries or investments in such countries. The economies
of developing countries generally are heavily dependent
upon international trade and, accordingly, have been and
may continue to be adversely affected by trade barriers,
exchange or currency controls, managed adjustments in
relative currency values and other protectionist measures
imposed or negotiated by the countries with which they
trade.
In addition to the risks of investing in emerging
market country debt securities, a Fund's investment in
government, government-related and restructured debt
instruments are subject to special risks, including the
inability or unwillingness to repay principal and interest,
requests to reschedule or restructure outstanding debt, and
requests to extend additional loan amounts. A Fund may have
limited recourse in the event of default on such debt
instruments.
TEMPORARY DEFENSIVE INVESTMENTS
For temporary defensive purposes, when the Money Managers
determine that market conditions warrant, the Funds may
invest up to 100% of their assets in U.S. dollar-
25
<PAGE>
denominated fixed income securities or debt obligations and
in domestic and foreign money market instruments. In
addition, the Funds may invest in the foregoing instruments
and hold cash for liquidity purposes.
For additional information regarding the Funds'
permitted investments, see "Description of Permitted
Investments and Risk Factors" in this Prospectus and
"Description of Permitted Investments" in the Statement of
Additional Information.
INVESTMENT LIMITATIONS
________________________________________________________________________
The investment objectives and certain of the investment
limitations are fundamental policies of the Funds.
Fundamental policies cannot be changed with respect to the
Trust or a Fund without the consent of the holders of a
majority of the Trust's or that Fund's outstanding shares.
EXCEPT AS OTHERWISE NOTED, NO FUND MAY:
1. With respect to 75% of its total assets, (i) purchase
securities of any issuer (except securities issued or
guaranteed by the United States Government, its agencies
or instrumentalities) if, as a result, more than 5% of
its total assets would be invested in the securities of
such issuer; or (ii) acquire more than 10% of the
outstanding voting securities of any one issuer. This
restriction does not apply to the International Fixed
Income Fund.
2. Purchase any securities which would cause more than 25%
of its total assets 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 securities
issued or guaranteed by the United States Government, its
agencies or instrumentalities.
3. Issue any class of senior security or sell any senior
security of which it is the issuer, except that a Fund
may borrow from any bank, provided that immediately after
any such borrowing there is asset coverage of at least
300% for all borrowings of the Fund, and further provided
that, to the extent that such borrowings exceed 5% of a
Fund's total assets, all borrowings shall be repaid
before such Fund makes additional investments. The term
"senior security" shall not include any temporary
borrowings that do not exceed 5% of the value of such
Fund's total assets at the time the Fund makes such
temporary borrowing. In addition, investment strategies
that either obligate a Fund to purchase securities or
require a Fund to segregate assets will not be considered
borrowings or senior securities.
The foregoing percentage limitations will apply at
the time of the purchase of a security. Additional
fundamental and non-fundamental investment limitations are
set forth in the Statement of Additional Information.
26
<PAGE>
PURCHASE AND
REDEMPTION OF SHARES
____________________________________________________________________________
Shares of each Fund may be purchased or redeemed on days on
which the New York Stock Exchange is open for business
(each, a "Business Day").
Shareholders who desire to purchase shares for cash
must place their orders with the Transfer Agent (or its
authorized agent) prior to the determination of net asset
value on any Business Day for the order to be accepted on
that Business Day. Purchase orders received by a fund after
the determination of net asset value will be effected at
the next Business Day's net asset value. Generally, payment
for fund shares must be transmitted on the next Business
Day following the day the order is placed. Payment for such
shares may only be transmitted or delivered in federal
funds to the wire agent. The Trust reserves the right to
reject a purchase order when the Distributor determines
that it is not in the best interest of the Trust or its
shareholders to accept such purchase order. In addition,
because excessive trading (including short-term "market
timing" trading) can hurt a Fund's performance, each Fund
may refuse purchase orders from any shareholder account if
the accountholder has been advised that previous purchase
and redemption transactions were considered excessive in
number or amount. Accounts under common control or
ownership, including those with the same taxpayer
identification number and those administered so as to
redeem or purchase shares based upon certain predetermined
market indicators, will be considered one account for this
purpose.
Purchases will be made in full and fractional shares
of the Funds calculated to three decimal places. The Trust
will send shareholders a statement of shares owned after
each transaction. The purchase price of shares is the net
asset value next determined after a purchase order is
received and accepted by the Trust. The net asset value per
share of each Fund is determined by dividing the total
market value of a Fund's investment and other assets, less
any liabilities, by the total number of outstanding shares
of that Fund. Net asset value per share is determined as of
the regularly-scheduled close of normal trading on the New
York Stock Exchange (normally, 4:00 p.m., Eastern time) on
any Business Day.
If there is no readily ascertainable market value for
a security, SEI Management will make a good faith
determination as to the "fair value" of the security.
Securities having maturities of 60 days or less at the time
of purchase will be valued using the amortized cost method
(described in the Statement of Additional Information).
Shares of a Fund may be purchased in exchange for
securities included in the Fund subject to SEI Management's
determination that the securities are acceptable.
Securities accepted in an exchange will be valued at the
market value. All accrued interest and subscription of
other rights which are reflected in the market price of
accepted securities
27
<PAGE>
at the time of valuation become the property of the Trust
and must be delivered by the Shareholder to the Trust upon
receipt from the issuer.
SEI Management will not accept securities for a Fund
unless (1) such securities are appropriate for the Fund at
the time of the exchange; (2) such securities are acquired
for investment and not for resale; (3) the Shareholder
represents and agrees that all securities offered to the
Trust for the Fund are not subject to any restrictions upon
their sale by the Fund under the Securities Act of 1933, or
otherwise; (4) such securities are traded on the American
Stock Exchange, the New York Stock Exchange or on NASDAQ in
an unrelated transaction with a quoted sales price on the
same day the exchange valuation is made or, if not listed
on such exchanges or on NASDAQ, have prices available from
an independent pricing service approved by the Trust's
Board of Trustees; and (5) the securities may be acquired
under the investment restrictions applicable to the Fund.
Shareholders who desire to redeem shares of the Funds
must place their redemption orders with the Transfer Agent
(or its authorized agent) prior to the determination of net
asset value on any Business Day. Redemption orders received
after the determination of net asset value will be effected
at the next Business Day's net asset value. The redemption
price is the net asset value per share of the Fund next
determined after receipt by the Transfer Agent of the
redemption order. Payment on redemption will be made as
promptly as possible and, in any event, within seven days
after the redemption order is received.
The Trust intends to generally make redemptions in
cash. The Trust may, however, make redemptions in whole or
in part by a distribution in kind of readily marketable
securities in lieu of cash. Shareholders may incur
brokerage costs on the sale of any such securities so
received in payment of redemptions.
Purchase and redemption orders may be placed by
telephone. Neither the Trust nor the Transfer Agent will be
responsible for any loss, liability, cost or expense for
acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The
Trust and the Transfer Agent will each employ reasonable
procedures to confirm that instructions communicated by
telephone are genuine, including requiring a form of
personal identification prior to acting upon instructions
received by telephone and recording telephone instructions.
If market conditions are extraordinarily active, or
other extraordinary circumstances exist, and shareholders
experience difficulties placing redemption orders by
telephone, shareholders may wish to consider placing their
order by other means.
PERFORMANCE
______________________________________________________________________
From time to time, a Fund may advertise yield and total
return. These figures will be based on historical earnings
and are not intended to indicate future performance. No
representation can be made concerning actual yield or
future returns. The yield of a Fund refers to the
annualized income generated by an investment in the Fund
over a specified
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<PAGE>
30-day period. The yield is calculated by assuming that the
same amount of income generated by the investment during
that period is generated in each 30-day period over one
year and is shown as a percentage of the investment.
The total return of a Fund refers to the average
compounded rate of return on a hypothetical investment for
designated time periods, assuming that the entire
investment is redeemed at the end of each period and
assuming the reinvestment of all dividend and capital gain
distributions.
A Fund may periodically compare its performance to
that of: (i) other mutual funds tracked by mutual fund
rating services (such as Lipper Analytical), or by
financial and business publications and periodicals; (ii)
broad groups of comparable mutual funds; (iii) unmanaged
indices which may assume investment of dividends but
generally do not reflect deductions for administrative and
management costs; or (iv) other investment alternatives. A
Fund may quote Morningstar, Inc., a service that ranks
mutual funds on the basis of risk-adjusted performance. A
Fund may use long-term performance of these capital markets
to demonstrate general long-term risk versus reward
scenarios and could include the value of a hypothetical
investment in any of the capital markets. A Fund may also
quote financial and business publications and periodicals
as they relate to fund management, investment philosophy
and investment techniques.
A Fund may quote various measures of volatility and
benchmark correlation in advertising and may compare these
measures to those of other funds. Measures of volatility
attempt to compare historical share price fluctuations or
total returns to a benchmark while measures of benchmark
correlation indicate how valid a comparative benchmark
might be. Measures of volatility and correlation are
calculated using averages of historical data and cannot be
calculated precisely.
TAXES
______________________________________________________________________________
The following summary of federal income tax consequences is
based on current tax laws and regulations, which may be
changed by legislative, judicial or administrative action.
No attempt has been made to present a detailed explanation
of the federal, state or local tax treatment of the Funds
or their shareholders. Accordingly, shareholders are urged
to consult their tax advisers regarding specific questions
as to federal, state and local taxes. State and local tax
consequences of an investment in a Fund may differ from the
federal income tax consequences described below. Additional
information concerning taxes is set forth in the Statement
of Additional Information.
TAX STATUS OF THE FUNDS
Each Fund is treated as a separate entity for federal
income tax purposes and is not combined with the Trust's
other funds. The Funds intend to qualify for the special
tax treatment afforded regulated investment companies
("RICs") under Subchapter M of the Code so as to be
relieved of federal income tax on net investment company
taxable income and net capital gains (the excess of net
long-term capital gain over net short-term capital losses)
distributed to shareholders.
29
<PAGE>
TAX STATUS OF DISTRIBUTIONS
Each Fund distributes substantially all of its net
investment income (including net short-term capital gains)
to shareholders. Dividends from a Fund's net investment
income are taxable to its shareholders as ordinary income
(whether received in cash or in additional shares).
Distributions of net capital gains are taxable to
shareholders as gain from the sale or exchange of a capital
asset held for more than one year regardless of how long
the shareholder has held shares. Dividends distributions of
the Core Fixed Income Fund, High Yield Bond Fund,
International Fixed Income Fund, Emerging Markets Equity
Fund and International Equity Fund will not qualify for the
corporate dividends-received deduction. The Funds will
provide annual reports to shareholders of the federal
income tax status of all distributions.
Dividends declared by a Fund in October, November or
December of any year and payable to shareholders of record
on a date in such a month will be deemed to have been paid
by the Fund and received by the Shareholders on December 31
of the year declared if paid by the Fund at any time during
the following January.
Each Fund intends to make sufficient distributions to
avoid liability for the federal excise tax applicable to
RICs.
Investment income received by the Funds from sources
within foreign countries may be subject to foreign income
taxes withheld at the source. To the extent that a Fund is
liable for foreign income taxes so withheld, the Fund
intends to operate so as to meet the requirements of the
Code to pass through to the shareholders credit for foreign
income taxes paid. Although the Funds intend to meet Code
requirements to pass through credit for such taxes, there
can be no assurance that the Funds will be able to do so.
Each sale, exchange or redemption of Fund shares is a
taxable transaction to the shareholder.
GENERAL INFORMATION
______________________________________________________________
TRUSTEES 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. All
consideration received by the Trust for shares of any fund,
and all assets of such fund belong to that fund and would
be subject to the liabilities related thereto. The Trust
pays its expenses, including the fees of its service
providers, audit and legal expenses, expenses of preparing
prospectuses, proxy solicitation materials and reports to
shareholders, costs of custodial services and registering
the shares under federal and state securities laws,
pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges,
taxes and organizational expenses.
VOTING RIGHTS
Each share held entitles the shareholder of record to one
vote. The shareholders of each Fund will vote separately on
matters pertaining solely to that Fund, such as any
distribution plan. As a Massachusetts business trust, the
Trust is not required to hold
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<PAGE>
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.
As of September 1, 1998, SEI Trust Company owned a
controlling interest (as defined by the Investment Company
Act of 1940) in the Trust's Large Cap, Small Cap, Core
Fixed Income, and International Equity Funds.
REPORTING
The Trust issues an unaudited financial report
semi-annually and audited financial statements annually.
The Trust furnishes proxy statements and other reports to
shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to SEI Investments
Fund Management, Oaks, Pennsylvania 19456.
DIVIDENDS
Substantially all of the net investment income (exclusive
of capital gains) of each Fund is periodically declared and
paid as a dividend. It is the policy of the International
Fixed Income, Emerging Markets Equity and International
Equity Funds to pay dividends periodically, the Core Fixed
Income and High Yield Bond Funds to pay dividends monthly,
and the Small Cap and Large Cap Funds to pay dividends
quarterly. Currently, net capital gains for all the Funds
(the excess of net long-term capital gain over net
short-term capital loss) realized, if any, will be
distributed at least annually.
Shareholders automatically receive all income
dividends and capital gains distributions in additional
shares at the net asset value next determined following the
record date, unless the shareholder has elected to take
such payment in cash. Shareholders may change their
election by providing written notice to SEI Management at
least 15 days prior to the distribution.
Dividends and capital gains of each Fund are paid on
a per-share basis. The value of each share will be reduced
by the amount of any such payment. If shares are purchased
shortly before the record date for a dividend or capital
gains distributions, a shareholder will pay the full price
for the share and receive some portion of the price back as
a taxable dividend or distribution.
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve any Fund's
investment objective by investing all of that Fund's assets
in another investment company having the same investment
objective and substantially the same investment policies
and restrictions as those applicable to that Fund. It is
expected that any such investment company would be managed
by SIMC in substantially the same manner as the existing
Fund. The initial shareholder(s) of each Fund voted to vest
such authority in the sole discretion of the Trustees and
such investment may be made without further approval of the
shareholders of the Funds.
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However, shareholders of the Funds will be given at least
30 days' prior notice of any such investment. Such
investment would be made only if the Trustees determine it
to be in the best interests of a Fund and its shareholders.
In making that determination the Trustees will consider,
among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational
efficiencies. Although the Funds believe that the Trustees
will not approve an arrangement that is likely to result in
higher costs, no assurance is given that costs will be
materially reduced if this option is implemented.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
PricewaterhouseCoopers LLP serves as the independent
accountants of the Trust.
CUSTODIAN
First Union National Bank, Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, acts as wire
agent for each of the Funds and custodian for the assets of
the Large Cap, Small Cap, Core Fixed Income and High Yield
Bond Funds. State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110, acts as
custodian for the assets of the International Fixed Income,
Emerging Markets Equity and International Equity Funds.
First Union National Bank, and State Street Bank and Trust
Company (each a "Custodian," and, together, the
"Custodians") hold cash, securities and other assets of the
respective Funds for which they act as custodian as
required by the 1940 Act.
DESCRIPTION OF
PERMITTED INVESTMENTS
AND
RISK FACTORS
______________________________________________________________________
The following is a description of the permitted investment
practices for the Funds, and the associated risk factors:
AMERICAN DEPOSITARY RECEIPTS ("ADRS"), EUROPEAN DEPOSITARY RECEIPTS ("EDRS") AND
GLOBAL DEPOSITARY RECEIPTS ("GDRS")
ADRs are securities, typically issued by a U.S. financial
institution (a "depositary"), that evidence ownership
interests in a security or a pool of securities issued by a
foreign issuer and deposited with the depositary. ADRs
include American Depositary Shares and New York Shares.
EDRs, which are sometimes referred to as Continental
Depositary Receipts ("CDRs"), are securities, typically
issued by a non-U.S. financial institution, that evidence
ownership interests in a security or a pool of securities
issued by either a U.S. or foreign issuer. GDRs are issued
globally and evidence a similar ownership arrangement.
Generally, ADRs are designed for trading in the U.S.
securities market, EDRs are designed for trading in
European securities market and GDRs are designed for
trading in non-U.S. securities markets.
ASSET-BACKED SECURITIES
Asset-backed securities are secured by non-mortgage assets
such as company receivables, truck and auto loans, leases
and credit card receivables. Such securities are generally
issued as pass-through certificates, which represent
undivided fractional ownership interests in the underlying
pools of assets. Such securities also may be debt
instruments, which are also known as collateralized
obligations and are generally issued as the debt of a
special purpose entity, such as a trust, organized solely
for the purpose of owning such
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assets and issuing such debt. A Fund may invest in other
asset-backed securities that may be created in the future
if the Money Managers determine that they are suitable.
CONVERTIBLE SECURITIES
Convertible securities are corporate securities that are
exchangeable for a set number of another security at a
prestated price. Convertible securities typically have
characteristics similar to both fixed income and equity
securities. Because of the conversion feature, the market
value of a convertible security tends to move with the
market value of the underlying stock. The value of a
convertible security is also affected by prevailing
interest rates, the credit quality of the issuer, and any
call provisions.
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 the Fund's securities denominated in such
foreign currency.
At the maturity of a forward contract, the Fund may
either sell a fund 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. The Fund may realize a gain or loss from currency
transactions.
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 which 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 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 securities 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.
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
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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 futures options.
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 a demand notice
period exceeding seven days, securities for which there is
no active secondary market, and repurchase agreements with
durations over 7 days in length.
The Emerging Markets Equity Fund's Money Managers
believe that carefully selected investments in joint
ventures, cooperatives, partnerships, private placements,
unlisted securities and other similar situations
(collectively, "special situations") could enhance its
capital appreciation potential. Investments in special
situations may be illiquid, as determined by the Emerging
Markets Equity Fund's Money Managers based on criteria
approved by the Board of Trustees. To the extent these
investments are deemed illiquid, the Emerging Markets
Equity Fund's investment in them will be consistent with
its 15% restriction on investment in illiquid securities.
INVESTMENT COMPANIES
Because of restrictions on direct investment by U.S.
entities in certain countries, investment in other
investment companies may be the most practical or only
manner in which an international and global fund can invest
in the securities markets of those countries. A Fund does
not intend to invest in other investment companies unless,
in the judgment of its Money Managers, the potential
benefits of such investments exceed the associated costs
(which includes any investment advisory fees charged by the
investment companies) relative to the benefits and costs
associated with direct investments in the underlying
securities.
Investments in closed-end investment companies may
involve the payment of substantial premiums above the net
asset value of such issuers' fund securities, and are
subject to limitations under the 1940 Act. A Fund may incur
tax liability to the extent it invests in the stock of a
foreign issuer that constitutes a "passive foreign
investment company."
MONEY MARKET SECURITIES
Money market securities are high-quality dollar and
nondollar-denominated, short-term debt instruments. They
consist of: (i) bankers' acceptances, certificates of
deposits, notes and time deposits of highly-rated U.S. and
foreign banks; (ii) U.S. Treasury obligations and
obligations issued or guaranteed by the agencies and
instrumentalities of the U.S. Government; (iii)
high-quality commercial paper issued by U.S. and foreign
corporations; (iv) debt obligations with a maturity of one
year or less issued by corporations and governments that
issue high-quality commercial paper or similar securities;
(v) repurchase agreements involving any of the foregoing
obligations entered into with highly-rated banks and
broker-dealers; and (vi) foreign government obligations.
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MORTGAGE-BACKED SECURITIES
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.
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 the Government National
Mortgage Association ("GNMA"), Fannie Mae and the Federal
Home Loan Mortgage Company ("FHLMC"). 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.
GNMA, Fannie Mae and FHLMC each guarantee timely
distributions of interest to certificate holders. GNMA and
Fannie Mae also each guarantee timely distributions of
scheduled principal.
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 have
certain distinct characteristics. Commercial mortgage loans
are generally not amortizing or not fully amortizing. That
is, at their maturity date, repayment of the remaining
principal balance or "balloon" is due and is repaid through
the attainment of an additional loan of sale of the
property. 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.
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COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"): CMOs
are debt obligations of multiclass pass-through
certificates issued by agencies or instrumentalities of the
U.S. Government or by private originators or investors in
mortgage loans. In a CMO, series of bonds or certificates
are usually issued in multiple classes. Principal and
interest paid on the underlying mortgage assets may be
allocated among the several classes of a series of a CMO in
a variety of ways. Each class of a CMO 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 Code and invests in certain
mortgages principally secured by interests in real
property. Guaranteed REMIC pass-through certificates
("REMIC Certificates") issued by Fannie Mae 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.
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. SMBs are
extremely sensitive to changes in interest rates because of
the impact thereon of prepayment of principal on the
underlying mortgage securities. The market for SMBs is not
as fully developed as other markets; SMBs therefore may be
illiquid.
OBLIGATIONS OF SUPRANATIONAL ENTITIES
Supranational entities are entities established through the
joint participation of several governments, and include the
Asian Development Bank, the Inter-American Development
Bank, International Bank for Reconstruction and Development
(World Bank), African Development Bank, European Economic
Community, European Investment Bank and the Nordic
Investment Bank. The governmental members, or
"stockholders," usually make initial capital contributions
to the supranational entity and, in many cases, are
committed to make additional capital contributions if the
supranational entity is unable to repay its borrowings.
OPTIONS
A Fund may purchase and write put and call options on
indices or securities 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.
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. Alternatively, a Fund may choose to terminate
an option position by entering into a closing transaction.
All
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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, 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.
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.
PRIVATIZATIONS
Privatizations are foreign government programs for selling
all or part of the interests in government owned or
controlled enterprises. The ability of a U.S. entity to
participate in privatizations in certain foreign countries
may be limited by local law, or the terms on which the Fund
may be permitted to participate may be less advantageous
than those applicable for local investors. There can be no
assurance that foreign governments will continue to sell
their interests in companies currently owned or controlled
by them or that privatization programs will be successful.
RECEIPTS
Receipts are sold as zero coupon securities which means
that they are sold at a substantial discount and redeemed
at face value at their maturity date without interim cash
payments of interest or principal. This discount is
accreted over the life of the security, and such accretion
will constitute the income earned on the security for both
accounting and tax purposes. Because of these features,
such securities may be subject to greater interest rate
volatility than interest paying fixed income securities.
REITS
REITs are trusts that invest primarily in commercial real
estate or real estate-related loans. A real estate
investment trust ("REIT") is not taxed on income
distributed to its shareholders or unitholders if it
complies with regulatory requirements relating to its
organization, ownership, assets and income, and with a
regulatory requirement that it distribute to its
shareholders or unitholders at least 95% of its taxable
income for each taxable year. Generally, REITs can be
classified as Equity REITs, Mortgage REITs and Hybrid
REITs. Equity REITs invest the majority of their assets
directly in real property and derive their income primarily
from rents and capital gains from appreciation realized
through property sales. Mortgage REITs invest the majority
of their assets in real estate mortgages and derive their
income primarily from interest payments. Hybrid REITs
combine the characteristics of both Equity and Mortgage
REITs. By investing in REITs
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indirectly through the 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 value of their underlying
properties and by defaults by borrowers or tenants.
Mortgage REITs may be affected by the quality of the credit
extended. Furthermore, REITs are dependent on specialized
management skills. Some REITs may have limited
diversification and may be subject to risks inherent in
financing a limited number of properties. REITs depend
generally on their ability to generate cash flow to make
distributions to shareholders or unitholders, and may be
subject to defaults by borrowers and to self-liquidations.
In addition, a REIT may be affected by its failure to
qualify for tax-free pass-through of income under the Code
or its failure to maintain exemption from registration
under the 1940 Act.
REPURCHASE AGREEMENTS
Arrangements by which a Fund obtains a security and
simultaneously commits to return the security to the seller
at an agreed upon price (including principal and interest)
on an agreed upon date within a number of days from the
date of purchase. Repurchase agreements are considered
loans under the 1940 Act.
SECURITIES LENDING
In order to generate additional income, a Fund may lend
securities that it owns pursuant to agreements requiring
that the loan be continuously secured by collateral
consisting of cash, securities of the U.S. Government or
its agencies equal to at least 100% of the market value of
the loaned securities. A Fund continues to receive interest
on the loaned securities while simultaneously earning
interest on the investment of cash collateral. Collateral
is marked to market daily. There may be risks of delay in
recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail
financially or become insolvent.
SHORT SALES
A Fund may only sell securities short "against the box." A
short sale is "against the box" if, at all times during
which the short position is open, the Fund owns at least an
equal amount of the securities or securities convertible
into, or exchangeable without further consideration for,
securities of the same issue as the securities that are
sold short.
SWAPS, CAPS, FLOORS AND COLLARS
Interest rate swaps, mortgage swaps, currency swaps and
other types of swap agreements such as caps, floors and
collars are designed to permit the purchaser to preserve a
return or spread on a particular investment or portion of
its portfolio, and to protect against any increase in the
price of securities a Fund anticipates purchasing at a
later date.
Swap agreements will tend to shift a Fund's
investment exposure from one type of investment to another.
Depending on how they are used, swap agreements may
increase or decrease the overall volatility of the Fund's
investments and their share price or yield.
U.S. GOVERNMENT AGENCY SECURITIES
Obligations issued or guaranteed by agencies of the U.S.
Government, including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the
Small Business Administration, and obligations issued or
guaranteed by instrumentalities of the
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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 (E.G., GNMA securities), others are
supported by the right of the issuer to borrow from the
Treasury (E.G., Federal Farm Credit Bank securities), while
still others are supported only by the credit of the
instrumentality (E.G., Fannie Mae securities).
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
that are transferable through the Federal book-entry
Principal Securities ("STRIPS").
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 AND 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
that 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.
WARRANTS
Warrants are instruments giving holders the right, but not
the obligation, to buy equity or fixed income securities of
a company at a given price during a specified period.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES; INCLUDING TBA MORTGAGE-BACKED
SECURITIES
When-issued or delayed delivery basis transactions involve
the purchase of an instrument with payment and delivery
taking place in the future. Delivery of and payment for
these securities may occur a month or more after the date
of the purchase commitment. A Fund will maintain a separate
account with liquid securities or cash in an amount at
least equal to these commitments. The interest rate
realized on these securities is fixed as of the purchase
date, and no interest accrues to a Fund before settlement.
One form of when-issued or delayed-delivery security
that a Fund may purchase is a "to be announced" ("TBA")
mortgage-backed security. A TBA mortgage-backed security
transaction arises when a mortgage-backed security, such as
a GNMA pass-through security, is purchased or sold with
specific pools that will constitute that GNMA pass-through
security to be announced on a future settlement date.
YANKEE OBLIGATIONS
Yankee obligations ("Yankees") are U.S. dollar-denominated
instruments of foreign issuers who either register with the
SEC or issue under Rule 144A under the Securities Act of
1933. These obligations 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
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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.
The Yankee obligations selected for a Fund will
adhere to the same quality standards as those utilized for
the selection of domestic debt obligations.
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, the Fund will have fewer assets with which to
purchase income producing securities. Pay-in-kind
securities pay interest in either cash or additional
securities, at the issuer's option, for a specified period.
Pay-in-kind bonds, like zero coupon bonds, are designed to
give an issuer flexibility in managing cash flow.
Pay-in-kind bonds are expected to reflect the market value
of the underlying debt plus an amount representing accrued
interest since the last payment. Pay-in-kind bonds are
usually less volatile than zero coupon bonds, but more
volatile than cash pay securities. Pay-in-kind securities
are securities that have interest payable by delivery of
additional securities. Upon maturity, the holder is
entitled to receive the aggregate par value of the
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.
To avoid any leveraging concerns, the Fund will place
cash or liquid securities in a segregated account in an
amount sufficient to cover its repurchase obligation. Zero
coupon, pay-in-kind and deferred payment securities may be
subject to greater fluctuation in value and lesser
liquidity in the event of adverse market conditions than
comparably rated securities paying cash interest at regular
interest payment periods.
Additional information on permitted investments and
risk factors can be found in the Statement of Additional
Information.
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APPENDIX--DESCRIPTION OF CORPORATE BOND RATINGS ________________________________
DESCRIPTION OF MOODY'S LONG-TERM RATINGS
Aaa
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
Aa
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
the Aaa securities.
A
Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper-medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment some time in
the future.
Baa
Bonds which are rated Baa are considered as medium-grade obligations (I.E.,
they are neither highly protected nor poorly secured). Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa
Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca
Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C
Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's bond ratings, where specified, are applied to senior bank obligations
and insurance company senior policyholder and claims obligations with an
original maturity in excess of one year. Obligations relying upon support
mechanisms such as letters-of-credit and bonds of indemnity are excluded unless
explicitly rated.
A-1
<PAGE>
Obligations of a branch of a bank are considered to be domiciled in the country
in which the branch is located. Unless noted as an exception, Moody's rating on
a bank's ability to repay senior obligations extends only to branches located in
countries which carry a Moody's sovereign rating. Such branch obligations are
rated at the lower of the bank's rating or Moody's sovereign rating for the bank
deposits for the country in which the branch is located.
When the currency in which an obligation is denominated is not the same as the
currency of the country in which the obligation is domiciled, Moody's ratings do
not incorporate an opinion as to whether payment of the obligation will be
affected by the actions of the government controlling the currency of
denomination. In addition, risk associated with bilateral conflicts between an
investor's home country and either the issuer's home country or the country
where an issuer branch is located are not incorporated into Moody's ratings.
Moody's makes no representation that rated bank obligations or insurance company
obligations are exempt from registration under the U.S. Securities Act of 1933
or issued in conformity with any other applicable law or regulation. Nor does
Moody's represent that any specific bank or insurance company obligation is
legally enforceable or is a valid senior obligation of a rated issuer.
Moody's ratings are opinions, not recommendations to buy or sell, and their
accuracy is not guaranteed. A rating should be weighed solely as one factor in
an investment decision and you should make your own study and evaluation of any
issuer whose securities or debt obligations you consider buying or selling.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
DESCRIPTION OF STANDARD & POOR'S LONG-TERM RATINGS
INVESTMENT GRADE
AAA
Debt rated 'AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA
Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.
A
Debt rated 'A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB
Debt rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
A-2
<PAGE>
SPECULATIVE GRADE
Debt rated 'BB', 'B', 'CCC', 'CC', and 'C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. 'BB' indicates the least degree of speculation and 'C' the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
BB
Debt rated 'BB' has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could
lead to inadequate capacity to meet timely interest and principal payments.
The 'BB' rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied 'BBB-' rating.
B
Debt rate 'B' has greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions would likely impair capacity or
willingness to pay interest and repay principal. The 'B' rating category
also is used for debt subordinated to senior debt that is assigned an
actual or implied 'BB' or 'BB-' rating.
CCC
Debt rated 'CCC' has a current identifiable vulnerability to default, and
is dependent on favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The 'CCC' rating
category also is used for debt subordinated to senior debt that is assigned
an actual or implied 'B' or 'B-' rating.
CC
The rating 'CC' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC' rating.
C
The rating 'C' is typically applied to debt subordinated to senior debt
which is assigned an actual or implied 'CCC-' debt rating. The 'C' rating
may be used to cover a situation where a bankruptcy petition has been
filed, but debt service payments are continued.
CI
Debt rated 'CI' is reserved for income bonds on which no interest is being
paid.
D
Debt is rated 'D' when the issue is in payment default, or the obligor has
filed for bankruptcy. The 'D' rating is used when interest or principal
payments are not made on the date due, even if the applicable grace period
has not expired, unless S&P believes that such payments will be made during
such grace period.
Plus (+) or minus (-): The ratings from 'AA' to 'CCC' may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
DESCRIPTION OF DUFF & PHELPS' LONG-TERM DEBT RATINGS
AAA
Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA+
AA-
High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
A-3
<PAGE>
A+
A-
Protection factors are average but adequate. However, risk factors are more
variable and greater in periods of economic stress.
BBB+
BBB-
Below average protection factors but still considered sufficient for
prudent investment. Considerable variability in risk during economic
cycles.
BB+
BB
BB-
Below investment grade but deemed likely to meet obligations when due.
Present or prospective financial protection factors fluctuate according to
industry conditions or company fortunes. Overall quality may move up or
down frequently within this category.
B+
B
B-
Below investment grade and possessing risk that obligations will not be met
when due. Financial protection factors will fluctuate widely according to
economic cycles, industry conditions and/or company fortunes. Potential
exists for frequent changes in the rating within this category or into a
higher or lower rating grade.
CCC
Well below investment grade securities. Considerable uncertainty exists as
to timely payment of principal, interest or preferred dividends. Protection
factors are narrow and risk can be substantial with unfavorable economic/
industry conditions, and/or with unfavorable company developments.
DD
Defaulted debt obligations. Issuer failed to meet scheduled principal
and/or interest payments.
DP
Preferred stock with dividend arrearages.
DESCRIPTION OF FITCH'S LONG-TERM RATINGS
INVESTMENT GRADE BOND
AAA
Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable
events.
AA
Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated 'AAA'. Because bonds rated in
the 'AAA' and 'AA' categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated 'F-1+'.
A
Bonds 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 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.
A-4
<PAGE>
SPECULATIVE GRADE BOND
BB
Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes.
However, business and financial alternatives can be identified which could
assist the obligor in satisfying its debt service requirements.
B
Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited
margin of safety and the need for reasonable business and economic activity
throughout the life of the issue.
CCC
Bonds have certain identifiable characteristics which, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC
Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.
C
Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D
Bonds are in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis
of their ultimate recovery value in liquidation or reorganization
of the obligor. 'DDD' represents the highest potential for
recovery on these bonds, and 'D' represents the lowest potential
for recovery.
PLUS (+) MINUS (-)
Plus and minus signs are used with a rating symbol to indicate
the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the 'AAA', 'DDD',
'DD', or 'D' categories.
DESCRIPTION OF IBCA'S LONG-TERM RATINGS
AAA
Obligations for which there is 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 substantially.
AA
Obligations for which there is a very low expectation of investment risk.
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
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
Obligations for which there is currently a low expectation of investment
risk. Capacity for timely repayment of principal and interest is adequate,
although adverse changes in business, economic or financial conditions are
more likely to lead to increased investment risk than for obligations in
other categories.
A-5
<PAGE>
BB
Obligations for which there is a possibility of investment risk developing.
Capacity for timely repayment of principal and interest exists, but is
susceptible over time to adverse changes in business, economic or financial
conditions.
B
Obligations for which investment risk exists. Timely repayment of principal
and interest is not sufficiently protected against adverse changes in
business, economic or financial conditions.
CCC
Obligations for which there is a current perceived possibility of default.
Timely repayment of principal and interest is dependent on favorable
business, economic or financial conditions.
CC
Obligations which are highly speculative or which have a high risk of
default.
C
Obligations which are currently in default.
NOTES:
"+" or "-" may be appended to a rating to denote relative status within
major rating categories.
Ratings of BB and below are assigned where it is considered that
speculative characteristics are present.
DESCRIPTION OF THOMSON BANKWATCH'S LONG-TERM DEBT RATINGS
INVESTMENT GRADE
AAA
The highest category; indicates that the ability to repay principal and
interest on a timely basis is very high.
AA
The second-highest category; indicates 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
The third-highest category; indicates 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
The lowest investment-grade category; indicates 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.
NON-INVESTMENT GRADE
(Issues regarded as having speculative characteristics in the likelihood of
timely repayment of principal and interest.)
BB
While not investment grade, the "BB" rating suggests that the likelihood of
default is considerably less than for lower-rated issues. However, there
are significant uncertainties that could affect the ability to adequately
service debt obligations.
B
Issues rated "B" show a higher degree of uncertainty and therefore greater
likelihood of default than higher-rated issues. Adverse developments could
well negatively affect the payment of interest and principal on a timely
basis.
CCC
Issues rated "CCC" clearly have a high likelihood of default, with little
capacity to address further adverse changes in financial circumstances.
A-6
<PAGE>
CC
"CC" is applied to issues that are subordinate to other obligations rated
"CCC" and are afforded less protection in the event of bankruptcy or
reorganization.
D
Default
Ratings in the Long-Term Debt categories may include a plus (+) or minus
(-) designation, which indicates where within the respective category the issue
is placed.
A-7
<PAGE>
SEI INSTITUTIONAL INVESTMENTS TRUST
Manager:
SEI Investments Management Corporation
Administrator:
SEI Investments Fund Management
Distributor:
SEI Investments Distribution Co.
Money Managers:
1838 Investment Advisors, L.P.
Acadian Asset Management, Inc.
Alliance Capital Management L.P.
BEA Associates
BlackRock Financial Management, Inc.
Boston Partners Asset Management, L.P.
Capital Guardian Trust Company
Coronation Asset Management (Proprietary)
Limited
Credit Suisse Asset Management, Limited
Firstar Investment Research & Management
Company, LLC
Furman Selz Capital Management LLC
LSV Asset Management, L.P.
Mellon Equity Associates, LLP
Morgan Stanley Asset Management Inc.
Nicholas-Applegate Capital Management, Inc.
Parametric Portfolio Associates
Polynous Capital Management, Inc.
Provident Investment Counsel, Inc.
Robertson Stephens Investment
Management, L.P.
Sanford C. Bernstein & Co., Inc.
Scottish Widows Investment Management Limited
Spyglass Asset Management, Inc.
Strategic Fixed Income, LLC
TCW Funds Management Inc.
Wall Street Associates
Western Asset Management Company
SG Pacific Asset Management, Inc.,
SGY Pacific Asset Management (Singapore)
Limited and SG Yamaichi Asset
Management Co., Ltd.
This STATEMENT OF ADDITIONAL INFORMATION is not a Prospectus. It is intended
to provide additional information regarding the activities and operations of the
SEI Institutional Investments Trust (the "Trust") and should be read in
conjunction with the Trust's Prospectus dated September 30, 1998. A Prospectus
may be obtained through SEI Investments Distribution Co., Oaks, Pennsylvania
19456.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
The Trust................................................................. S-3
Description of Permitted Investments...................................... S-3
Description of Ratings.................................................... S-13
Investment Limitations.................................................... S-15
The Administrator and Transfer Agent...................................... S-16
The Manager and The Money Managers........................................ S-17
Distribution.............................................................. S-18
Trustees and Officers of the Trust........................................ S-19
Performance............................................................... S-21
Purchase and Redemption of Shares......................................... S-22
Taxes..................................................................... S-23
Portfolio Transactions.................................................... S-25
Description of Shares..................................................... S-27
Limitation of Trustees' Liability......................................... S-27
Voting.................................................................... S-27
Shareholder Liability..................................................... S-27
5% Shareholders........................................................... S-28
Experts................................................................... S-29
Legal Counsel............................................................. S-29
Financial Statements...................................................... S-29
</TABLE>
September 30, 1998
S-2
<PAGE>
THE TRUST
SEI Institutional Investments Trust (the "Trust") is an open-end management
investment company that has diversified and non-diversified funds. The Trust was
organized as a Massachusetts business trust under a Declaration of Trust dated
March 1, 1995. The Declaration of Trust permits the Trust to offer separate
series ("funds") of units of beneficial interest ("shares") and different
classes of shares. Each share of each fund represents an equal proportionate
interest in that fund with each other share of that fund.
This Statement of Additional Information relates to the following funds:
Large Cap, Small Cap, Core Fixed Income, High Yield Bond, International Fixed
Income, Emerging Markets Equity and International Equity Funds (each a "Fund"
and, together, the "Funds").
DESCRIPTION OF PERMITTED INVESTMENTS
AMERICAN DEPOSITARY RECEIPTS ("ADRs"), EUROPEAN DEPOSITARY RECEIPTS ("EDRs")
AND GLOBAL DEPOSITARY RECEIPTS ("GDRs")--ADRs, EDRs, CDRs and GDRs may be
available for investment 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 reciept's
underlying security. Holders of an unsponsored depositary receipt generally bear
all the costs of the unsponsored facility. The depositary of an unsponsored
facility frequently is under no obligation to distribute shareholder
communications received from the issuer of the deposited security or to pass
through to the holders of the receipts voting rights with respect to the
deposited securities.
ASSET-BACKED SECURITIES--securities backed by automobile receivables and
credit-card receivables and other securities backed by other types of
receivables or other assets. Credit support for asset-backed securities may be
based on the underlying assets and/or provided through credit enhancements by a
third party. Credit enhancement techniques include letters of credit, insurance
bonds, limited guarantees (which are generally provided by the issuer),
senior-subordinated structures and overcollateralization. The Core Fixed Income,
High Yield Bond and International Fixed Income Funds may invest in asset-backed
securities.
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 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 holder.
The market for asset-backed securities is at a relatively early stage of
development. Accordingly, there may be limited secondary market for such
securities.
BANKERS' ACCEPTANCES--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 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
S-3
<PAGE>
funds and normally can be traded in the secondary market, prior to maturity.
Certificates of deposit have penalties for early withdrawal.
COMMERCIAL PAPER--the term used to designate unsecured short-term promissory
notes issued by corporations and other entities. Maturities on these issues vary
from a few days to nine months. (See "Description of Ratings").
CONSTRUCTION LOANS--in general, 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.
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.
EQUITY SECURITIES--Equity securities represent ownership interests in a
company or corporation and consist of common stock, preferred stock, warrants
and other rights to acquire such instruments. Equity securities may be listed on
exchanges or traded in the over-the-counter market. Investments in common stocks
are subject to market risks which may cause their prices to fluctuate over time.
The value of convertible securities is also affected by prevailing interest
rates, the credit quality of the issuer and any call provisions. Changes in the
value of fund securities will not necessarily affect cash income derived from
these securities, but will affect a Fund's net asset value.
Investments in the equity securities of small capitalization companies
involves greater risk than is customarily associated with larger, more
established companies due to the greater business risks of small size, limited
markets and financial resources, narrow product lines and the frequent lack of
depth of management. The securities of small companies are often traded
over-the-counter and may not be traded
S-4
<PAGE>
in volumes typical on a national securities exchange. Consequently, the
securities of smaller companies may have limited market stability and may be
subject to more abrupt or erratic market movements than securities of larger,
more established growth companies or the market averages in general.
FOREIGN SECURITIES--may consist of obligations of foreign branches of U.S.
banks and foreign banks, including European Certificates of Deposit, European
Time Deposits, Canadian Time Deposits and Yankee Certificates of Deposit and
investments in Canadian Commercial Paper, foreign securities and Europaper. In
addition, a Fund may invest in American Depositary Receipts ("ADRs") traded on
registered exchanges or NASDAQ. While a Fund expects to invest primarily in
sponsored ADRs, a joint arrangement between the issuer and the depositary, some
ADRs may be unsponsored. These instruments may subject a Fund to investment
risks that differ in some respects from those related to investments in
obligations of U.S. domestic issuers. Such risks include future adverse
political and economic developments, the possible imposition of withholding
taxes on interest or other income, possible seizure, nationalization, or
expropriation of foreign deposits, the possible establishment of exchange
controls or taxation at the source, greater fluctuations in value due to changes
in the exchange rates, or the adoption of other foreign governmental
restrictions which might adversely affect the payment of principal and interest
on such obligations. Such investments may also entail higher custodial fees and
sales commissions than domestic investments. Foreign issuers of securities or
obligations are often subject to accounting treatment and engage in business
practices different from those respecting domestic issuers of similar securities
or obligations. Foreign branches of U.S. banks and foreign banks may be subject
to less stringent reserve requirements than those applicable to domestic
branches of U.S. banks.
FORWARD FOREIGN CURRENCY CONTRACTS--involve an obligation to purchase or
sell a specified currency at a future date at a price set at the time of the
contract. Forward currency contracts do not eliminate fluctuations in the values
of fund securities but rather allow a Fund to establish a rate of exchange for a
future point in time.
When entering into a contract for the purchase or sale of a security in a
foreign currency, a Fund may enter into a foreign forward currency contract for
the amount of the purchase or sale price to protect against variations, between
the date the security is purchased or sold and the date on which payment is made
or received, in the value of the foreign currency relative to the United States
Dollar or other foreign currency.
Also, when the Money Manager anticipates that a particular foreign currency
may decline substantially relative to the United States dollar or other leading
currencies, in order to reduce risk, a Fund may enter into a forward contract to
sell, for a fixed amount, the amount of foreign currency approximating the value
of its securities denominated in such foreign currency. With respect to any such
forward foreign currency contract, it generally will not be possible to match
precisely the amount covered by that contract and the value of the securities
involved due to changes in the values of such securities resulting from market
movements between the date the forward contract is entered into and the date it
matures. In addition, while forward currency contracts may offer protection from
losses resulting from declines in value of a particular foreign currency, they
also limit potential gains which might result from increases in the value of
such currency. A Fund will also incur costs in connection with forward foreign
currency contracts and conversions of foreign currencies into United States
dollars. The 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--A Fund may enter into futures contracts and
options on futures contracts traded on an exchange regulated by the Commodities
Futures Trading Commission ("CFTC"), as 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 a Fund's net assets. A Fund may
buy and sell futures contracts and related options to manage its exposure to
changing interest rates and securities prices. Some strategies reduce a Fund's
exposure to price fluctuations, while others tend to increase its market
exposure. Futures
S-5
<PAGE>
and options on futures can be volatile instruments and involve certain risks
that could negatively impact a Fund's return.
LOWER RATED SECURITIES--lower-rated bonds are commonly referred to as "junk
bonds" or high yield/high risk securities. These securities are rated "Baa" or
"BBB" or lower by an NRSRO. Each Fund may invest in securities rated as low as
"C" by Moody's or "D" by S&P. These ratings indicate that the obligations are
speculative and may be in default. In addition, each Fund may invest in unrated
securities subject to the restrictions stated in the Prospectus.
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, a 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 a 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, a 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 a Fund's assets. If a Fund experiences significant unexpected
net redemptions, this may force it to sell high-yield, high-risk bonds without
regard to their investment merits, thereby decreasing the asset base upon which
expenses can be spread and possibly reducing the Fund's rate of return.
LIQUIDITY AND VALUATION. There may be little trading in the secondary
market for particular bonds, which may affect adversely a Fund's ability to
value accurately or dispose of such bonds. Adverse publicity and investor
perception, whether or not based on fundamental analysis, may decrease the value
and liquidity of high-yield, high-risk bonds, especially in a thin market.
TAXES. A Fund may purchase debt securities (such as zero-coupon or
pay-in-kind securities) that contain original issue discount. Original issue
discount that accretes in a taxable year is treated as earned by a Fund and
therefore is subject to the distribution requirements of the Internal Revenue
Code of 1986, as amended (the "Code"). Because the original issue discount
earned by a 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.
MORTGAGE-BACKED SECURITIES--The Funds may invest in mortgage-backed
securities, which represent pools of mortgage loans assembled for sale to
investors by various governmental agencies such as GNMA and government-related
organizations such as Fannie Mae and the Federal Home Loan Mortgage Corporation
("FHLMC"). In addition, the High Yield Bond may invest in pools of mortgage
loans from nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain mortgage-backed securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If a 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
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such securities are inversely affected by changes in interest rates. However,
though the value of a mortgage-backed security may decline when interest rates
rise, the converse is not necessarily true since in periods of declining
interest rates the mortgages underlying the securities are prone to prepayment.
For this and other reasons, a mortgage-backed security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages and, therefore,
it is not possible to predict accurately the security's return to a 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.
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
GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie
Maes") which are guaranteed as to the timely payment of principal and interest
by GNMA and is backed by the full faith and credit of the United States. 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") which 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 FHLMC include FHLMC Mortgage Participation
Certificates (also known as "Freddie Macs" or "PCs"). 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 FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. FHLMC has in
the past guaranteed only the ultimate collection of principal of the underlying
mortgage loan; however, FHLMC now issues mortgage-backed securities (FHLMC Gold
PCs) which also guarantee timely payment of monthly principal reductions.
Government and private guarantees do not extend to the securities' value, which
is likely to vary inversely with fluctuations in interest rates. When 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. The Core Fixed Income, High Yield Bond and International Fixed
Income Funds may, consistent with their respective investment objectives and
policies, invest in mortgage-backed securities issued or guaranteed by the U.S.
Government or its agencies or instrumentalities. The High Yield Bond Fund may
also purchase mortgage-backed securities issued by non-governmental entities as
set forth in the Prospectus.
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. It is possible that payments on one class of parallel pay
security may be deferred or subordinated to payments on other classes. 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.
MORTGAGE DOLLAR ROLLS--Mortgage "dollar rolls" or "covered rolls," are
transactions in which a Fund sells securities (usually mortgage-backed
securities) and simultaneously contracts to repurchase typically in 30 or 60
days, substantially similar, but not identical, securities on a specified future
date.
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During the roll period, a Fund forgoes principal and interest paid on such
securities. A Fund is compensated by the difference between the current sales
price and the forward price for the future purchase (often referred to as the
"drop") as well as by the interest earned on the cash proceeds of the initial
sale. At the end of the roll commitment period, a Fund may or may not take
delivery of the securities it has contracted to purchase. Mortgage dollar rolls
may be renewed prior to cash settlement and initially may involve only a firm
commitment agreement by the Fund to buy a security. A "covered roll" is a
specific type of mortgage dollar roll for which there is an offsetting cash
position or cash equivalent securities position that matures on or before the
forward settlement date of the mortgage dollar roll transaction. As used herein
the term "mortgage dollar roll" refers to mortgage dollar rolls that are not
"covered rolls." If the broker-dealer to whom the 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 the Fund is required to
repurchase may be worth less than the security that the Fund originally held.
To avoid any leveraging concerns, the Fund will place liquid securities in a
segregated account in an amount sufficient to cover its repurchase obligation.
OBLIGATIONS OF SUPRANATIONAL AGENCIES--may be purchased by the Core Fixed
Income, International Fixed Income, Emerging Markets Equity and International
Equity Funds. Currently, each Fund intends to invest only in obligations issued
or guaranteed by the Asian Development Bank, Inter-American Development Bank,
European Coal and Steel Community, European Economic Community, European
Investment Bank and the Nordic Investment Bank.
OPTIONS--The initial purchase (sale) of an option contract is an "opening
transaction." In order to close out an option position, a Fund may enter into a
"closing transaction," which is simply the sale (purchase) of an option contract
on the same security with the same exercise price and expiration date as the
option contract originally opened. If a Fund is unable to effect a closing
purchase transaction with respect to an option it has written, it will not be
able to sell the underlying security until the option expires or the Fund
delivers the security upon exercise.
A Fund may purchase put and call options on securities to protect against a
decline in the market value of the securities in its portfolio or to anticipate
an increase in the market value of securities that the Fund may seek to purchase
in the future. A Fund purchasing put and call options pays a premium therefor.
If price movements in the underlying securities are such that exercise of the
options would not be profitable for the Fund, loss of the premium paid may be
offset by an increase in the value of the Fund's securities or by a decrease in
the cost of acquisition of securities by the Fund.
A Fund may write covered call options on securities as a means of increasing
the yield on its fund and as a means of providing limited protection against
decreases in its market value. When a Fund writes an option, if the underlying
securities do not increase or decrease to a price level that would make the
exercise of the option profitable to the holder thereof, the option generally
will expire without being exercised and the Fund will realize as profit the
premium received for such option. When a call option of which a Fund is the
writer is exercised, the Fund will be required to sell the underlying securities
to the option holder at the strike price, and will not participate in any
increase in the price of such securities above the strike price. 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 segregated account is maintained to cover the difference between the
closing price of the index and the exercise price of the index option, expressed
in dollars multiplied by a specified number. Thus, unlike options on individual
securities, the ability of a Fund to enter into closing transactions depends
upon the existence of a liquid secondary market for such transactions.
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
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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 SEC that OTC options
are generally illiquid.
PUT TRANSACTIONS--All of the Funds may purchase securities at a price which
would result in a yield to maturity lower than generally offered by the seller
at the time of purchase when a Fund can simultaneously acquire the right to sell
the securities back to the seller, the issuer or a third party (the "writer") at
an agreed-upon price at any time during a stated period or on a certain date.
Such a right is generally denoted as a "standby commitment" or a "put." The
purpose of engaging in transactions involving puts is to maintain flexibility
and liquidity to permit a Fund to meet redemptions and remain as fully invested
as possible in municipal securities. A Fund reserves the right to engage in put
transactions. The right to put the securities depends on the writer's ability to
pay for the securities at the time the put is exercised. A Fund would limit its
put transactions to institutions which the Fund's Money Managers believe present
minimum credit risks, and the Fund's Money Managers would use their best efforts
to initially determine and continue to monitor the financial strength of the
sellers of the options by evaluating their financial statements and such other
information as is available in the marketplace. It may, however, be difficult to
monitor the financial strength of the writers because adequate current financial
information may not be available. In the event that any writer is unable to
honor a put for financial reasons, a Fund would be a general creditor (I.E., on
a parity with all other unsecured creditors) of the writer. Furthermore,
particular provisions of the contract between a Fund and the writer may excuse
the writer from repurchasing the securities; for example, a change in the
published rating of the underlying municipal securities or any similar event
that has an adverse effect on the issuer's credit or a provision in the contract
that the put will not be exercised except in certain special cases, for example,
to maintain fund liquidity. A Fund could, however, at any time sell the
underlying portfolio security in the open market or wait until the portfolio
security matures, at which time it should realize the full par value of the
security.
The securities purchased subject to a put may be sold to third persons at
any time, even though the put is outstanding, but the put itself, unless it is
an integral part of the security as originally issued, may not be marketable or
otherwise assignable. Therefore, the put would have value only to that
particular Fund. Sale of the securities to third parties or lapse of time with
the put unexercised may terminate the right to put the securities. Prior to the
expiration of any put option, a Fund could seek to negotiate terms for the
extension of such an option. If such a renewal cannot be negotiated on terms
satisfactory to the Fund, the Fund could, of course, sell the portfolio
security. The maturity of the underlying security will generally be different
from that of the put. There will be no limit to the percentage of fund
securities that a Fund may purchase subject to a put but the amount paid
directly or indirectly for puts which are not integral parts of the security as
originally issued will not exceed 1/2 of 1% of the value of the total assets of
such Fund calculated immediately after any such put is acquired. For the purpose
of determining the "maturity" of securities purchased subject to an option to
put, and for the purpose of determining the dollar-weighted average maturity of
a Fund including such securities, the Trust will consider "maturity" to be the
first date on which it has the right to demand payment from the writer of the
put although the final maturity of the security is later than such date.
RECEIPTS--interests in separately traded interest and principal component
parts of U.S. Government obligations that are issued by banks or brokerage firms
and are created by depositing U.S. Government obligations into a special account
at a custodian bank. The custodian holds the interest and principal payments for
the benefit of the registered owners of the certificates or receipts. The
custodian arranges for the issuance of the certificates or receipts evidencing
ownership and maintains the register. Receipts include "Treasury Receipts"
("TRs"), "Treasury Investment Growth Receipts" ("TIGRs"), and "Certificates of
Accrual on Treasury Securities" ("CATS"). TIGRs and CATS are interests in
private proprietary accounts while TRs and STRIPS (See "U.S. Treasury
Obligations") are interests in accounts
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sponsored by the U.S. Treasury. Receipts are sold as zero coupon securities; for
more information, see "Zero Coupon Securities."
REPURCHASE AGREEMENTS--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 the Fund is delayed or prevented from exercising
its rights to dispose of the collateral securities. A Fund's Money Managers
enter into repurchase agreements only with financial institutions that they deem
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. A Fund's
Money Managers 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.
SECURITIES LENDING--in order to generate additional income, a Fund may lend
the securities in which it is invested pursuant to agreements requiring that the
loans be continuously secured by cash, securities of the U.S. Government or its
agencies, or any combination of cash and such securities, as collateral equal to
at least the market value at all times of the loaned securities. A Fund will
continue to receive interest on the loaned securities while simultaneously
earning interest on the investment of the cash collateral in U.S. Government
securities. However, a Fund will normally pay lending fees to such
broker-dealers and related expenses from the interest earned on invested
collateral. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans are made only to borrowers deemed by the Fund's Money Managers to be of
good standing and when, in the judgment of the Fund's Money Managers, the
consideration which can be earned currently from such securities loans justifies
the attendant risk. Any loan may be terminated by either party upon reasonable
notice to the other party. Each Fund may use the Distributor as a broker in
these transactions.
SHORT SALES--Selling securities short involves selling securities the Fund
does not own (but has borrowed) in anticipation of a decline in the market price
of such securities. To deliver the securities to the buyer, the seller must
arrange through a broker to borrow the securities and, in so doing, the seller
becomes obligated to replace the securities borrowed at their market price at
the time of replacement. In a short sale, the proceeds the seller receives from
the sale are retained by a broker until the seller replaces the borrowed
securities. The seller may have to pay a premium to borrow the securities and
must pay any dividends or interest payable on the securities until they are
replaced.
SWAPS, CAPS, FLOORS AND COLLARS--are sophisticated hedging instruments that
typically involve a small investment of cash relative to the magnitude of risk
assumed. As a result, swaps can be highly volatile and have a considerable
impact on a Fund's performance. Swap agreements are subject to risks related to
the counterparty's ability to perform, and may decline in value if the
counterparty's creditworthiness deteriorates. A Fund may also suffer losses if
it is unable to terminate outstanding swap agreements or reduce its exposure
through offsetting transactions. Any obligation a Fund may have under
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these types of arrangements will be covered by setting aside liquid, high grade
securities in a segregated account. A Fund will enter into swaps only with
counterparties believed to be creditworthy.
In a typical interest rate swap, one party agrees to make regular payments
equal to a floating interest rate times a "notional principal amount," in return
for payments equal to a fixed rate times the same amount, for a specific period
of time. Swaps may also depend on other prices or rates, such as the value of an
index or mortgage prepayment rates.
In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party.
The buyer of an interest rate cap obtains the right to receive payments to
the extent that a specific interest rate exceeds an agreed-upon level, while the
seller of an interest rate floor is obligated to make payments to the extent
that a specified interest rate falls below an agreed-upon level. An interest
rate collar combines elements of buying a cap and selling a floor.
TIME DEPOSITS--a non-negotiable receipt issued by a bank in exchange for the
deposit of funds. Like a certificate of deposit, it earns a specified rate of
interest over a definite period of time; however, it cannot be traded in the
secondary market.
Time deposits with a withdrawal penalty are considered to be illiquid
securities. The High Yield Bond, International Fixed Income, Emerging Markets
Equity and International Equity Funds may invest in time deposits.
U.S. GOVERNMENT AGENCY OBLIGATIONS--agencies of the United States Government
that issue obligations, including, among others, Export Import Bank of the
United States, Farmers Home Administration, Federal Farm Credit System, Federal
Housing Administration, Government National Mortgage Association, Maritime
Administration, Small Business Administration and The Tennessee Valley
Authority. A Fund may purchase securities issued or guaranteed by the GNMA which
represent participations in Veterans Administration and Federal Housing
Administration backed mortgage pools.
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 or to the value of a Fund's shares.
U.S. TREASURY OBLIGATIONS--bills, notes and bonds issued by the U.S.
Treasury and separately traded interest and principal component parts of such
obligations that are transferable through the Federal book-entry system known as
Separately Traded Registered Interest and Principal Securities ("STRIPS"). No
Fund may actively trade STRIPS. STRIPS are sold as zero coupon securities; for
more information, see "Zero Coupon Securities."
VARIABLE AND FLOATING RATE INSTRUMENTS--may involve a demand feature and may
include variable amount master demand notes available through the Custodian, or
otherwise. Variable or floating rate instruments bear interest at a rate which
varies with changes in market rates. The holder of an instrument with a demand
feature may tender the instrument back to the issuer at par prior to maturity. A
variable amount master demand note is issued pursuant to a written agreement
between the issuer and the holder, its amount may be increased by the holder or
decreased by the holder or issuer, it is payable on demand, and the rate of
interest varies based upon an agreed formula. The quality of the underlying
credit must, in the opinion of the Fund's managers, be equivalent to the
long-term bond or commercial paper ratings applicable to permitted investments
for each Fund. Each Fund's Money Managers 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
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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 fund maturity.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--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. These
securities are subject to market fluctuation due to changes in market interest
rates, and it is possible that the market value at the time of settlement could
be higher or lower than the purchase price if the general level of interest
rates has changed. Although a Fund generally purchases securities on a
when-issued or forward commitment basis with the intention of actually acquiring
securities, a Fund may dispose of a when-issued security or forward commitment
prior to settlement if it deems it appropriate to do so. When investing in
when-issued securities, a Fund will not accrue income until delivery of the
securities and will invest in such securities only for purposes of actually
acquiring the securities and not for purposes of leveraging.
One form of when-issued or delayed-delivery security that a Portfolio may
purchase is a "to be announced" ("TBA") mortgage-backed security. A TBA
mortgage-backed security transaction arises when a mortgage-backed security,
such as a GNMA pass-through security, is purchased or sold with specific pools
that will constitute that GNMA pass-through security to be announced on a future
settlement date.
Purchasing obligations on a when-issued basis is a form of leveraging and
can involve a risk that the yields available in the market when the delivery
takes place may actually be higher than those obtained in the transaction
itself. In that case there could be an unrealized loss at the time of delivery.
A Fund will establish a segregated account 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.
ZERO COUPON SECURITIES--STRIPS and receipts (TRs, TIGRs and CATS) are sold
as zero coupon securities, that is, fixed income securities that have been
stripped of their unmatured interest coupons. Zero coupon securities are sold at
a (usually substantial) discount and redeemed at face value at their maturity
date without interim cash payments of interest or principal. The amount of this
discount is accreted over the life of the security, and the accretion
constitutes the income earned on the security for both accounting and tax
purposes. Because of these features, the market prices of zero coupon securities
are generally more volatile than the market prices of securities that have
similar maturity but that pay interest periodically. Zero coupon securities are
likely to respond to a greater degree to interest rate changes than are non-zero
coupon securities with similar maturity and credit qualities.
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 dated one
or more years into the future, after which 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. A Fund must accrete the discount or interest on
high-yield bonds structured as zero coupon securities as income even though it
does not receive a corresponding cash interest payment until the security's
maturity or payment date. A Fund may have to dispose of its securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing cash to satisfy distribution requirements. A Fund accrues income
with respect to the securities prior to the receipt of cash payments.
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DESCRIPTION OF RATINGS
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.
PRIME-3 Issuers rated Prime-3 (or supporting institutions) have an
acceptable ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more pronounced.
Variability in earnings and profitability may result in changes in the level of
debt protection measurements and may require relatively high financial leverage.
Adequate alternate liquidity is maintained.
NOT PRIME Issuers rated Not Prime do not fall within any of the Prime rating
categories.
STANDARD & POOR'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'.
A-3 Debt carrying this designation has an adequate capacity for timely payment. It is,
however, more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations.
B Debt rated 'B' is regarded as having only speculative capacity for timely payment.
C This rating is assigned to short-term debt obligations with a doubtful capacity for
payment.
D This rating indicates that the obligation is in payment default.
</TABLE>
DESCRIPTION OF DUFF & PHELPS' SHORT-TERM RATINGS
<TABLE>
<S> <C>
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.
</TABLE>
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<TABLE>
<S> <C>
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.
SATISFACTORY GRADE
Duff 3 Satisfactory liquidity and other protection factors qualify issue as to investment
grade. Risk factors are larger and subject to more variation. Nevertheless, timely
payment is expected.
NON-INVESTMENT GRADE
Duff 4 Speculative investment characteristics. Liquidity is not sufficient to insure
against disruption in debt service. Operating factors and market access may be
subject to a high degree of variation.
DEFAULT
Duff 5 Issuer failed to meet scheduled principal and/or interest payments.
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.
F-3 Fair Credit Quality. Issues assigned this rating have characteristics suggesting
that the degree of assurance for timely payment is adequate, however, near-term
adverse changes could cause these securities to be rated below investment grade.
F-S Weak Credit Quality. Issues assigned this rating have characteristics suggesting a
minimal degree of assurance for timely payment and are vulnerable to near-term
adverse changes in financial and economic conditions.
D Default. Issues assigned this rating are in actual or imminent payment default.
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.
A3 Obligations supported by an adequate capacity for timely repayment. Such capacity
is more susceptible to adverse changes in business, economic, or financial
conditions than for obligations in higher categories.
B Obligations for which the capacity for timely repayment is susceptible to adverse
changes in business, economic, or financial conditions.
C Obligations for which there is an inadequate capacity to ensure timely repayment.
D Obligations which have a high risk of default or which are currently in default.
</TABLE>
S-14
<PAGE>
<TABLE>
<S> <C>
DESCRIPTION OF THOMSON BANKWATCH'S SHORT-TERM RATINGS
TBW-1 The highest category; indicates a very high likelihood that principal and interest
will be paid on a timely basis.
TBW-2 The second-highest category; while the degree of safety regarding timely repayment
of principal and interest is strong, the relative degree of safety is not as high
as for issues rated "TBW-1".
TBW-3 The lowest investment-grade category; indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely fashion
is considered adequate.
TBW-4 The lowest rating category; this rating is regarded as non-investment grade and
therefore speculative.
</TABLE>
INVESTMENT LIMITATIONS
FUNDAMENTAL POLICIES
The following investment limitations and the investment limitations in the
Prospectus are fundamental policies of the Trust and may not be changed without
shareholder approval.
A Fund may not:
1. Make loans if, as a result, more than 33 1/3% of its total assets would be
lent 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.
2. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts, and (ii)
commodities contracts relating to financial instruments, such as financial
futures contracts and options on such contracts.
3. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a portfolio security.
4. Invest in interests in oil, gas or other mineral exploration or development
programs and oil, gas or mineral leases.
For purposes of the industry concentration limitation specified in the
prospectus, (i) utility companies will be divided according to their services,
for example, gas, gas transmission, electric and telephone will each be
considered a separate industry; (ii) financial service companies will be
classified according to end users of their services, for example, automabile
finance, bank finance and diversified finance will each be considered a separate
industry; (iii) supranational agencies will be deemed to be issuers conducting
their principal business activities in the same industry; and (iv) governmental
issuers within a particular country will be deemed to be conducting their
principal business activities in that same industry.
NON-FUNDAMENTAL POLICIES
The following investment limitations are non-fundamental policies of the
Trust and may be changed without shareholder approval.
A Fund may not:
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.
S-15
<PAGE>
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 of
section 18 of the 1940 Act.
4. Invest its assets in securities of any investment company, except as
permitted by the 1940 Act.
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.
THE ADMINISTRATOR AND TRANSFER AGENT
The Administration Agreement provides that the Administrator, SEI
Investments Fund Management ("SEI Management" or the "Administrator") 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. This
Agreement shall not be assignable by either party without the written consent of
the other party.
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, The Arbor Fund, ARK
Funds, Armada Funds, Bishop Street Funds, Boston 1784
Funds-Registered Trademark-, CoreFunds, Inc., Crestfunds, Inc., CUFUND, the
Expedition Funds, First American Funds, Inc., First American Investment Funds,
Inc., First American Strategy Funds, Inc., HighMark Funds, The Nevis Funds,
Marquis Funds-Registered Trademark-, Monitor Funds, Morgan Grenfell Investment
Trust, Oak Associates Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund,
Inc., The Pillar Funds, Santa Barbara Group of Mutual Funds, Inc., SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
Managed Trust, SEI International Trust, SEI Liquid Asset Trust, SEI Tax Exempt
Trust, STI Classic Funds, STI Classic Variable Trust, TIP Funds and TIP
Institutional Funds.
If operating expenses of any Fund exceed applicable limitations, SEI
Management will pay such excess. SEI Management will not be required to bear
expenses of any Fund to an extent which would result in the Fund's inability to
qualify as a regulated investment company under provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). The term "expenses" is defined in
such laws or
S-16
<PAGE>
regulations, and generally excludes brokerage commissions, distribution
expenses, taxes, interest and extraordinary expenses.
For the fiscal year ended May 31, 1998, the Funds paid fees to SEI
Management as follows:
<TABLE>
<CAPTION>
FEES PAID FEES
FUND (REIMBURSED) (000) WAIVED (000)
- -------------------------------------------------- ------------------ ------------
1998 1998
------------------ ------------
<S> <C> <C>
Large Cap Fund.................................... $110 $305
Small Cap Fund.................................... $ 30 $ 83
Core Fixed Income Fund............................ $ 75 $202
High Yield Bond Fund.............................. * *
International Fixed Income Fund................... * *
Emerging Markets Equity Fund...................... * *
International Equity Fund......................... $186 $ 48
</TABLE>
- ------------------------
* Not in operation during such period.
THE MANAGER AND THE MONEY MANAGERS
The Manager Agreement and certain of the Money Manager Agreements provide
that SEI Investments Management Corporation ("SIMC" or the "Manager")(or any
Money Manager) 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 Money Manager
Agreements provide that the Money Manager 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 Manager and Money Manager 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 Money Manager 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 Manager or Money Manager, or by the
Manager or Money Manager 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
unaffiliated Money Managers for a Fund without submitting the Money Manager
agreement to a vote of the Fund's shareholders. The exemptive relief permits the
non-disclosure of amounts payable by SIMC under such Money Manager agreements.
The Trust will notify shareholders in the event of any change in the identity of
the Money Manager for a Fund.
S-17
<PAGE>
For the fiscal year ended May 31, 1998, the Funds paid SIMC fees as follows:
<TABLE>
<CAPTION>
FUND
- -------------------------------------------------------------------------------
FEES PAID (000) FEE WAIVERS (000)
--------------- -----------------
1998 1998
--------------- -----------------
<S> <C> <C>
Large Cap Fund................................................................. $ 2,125 $ 1,199
Small Cap Fund................................................................. $ 1,191 $ 290
Core Fixed Income Fund......................................................... $ 706 $ 958
High Yield Bond Fund........................................................... * *
International Fixed Income Fund................................................ * *
Emerging Markets Equity Fund................................................... * *
International Equity Fund...................................................... $ 1,644 $ 744
</TABLE>
- ------------------------
* Not in operation during such period.
For the fiscal year ended May 31, 1998, SIMC paid the Money Managers as
follows:
<TABLE>
<CAPTION>
FUND
- -------------------------------------------------------------------------------
FEES PAID (000) FEE WAIVERS (000)
--------------- -------------------
1998 1998
--------------- -------------------
<S> <C> <C>
Large Cap Fund................................................................. $ 1,777 $ 0
Small Cap Fund................................................................. $ 1,062 $ 0
Core Fixed Income Fund......................................................... $ 655 $ 0
High Yield Bond Fund........................................................... * *
International Fixed Income Fund................................................ * *
Emerging Markets Equity Fund................................................... * *
International Equity Fund...................................................... $ 1,108 $ 0
</TABLE>
- ------------------------
* Not in operation during such period.
DISTRIBUTION
The Distributor, a wholly-owned subsidiary of SEI, and the Trust are parties
to a distribution agreement ("Distribution Agreement"). The Distribution
Agreement shall be reviewed and ratified at least annually (i) by the Trust's
Trustees or by the vote of a majority of the outstanding shares of the Trust,
and (ii) by the vote of a majority of the Trustees of the Trust who are not
parties to the Distribution Agreement or interested persons (as defined in the
1940 Act) of any party to the Distribution Agreement, cast in person at a
meeting called for the purpose of voting on such approval. The Distribution
Agreement will terminate in the event of any assignment, as defined in the 1940
Act, and is terminable with respect to a particular Fund on not less than sixty
days' notice by the Trust's Trustees, by vote of a majority of the outstanding
shares of such Fund or by the Distributor. The Distributor will receive no
compensation for the distribution of Fund shares.
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.
S-18
<PAGE>
TRUSTEES AND OFFICERS OF 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, The Arbor Fund,
ARK Funds, Bishop Street Funds, Boston 1784 Funds-Registered Trademark-,
CoreFunds, Inc., CrestFunds, Inc., CUFUND, The Expedition Funds, First American
Funds, Inc., First American Investment Funds, Inc., First American Strategy
Funds, Inc., HighMark Funds, Marquis Funds-Registered Trademark-, Monitor Funds,
Morgan Grenfell Investment Trust, Oak Associates Funds, The PBHG Funds, Inc.,
PBHG Insurance Series Fund, Inc., The Pillar Funds, Santa Barbara Group of
Mutual Funds, Inc., SEI Daily Income Trust, SEI Index Funds, SEI Asset
Allocation Trust, SEI Institutional International Trust, SEI Institutional
Managed Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI Classic Funds,
STI Classic Variable Trust, TIP Funds, and TIP Institutional Funds, each of
which is an open-end management investment company managed by SEI Fund
Management or its affiliates and, except for Santa Barbara Group of Mutual
Funds, Inc., distributed by SEI Investments Distribution Co. (the
"Distributor").
ROBERT A. NESHER (DOB 08/17/46)--Chairman of the Board of
Trustees*--Currently performs various services on behalf of SEI Investments for
which Mr. Nesher is compensated. Executive Vice President of SEI Investments,
1986-1994. Director and Executive Vice President of the Manager, the
Administrator and the Distributor, 1981-1994. Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund, Boston 1784 Funds-Registered Trademark-, The
Expedition Funds, Marquis Funds-Registered Trademark-, Oak Associates Funds,
Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional International Trust,
SEI Liquid Asset Trust and SEI Tax Exempt Trust.
WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, the Manager, the Administrator and the
Distributor, Director and Secretary of SEI Investments and Secretary of the
Manager, the Administrator and the Distributor. Trustee of The Advisors' Inner
Circle Fund. The Arbor Fund, The Expedition Funds, Marquis
Funds-Registered Trademark-, Oak Associates Funds, SEI Asset Allocation Trust,
SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust and SEI Tax Exempt
Trust.
F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--President, Orange County
Publishing Co., Inc.; Publisher, Paoli News and Paoli Republican; and Editor,
Paoli Republican, October 1981-January 1997. President, H&W Distribution, Inc.,
since July 1984. Executive Vice President, Trust Department, Harris Trust and
Savings Bank and Chairman of the Board of Directors of The Harris Trust Company
of Arizona before January 1981. Trustee of SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI
Institutional International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust,
STI Classic Funds and STI Classic Variable Trust.
FRANK E. MORRIS (DOB 12/30/23)--Trustee**--Peter Drucker Professor of
Management, Boston College, 1989-1990. President, Federal Reserve Bank of
Boston, 1968-1988. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund,
The Expedition Funds, Marquis Funds-Registered Trademark-, Oak Associates Funds,
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional Managed Trust, SEI Institutional International Trust, SEI Liquid
Asset Trust, and SEI Tax Exempt Trust.
JAMES M. STOREY (DOB 04/12/31)--Trustee**--Partner, Dechert Price & Rhoads,
from September 1987-December 1993. Trustee of The Advisors' Inner Circle Fund,
The Arbor Fund, The Expedition Funds, Marquis Funds-Registered Trademark-, Oak
Associates Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Managed Trust, SEI Institutional International Trust,
SEI Liquid Asset Trust, and SEI Tax Exempt Trust.
S-19
<PAGE>
GEORGE J. SULLIVAN, JR. (DOB 11/13/42)--Trustee**--Chief Executive Officer,
Newfound Consultants Inc. since April 1997. General Partner, Teton Partners,
L.P., June 1991-December 1996; Chief Financial Officer, Noble Partners, L.P.,
March 1991-December 1996; Treasurer and Clerk, Peak Asset Management, Inc.,
since 1991; Trustee, Navigator Securities Lending Trust, since 1995, Trustee of
SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Liquid
Asset Trust, SEI Institutional Managed Trust, SEI Institutional International
Trust, and SEI Tax Exempt Trust.
EDWARD D. LOUGHLIN (DOB 03/07/51)--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments, the Manager and the Administrator since 1997. Senior Vice
President, SEI Investments, 1986-1991; Vice President, SEI Investments,
1981-1986.
TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, the
Manager, the Administrator and the Distributor since 1995. Associate, Dewey
Ballantine (law firm), 1994-1995. Associate, Winston & Strawn (law firm),
1991-1994.
LYDIA A. GAVALIS (DOB 06/05/64)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Assistant General Counsel and Director of Arbitration,
Philadelphia Stock Exchange, 1989-1998.
KATHY HEILIG (DOB 12/21/58)--Vice President and Assistant
Secretary--Treasurer of SEI Investments Company since 1997; Assistant Controller
of SEI Investments Company since 1995; Vice President of SEI Investments Company
since 1991; Director of Taxes of SEI Investments Company 1987 to 1991. Tax
Manager, Arthur Anderson LLP prior to 1987.
JOSEPH M. O'DONNELL (DOB 11/13/54)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Manager, the
Administrator and the Distributor since 1998. Vice President and General
Counsel, FPS Services, Inc., 1993-1997. Staff Counsel and Secretary, Provident
Mutual Family of Funds, 1990-1993.
SANDRA K. ORLOW (DOB 10/18/53)--Vice President and Assistant
Secretary--Secretary of the Distributor since 1998; Vice President of the
Distributor since 1988. Vice President and Assistant Secretary of the Manager
and the Administrator since 1988. Assistant Secretary of the Distributor from
1988 to 1998.
CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the SEI Investments, the
Manager, 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, September 1990-September
1992.
KEVIN P. ROBINS (DOB 04/15/61)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments, the
Manager, the Administrator and the Distributor since 1994. Assistant Secretary
of SEI Investments since 1992; Secretary of the Adviser and the Manager since
1994. Vice President, General Counsel and Assistant Secretary of the Adviser,
the Manager and the Distributor, 1992-1994. Associate, Morgan, Lewis & Bockius
LLP (law firm), 1988-1992.
KATHRYN L. STANTON (DOB 11/19/58)--Vice President and Assistant
Secretary--General Counsel, Investment Systems and Services since 1997. Deputy
General Counsel of SEI Investments since 1996. Vice President and Assistant
Secretary of SEI Investments, the Manager, the Administrator and the Distributor
since 1994; Associate, Morgan, Lewis & Bockius LLP (law firm), 1989-1994.
LYNDA J. STRIEGEL (DOB 10/30/48)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of the Administrator and the
Distributor since 1998. Senior Asset Management Counsel, Barnett Banks, Inc.
(1997-1998). Partner, Groom and Nordberg, Chartered, 1996-1997. Associate
General Counsel, Riggs Bank, N.A., 1991-1995.
S-20
<PAGE>
RICHARD W. GRANT (DOB 10/25/45)--Secretary--2000 One Logan Square,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, the Manager, the Administrator and the
Distributor.
MARK E. NAGLE (DOB 10/20/59)--Controller and Chief Financial Officer--Vice
President of Fund Accounting and Administration for SEI Investments Mutual Fund
Services and Vice President of the Manager since 1996. Vice President of the
Distributor since December 1997. Vice President, Fund Accounting, BISYS Fund
Services September 1995 to November 1996. Senior Vice President and Site
Manager, Fidelity Investments 1981 to September 1995.
- ------------------------
*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.
**Messrs. Gooch, Storey, Morris and Sullivan serve as members of the Audit
Committee of the Trust.
Compensation of officers and affiliated Trustees of the Trust is paid by SEI
Management. The Trust pays the fees for unaffiliated Trustees. For the fiscal
year ended May 31, 1998, the Trust paid the following amounts to the Trustees.
<TABLE>
<CAPTION>
AGGREGATE PENSION OR TOTAL COMPENSATION FROM
COMPENSATION RETIREMENT BENEFITS ESTIMATED REGISTRANT AND TRUST
FROM REGISTRANT ACCRUED AS ANNUAL COMPLEX PAID TO TRUSTEES
NAME OF FOR FISCAL YEAR PART OF BENEFITS UPON FOR
PERSON, POSITION ENDED 5/31/98 FUND EXPENSES RETIREMENT FISCAL YEAR ENDED 5/31/98
- ----------------------------------- ----------------- ----------------------- -------------- --------------------------
<S> <C> <C> <C> <C>
F. Wendell Gooch, Trustee.......... $ 16,836 $ 0 $ 0 $99,000 for services on 8
boards
Frank E. Morris, Trustee........... $ 16,836 $ 0 $ 0 $99,000 for services on 8
boards
James M. Storey, Trustee........... $ 16,836 $ 0 $ 0 $99,000 for services on 8
boards
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
George J. Sullivan, Trustee........ $ 16,836 $ 0 $ 0 $99,000 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.
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 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) 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.
S-21
<PAGE>
Actual yield will depend on such variables as asset quality, average asset
maturity, the type of instruments a Fund invests in, changes in interest rates
on money market instruments, changes in the expenses of the Fund and other
factors. For the 30-day period ending May 31, 1998, the yields for the Large
Cap, Small Cap and Core Fixed Income Funds were 1.27%, 0.49% and 5.88%,
respectively.
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)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.
Based on the foregoing, the average annual total return for the Funds from
inception through May 31, 1998 were as follows:
<TABLE>
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
FUND SINCE INCEPTION
- ---------------------------------------------------------------------------------------- ---------------
<S> <C>
Large Cap Fund.......................................................................... 31.45%
Small Cap Fund.......................................................................... 17.98%
Core Fixed Income Fund.................................................................. 10.13%
High Yield Bond Fund.................................................................... *
International Fixed Income Fund......................................................... *
Emerging Markets Equity Fund............................................................ *
International Equity Fund............................................................... 9.15%
</TABLE>
- ------------------------
* Not in operation during such period.
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.
From time to time the Trust may include the names of clients of the Money
Managers in advertisements and/or sales literature for the Trust.
PURCHASE AND REDEMPTION OF SHARES
The purchase and redemption price of shares is the net asset value of each
share. The net asset value of each Fund is determined by SIMC and is based upon
the proportional net asset values of each Fund's Underlying Portfolio shares
(plus any available cash). Each Underlying Portfolio's securities are valued by
SIMC pursuant to valuations provided by an independent pricing service
(generally the last quoted sale price). Underlying Portfolio securities listed
on a securities exchange for which market quotations are available are valued at
the last quoted sale price on each Business Day (defined as days on which the
New York Stock Exchange is open for business ("Business Day")) or, if there is
no such reported sale, at the most recently quoted bid price. Unlisted
securities for which market quotations are readily available are valued at the
most recently quoted bid price. The pricing service may also use a matrix system
to determine valuations. This system considers such factors as security prices,
yields, maturities, call features, ratings and developments relating to specific
securities in arriving at valuations. The procedures of the pricing service and
its valuations are reviewed by the officers of the Trust under the general
supervision of the Trustees.
S-22
<PAGE>
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.
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 fund securities is not reasonably practicable, or
for such other periods as the SEC may by order permit. The Trust also reserves
the right to suspend sales of shares of the Funds for any period during which
the New York Stock Exchange, the Manager, the Administrator, the Distributor,
the Money Managers and/or the Custodian are not 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 securities may be traded on foreign markets on days other than Business
Days or the net asset value of a Fund may be computed on days when such foreign
markets are closed. In addition, foreign markets may close at times other than
4:00 p.m. Eastern time. As a consequence, the net asset value of a share of a
Fund may not reflect all events that may affect the value of the Fund's foreign
securities unless the Money Managers determine that such events materially
affect net asset value in which case net asset value will be determined by
consideration of other factors.
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' Prospectus. 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' Prospectus 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 as 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 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 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, securities or foreign currencies, or other income derived with respect to
its business of investing in such stock or securities or currencies; (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
S-23
<PAGE>
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 which the Fund controls and which are engaged in the same, similar, or
related trades or businesses.
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 Fund investments in order to make sufficient distributions
to avoid federal excise tax liability at a time when the investment advisor
might not otherwise have chosen to do so, and liquidation of investments in such
circumstances may affect the ability of a Fund to satisfy the requirements for
qualification as a RIC.
Any gain or loss recognized on a sale, exchange or redemption of shares of a
Fund by a shareholder who is not a dealer in securities will generally, for
individual shareholders, be treated as a long-term capital gain or loss if the
shares have been held for more than twelve months and otherwise will be treated
as a 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 income will be
subject to federal income tax at corporate rates, and its distributions
(including capital gain distributions) generally will be taxable as ordinary
income dividends to its shareholders, subject to the dividends received
deduction for eligible 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.
Dividends and interest received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries and United States
possessions that would reduce the yield on a Fund's securities. Tax conventions
between certain countries and the United States may reduce or eliminate these
taxes. Foreign countries generally do not impose taxes on capital gains with
respect to investments by foreign investors. If more than 50% of the value of a
Fund's total assets at the close of its taxable year consists of securities of
foreign corporations, a Fund will be eligible to, and will, file an election
with the Internal Revenue Service that will enable shareholders, in effect, to
receive the benefit of the foreign tax credit with respect to any foreign and
United States possessions income taxes paid by a Fund. Pursuant to the election,
a Fund will treat those taxes as dividends paid to its shareholders. Each
shareholder will be required to include a proportionate share of those taxes in
gross income as income received from a foreign source and must treat the amount
so included as if the shareholder had paid the foreign tax directly. The
shareholder may then either deduct the taxes deemed paid by him or her in
computing his or her taxable income or, alternatively, use the foregoing
information in calculating the foreign tax credit (subject to significant
limitations) against the shareholder's federal income tax. If a Fund makes the
election, it will
S-24
<PAGE>
report annually to its shareholders the respective amounts per share of the
Fund's income from sources within, and taxes paid to, foreign countries and
United States possessions.
STATE TAXES
A Fund is not liable for any income or franchise tax in Massachusetts if it
qualifies as a RIC for federal income tax purposes. Distributions by a Fund to
shareholders and the ownership of shares may be subject to state and local
taxes. Shareholders should consult their own tax advisers regarding the affect
of federal, state and local taxes in their own individual circumstances.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in fund securities. Subject to policies
established by the Trustees, the Money Managers 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 Money
Managers generally seek reasonably competitive spreads or commissions, the Trust
will not necessarily be paying the lowest spread or commission available. The
Trust will not purchase fund securities from any affiliated person acting as
principal except in conformity with the regulations of the SEC.
The money market securities in which a Fund invests are traded primarily in
the over-the-counter market. Bonds and debentures are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Money
Managers will deal directly with the dealers who make a market in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. Such dealers usually are acting as principal for their own
account. On occasion, securities may be purchased directly from the issuer.
Money market securities are generally traded on a net basis and do not normally
involve either brokerage commissions or transfer taxes. The cost of executing
fund securities transactions of a Fund will primarily consist of dealer spreads
and underwriting commissions.
It is expected that the Funds may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, for a
commission, in conformity with the 1940 Act, the Securities Exchange Act of
1934, as amended, and rules of the SEC. Under these provisions, the Distributor
is permitted to receive and retain compensation for effecting fund transactions
for a Fund on an exchange. 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, a Fund 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 Fund's expenses. The Trustees,
including those who are not "interested persons" of the Trust, have adopted
procedures for evaluating the reasonableness of commissions paid to the
Distributor and will review these procedures periodically.
Since the Trust does not market its shares through intermediary brokers or
dealers, it is not the Trust's practice to allocate brokerage or principal
business on the basis of sales of its shares which may be made through such
firms. However, the Fund's Money Managers may place fund orders with qualified
broker-dealers who recommend the Trust to clients, and may, when a number of
brokers and dealers can provide best price and execution on a particular
transaction, consider such recommendations by a broker or dealer in selecting
among broker-dealers.
S-25
<PAGE>
The Trust does not expect to use one particular dealer, but a Fund's Money
Managers may, consistent with the interests of the Fund, select brokers on the
basis of the research services they provide to the Fund's Money Managers. 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 Money Manager will be in addition to and not in lieu of the
services required to be performed by a Fund's Money Managers under the Advisory
and/or Sub-Advisory Agreements. If in the judgement of a Fund's Money Managers
the Funds, or other accounts managed by the Fund's Money Managers, will be
benefitted by supplemental research services, the Fund's Money Managers are
authorized to pay brokerage commissions to a broker furnishing such services
which are in excess of commissions which another broker may have charged for
effecting the same transaction. The expenses of a Fund's Money Managers will not
necessarily be reduced as a result of the receipt of such supplemental
information.
In connection with transactions effected for Funds operating within the
"Manager of Managers" structure, under this policy, SIMC and the various firms
that serve as money managers to certain Funds of the Trust, in the exercise of
joint investment discretion over the assets of a Fund, may direct a 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.
For the fiscal year ended May 31, 1998, the Funds paid the following
brokerage fees:
<TABLE>
<CAPTION>
% OF TOTAL
TOTAL $ AMOUNT TOTAL $ AMOUNT % OF TOTAL BROKERED
OF BROKERAGE OF BROKERAGE BROKERAGE TRANSACTIONS TOTAL $ AMOUNT
COMMISSION COMMISSIONS COMMISSIONS EFFECTED THROUGH OF BROKERED
PAID IN 1998 PAID TO AFFILIATES PAID TO AFFILIATES AFFILIATES TRANSACTIONS
FUND (000) IN 1998 (000) IN 1998 IN 1998 IN 1998
- -------------------------------- -------------- ------------------ ------------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
Large Cap Fund.................. $1,331 $0 0% 0% $717,375
Small Cap Fund.................. $ 639 $0 0% 0% $197,196
Core Fixed Income Fund.......... * $0 0% 0% $ 55,236
High Yield Bond Fund............ * * * * *
International
Fixed Income Fund.............. * * * * *
Emerging Markets Equity Fund.... * * * * *
International Equity Fund....... $1,576 $0 0% 0% $893,767
<CAPTION>
TOTAL BROKERAGE
COMMISSIONS
PAID TO THE DISTRIBUTOR
IN CONNECTION WITH
REPURCHASE AGREEMENT
FUND TRANSACTIONS IN 1998
- -------------------------------- -----------------------
<S> <C>
Large Cap Fund.................. $0
Small Cap Fund.................. $0
Core Fixed Income Fund.......... $0
High Yield Bond Fund............ *
International
Fixed Income Fund.............. *
Emerging Markets Equity Fund.... *
International Equity Fund....... $0
</TABLE>
- ------------------------------
* Not in operation during such period.
The portfolio turnover rate for each Fund for the fiscal year ended May 31,
1998 was as follows:
<TABLE>
<CAPTION>
TURNOVER RATE
FUND 1997
- ------------------------------------------------------------------------------- -------------
<S> <C>
Large Cap Fund................................................................. 72%
Small Cap Fund................................................................. 120%
Core Fixed Income Fund......................................................... 324%
High Yield Bond Fund........................................................... *
International Fixed Income Fund................................................ *
Emerging Markets Equity Fund................................................... *
International Equity Fund...................................................... 109%
</TABLE>
- ------------------------
* Not in operation during such period.
As of May 31, 1998, the Large Cap Fund owned $3,745,000 of equity securities
issued by Lehman Brothers; $4,806,000 of equity securities issued by Merrill
Lynch; $2,695,000 of equity securities and $29,844,000 of debt securities issued
by J.P. Morgan; $6,659,000 of equity securities issued by Bear Stearns; and
$8,634,000 of equity securities issued by Morgan Stanley. The Small Cap Fund
owned $28,113,000 of debt securities issued by Merrill Lynch. The Core Fixed
Income Fund owned $150,521,000 of debt
S-26
<PAGE>
securities issued by J.P. Morgan; $799,000 of debt securities issued by Goldman
Sachs; $6,908,000 of debt securities issued by Lehman Brothers; $1,727,000 of
debt securities issued by PaineWebber; $4,746,000 of debt securities issued by
Salomon Brothers; $8,109,000 of debt securities issued by Merrill Lynch; and
$1,465,000 of debt securities issued by Bear Stearns. The International Equity
Fund owned $9,269,000 of debt securities issued by Merrill Lynch; $32,382,000 of
debt securities issued by Morgan Stanley; and $2,516,000 of debt securities
issued by State Street Bank.
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. 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 funds. Share certificates
representing the shares will not be issued.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable only for
his or her own willful defaults and, if reasonable care has been exercised in
the selection of officers, agents, employees or administrators, shall not be
liable for any neglect or wrongdoing of any such person. The Declaration of
Trust also provides that the Trust will indemnify its Trustees and officers
against liabilities and expenses incurred in connection with actual or
threatened litigation in which they may be involved because of their offices
with the Trust 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 willful misfeasance, bad faith, gross negligence or reckless
disregard of his or her duties.
VOTING
Where the Prospectus for the Funds or this 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 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 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 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 (i) 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 (ii) provides for indemnification out of the Trust property for
any shareholders held personally liable for the obligations of the Trust.
S-27
<PAGE>
5% SHAREHOLDERS
As of September 1, 1997, 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 above were held by the above persons in accounts for their
fiduciary, agency, or custodial customers.
<TABLE>
<CAPTION>
LARGE CAP FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
SEI Trust Company .................................................. 66,283,428 89.96%
Attn: Jacqueline Esposito
One Freedom Valley Drive
Oaks, PA 19456
<CAPTION>
SMALL CAP FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
SEI Trust Company .................................................. 18,212,386 64.27%
Attn: Jacqueline Esposito
One Freedom Valley Drive
Oaks, PA 19456
Wachovia Bank N.A. ................................................. 3,810,975 13.45%
Air Products and Chemicals Inc.
301 North Church Street
Winston-Salem NC 27101
Fleet National Bank ................................................ 2,006,608 7.08%
Mutual Fund Specialist
P.O. Box 92800
Rochester, NY 14692
<CAPTION>
CORE FIXED INCOME FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
SEI Trust Company .................................................. 59,843,692 84.07%
Attn: Jacqueline Esposito
One Freedom Valley Drive
Oaks, PA 19456
Fleet National Bank ................................................ 4,574,972 6.43%
Mutual Fund Specialist
P.O. Box 92800
Rochester, NY 14692
<CAPTION>
INTERNATIONAL EQUITY FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
- -------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
SEI Trust Company .................................................. 37,221,881 72.29%
Attn: Jacqueline Esposito
One Freedom Valley Drive
Oaks, PA 19456
</TABLE>
S-28
<PAGE>
EXPERTS
The financial statements incorporated by reference into this Statement of
Additional Information have been incorporated by reference in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP serves as counsel to the Trust.
FINANCIAL STATEMENTS
The Trust's financial statements for the fiscal year ended May 31, 1998,
including notes thereto and the report of PricewaterhouseCoopers LLP thereon,
are herein incorporated by reference from the Trust's 1998 Annual Report. A copy
of the 1998 Annual Report must accompany the delivery of this Statement of
Additional Information.
S-29
<PAGE>
SEI INSTITUTIONAL INVESTMENTS TRUST
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) Financial Statements.
<TABLE>
<S> <C>
Part A: Financial Highlights
Part B: The following audited Financial Statements for the fiscal year ended May 31,
1998 and Report of Independent Public Accountants dated July 16, 1998 are
incorporated by reference to the Statement of Additional Information from form N-30D
filed on July 27, 1998 with Accession Number 0000935069-98-000116.
Statement of Net Assets
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
</TABLE>
(b) Additional Exhibits:
<TABLE>
<S> <C>
(1) Registrant's Declaration of Trust is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 33-58041),
filed with the Securities and Exchange Commission ("SEC") on March 10,
1995.
(2) Registrant's By-Laws are incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 33-58041), filed with the
SEC on March 10, 1995.
(2)(a) Amended By-Laws are incorporated by reference to Registrant's Registration
Statement on Form N-1A (File No. 33-58041), filed with the SEC on
September 29, 1997.
(3) Not Applicable.
(4) Not Applicable.
(5)(a) Investment Advisory Agreement between the Trust and SEI Investments
Management Corporation ("SIMC") (formerly "SEI Financial Management
Corporation") as previously filed with Registrant's Pre-Effective
Amendment No. 2 on Form N-1A (File No. 33-58041), filed with the SEC on
June 7, 1996 is herein incorporated by reference to Post-Effective
Amendment No. 2, filed with the SEC on September 29, 1997.
(5)(b) Form of Investment Sub-Advisory Agreement between SIMC and 1838 Investment
Advisors, L.P. with respect to the Trust's Small Cap Fund as previously
filed with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File
No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(c) Investment Sub-Advisory Agreement between SIMC and Acadian Asset
Management, L.P. with respect to the Trust's International Equity Fund
as previously filed with Registrant's Pre-Effective Amendment No. 1 on
Form N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is
herein incorporated by reference to Post-Effective Amendment No. 2,
filed with the SEC on September 29, 1997.
</TABLE>
C-1
<PAGE>
<TABLE>
<S> <C>
(5)(d) Investment Sub-Advisory Agreement between SIMC and Alliance Capital
Management L.P. with respect to the Trust's Large Cap Fund as previously
filed with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File
No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(e) Form of Investment Sub-Advisory Agreement between SIMC and
Apodaca-Johnston Capital Management, Inc. with respect to the Trust's
Small Cap Fund is incorporated herein by reference to Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), as
previously filed with the SEC on April 26, 1996.
(5)(f) Investment Sub-Advisory Agreement between SIMC and BEA Associates with
respect to the High Yield Bond Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on April 26, 1996 is herein incorporated
by reference to Post-Effective Amendment No. 2, filed with the SEC on
September 29, 1997.
(5)(g) Investment Sub-Advisory Agreement between SIMC and BlackRock Financial
Management, Inc. with respect to the Core Fixed Income Fund as
previously filed with Registrant's Pre-Effective Amendment No. 1 on Form
N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(h) Investment Sub-Advisory Agreement between SIMC and Boston Partners Asset
Management, L.P. with respect to the Small Cap Fund as previously filed
with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on April 26, 1996 is herein incorporated
by reference to Post-Effective Amendment No. 2, filed with the SEC on
September 29, 1997.
(5)(i) Investment Sub-Advisory Agreement between SIMC and Firstar Investment
Research & Management Company with respect to the Core Fixed Income Fund
as previously filed with Registrant's Pre-Effective Amendment No. 1 on
Form N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is
herein incorporated by reference to Post-Effective Amendment No. 2,
filed with the SEC on September 29, 1997.
(5)(j) Investment Sub-Advisory Agreement between SIMC and American Express Asset
Management Group, Inc. (formerly "IDS Advisory Group, L.P.") with
respect to the Trust's Large Cap Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on April 26, 1996 is herein incorporated
by reference to Post-Effective Amendment No. 2, filed with the SEC on
September 29, 1997.
(5)(k) Investment Sub-Advisory Agreement between SIMC and LSV Asset Management
with respect to the Trust's Large Cap and Small Cap Funds as previously
filed with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File
No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(l) Investment Sub-Advisory Agreement between SIMC and Mellon Equity
Associates with respect to the Large Cap Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on April 26, 1996 is herein incorporated
by reference to Post-Effective Amendment No. 2, filed with the SEC on
September 29, 1997.
</TABLE>
C-2
<PAGE>
<TABLE>
<S> <C>
(5)(m) Investment Sub-Advisory Agreement between SIMC and HighMark Capital
Management, Inc. (formerly "Pacific Alliance Capital Management") with
respect to the Large Cap Fund as previously filed with Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed
with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29,
1997.
(5)(n) Investment Sub-Advisory Agreement between SIMC and Montgomery Asset
Management, L.P. with respect to the Emerging Markets Equity Fund as
previously filed with Registrant's Pre-Effective Amendment No. 1 on Form
N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(o) Form of Investment Sub-Advisory Agreement between SIMC and Morgan Grenfell
Investment Services Limited with respect to the International Equity
Fund is incorporated herein by reference to Registrant's Pre-Effective
Amendment No. 1 on Form N-1A (File No. 33-58041), as previously filed
with the SEC on April 26, 1996.
(5)(p) Investment Sub-Advisory Agreement between SIMC and Nicholas-Applegate
Capital Management, Inc. with respect to the Small Cap Fund as
previously filed with Registrant's Pre-Effective Amendment No. 1 on Form
N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(q) Investment Sub-Advisory Agreement between SIMC and Provident Investment
Counsel, Inc. with respect to the Large Cap Fund as previously filed
with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on April 26, 1996 is herein incorporated
by reference to Post-Effective Amendment No. 2, filed with the SEC on
September 29, 1997.
(5)(r) Form of Investment Sub-Advisory Agreement between SIMC and Schroder
Capital Management International Limited with respect to the
International Equity Fund is incorporated herein by reference to
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), as previously filed with the SEC on April 26, 1996.
(5)(s) Investment Sub-Advisory Agreement between SIMC and Strategic Fixed Income
L.P. with respect to the International Fixed Income Fund as previously
filed with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File
No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(t) Investment Sub-Advisory Agreement between SIMC and Wall Street Associates
with respect to the Small Cap Fund as previously filed with Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed
with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29,
1997.
(5)(u) Investment Sub-Advisory Agreement between SIMC and Western Asset
Management Company with respect to the Core Fixed Income Fund as
previously filed with Registrant's Pre-Effective Amendment No. 1 on Form
N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
</TABLE>
C-3
<PAGE>
<TABLE>
<S> <C>
(5)(v) Investment Sub-Advisory Agreement between SIMC and First of America
Investment Corporation with respect to the Small Cap Fund as previously
filed as Exhibit (5)(w) with Registrant's Pre-Effective Amendment No. 2
on Form N-1A (File No. 33-58041), filed with the SEC on June 7, 1996 is
herein incorporated by reference to Post-Effective Amendment No. 2,
filed with the SEC on September 29, 1997.
(5)(w) Investment Sub-Advisory Agreement between SIMC and Farrell Wako Global
Investment Management, Inc. with respect to the International Equity
Fund as previously filed as Exhibit (5)(x) with Registrant's
Pre-Effective Amendment No. 2 on Form N-1A (File No. 33-58041), filed
with the SEC on June 7, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29,
1997.
(5)(x) Investment Sub-Advisory Agreement between SIMC and Seligman Henderson Co.
with respect to the International Equity Fund as previously filed as
Exhibit (5)(y) with Registrant's Pre-Effective Amendment No. 2 on Form
N-1A (File No. 33-58041), filed with the SEC on June 7, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(y) Investment Sub-Advisory Agreement between SIMC and SG Pacific Asset
Management, Inc. (formerly "Yamaichi Capital Management, Inc.") with
respect to the International Equity Fund as previously filed as Exhibit
(5)(z) with Registrant's Pre-Effective Amendment No. 2 on Form N-1A
(File No. 33-58041), filed with the SEC on June 7, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(z) Investment Sub-Advisory Agreement between SIMC and Coronation Asset
Management (Proprietary) Limited with respect to the Emerging Markets
Equity Fund is incorporated herein by reference as Exhibit (5)(aa) to
Registrant's Post-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on December 30, 1996.
(5)(aa) Investment Sub-Advisory Agreement between SIMC and Furman Selz Capital
Management LLC with respect to the Small Cap Fund as previously filed as
Exhibit (5)(bb) to Registrant's Post-Effective Amendment No. 1 on Form
N-1A (File No. 33-58041), filed with the SEC on December 30, 1996 is
herein incorporated by reference to Post-Effective Amendment No. 2,
filed with the SEC on September 29, 1997.
(5)(bb) Investment Sub-Advisory Agreement between SIMC and Lazard London
International Investment Management Limited with respect to the
International Equity Fund as previously filed as Exhibit (5)(cc) to
Registrant's Post-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on December 30, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
(5)(cc) Investment Sub-Advisory Agreement between SIMC and Parametric Portfolio
Associates with respect to the Emerging Markets Equity Fund is
incorporated herein by reference as Exhibit (5)(dd) to Registrant's
Post-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed
with the SEC on December 30, 1996.
(5)(dd) Investment Sub-Advisory Agreement between SIMC and SG Pacific Asset
Management, Inc. (formerly "Yamaichi Capital Management, Inc.") and SGY
Asset Management (Singapore) Ltd. (formerly "Yamaichi Capital Management
(Singapore) Limited) with respect to the International Equity Fund is
incorporated herein by reference as Exhibit (5)(ee) to Registrant's
Post-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed
with the SEC on December 30, 1996.
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
(5)(ee) Schedule B dated January 1, 1997 to the Trust's Sub-Advisory Agreement
dated June 14, 1996 between SIMC and LSV Asset Management is
incorporated by reference to Registrant's Registration Statement on Form
N-1A (File No. 33-58041), filed with the SEC on September 29, 1997.
(5)(ff) Investment Sub-Advisory Agreement between SIMC and Sanford C. Bernstein &
Co., Inc. with respect to the Large Cap Fund is filed herewith.
(5)(gg) Investment Sub-Advisory Agreement between SIMC and Polynous Capital
Management with respect to the Small Cap Fund is filed herewith.
(5)(hh) Investment Sub-Advisory Agreement between SIMC and Robertson Stephens
Investment Management, L.P. with respect to the Small Cap Fund is filed
herewith.
(5)(ii) Investment Sub-Advisory Agreement between SIMC and Capital Guardian Trust
Company with respect to the International Equity Fund is filed herewith.
(5)(jj) Investment Sub-Advisory Agreement between SIMC and Scottish Widows
Investment Management Limited with respect to the International Equity
Fund is filed herewith.
(5)(kk) Investment Sub-Advisory Agreement between SIMC and Credit Suisse Asset
Management, Limited with respect to the Emerging Markets Equity Fund is
filed herewith.
(5)(ll) Investment Sub-Advisory Agreement between SIMC and TCW Funds Management
Inc. with respect to the Large Cap Fund is filed herewith.
(5)(mm) Investment Sub-Advisory Agreement between SIMC and Mellon Equity
Associates, LLP with respect to the Small Cap Fund is filed herewith.
(5)(nn) Investment Sub-Advisory Agreement between SIMC and Spyglass Asset
Management, Inc. with respect to the Small Cap Fund is filed herewith.
(5)(oo) Investment Sub-Advisory Agreement between SIMC and Morgan Stanley Asset
Management Inc. with respect to the Emerging Markets Equity Fund is
filed herewith.
(5)(pp) Investment Sub-Advisory Agreement between SIMC and Nicholas-Applegate
Capital Management, Inc. with respect to the Emerging Markets Equity
Fund is filed herewith.
(6) Distribution Agreement between the Trust and SEI Investments Distribution
Co. (formerly "SEI Financial Services Company") as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No.
33-58041), filed with the SEC on April 26, 1996 is herein incorporated
by reference to Post-Effective Amendment No. 2, filed with the SEC on
September 29, 1997.
(7) Not Applicable.
(8) Custodian Agreement between the Trust and First Union National Bank, N.A.
with respect to the Trust's Large Cap, Small Cap, Core Fixed Income and
High Yield Bond Funds as previously filed with Registrant's
Pre-Effective Amendment No. 2 on Form N-1A (File No. 33-58041), filed
with the SEC on June 7, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29,
1997.
(8)(a) Custodian Agreement between the Trust and State Street Bank and Trust
Company is incorporated by reference to Registrant's Registration
Statement on Form N-1A (File No. 33-58041), filed with the SEC on
September 29, 1997.
(9)(a) Administration Agreement dated June 14, 1996 between the Trust and SEI
Investments Fund Management as previously filed with Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed
with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29,
1997.
</TABLE>
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<TABLE>
<S> <C>
(10) Opinion and Consent of Counsel is incorporated herein by reference to
Registrant's Pre-Effective Amendment No. 2 on Form N-1A (File No.
33-58041), filed with the SEC on June 7, 1996.
(11) Consent of Independent Public Accountants is filed herewith.
(12) Not Applicable.
(13) Not Applicable.
(14) Not Applicable.
(15) Not Applicable.
(16) Performance Quotation Computation is incorporated herein by reference to
Registrant's Pre-Effective Amendment No. 2 on Form N-1A (File No.
33-58041), filed with the SEC on June 7, 1996.
(17) Financial Data Schedules are filed herewith.
(24) Powers of Attorney for Robert A. Nesher, William M. Doran, George J.
Sullivan, Jr., F. Wendell Gooch, Mark E. Nagle, James M. Storey, Edward
D. Loughlin and Frank E. Morris are filed herewith.
</TABLE>
ITEM 25.
See the Prospectus and Statement of Additional Information filed herewith
regarding the Trust's control relationships. The Administrator is a subsidiary
of SEI Investments Company which also controls the Distributor of the
Registrant, SEI Investments Distribution Co., and other corporations engaged in
providing various financial and record keeping services, primarily to bank trust
departments, pension plan sponsors, and investment managers.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES:
The number of record holders as of September 1, 1998:
<TABLE>
<CAPTION>
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
- ---------------------------------------------------------------------------------- -------------
<S> <C>
Large Cap Fund.................................................................... 11
Small Cap Fund.................................................................... 15
Core Fixed Income Fund............................................................ 12
High Yield Bond Fund.............................................................. N/A
International Fixed Income Fund................................................... N/A
Emerging Markets Equity Fund...................................................... N/A
International Equity Fund......................................................... 15
</TABLE>
ITEM 27. INDEMNIFICATION:
Article VIII of the Agreement and Declaration of Trust is filed as Exhibit 1
to the Registration Statement. Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to trustees,
directors, officers and controlling persons of the Registrant by the Registrant
pursuant to the Declaration of Trust or otherwise, the Registrant is aware that
in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Act and, therefore, is
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by trustees, directors, officers or controlling persons of the Registrant
in connection with the successful defense of any act, suite or proceeding) is
asserted by such trustees, directors, officers or controlling persons in
connection with the shares being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled
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<PAGE>
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF MONEY MANAGERS:
Other business, profession, vocation, or employment of a substantial nature
in which each director or principal officer of each Money Manager is or has
been, at any time during the last two fiscal years, engaged for his own account
or in the capacity of director, officer, employee, partner or trustee are as
follows:
1838 INVESTMENT ADVISORS, L.P.
1838 Investment Advisors L.P. ("1838") is a money manager for the
Registrant's Small Cap Fund. The principal business address of 1838 is 5 Radnor
Corporate Center, 100 Matsonford Road, Suite 320, Radnor, Pennsylvania 19087.
1838 is an investment money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of 1838,
together with information as to any other business, profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by 1838 pursuant to the Advisers Act (SEC File No. 801-33025).
ACADIAN ASSET MANAGEMENT, INC.
Acadian Asset Management, Inc. ("Acadian") is a money manager for the
Registrant's International Equity Fund. The principal business address of
Acadian is 260 Franklin Street, Boston, Massachusetts 02110. Acadian is an
investment money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Acadian,
together with information as to any other business, profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Acadian pursuant to the Advisers Act (SEC File No. 28078).
ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance Capital Management L.P. ("Alliance") is a money manager for the
Registrant's Large Cap Fund. The principal business address of Alliance is 1345
Avenue of the Americas, New York, New York 10105. Alliance is an investment
money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Alliance,
together with information as to any other business, profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Alliance pursuant to the Advisers Act (SEC File No.
801-32361).
BEA ASSOCIATES
BEA Associates ("BEA") is the money manager for the Registrant's High Yield
Fund. The principal business address of BEA is One Citicorp Center, 153 East
53rd Street, New York, New York 10022. BEA is an investment money manager
registered under the Advisers Act.
The list required by this Item 28 of officers and directors of BEA, together
with information as to any other business, profession, vocation or employment of
a substantial nature engaged in by such officers and directors during the past
two years, is incorporated by reference to Schedules A and D of Form ADV filed
by BEA pursuant to the Advisers Act (SEC File No. 801-37170).
C-7
<PAGE>
BLACKROCK, INC.
BlackRock, Inc. ("BlackRock") is a money manager for the Registrant's Core
Fixed Income Fund. The principal business address of BlackRock is 345 Park
Avenue, 29th Floor, New York, New York 10154. BlackRock is an investment money
manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of BlackRock,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by BlackRock pursuant to the Advisers Act (SEC File No.
801-48433).
BOSTON PARTNERS ASSET MANAGEMENT, L.P.
Boston Partners Asset Management, L.P. ("BPAM") is a money manager for the
Registrant's Small Cap Fund. The principal business address of BPAM is One
Financial Center, 43rd Floor, Boston, Massachusetts 02111. BPAM is an investment
money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of BPAM,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by BPAM pursuant to the Advisers Act (SEC File No. 801-49059).
CAPITAL GUARDIAN TRUST COMPANY
Capital Guardian Trust Company ("CGTC") is a money manager for the
Registrant's International Equity Fund. The principal business address of CGTC
is 333 South Hope Street, Los Angeles, California 90071.
<TABLE>
<CAPTION>
NAME AND POSITION WITH
INVESTMENT ADVISER NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
- ---------------------------- ----------------------------------------- ----------------------------------------
<S> <C> <C>
Richard C. Barker Capital Group International, Inc. Vice Chairman of the Board and Director
Capital International Limited Chairman of the Board
Michael D. Beckman Capital Guardian Research Company Treasurer
Senior Vice President, Capital Guardian Trust Company, a Nevada Director
Treasurer, and Director Corporation
David I. Fisher The Capital Group Companies, Inc. Chairman of the Board
Chairman of the Board Capital Group International, Inc. President, Director
Capital International, Inc. Vice Chairman of the Board
Capital International S.A. Chairman of the Board
Capital International Limited Vice Chairman
Capital International K.K. Vice Chairman
Capital Group Research, Inc. Director
Capital Research Company Director
Capital Research International Director
William H. Hurt Capital Guardian Trust Company, a Nevada Chairman of the Board
Senior Vice President and Corporation
Director Capital Strategy Research, Inc. Chairman of the Board
Robert G. Kirby The Capital Group Partners L.P. Senior Partner
Director and portfolio
manager
</TABLE>
C-8
<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION WITH
INVESTMENT ADVISER NAME OF OTHER COMPANY CONNECTION WITH OTHER COMPANY
- ---------------------------- ----------------------------------------- ----------------------------------------
<S> <C> <C>
Nancy J. Kyle -- --
Senior Vice President-
International, Director of
the Executive Committee,
international equity and
emerging markets portfolio
manager
Karin L. Larson Capital Guardian Research Company President, Director of Research and
Director member of the Board
Capital Research International President, Director of Research and
member of the Board
The Capital Group Companies, Inc. Director
D. James Martin Capital Guardian Research Company Senior Vice President and Director
Director
John McIlwralth Capital International Limited Senior Vice President and Director
Senior Vice President-
International and Director
James R. Mulally Capital Guardian Research Company Director
Senior Vice President, Capital Research Company Vice President
Director and Chairman of Capital International Limited Senior Vice President
the Fixed Income
Subcommittee
Jason M. Pilalas Capital Guardian Research Company Senior Vice President and Director
Director
Robert Ronus Capital Research International Chairman of the Board
President and Director Capital International S.A. Senior Vice President
Capital International Limited Senior Vice President
Theodore R. Samuels Capital Guardian Research Company Director
Senior Vice President and
Director, portfolio manager
John B. Seiter Capital Group International, Inc. Senior Vice President
Executive Vice President The Capital Group Companies, Inc. Vice President
and Director
Eugene P. Stein Capital Guardian Research Company Director
Executive Vice President,
Director, portfolio manager
and Chairman of the
Investment Committee
Edus H. Warren The Capital Group Partners, L.P. Senior Partner
</TABLE>
C-9
<PAGE>
CREDIT SUISSE ASSET MANAGEMENT LIMITED
Credit Suisse Asset Management Limited ("Credit Suisse") is a money manager
for the Registrant's Emerging Market Equity Fund. The principal business address
of Credit Suisse is Beaufort House, 15 St. Botolph Street, London, EC3A 7JJ.
The list required by this item 28 of officers and directors of Credit Suisse
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Credit Suisse pursuant to the Advisers Act (SEC File No.
804-40177).
CORONATION ASSET MANAGEMENT (PROPRIETARY) LIMITED
Coronation Asset Management (Proprietary) Limited ("Coronation") is a money
manager for the Registrant's Emerging Markets Equity Fund. The principal
business address of Coronation is 80 Strand Street, Cape Town, South Africa
8001. Coronation is an investment money manager registered under the Advisers
Act.
The list required by this Item 28 of officers and directors of Coronation,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Coronation pursuant to the Advisers Act (SEC File No.
801-52830).
FIRSTAR INVESTMENT RESEARCH & MANAGEMENT COMPANY, LLC
Firstar Investment Research & Management Company, LLC ("FIRMCO") is a money
manager for the Registrant's Core Fixed Income Fund. The principal business
address of FIRMCO is 777 East Wisconsin Avenue, Suite 800, Milwaukee, Wisconsin
53202. FIRMCO is an investment money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of FIRMCO,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by FIRMCO pursuant to the Advisers Act (SEC File No. 801-28084).
FURMAN SELZ CAPITAL MANAGEMENT LLC
Furman Selz Capital Management LLC ("Furman Selz") is a money manager for
the Registrant's Small Cap Fund. The principal business address of Furman Selz
is 230 Park Avenue, New York, NY 10169. Furman Selz is an investment money
manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Furman Selz,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Furman Selz pursuant to the Advisers Act (SEC File No.
801-20737).
LSV ASSET MANAGEMENT
LSV Asset Management ("LSV") is a money manager for the Registrant's Large
Cap and Small Cap Funds. The principal business address of LSV is 181 West
Madison Street, Chicago, Illinois 60602. LSV is an investment money manager
registered under the Advisers Act.
The list required by this Item 28 of officers and directors of LSV, together
with information as to any other business, profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and D of Form ADV filed by
LSV pursuant to the Advisers Act (SEC File No. 801-38734).
C-10
<PAGE>
MELLON EQUITY ASSOCIATES, LLP
Mellon Equity Associates ("Mellon Equity") is a money manager for the
Registrant's Large Cap and Small Cap Funds. The principal business address of
Mellon Equity is 500 Grant Street, Suite 3700, Pittsburgh, PA 15258. Mellon
Equity is an investment money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Mellon
Equity, together with information as to any other business, profession, vocation
or employment of substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedule A and D of
Form ADV filed by Mellon Equity pursuant to the Advisers Act (SEC File No.
801-28692).
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, INC.
Nicholas-Applegate Capital Management, Inc. ("Nicholas-Applegate") is a
money manager for the Registrant's Small Cap Fund and Emerging Markets Equity
Fund. The principal business address of Nicholas-Applegate is 600 West Broadway,
29th Floor, San Diego, California 92101. Nicholas-Applegate is an investment
money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of
Nicholas-Applegate, together with information as to any other business,
profession, vocation or employment of substantial nature engaged in by such
officers and directors during the past two years, is incorporated by reference
to Schedules A and D of Form ADV filed by Nicholas-Applegate pursuant to the
Advisers Act (SEC File No. 801-21442).
PARAMETRIC PORTFOLIO ASSOCIATES
Parametric Portfolio Associates ("Parametric") is a money manager for the
Registrant's Emerging Markets Equity Fund. The principal business address of
Parametric is 700 Newport Center Drive, Newport Beach, CA 92660. Parametric is
an investment money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Parametric
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Parametric pursuant to the Advisers Act (SEC File No.
801-48184).
POLYNOUS CAPITAL MANAGEMENT, INC.
Polynous Capital Management, Inc. ("Polynous") is a money manager for the
Registrant's Small Cap Fund. The principal business address of Polynous is 88
Kearny Street, Suite 1300, San Francisco, California 94108.
The list required by this item 28 of officers and directors of Polynous
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Polynous pursuant to the Advisers Act (SEC File No.
801-49411).
PROVIDENT INVESTMENT COUNSEL, INC.
Provident Investment Counsel, Inc. ("Provident") is a money manager for the
Registrant's Large Cap Fund. The principal business address of Provident is 300
North Lake Avenue, Pasadena, CA 91101. Provident is an investment money manager
registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Provident,
together with information as to any other business, profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Provident pursuant to the Advisers Act (SEC File No.
801-47993).
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<PAGE>
ROBERTSON, STEPHENS INVESTMENT MANAGEMENT, L.P.
Robertson, Stephens Investment Management, L.P. ("Robertson") is a money
manager for the Registrant's Small Cap Fund. The principal business address of
Robertson is 555 California Street, Suite 2600, San Francisco, California 94104.
The list required by this item 28 of officers and directors of Robertson
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Robertson pursuant to the Advisers Act (SEC File No.
804-144125).
SANFORD C. BERNSTEIN & CO., INC.
Sanford C. Bernstein & Co., Inc. ("Bernstein") is a money manager for the
Registrant's Large Cap Fund. The principal business address of Bernstein is 767
Fifth Avenue, New York, New York 10153.
The list required by this item 28 of officers and directors of Bernstein
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Bernstein pursuant to the Advisers Act (SEC File No.
801-10488).
SCOTTISH WIDOWS INVESTMENT MANAGEMENT LIMITED
Scottish Widows Investment Management Limited ("Scottish Widows") is a money
manager for the Registrant's International Equity Fund. The principal business
address of Scottish Widows is P.O. Box 17036, 69 Morris Street, Edinburgh EH3
8YF, Scotland.
The list required by this item 28 of officers and directors of Scottish
Widows together with information as to any other business, profession, vocation
or employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Scottish Widows pursuant to the Advisers Act (SEC File No.
804-33075).
SEI INVESTMENTS MANAGEMENT CORPORATION
SEI Investments Management Corporation ("SIMC") is the money manager for the
Large Cap, Small Cap, Core Fixed Income, High Yield Bond, International Fixed
Income, Emerging Markets Equity and International Equity Funds. The principal
address of SIMC is Oaks, Pennsylvania 19456. SIMC is an investment money manager
registered under the Advisers Act.
The list required by this Item 28 of officers and directors of SIMC,
together with information as to any other business profession, vocation, or
employment of a substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by SIMC to the Advisers Act (SEC File No. 801-24593).
STRATEGIC FIXED INCOME, LLC
Strategic Fixed Income, LLC ("SFI") is a money manager for the Registrant's
International Fixed Income Fund. The principal business address of SFI is 1001
Nineteenth Street North, 17th Floor, Arlington, Virginia 22209. SFI is an
investment money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of SFI, together
with information as to any other business, profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and D of Form ADV filed by
SFI pursuant to the Advisers Act (SEC File No. 801-38734).
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<PAGE>
WALL STREET ASSOCIATES
Wall Street Associates ("WSA") is a money manager for the Registrant's Small
Cap Fund. The principal address for WSA is 1200 Prospect Street, Suite 100, La
Jolla, California 92037. WSA is an investment money manager registered under the
Advisers Act.
The list required by this Item 28 of officers and directors of WSA, together
with information as to any other business, profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and D of Form ADV filed by
WSA pursuant to the Advisers Act (SEC File No. 801-30019).
WESTERN ASSET MANAGEMENT COMPANY
Western Asset Management Company ("Western") is a money manager for the
Registrant's Core Fixed Income Fund. The principal business address of Western
is 117 East Colorado Boulevard, Pasadena, California 91105. Western is an
investment money manager registered under the Advisers Act.
The list required by this Item 28 of officers and directors of Western,
together with information as to any other business, profession, vocation or
employment of substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by Western pursuant to the Advisers Act (SEC File No. 801-08162).
SG PACIFIC ASSET MANAGEMENT, INC.
SG Pacific Asset Management, Inc. ("SG Pacific") is a sub-adviser for the
Registrant's International Equity and Emerging Markets Equity Funds. The
principal business address of SG Pacific is 30 Wall Street, 8th Floor, New York,
New York 10005. SG Pacific is an investment adviser registered under the
Advisers Act.
The list required by this Item 28 of officers and directors of SG Pacific,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by SG Pacific pursuant to the Advisers Act (SEC File No.
801-15955).
SGY ASSET MANAGEMENT (SINGAPORE) LIMITED
SGY Asset Management (Singapore) Limited ("SGY") is a sub-adviser for the
Registrant's International Equity and Emerging Markets Equity Funds. The
principal address of SGY is 138 Robinson Road #13-01/05, Hong Leong Center,
Singapore, 068906. SGY is an investment adviser registered under the Advisers
Act.
The list required by this Item 28 of officers and directors of SGY, together
with information as to any other business, profession, vocation or employment of
substantial nature engaged in by such officers and directors during the past two
years, is incorporated by reference to Schedules A and D of Form ADV filed by
SGY pursuant to the Advisers Act (SEC File No. 801-44118).
SG YAMAICHI ASSET MANAGEMENT CO., LTD.
SG Yamaichi Asset Management Co., Ltd. ("SG Yamaichi") is a sub-adviser for
the Registrant's International Equity Fund. The principal business address of SG
Yamaichi is 5-1. Nihombashi Kabutocho, Chuo-ku, Tokyo 103, Japan. SG Yamaichi is
an investment adviser registered under the Advisers Act.
The list required by this Item 28 of officers and directors of SG Yamaichi,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by SG Yamaichi pursuant to the Advisers Act (SEC File No.
801-17987).
C-13
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing the securities of
the Registrant also acts as a principal underwriter, distributor or investment
adviser.
Registrant's distributor, SEI Investments Distribution Co. (the
"Distributor"), acts as distributor for:
<TABLE>
<S> <C>
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
CUFUND May 1, 1992
STI Classic Funds May 29, 1992
CoreFunds, Inc. October 30, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds-Registered Trademark- June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Marquis Funds-Registered Trademark- August 17, 1993
Morgan Grenfell Investment Trust January 3, 1994
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
TIP Institutional Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Funds June 29, 1998
The Parkstone Group of Funds September 14, 1998
</TABLE>
The Distributor provides numerous financial services to investment managers,
pension plan sponsors, and bank trust departments. These services include
portfolio evaluation, performance measurement and consulting services
("Funds Evaluation") and automated execution, clearing and settlement of
securities transactions ("MarketLink").
C-14
<PAGE>
(b) Furnish the Information required by the following table with respect to
each director, officer or partner of each principal underwriter named in the
answer to Item 21 of Part B. Unless otherwise noted, the business address of
each director or officer is Oaks, PA 19456.
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------ ------------------------------------------------------- ------------------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President &
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President &
Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President &
Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President --
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
</TABLE>
C-15
<PAGE>
<TABLE>
<CAPTION>
POSITION AND OFFICE POSITIONS AND OFFICES
NAME WITH UNDERWRITER WITH REGISTRANT
- ------------------------------ ------------------------------------------------------- ------------------------
<S> <C> <C>
Mark Nagle Vice President Controller & Chief
Financial Officer
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President &
Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President &
Assistant Secretary
Cynthia M. Parrish Vice President & Assistant Secretary Vice President &
Assistant Secretary
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Steve Smith Vice President --
Daniel Spaventa Vice President --
Kathryn L. Stanton Vice President & Assistant Secretary Vice President &
Assistant Secretary
Lynda J. Striegel Vice President & Assistant Secretary Vice President &
Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS:
Books or other documents required to be maintained by Section 31(a) of the
Investment Company Act of 1940, and the rules promulgated thereunder, are
maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records are maintained
at the offices of Registrant's Custodians:
First Union National Bank, N.A.
Broad and Chestnut Streets
P.O. Box 7618
Philadelphia, PA 19101
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1),(4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books
and records are maintained at the offices of Registrant's Administrator:
SEI Investments Fund Management
Oaks, PA 19456
C-16
<PAGE>
(c) With respect to Rules 31a-1(b)(5),(6),(9) and 10 and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Money Managers:
1838 Investment Advisors, L.P.
5 Radnor Corporate Center
100 Matsonford Road
Suite 320
Radnor, Pennsylvania 19087
Acadian Asset Management
Two International Place
Boston, Massachusetts 02110
Alliance Capital Management L.P.
1345 Avenue of the Americas
New York, New York 10105
BEA Associates
One Citicorp Center
153 East 53rd Street
New York, New York 10022
BlackRock, Inc.
345 Park Avenue
30th Floor
New York, New York 10154
Boston Partners Asset Management, L.P.
One Financial Center
43rd Floor
Boston, Massachusetts 02111
Capital Guardian Trust Company
630 5th Avenue, 36th Floor
New York, New York 10111
Coronation Asset Management (Proprietary) Limited
80 Strand Street
Cape Town, South Africa, 8001
Credit Suisse Asset Management Limited
Beaufort House
15 St. Botolph Street
London, England EC3A 7JJ
Firstar Investment Research & Management Company, LLC
777 East Wisconsin Avenue
Suite 800
Milwaukee, Wisconsin 53202
Furman Selz Capital Management LLC
230 Park Avenue
New York, NY 10169
LSV Asset Management, L.P.
200 W. Madison Ave.
Chicago, Illinois 60606
C-17
<PAGE>
Mellon Equity Associates, LLP
500 Grant Street
Suite 3715
Pittsburgh, PA 15258
Morgan Stanley Asset Management
1221 Avenue of the Americas
New York, New York 10020
Nicholas-Applegate Capital Management, Inc.
600 West Broadway, 29th Floor
San Diego, California 92101
Parametric Portfolio Associates
701 5th Ave.,
Suite 1220
San Francisco, CA 94101
Polynous Capital Management, Inc.
345 California Street,
Suite 1220
San Francisco, California 94101
Provident Investment Counsel, Inc.
300 North Lake Avenue
Penthouse
Pasadena, CA 91101
Robertson, Stephens Investment Management, L.P.
555 California Street
Suite 2600
San Francisco, California 94104
SEI Investments Management Corporation
Oaks, PA 19456
Sanford C. Bernstein & Co., Inc.
767 Fifth Avenue
New York, NY 10153-0185
Scottish Widows Investment Management Limited
P.O. Box 17036
69 Morrison Street
Edinburgh EH3 8YF
Scotland
Strategic Fixed Income, LLC
1001 Nineteenth Street North
Suite 1720
Arlington, VA 22209
Wall Street Associates
1200 Prospect Street
Suite 100
La Jolla, California 92037
Western Asset Management Company
117 East Colorado Boulevard
Pasadena, CA 91105
C-18
<PAGE>
Spyglass Asset Management, Inc.
3454 Oak Alley Court #209
Toledo, OH 43606
SG Pacific Asset Management, Inc. /SGY Asset Management
(Singapore) Ltd. /SG Yamaichi Asset Management Co., Ltd.,
30 Wall Street, 8th Floor
New York, New York 10005
TCW Funds Management, Inc.
8655 Figueroa Street
Los Angeles, California 90017
ITEM 31. MANAGEMENT SERVICES:
None.
ITEM 32. UNDERTAKINGS:
Registrant hereby undertakes to file a post-effective amendment containing
reasonably current financial statements , which need not be certified, within
four to six months of the effective date of the Registrant's 1933 Act
Registration Statement or the commencement of operations of the High Yield Bond,
International Fixed Income and Emerging Markets Equity Funds, whichever is
later.
Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the Investment Company Act of 1940 inform the
Board of Trustees of their desire to communicate with Shareholders of the Trust,
the Trustees will inform such Shareholders as to the approximate number of
Shareholders of record and the approximate cost of mailing or afford said
Shareholders access to a list of Shareholders.
Registrant undertakes to hold a meeting of Shareholders for the purpose of
voting upon the question of removal of a Trustee(s) when requested in writing to
do so by the holders of at least 10% of Registrant's outstanding shares and in
connection with such meetings to comply with the provisions of Section 16(c) of
the Investment Company Act of 1940 relating to Shareholder communications.
Registrant undertakes to furnish each person to whom a prospectus for any
series of the Registrant is delivered with a copy of the Registrant's latest
annual report to shareholders for such series, when such annual report is issued
containing information called for by Item 5A of Form N-1A, upon request and
without charge.
NOTICE
A copy of the Agreement and Declaration of Trust of SEI Institutional
Investments Trust is on file with the Secretary of State of The Commonwealth of
Massachusetts and notice is hereby given that this Registration Statement has
been executed on behalf of the Trust by an officer of the Trust as an officer
and by its Trustees as trustees and not individually and the obligations of or
arising out of this Registration Statement are not binding upon any of the
Trustees, Officers, or Shareholders individually but are binding only upon the
assets and property of the Trust.
C-19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant certifies that it
meets all of the requirements for effectiveness of this Registration Statement
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Post-Effective Amendment No. 2 to Registration Statement No. 33-58041 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wayne, Commonwealth of Pennsylvania on the 25th day of September, 1998.
SEI INSTITUTIONAL INVESTMENTS TRUST
By: /s/ EDWARD D. LOUGHLIN
-----------------------------------------
Edward D. Loughlin,
PRESIDENT & CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacity on the date(s) indicated.
*
- ------------------------------ Trustee September 25, 1998
William M. Doran
*
- ------------------------------ Trustee September 25, 1998
F. Wendell Gooch
*
- ------------------------------ Trustee September 25, 1998
Frank E. Morris
*
- ------------------------------ Trustee September 25, 1998
George J. Sullivan, Jr.
*
- ------------------------------ Trustee September 25, 1998
James M. Storey
*
- ------------------------------ Trustee September 25, 1998
Robert A. Nesher
/s/ EDWARD D. LOUGHLIN
- ------------------------------ President & Chief September 25, 1998
Edward D. Loughlin Executive Officer
/s/ MARK E. NAGLE
- ------------------------------ Controller & Chief September 25, 1998
Mark E. Nagle Financial Officer
*By: /s/ EDWARD D. LOUGHLIN
-------------------------
Edward D. Loughlin
ATTORNEY-IN-FACT
C-20
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.B(1) Registrant's Declaration of Trust is incorporated herein by reference to
Registrant's Registration Statement on Form N-1A (File No. 33-58041), filed with
the Securities and Exchange Commission ("SEC") on March 10, 1995.
EX-99.B(2) Registrant's By-Laws are incorporated herein by reference to Registrant's
Registration Statement on Form N-1A (File No. 33-58041), filed with the SEC on
March 10, 1995.
EX-99.B(2)(a) Amended By-Laws are incorporated by reference to Registrant's Registration
Statement on Form N-1A (File No. 33-58041), filed with the SEC on September 29,
1997.
EX-99.B(3) Not Applicable.
EX-99.B(4) Not Applicable.
EX-99.B(5)(a) Investment Advisory Agreement between the Trust and SEI Investments Management
Corporation ("SIMC") (formerly "SEI Financial Management Corporation") as
previously filed with Registrant's Pre-Effective Amendment No. 2 on Form N-1A
(File No. 33-58041), filed with the SEC on June 7, 1996 is herein incorporated by
reference to Post-Effective Amendment No. 2, filed with the SEC on September 29,
1997.
EX-99.B(5)(b) Form of Investment Sub-Advisory Agreement between SIMC and 1838 Investment
Advisors, L.P. with respect to the Trust's Small Cap Fund as previously filed
with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(c) Investment Sub-Advisory Agreement between SIMC and Acadian Asset Management, L.P.
with respect to the Trust's International Equity Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(d) Investment Sub-Advisory Agreement between SIMC and Alliance Capital Management L.P.
with respect to the Trust's Large Cap Fund as previously filed with Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the
SEC on April 26, 1996 is herein incorporated by reference to Post-Effective
Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(e) Form of Investment Sub-Advisory Agreement between SIMC and Apodaca-Johnston Capital
Management, Inc. with respect to the Trust's Small Cap Fund is incorporated
herein by reference to Registrant's Pre-Effective Amendment No. 1 on Form N-1A
(File No. 33-58041), as previously filed with the SEC on April 26, 1996.
EX-99.B(5)(f) Investment Sub-Advisory Agreement between SIMC and BEA Associates with respect to
the High Yield Bond Fund as previously filed with Registrant's Pre-Effective
Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the SEC on April 26,
1996 is herein incorporated by reference to Post-Effective Amendment No. 2, filed
with the SEC on September 29, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.B(5)(g) Investment Sub-Advisory Agreement between SIMC and BlackRock Financial Management,
Inc. with respect to the Core Fixed Income Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(h) Investment Sub-Advisory Agreement between SIMC and Boston Partners Asset
Management, L.P. with respect to the Small Cap Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(i) Investment Sub-Advisory Agreement between SIMC and Firstar Investment Research &
Management Company with respect to the Core Fixed Income Fund as previously filed
with Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(j) Investment Sub-Advisory Agreement between SIMC and American Express Asset
Management Group, Inc. (formerly "IDS Advisory Group, L.P.") with respect to the
Trust's Large Cap Fund as previously filed with Registrant's Pre-Effective
Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the SEC on April 26,
1996 is herein incorporated by reference to Post-Effective Amendment No. 2, filed
with the SEC on September 29, 1997.
EX-99.B(5)(k) Investment Sub-Advisory Agreement between SIMC and LSV Asset Management with
respect to the Trust's Large Cap and Small Cap Funds as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(l) Investment Sub-Advisory Agreement between SIMC and Mellon Equity Associates with
respect to the Large Cap Fund as previously filed with Registrant's Pre-Effective
Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the SEC on April 26,
1996 is herein incorporated by reference to Post-Effective Amendment No. 2, filed
with the SEC on September 29, 1997.
EX-99.B(5)(m) Investment Sub-Advisory Agreement between SIMC and Highmark Capital Management,
Inc. (formerly "Pacific Alliance Capital Management") with respect to the Large
Cap Fund as previously filed with Registrant's Pre-Effective Amendment No. 1 on
Form N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with the SEC
on September 29, 1997.
EX-99.B(5)(n) Investment Sub-Advisory Agreement between SIMC and Montgomery Asset Management,
L.P. with respect to the Emerging Markets Equity Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.B(5)(o) Form of Investment Sub-Advisory Agreement between SIMC and Morgan Grenfell
Investment Services Limited with respect to the International Equity Fund is
incorporated herein by reference to Registrant's Pre-Effective Amendment No. 1 on
Form N-1A (File No. 33-58041), as previously filed with the SEC on April 26,
1996.
EX-99.B(5)(p) Investment Sub-Advisory Agreement between SIMC and Nicholas-Applegate Capital
Management, Inc. with respect to the Small Cap Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(q) Investment Sub-Advisory Agreement between SIMC and Provident Investment Counsel,
Inc. with respect to the Large Cap Fund as previously filed with Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the
SEC on April 26, 1996 is herein incorporated by reference to Post-Effective
Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(r) Investment Sub-Advisory Agreement between SIMC and Schroder Capital Management
International Limited with respect to the International Equity Fund is
incorporated herein by reference to Registrant's Pre-Effective Amendment No. 1 on
Form N-1A (File No. 33-58041), as previously filed with the SEC on April 26,
1996.
EX-99.B(5)(s) Investment Sub-Advisory Agreement between SIMC and Strategic Fixed Income L.P. with
respect to the International Fixed Income Fund as previously filed with
Registrant's Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on April 26, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(t) Investment Sub-Advisory Agreement between SIMC and Wall Street Associates with
respect to the Small Cap Fund as previously filed with Registrant's Pre-Effective
Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the SEC on April 26,
1996 is herein incorporated by reference to Post-Effective Amendment No. 2, filed
with the SEC on September 29, 1997.
EX-99.B(5)(u) Investment Sub-Advisory Agreement between SIMC and Western Asset Management Company
with respect to the Core Fixed Income Fund as previously filed with Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the
SEC on April 26, 1996 is herein incorporated by reference to Post-Effective
Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(v) Investment Sub-Advisory Agreement between SIMC and First of America Investment
Corporation with respect to the Small Cap Fund as previously filed as Exhibit
(5)(w) with Registrant's Pre-Effective Amendment No. 2 on Form N-1A (File No.
33-58041), filed with the SEC on June 7, 1996 is herein incorporated by reference
to Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.B(5)(w) Investment Sub-Advisory Agreement between SIMC and Farrell Wako Global Investment
Management, Inc. with respect to the International Equity Fund as previously
filed as Exhibit (5)(x) with Registrant's Pre-Effective Amendment No. 2 on Form
N-1A (File No. 33-58041), filed with the SEC on June 7, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with the SEC
on September 29, 1997.
EX-99.B(5)(x) Investment Sub-Advisory Agreement between SIMC and Seligman Henderson Co. with
respect to the International Equity Fund as previously filed as Exhibit (5)(y)
with Registrant's Pre-Effective Amendment No. 2 on Form N-1A (File No. 33-58041),
filed with the SEC on June 7, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(y) Investment Sub-Advisory Agreement between SIMC and Yamaichi Capital Management,
Inc. with respect to the International Equity Fund as previously filed as Exhibit
(5)(z) with Registrant's Pre-Effective Amendment No. 2 on Form N-1A (File No.
33-58041), filed with the SEC on June 7, 1996.
EX-99.B(5)(z) Investment Sub-Advisory Agreement between SIMC and Coronation Asset Management
(Proprietary) Limited with respect to the Emerging Markets Equity Fund is
incorporated herein by reference as Exhibit (5)(aa) to Registrant's
Post-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the
SEC on December 30, 1996.
EX-99.B(5)(aa) Investment Sub-Advisory Agreement between SIMC and Furman Selz Capital Management
LLC with respect to the Small Cap Fund as previously filed as Exhibit (5)(bb) to
Registrant's Post-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on December 30, 1996 is herein incorporated by reference to
Post-Effective Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(5)(bb) Investment Sub-Advisory Agreement between SIMC and Lazard London International
Investment Management Limited with respect to the International Equity Fund as
previously filed as Exhibit (5)(cc) to Registrant's Post-Effective Amendment No.
1 on Form N-1A (File No. 33-58041), filed with the SEC on December 30, 1996 is
filed herewith.
EX-99.B(5)(cc) Investment Sub-Advisory Agreement between SIMC and Parametric Portfolio Associates
with respect to the Emerging Markets Equity Fund is incorporated herein by
reference as Exhibit (5)(dd) to Registrant's Post-Effective Amendment No. 1 on
Form N-1A (File No. 33-58041), filed with the SEC on December 30, 1996.
EX-99.B(5)(dd) Investment Sub-Advisory Agreement between SIMC and Yamaichi Capital Management,
Inc. And Yamaichi Capital Management (Singapore) Limited with respect to the
International Equity Fund is incorporated herein by reference as Exhibit (5)(ee)
to Registrant's Post-Effective Amendment No. 1 on Form N-1A (File No. 33-58041),
filed with the SEC on December 30, 1996.
EX-99.B(5)(ee) Schedule B dated January 1, 1997 to the Trust's Sub-Advisory Agreement dated June
14, 1996 between SIMC and LSV Asset Management is herein incorporated by
reference to Post-Effective Amendment No. 2, filed with the SEC on September 29,
1997.
EX-99.B(5)(ff) Investment Sub-Advisory Agreement between SIMC and Sanford C. Bernstein & Co., Inc.
with respect to the Large Cap Fund is filed herewith.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.B(5)(gg) Investment Sub-Advisory Agreement between SIMC and Polynous Capital Management with
respect to the Small Cap Fund is filed herewith.
EX-99.B(5)(hh) Investment Sub-Advisory Agreement between SIMC and Robertson Stephens Investment
Management, L.P. with respect to the Small Cap Fund is filed herewith.
EX-99.B(5)(ii) Investment Sub-Advisory Agreement between SIMC and Capital Guardian Trust Company
with respect to the International Equity Fund is filed herewith.
EX-99.B(5)(jj) Investment Sub-Advisory Agreement between SIMC and Scottish Widows Investment
Management Limited with respect to the International Equity Fund is filed
herewith.
EX-99.B(5)(kk) Investment Sub-Advisory Agreement between SIMC and Credit Suisse Asset Management,
Limited with respect to the Emerging Markets Equity Fund is filed herewith.
EX-99.B(5)(ll) Investment Sub-Advisory Agreement between SIMC and TCW Funds Management Inc. with
respect to the Large Cap Fund is filed herewith.
EX-99.B(5)(mm) Investment Sub-Advisory Agreement between SIMC and Mellon Equity Associates, LLP
with respect to the Large Cap Fund is filed herewith.
EX-99.B(5)(nn) Investment Sub-Advisory Agreement between SIMC and Spyglass Asset Management, Inc.
with respect to the Large Cap Fund is filed herewith.
EX-99.B(5)(oo) Investment Sub-Advisory Agreement between SIMC and Morgan Stanley Asset Management
Inc. with respect to the Large Cap Fund is filed herewith.
EX-99.B(5)(pp) Investment Sub-Advisory Agreement between SIMC and Nicholas-Applegate Capital
Management, Inc. with respect to the Large Cap Fund is filed herewith.
EX-99.B(6) Distribution Agreement between the Trust and SEI Investments Distribution Co.
(formerly "SEI Financial Services Company") as previously filed with Registrant's
Pre-Effective Amendment No. 1 on Form N-1A (File No. 33-58041), filed with the
SEC on April 26, 1996 is herein incorporated by reference to Post-Effective
Amendment No. 2, filed with the SEC on September 29, 1997.
EX-99.B(7) Not Applicable.
EX-99.B(8) Custodian Agreement between the Trust and First Union National Bank, N.A. with
respect to the Trust's Large Cap, Small Cap, Core Fixed Income and High Yield
Bond Funds as previously filed with Registrant's Pre-Effective Amendment No. 2 on
Form N-1A (File No. 33-58041), filed with the SEC on June 7, 1996 is herein
incorporated by reference to Post-Effective Amendment No. 2, filed with the SEC
on September 29, 1997.
EX-99.B(8)(a) Custodian Agreement between the Trust and State Street Bank and Trust Company is
incorporated by reference to Registrant's Registration Statement on Form N-1A
(File No. 33-58041), filed with the SEC on September 29, 1997.
EX-99.B(9)(a) Administration Agreement dated June 14, 1996 between the Trust and SEI Investments
Fund Management as previously filed with Registrant's Pre-Effective Amendment No.
1 on Form N-1A (File No. 33-58041), filed with the SEC on April 26, 1996 is
herein incorporated by reference to Post-Effective Amendment No. 2, filed with
the SEC on September 29, 1997.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------------- -----------------------------------------------------------------------------------
<S> <C>
EX-99.B(10) Opinion and Consent of Counsel is incorporated herein by reference to Registrant's
Pre-Effective Amendment No. 2 on Form N-1A (File No. 33-58041), filed with the
SEC on June 7, 1996.
EX-99.B(11) Consent of Independent Public Accountants is filed herewith.
EX-99.B(12) Not Applicable.
EX-99.B(13) Not Applicable.
EX-99.B(14) Not Applicable.
EX-99.B(15) Not Applicable.
EX-99.B(16) Performance Quotation Computation is incorporated herein by reference to
Registrant's Pre-Effective Amendment No. 2 on Form N-1A (File No. 33-58041),
filed with the SEC on June 7, 1996.
EX-99.B(24) Powers of Attorney for Robert A. Nesher, William M. Doran, George J. Sullivan, Jr.,
F. Wendell Gooch, Mark E. Nagle, James M. Storey, Edward D. Loughlin and Frank E.
Morris are filed herewith.
EX-27.1 Financial Data Schedule for the Large Cap Fund is filed herewith.
EX-27.2 Financial Data Schedule for the Small Cap Fund is filed herewith.
EX-27.3 Financial Data Schedule for the Core Fixed Income Fund is filed herewith.
EX-27.4 Financial Data Schedule for the International Equity Fund is filed herewith.
</TABLE>
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this 15th day of December, 1997, between SEI Investments
Management Corporation, (the "Adviser") and Sanford C. Bernstein & Co., Inc.
(the "Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996 (the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the Large Cap Fund (the
"Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction of
the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Portfolio, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In executing Portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use
<PAGE>
its best efforts to seek on behalf of the Portfolio the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In evaluating the
best overall terms available, and in selecting the broker-dealer to execute
a particular transaction, the Sub-Adviser may also consider the brokerage
and research services provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust and Section 28(e) of the
Exchange Act, the Sub-Adviser is authorized to pay to a broker or dealer
who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Sub-Adviser determines in
good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer - -
viewed in terms of that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to its discretionary clients, including
the Portfolio. In addition, the Sub-Adviser is authorized to allocate
purchase and sale orders for securities to brokers or dealers (including
brokers and dealers that are affiliated with the Adviser, Sub-Adviser or
the Trust's principal underwriter) to take into account the sale of shares
of the Trust if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will the Portfolio's
Assets be purchased from or sold to the Adviser, Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust,
Adviser, the Sub-Adviser or the principal underwriter, acting as principal
in the transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records upon the Portfolio's request; provided, however, that the
Sub-Adviser may retain a copy of
2
<PAGE>
such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any such records as are required to be maintained by it
pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if there
is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
3
<PAGE>
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule which is
attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser s management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the Sub-Adviser's failure to perform its
obligations under this Agreement with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent person
acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims; provided,
however, that the Sub-Adviser s obligation under this Section 5 shall be
reduced to the extent that the claim against, or the loss, liability or
damage experienced by the Adviser, is caused by or is otherwise directly
related to the Adviser's own willful misfeasance, bad faith or negligence,
or to the reckless disregard of its duties under this Agreement.
In any determination of the Sub-Adviser's liability for indemnification
under this Section 5 or otherwise, the investment and management decisions
of the Sub-Adviser respecting individual assets and courses of action shall
not be evaluated in isolation but in the context of the Portfolio taken as
a whole and as part of an overall investment strategy having risk and
return objectives reasonable suited to the Portfolio. The conditions of
the foregoing indemnity and hold harmless covenant are that (a) the
indemnified persons shall inform the Sub-Adviser promptly of any claims
threatened or made against any indemnified persons (b) the indemnified
persons shall cooperate fully with the Sub-Adviser in responding to such
threatened or actual claims, (c) any settlement agreement shall require the
written approval of the Sub-Adviser, (d) the Sub-Adviser shall not be
liable for any legal or other expenses incurred in connection with any
threatened, pending or current actions, suit, proceeding or claim (of any
nature whatsoever), or defense to any of the foregoing, that were not
specifically authorized by the Sub-Adviser and (e) the Sub-Adviser shall
not be liable for indemnification under this Section 5 as a result of any
court, administrative or other action, suit, claim or proceeding in which
it has not been made a party and been able to present its defense. Nothing
in this Agreement shall in any way constitute a waiver or limitation of any
of the obligations which the Sub-Adviser may have under any federal
securities laws.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by
4
<PAGE>
the Trust's Board of Trustees and by the vote of a majority of the
outstanding voting securities of the Portfolio; provided, however, that at
any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of a termination of the Adviser's agreement with the Trust. As used
in this Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
5
<PAGE>
To the Sub-Adviser at: Sanford C. Bernstein & Co., Inc.
21st Floor
767 5th Avenue
New York, NY 10153-0185
Attention: Dean Allen
with a copy to: Kevin Brine
(at the above address)
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION SANFORD C. BERNSTEIN & CO., INC.
By: /s/Kevin P. Robins By: /s/J. Philip Clark
-------------------------------- -------------------------------
Name: Kevin P. Robins Name: J. Philip Clark
------------------------------ -----------------------------
Title: Vice President Title: Vice President & Managing
----------------------------- Director
----------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
SANFORD C. BERNSTEIN & CO., INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
SEI Institutional Investments Trust
Large Cap Fund .25%
For purposes of calculating fees, the average monthly market value of the assets
of the Portfolio and such other related SEI large cap domestic equity portfolios
or accounts as the Sub-Adviser may now or in the future provide investment
sub-advisory services for (collectively, the "SEI Portfolios"), shall be
aggregated. Further, if the combined value of the portion of the assets of the
SEI Portfolios allocated to the Sub-Adviser have not grown to $800 million by
December 31, 1998, the Adviser will pay to the Sub-Adviser the difference
between (i) an amount equal to 0.25% of the combined value of the portion of the
assets of the SEI Portfolios allocated to the Sub-Adviser on December 31, 1998
(the "12/31/98 Portfolio Value") and (ii) and amount calculated by multiplying
the 12/31/98 Portfolio Value by the fee rate determined in accordance with Fee
Schedule A set forth below. The amount of such payment will be billed to the
Adviser by the Sub-Adviser during January 1999 and is due and payable when
billed. The following Fee Schedules (A and B) will be in effect for all periods
commencing on and after December 31, 1998.
FEE SCHEDULE A
<TABLE>
<CAPTION>
Average Monthly Market Value of the combined Annual Fee
assets of the Portfolios (Less than $800 million)
<S> <C>
First $300,000,000 .35%
Next $499,000,000 .20%
</TABLE>
FEE SCHEDULE B
<TABLE>
<CAPTION>
Average Monthly Market Value of the combined Annual Fee
assets of the Portfolios ($800 million or greater)
<S> <C>
$800,000,000 and thereafter .25%
</TABLE>
7
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this 15th day of December, 1997, between SEI Investments
Management Corporation, (the "Adviser") and Polynous Capital Management, Inc.
(the "Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996 (the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the Small Cap Fund (the
"Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall determine from time to time what Assets will be
purchased, retained or sold by the Portfolio, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In executing Portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on behalf of the
Portfolio the best overall terms available. In
<PAGE>
assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors that it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker-dealer to execute a particular
transaction, the Sub-Adviser may also consider the brokerage and research
services provided (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust, the Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for
the Portfolio which is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer - - viewed in terms of that particular
transaction or terms of the overall responsibilities of the Sub-Adviser to
its discretionary clients, including the Portfolio. In addition, the
Sub-Adviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) to take into account the sale of shares of the Trust if the
Sub-Adviser believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms. In no
instance, however, will the Portfolio's Assets be purchased from or sold to
the Adviser, Sub-Adviser, the Trust's principal underwriter, or any
affiliated person of either the Trust, Adviser, the Sub-Adviser or the
principal underwriter, acting as principal in the transaction, except to
the extent permitted by the Securities and Exchange Commission ("SEC"), the
Investment Advisers Act of 1940 and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records upon the Portfolio's request; provided, however, that the
Sub-Adviser may retain a copy of such records. In addition, for the
duration of this Agreement, the Sub-Adviser shall
2
<PAGE>
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any
such records as are required to be maintained by it pursuant to this
Agreement, and shall transfer said records to any successor sub-adviser
upon the termination of this Agreement (or, if there is no successor
sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
3
<PAGE>
(c) Prospectus of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule which is
attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser s management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of a termination of the Adviser's agreement with the Trust. As used
in this Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
4
<PAGE>
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Polynous Capital Management
88 Kearney Street
San Fransico, CA 94108
Attention: Kevin Wenck
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION POLYNOUS CAPITAL MANAGEMENT
By: /s/Kevin P. Robins By: /s/Kevin L. Wenck
-------------------------------- -------------------------------
Name: Kevin P. Robins Name: Kevin L. Wenck
------------------------------ -----------------------------
Title: Vice President Title: President
----------------------------- ----------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
POLYNOUS CAPITAL MANAGEMENT
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate of up to:
SEI Institutional Investments Trust .50%
Small Cap Fund
7
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this 23rd day of March, 1998 between SEI Investments
Management Corporation, (the "Adviser") and Robertson Stephens Investment
Management, L.P. (the "Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996, (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Fund (the
"Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and under the supervision of
the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Portfolio, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In
<PAGE>
executing Portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Portfolio
the best overall terms available. In assessing the best overall terms
available for any transaction, the Sub-Adviser shall consider all factors
that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting
the broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services provided (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934).
Consistent with any guidelines established by the Board of Trustees of the
Trust, the Sub-Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in good faith that
such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer - - viewed in terms
of that particular transaction or terms of the overall responsibilities of
the Sub-Adviser to the Portfolio. In addition, the Sub-Adviser is
authorized to allocate purchase and sale orders for securities to brokers
or dealers (including brokers and dealers that are affiliated with the
Adviser, Sub-Adviser or the Trust's principal underwriter) to take into
account the sale of shares of the Trust if the Sub-Adviser believes that
the quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
the Portfolio's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated person of
either the Trust, Adviser, the Sub-Adviser or the principal underwriter,
acting as principal in the transaction, except to the extent permitted by
the Securities and Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the
2
<PAGE>
Portfolio are property of the Portfolio and the Sub-Adviser will surrender
promptly to the Portfolio any of such records upon the Portfolio's request;
provided, however, that the Sub-Adviser may retain a copy of such records.
In addition, for the duration of this Agreement, the Sub-Adviser shall
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any
such records as are required to be maintained by it pursuant to this
Agreement, and shall transfer said records to any successor sub-adviser
upon the termination of this Agreement (or, if there is no successor
sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
3
<PAGE>
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser s management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance of the Adviser's obligations
under this Agreement; provided, however, that the Adviser's obligation
under this Section 5 shall be reduced to the extent that the claim against,
or the loss, liability or damage experienced by the Sub-Adviser, is caused
by or is otherwise related to the Sub-Adviser's own willful misfeasance,
bad faith or negligence, or to the reckless disregard of its duties under
this Agreement.
6. PROPRIETARY RIGHTS. The Adviser agrees and acknowledges that the
Sub-Adviser is the sole owner of the name and mark "Robertson, Stephens &
Company Investment Management, L.P." and that all use of any designation
consisting in whole or part of "Robertson, Stephens & Company Investment
Management, L.P." (a "Robertson Stephens Mark") under this Agreement shall
inure to the benefit of the Sub-Adviser. The Adviser on its own behalf and
on behalf of the Trust agrees not to use any Robertson Stephens Mark in any
advertisement or sales literature or other materials promoting the Trust,
except with the prior written consent of the Sub-Adviser. Without the
prior written consent of the Sub-Adviser, the Adviser shall not, and the
Adviser shall use its best efforts to cause the Trust not to, make
representations regarding the Sub-Adviser in any disclosure document,
advertisement or sales literature or other materials relating to
4
<PAGE>
the Trust. Upon termination of this Agreement for any reason, the Adviser
shall cease, and the Adviser shall use its best efforts to cause the Trust
to cease, all use of any Robertson Stephens Mark(s) as soon as reasonably
practicable.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio(s) involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-
Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of a termination of the Adviser's agreement with the Trust. As used
in this Section 7, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
8. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
9. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
10. AMENDMENT. This Agreement may be amended in writing at any time by
material consent of the Adviser and Sub-Adviser, provided that, if required
by law, such amendments shall also have been approved by vote of a majority
of the outstanding securities of the Series and by a vote of a majority of
the trustees of the Trust who are not interested persons of the Trust, the
Adviser or Sub-Adviser, cast in person at a meeting called for the purpose
of voting on such approval.
5
<PAGE>
11. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Robertson Stephens Investment
Management, L.P.
555 California Street, Suite 2600
San Francisco, CA 94104
Attention: David Elliot
with a copy to:
Dana M. Welch, Esq.
Robertson Stephens Investment
Management, L.P.
555 California Street, Suite 2600
San Francisco, CA 94104
12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of
the SEC, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first
written above.
SEI INVESTMENTS MANAGEMENT CORPORATION ROBERTSON STEPHENS INVESTMENT MANAGEMENT
LIMITED
By: /s/Kevin P. Robins By: /s/Dana Welch
--------------------------------- --------------------------------
Name: Kevin P. Robins Name: Dana Welch
----------------------------- -----------------------------
Title: Vice President Title: Managing Director
---------------------------- -----------------------------
7
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
ROBERTSON STEPHENS INVESTMENT MANAGEMENT LIMITED
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation
monthly at an annual rate as follows:
SEI Institutional Investments Trust
Small Cap Fund .50% (50 basis points)
8
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this 29th day of June, 1998, between SEI Investments
Management Corporation, (the "Adviser") and Capital Guardian Trust Company (the
"Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996,(the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the International Equity Fund (the
"Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, subject to the direction of the Adviser, determine
from time to time what Assets will be purchased, retained or sold by the
Portfolio, and what portion of the Assets will be invested or held
uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the specific provisions of the 1940 Act,
the Internal Revenue Code of 1986, and all other applicable federal and
state laws and regulations, as each is amended from time to time as are
identified as the Sub-Adviser's responsibility in the Portfolio's
Compliance Manual to be mutually agreed upon by the Adviser and the Sub-
Adviser.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's
<PAGE>
Registration Statement (as defined herein) and Prospectus or as the Board
of Trustees or the Adviser may direct from time to time, in conformity with
federal securities laws. In executing Portfolio transactions and selecting
brokers or dealers, the Sub-Adviser will use its best efforts to seek on
behalf of the Portfolio the best overall terms available. In assessing the
best overall terms available for any transaction, the Sub-Adviser shall
consider all factors that it deems relevant, including the breadth of the
market in the security, the price of the security, the financial condition
and execution capability of the broker or dealer, and the reasonableness of
the commission, if any, both for the specific transaction and on a
continuing basis. In evaluating the best overall terms available, and in
selecting the broker-dealer to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research services provided
(as those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934). Consistent with any guidelines established by the Board of
Trustees of the Trust, the Sub-Adviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Sub-Adviser determines in
good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer - -
viewed in terms of that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to the Portfolio. In addition, the
Sub-Adviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) to take into account the sale of shares of the Trust if the
Sub-Adviser believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms. In no
instance, however, will the Portfolio's Assets be purchased from or sold to
the Adviser, Sub-Adviser, the Trust's principal underwriter, or any
affiliated person of either the Trust, Adviser, the Sub-Adviser or the
principal underwriter, acting as principal in the transaction, except to
the extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act. Adviser will periodically provide Sub-Adviser with a current
list of all such affiliated persons, which list will be relied upon by Sub-
Adviser.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any
2
<PAGE>
exemptive or other relief that the Adviser or the Trust obtains from the
SEC. The Sub-Adviser agrees that all records that it maintains on behalf
of the Portfolio are property of the Portfolio and the Sub-Adviser will
surrender promptly to the Portfolio any of such records upon the
Portfolio's request; provided, however, that the Sub-Adviser may retain a
copy of such records. In addition, for the duration of this Agreement, the
Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2 under
the 1940 Act any such records as are required to be maintained by it
pursuant to this Agreement, and shall transfer said records to any
successor sub-adviser upon the termination of this Agreement (or, if there
is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) Provided that the Custodian timely provides all proxy materials to the
Sub-Adviser, the Sub-Adviser shall review all proxy solicitation materials
and be responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Prospectus,
the instructions and directions of the Board of Trustees of the Trust, and
the specific provisions of the 1940 Act, the Internal Revenue Code of 1986,
and all other applicable federal and state laws and regulations, as each is
amended from time to time as are identified as the Sub-Adviser's
responsibility in the Portfolio's Compliance Manual to be mutually agreed
upon by the Adviser and the Sub-Adviser.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
3
<PAGE>
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-
Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser s management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. Notwithstanding anything to the contrary herein, in the
absence of willful misconduct, bad faith, negligence or reckless disregard
of obligations and duties under this Agreement, the Sub-Adviser shall not
be subject to liability to the Adviser for any act or omission in the
course of rendering services under this Agreement.
The Sub-Adviser agrees to indemnify and hold harmless the Adviser, any
affiliated person within the meaning of Section 2(a)(3) of the 1940 Act
("affiliated person") of the Adviser (other than the Sub-Adviser) and each
person, if any, who, within the meaning of Section 15 of the Securities Act
of 1933 (the "1933 Act"), controls ("controlling person") the Adviser
(collectively, the "Indemnified Adviser Parties") against any and all
losses, claims, damages, liabilities or litigation (including reasonable
legal and other expenses) to which the Adviser, or such affiliated person
or controlling person may become subject under the 1933 Act, 1940 Act, the
Investment Advisers Act of 1940 (the "Advisers Act"), or under any other
statute, at common law or otherwise, which (1) may be based upon the
willful misconduct, bad faith or negligence by the Sub-Adviser, any of its
employees or representatives or any affiliate of or any person acting on
behalf of the Sub-Adviser (it being understood that broker/dealers are not
deemed to be acting on behalf of the Sub-Adviser) or (2) may be based upon
any untrue statement or alleged untrue statement of a material fact
contained in a registration statement or prospectus covering the shares of
the Portfolio or any amendment thereof or any supplement thereto or the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made with reasonable
reliance upon written information furnished to the Adviser or the
Portfolio, or any affiliated person of the Adviser or the Portfolio, by the
Sub-Adviser or any affiliated person of the Sub-Adviser supplied for the
express purpose of inclusion in such registration statement or prospectus;
provided, however, that in no case is the Sub-Adviser's indemnity in favor
of
4
<PAGE>
the Adviser or any affiliated person or controlling person of the Adviser
deemed to protect such person against any liability to which any such
person would otherwise be subject by reason of willful misconduct, bad
faith or negligence in the performance of its duties or by reason of its
reckless disregard of obligations and duties under this Agreement or under
any law applicable to the Adviser.
The Adviser agrees to indemnify and hold harmless the Sub-Adviser, its
affiliates, and their respective directors, officers, employees and
affiliated persons and controlling persons (collectively, the "Indemnified
Sub-Adviser Parties") against any and all losses, claims, damages,
liabilities or litigation (including reasonable legal and other expenses)
to which any of the Indemnified Sub-Adviser Parties may become subject
under the 1933 Act, 1940 Act, the Advisers Act, or under any other statute,
at common law or otherwise which does not require the Sub-Adviser to
provide an indemnity under the previous paragraph, provided that none of
the Indemnified Sub-Adviser Party has acted in a manner that involves
willful misconduct, bad faith or negligence in the performance of its
duties or by reason of its reckless disregard of obligations and duties
under this Agreement or under any law applicable to the Sub-Adviser.
In order to provide for just and equitable contribution in circumstances in
which the indemnities provided above are for any reason unenforceable or
unavailable to or otherwise insufficient to hold harmless an indemnified
party, the Indemnified Adviser Parties and the Indemnified Sub-Adviser
Parties shall contribute to the aggregate losses, claims, damages,
liabilities and legal and other expenses based upon the relative fault of
the Indemnified Adviser Parties and the Indemnified Sub-Adviser Parties
shall be determined by reference to amongst other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact or the inaccurate or alleged
inaccurate representation and or warranty relates to information supplied
by the Indemnified Adviser Parties or the Indemnified Sub-Adviser Parties.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio(s) involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any
5
<PAGE>
penalty, on not more than 60 days' nor less than 30 days' written notice to
the Sub-Adviser, or (c) by the Sub-Adviser at any time, without the payment
of any penalty, on 90 days' written notice to the Adviser. This Agreement
shall terminate automatically and immediately in the event of its
assignment, or in the event of a termination of the Adviser's agreement
with the Trust. As used in this Section 6, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to such exceptions as may be granted by the SEC under
the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Capital Guardian Trust Company
333 South Hope Street
Los Angeles, CA 90071
Attention: Treasurer
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
11. ADVISER'S REPRESENTATIONS. The Adviser hereby warrants and represents to
the Sub-Adviser that (a) it has obtained all applicable licenses, permits,
registrations and approvals that may be required in order to serve in its
designated capacities with respect to the Trust, and shall continue to keep
current such licenses, permits, registrations and approvals for so long as
this Agreement is in effect; (b) it is not prohibited by the 1940 Act or
other applicable laws and regulations from performing the services
contemplated by this
6
<PAGE>
Agreement; (c) it will immediately notify the Sub-Adviser of the occurrence
of any event that would disqualify it from serving in its designated
capacities with respect to the Trust; and (d) this Agreement has been duly
and validly authorized, executed and delivered on behalf of the Adviser and
is valid and binding Agreement of the Adviser enforceable in accordance
with its terms.
12. USE OF NAME. The parties agree that the name "Capital Guardian Trust
Company", the names of the Sub-Adviser's affiliates within The Capital
Group Companies, Inc., and any derivative or logo or trade or service mark,
are the valuable property of the Sub-Adviser and its affiliates. The Trust
and the Adviser shall have the right to use such name(s), derivatives,
logos, trade or service marks only with the prior written approval of the
Sub-Adviser, which approval shall not be unreasonably withheld so long as
this Agreement is in effect. Upon termination of this Agreement, the Trust
and the Adviser shall forthwith cease to use such name(s), derivatives,
logos, trade or service marks. The Trust and the Adviser agree that they
will review with the Sub-Adviser any advertisement, sales literature or
notice prior to its use that makes reference to the Sub-Adviser so that the
Sub-Adviser may review the context in which it is referred to, it being
agreed that the Sub-Adviser shall have no responsibility to ensure the
adequacy of the form or content of such materials for purposes of the 1940
Act or other applicable laws and regulations. If the Trust, or the Adviser
makes any unauthorized use of the Sub-Adviser's name(s), derivatives,
logos, trade or service marks, the parties acknowledge that the Sub-Adviser
shall suffer irreparable harm for which monetary damages are inadequate and
thus, the Sub-Adviser shall be entitled to injunctive relief.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their officers designated below as of the day and year first written above.
SEI INVESTMENTS MANAGEMENT CORPORATION CAPITAL GUARDIAN TRUST COMPANY
By: /s/Kevin P. Robins By: /s/Roberta A. Conroy
--------------------------- ----------------------------
Name: Kevin P. Robins Name: Roberta A. Conroy
-------------------------- --------------------------
Title: Vice President Title: Senior Vice President
------------------------- -------------------------
8
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
CAPITAL GUARDIAN TRUST COMPANY
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
SEI Institutional Investments Trust
International Equity Fund .75 of 1% of the first $25 million
.60 of 1% of the next $25 million
.425 of 1% of the next $200 million
.375 of 1% on assets over $250 million
9
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this 23rd day of March, 1998 between SEI Investments
Management Corporation, (the "Adviser") and Scottish Widows Investment
Management Limited (the "Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996, (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the International Equity
Fund (the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction of
the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Portfolio, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In
<PAGE>
executing Portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Portfolio
the best overall terms available. In assessing the best overall terms
available for any transaction, the Sub-Adviser shall consider all factors
that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting
the broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services provided (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934).
Consistent with any guidelines established by the Board of Trustees of the
Trust, the Sub-Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in good faith that
such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer - - viewed in terms
of that particular transaction or terms of the overall responsibilities of
the Sub-Adviser to the Portfolio. In addition, the Sub-Adviser is
authorized to allocate purchase and sale orders for securities to brokers
or dealers (including brokers and dealers that are affiliated with the
Adviser, Sub-Adviser or the Trust's principal underwriter) to take into
account the sale of shares of the Trust if the Sub-Adviser believes that
the quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
the Portfolio's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated person of
either the Trust, Adviser, the Sub-Adviser or the principal underwriter,
acting as principal in the transaction, except to the extent permitted by
the Securities and Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records
2
<PAGE>
upon the Portfolio's request; provided, however, that the Sub-Adviser may
retain a copy of such records. In addition, for the duration of this
Agreement, the Sub-Adviser shall preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be
maintained by it pursuant to this Agreement, and shall transfer said
records to any successor sub-adviser upon the termination of this Agreement
(or, if there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
3
<PAGE>
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser s management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY; INDEMNIFICATION. The Sub-Adviser shall not be
liable for any loss or damage arising out of the performance of its duties
hereunder unless such loss or damage arose out of or in connection with its
breach of this Agreement or its negligence wilful default, bad faith or
fraud in the performance of its duties hereunder.
The Sub-Adviser shall indemnify and keep indemnified and hold harmless the
Adviser (and each of its directors, officers and agents) from and against
any and all claims, actions, proceedings, judgments, liabilities, damages,
losses, costs and expenses (including reasonable legal fees and expenses in
relation thereto) suffered or incurred by them or any of them arising out
of or in connection with any negligence, wilful default, fraud or bad faith
of the Sub-Adviser in the performance of its duties hereunder or as
otherwise may be required by law.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio(s) involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days'
4
<PAGE>
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of a termination of the Adviser's agreement with the Trust. As used
in this Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Scottish Widows Investment Management Limited
22 Chambers Street, Suite 102
Princeton, NJ 08542
Attention: John Griffith, Jr.
and: Scottish Widows Investment Management, Ltd.
P.O. Box 17036
69 Morrison Street
Edinburgh, EH3 8YF
Scotland
Attention: Allan M. McKenzie
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
5
<PAGE>
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION SCOTTISH WIDOWS INVESTMENT MANAGEMENT
LIMITED
By: /s/ Kevin P. Robins By: /s/John L. Griffith, Jr.
--------------------------- -----------------------------------
Name: Kevin P. Robins Name: John L. Griffith, Jr.
------------------------- ----------------------------------
Title: Vice President Title: Investment Director
------------------------ ---------------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
SCOTTISH WIDOWS INVESTMENT MANAGEMENT LIMITED
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation
monthly at an annual rate as follows:
SEI Institutional Investments Trust
International Equity Fund .30% (30 basis points)
7
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this 15th day of December, 1997, between SEI Investments
Management Corporation, (the "Adviser") and Credit Suisse Asset Management (the
"Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996 (the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the Emerging Markets Equity Fund
(the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction of
the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Portfolio, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In
<PAGE>
executing Portfolio transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Portfolio
the best overall terms available. In assessing the best overall terms
available for any transaction, the Sub-Adviser shall consider all factors
that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting
the broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services provided (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934).
Consistent with any guidelines established by the Board of Trustees of the
Trust, the Sub-Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in good faith that
such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer - - viewed in terms
of that particular transaction or terms of the overall responsibilities of
the Sub-Adviser to its discretionary clients, including the Portfolio. In
addition, the Sub-Adviser is authorized to allocate purchase and sale
orders for securities to brokers or dealers (including brokers and dealers
that are affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) to take into account the sale of shares of the Trust if the
Sub-Adviser believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms. In no
instance, however, will the Portfolio's Assets be purchased from or sold to
the Adviser, Sub-Adviser, the Trust's principal underwriter, or any
affiliated person of either the Trust, Adviser, the Sub-Adviser or the
principal underwriter, acting as principal in the transaction, except to
the extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records
2
<PAGE>
upon the Portfolio's request; provided, however, that the Sub-Adviser may
retain a copy of such records. In addition, for the duration of this
Agreement, the Sub-Adviser shall preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be
maintained by it pursuant to this Agreement, and shall transfer said
records to any successor sub-adviser upon the termination of this Agreement
(or, if there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
3
<PAGE>
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the "By-
Laws");
(c) Prospectus of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-
Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule which is
attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser's management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3)
of the 1940 Act), or a loss resulting from willful misfeasance, bad faith
or negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
The Sub-Adviser shall not be responsible for any loss incurred by reason of
any act or omission of any broker-dealer; provided, however, that the Sub-
Adviser shall use reasonable care in its selection and use of brokers in
effecting transactions for the Portfolio. The Sub-Adviser shall have no
obligation to seek to obtain any material non-public ("inside") information
about any issuer of securities, nor to purchase or sell, or to recommend
for purchase or sale, for the Portfolio the securities of any issuer on the
basis of any such information as may come into its possession.
The Adviser acknowledges and agrees that the Sub-Adviser makes no
representation and warranty, express or implied, that any level of
performance or investment results will be achieved by the Portfolio or that
the Portfolio will perform comparably with any standard or index, including
other clients of the Sub-Adviser whether public or private.
6. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
4
<PAGE>
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance of the Adviser's obligations
under this Agreement; provided, however, that the Adviser's obligation
under this Section 5 shall be reduced to the extent that the claim against,
or the loss, liability or damage experienced by the Sub-Adviser, is caused
by or is otherwise directly related to the Sub-Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
Neither party shall be responsible for payment of any amounts in settlement
of a claim by the other unless the indemnifying party has consented to such
settlement, which consent shall not be unreasonably withheld.
7. CUSTODY. The cash and assets of the Portfolio shall be held by the Trust's
Custodian (the "Custodian"), which the Adviser hereby represents has agreed
to act as custodian for the Portfolio. The Sub-Adviser shall at no time
have custody or physical control of the Assets in the Portfolio. In
addition, the Sub-Advisor shall not be liable for any act or omission of
the Custodian. The Sub-Adviser shall give instructions to the Custodian in
writing or orally (at the discretion of the Custodian) and confirmed in
writing as soon as practicable thereafter. The Adviser shall instruct the
Custodian to provide the Sub-Adviser with such periodic reports concerning
the status of the Portfolio as the Sub-Adviser and the Adviser may agree
from time to time. The Adviser shall provide the Sub-Adviser with a copy
of the Portfolio's agreement with the Custodian and any modification
thereto and will notify the Sub-Adviser in advance of a change in the
Custodian.
8. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser represents and
warrants to the Sub-Adviser that (a) the Adviser has the authority to act
on behalf of the Trust and has and will continue to convey to the Sub-
Adviser all relevant information regarding the Trust and the Portfolio
including, but not limited to, any relevant investment restrictions of the
Trust and the Portfolio; (b) this Agreement has been duly authorized,
executed and delivered by the Adviser and constitutes its valid and binding
obligation, enforceable in accordance with its terms; (c) no governmental
authorizations, approvals, consents or filings are required in connection
with the execution, delivery or performance of this Agreement by the
Adviser; (d) the execution, delivery and performance of this Agreement by
the Adviser will not violate or result in any default under the Adviser's
certificate of incorporation or by-laws (or equivalent constituent
documents), any contract or other agreement to which the Adviser is a party
or by which its assets may be bound or any statute or any rule, regulation
or order of any government agency or body; (e) the Assets of the Portfolio
do not and will not constitute assets of any employee benefit plan within
the meaning of Section 3(3) of the Employee Retirement Security Act of 1974
or Section 4975(e) of the Internal Revenue Code of 1986 and this Agreement
and the transactions contemplated hereby will not constitute an investment
by a "benefit plan investor" within the meaning of DOL Reg. Section 2510.3-
101; and (f) the Adviser has received a copy of Part II of the Sub-
Adviser's Form ADV as most recently filed with the SEC.
5
<PAGE>
9. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-
Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of a termination of the Adviser's agreement with the Trust. As used
in this Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
10. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
11. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
12. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
6
<PAGE>
To the Sub-Adviser at: Credit Suisse Asset Management
153 East 53rd Street
New York, NY 10022
Attention: Hal Liebes
13. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION CREDIT SUISSE ASSET MANAGEMENT
By: /s/Kevin P. Robins By: /s/Hal Liebes
-------------------------------- -------------------------------
Name: Kevin P. Robins Name: Hal Liebes
------------------------------- ------------------------------
Title: Vice President Title: Senior Vice President
------------------------------ -----------------------------
7
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
CREDIT SUISSE ASSET MANAGEMENT
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate of up to:
SEI Institutional Investments Trust
Emerging Markets Equity Fund .60%
The compensation will have a minimum fee payment of four hundred
fifty-five thousand dollars ($455,000) within the first calendar year commencing
on the date of this Agreement; provided, however, the compensation will not
exceed an annual rate of seventy (70) basis points (.70%).
8
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this ____ day of September, 1998 between SEI Investments
Management Corporation, (the "Adviser") and TCW Funds Management, Inc. (the
"Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996 (the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the Large Cap Growth Portfolio
(the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall determine from time to time what Assets will be
purchased, retained or sold by the Portfolio, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In executing Portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use
<PAGE>
its best efforts to seek on behalf of the Portfolio the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In evaluating the
best overall terms available, and in selecting the broker-dealer to execute
a particular transaction, the Sub-Adviser may also consider the brokerage
and research services provided (as those terms are defined in Section 28(e)
of the Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust, the Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for
the Portfolio which is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer - - viewed in terms of that particular
transaction or terms of the overall responsibilities of the Sub-Adviser to
the Portfolio. In addition, the Sub-Adviser is authorized to allocate
purchase and sale orders for securities to brokers or dealers (including
brokers and dealers that are affiliated with the Adviser, Sub-Adviser or
the Trust's principal underwriter) to take into account the sale of shares
of the Trust if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will the Portfolio's
Assets be purchased from or sold to the Adviser, Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust,
Adviser, the Sub-Adviser or the principal underwriter, acting as principal
in the transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act. Adviser will periodically
provide Sub-Adviser with a current list of all such affiliated persons,
which list will be relied upon by Sub-Adviser.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records
2
<PAGE>
upon the Portfolio's request; provided, however, that the Sub-Adviser may
retain a copy of such records. In addition, for the duration of this
Agreement, the Sub-Adviser shall preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be
maintained by it pursuant to this Agreement, and shall transfer said
records to any successor sub-adviser upon the termination of this Agreement
(or, if there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
3
<PAGE>
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
Copies of any amendments to the above documents will be furnished promptly
to the Sub-Adviser.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser s management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of the
Adviser's duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio(s) involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-
Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. Any trades executed by Sub-Adviser but not
yet settled at the
4
<PAGE>
time of receipt of such notice shall be settled. This Agreement shall
terminate automatically and immediately in the event of its assignment, or
in the event of a termination of the Adviser's agreement with the Trust.
As used in this Section 6, the terms "assignment" and "vote of a majority
of the outstanding voting securities" shall have the respective meanings
set forth in the 1940 Act and the rules and regulations thereunder, subject
to such exceptions as may be granted by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: TCW Funds Management, Inc.
865 S. Figueroa Street
Los Angeles, CA 90017
Attention: General Counsel
10. ARBITRATION. Any dispute relating to this Agreement which cannot be
amicably resolved between the parties shall be resolved by binding
arbitration conducted in accordance with the Commercial Arbitration Rules
of the American Arbitration Association then prevailing, and the decision
of the arbitrators shall be final and binding on all of the parties. The
costs of the arbitration (other than fees and expenses of counsel, which
shall be the responsibility of the parties retaining such counsel) shall be
shared equally by the parties.
11. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
5
<PAGE>
12. AMENDMENTS. This agreement can be amended only by a written document
signed by the parties hereto.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION TCW FUNDS MANAGEMENT, INC.
By: /s/ Lynda Striegal By:
------------------------------- --------------------------
Name: Lynda Striegal Name: Michael E. Cahill
----------------------------- -------------------------
Title: Title: Managing Director
----------------------------- ------------------------
By: /s/ Mohan V. Phansalker
--------------------------
Name: Mohan V. Phansalkar
Title:Senior Vice President
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
TCW FUNDS MANAGEMENT, INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
SEI Institutional Investments Trust
Large Cap Fund 0.20%
7
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this __ day of September, 1998, by and among SEI Investments
Management Corporation, (the "Adviser") and Mellon Equity Associates, LLP (the
"Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust") is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996 (the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the Small Cap Fund (the
"Portfolio"), which is a separate series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Sub-Adviser. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage the investment
operations of the Portfolio and the composition of the Portfolio, including
the purchase, retention and disposition of securities and other assets, in
accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall provide supervision of the Portfolio's investments
and determine from time to time what investments and securities will be
purchased, retained or sold by the Portfolio, and what portion of the
assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the securities to be purchased or sold by
the Portfolio and will place orders with or through such persons, brokers
or dealers to carry out the policy with respect to brokerage set forth in
the Portfolio's Registration Statement and Prospectus or as
<PAGE>
the Board of Trustees or the Adviser may direct from time to time, in
conformity with federal securities laws. In executing Portfolio
transactions and selecting brokers or dealers, the Sub-Adviser will use its
best efforts to seek on behalf of the Portfolio the best overall terms
available. In assessing the best overall terms available for any
transaction, the Sub-Adviser shall consider all factors that it deems
relevant, which may include the breadth of the market in the security, the
price of the security, the financial condition and execution capability of
the broker or dealer, and the reasonableness of the commission, if any,
both for the specific transaction and on a continuing basis. In evaluating
the best overall terms available, and in selecting the broker-dealer to
execute a particular transaction the Sub-Adviser may also consider the
brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) provided to the Portfolio
and/or other accounts over which the Sub-Adviser or an affiliate of the
Sub-Adviser may exercise investment discretion. The Sub-Adviser is
authorized, subject to the prior approval of the Trust's Board of Trustees,
to pay to a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for any of the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if, but only if,
the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer - - viewed in terms of that particular
transaction or terms of the overall responsibilities of the Sub-Adviser to
the Portfolio. In addition, the Sub-Adviser is authorized to allocate
purchase and sale orders for portfolio securities to brokers or dealers
(including brokers and dealers that are affiliated with the Sub-Adviser or
the Trust's principal underwriter) to take into account the sale of shares
of the Trust if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will the Portfolio's
securities be purchased from or sold to the Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust, the
Sub-Adviser or the principal underwriter, acting as principal in the
transaction, except to the extent permitted by the Securities and Exchange
Commission and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to the
Portfolio's portfolio transactions required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act
and shall render to the Adviser or Board of Trustees such periodic and
special reports as the Adviser or Board of Trustees may reasonably request.
The Sub-Adviser shall keep the Portfolio's books and records required to be
maintained by the Sub-Adviser of this Agreement and shall timely furnish to
the Adviser all information relating to the Sub-Adviser's services under
this Agreement needed by the Adviser to keep the other books and records of
the Portfolio required by Rule 31a-1 under the 1940 Act. The Sub-Adviser
shall also furnish to the Adviser any other information that is required to
be filled by the Adviser or the Trust with the Securities and Exchange
Commission ("SEC") or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
2
<PAGE>
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records upon the Portfolio's request; provided, however, that the
Sub-Adviser may retain a copy of such records. In addition, for the
duration of this Agreement, the Sub-Adviser shall preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to this Agreement, and shall
transfer said records to any successor Sub-Adviser upon the termination of
this Agreement (or, if there is no successor Sub-Adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. Duties of the Adviser. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that nothing herein shall
be construed to relieve the Sub-Adviser of responsibility for compliance
with the Portfolio's investment objectives, policies, and restrictions, as
provided in Section 1 hereunder. The Adviser hereby covenants to promptly
provide the Sub-Adviser with copies of any amendment or supplement to the
Portfolio's Registration Statement as well as all applicable trading
guidelines and procedures established for the Portfolio.
3. Delivery of Documents. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
3
<PAGE>
(c) Prospectus(es) of the Portfolio.
(d) The Adviser hereby covenants to promptly furnish the Sub-Adviser with
copies of any amendments or supplements to such documents.
4. Compensation to the Sub-Adviser. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-
Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in Schedule A which is
attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of investments under
management and will be paid to the Sub-Adviser monthly. The Sub-Adviser
may, in its discretion and from time to time, waive a portion of its fee.
5. Limitation of Liability of the Sub-Adviser. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with performance of its obligations under this Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3)
of the 1940 Act), or a loss resulting from willful misfeasance, bad faith
or negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. Reports. During the term of this Agreement, the Adviser agrees to furnish
the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Portfolio, the Trust or the public that
refer to the Sub-Adviser or its clients in any way prior to use thereof and
not to use material if the Sub-Adviser reasonably objects in writing within
five business days (or such other period as may be mutually agreed) after
receipt thereof. The Sub-Adviser's right to object to such materials is
limited to the portions of such materials that expressly relate to the Sub-
Adviser, its services and its clients. The Adviser agrees to use its
reasonable best efforts to ensure that materials prepared by its employees
or agents or its affiliates that refer to the Sub-Adviser or its clients in
any way are consistent with those materials previously approved by the
Sub-Adviser as referenced in the first sentence of this paragraph. Sales
literature may be furnished to the Sub-Adviser by first class or overnight
mail, facsimile transmission equipment or hand delivery.
7. Indemnification. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance by the Sub-Adviser of
its duties under this Agreement; provided, however, that the Sub-Adviser
shall not be required to indemnify or otherwise hold the Adviser harmless
under this
4
<PAGE>
Section 7 where the claim against, or the loss, liability or damage
experienced by the Adviser, is caused by or is otherwise directly related
to the Adviser's own willful misfeasance, bad faith or negligence, or to
the reckless disregard of its duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance by the Adviser of its duties
under this Agreement; provided, however, that the Adviser shall not be
required to indemnify or otherwise hold the Sub-Adviser harmless under this
Section 7 where the claim against, or the loss, liability or damage
experienced by the Sub-Adviser, is caused by or is otherwise directly
related to the Sub-Adviser's own willful misfeasance, bad faith or
negligence, or to the reckless disregard of its duties under this
Agreement.
8. Duration and Termination. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the SEC
permitting it to engage a Sub-Adviser without first obtaining approval of
the Agreement from a majority of the outstanding voting securities of the
Portfolio involved, the Agreement shall become effective upon its approval
by the Trust's Board of Trustees. Any Sub-Adviser so selected and approved
shall be without the protection accorded by shareholder approval of an
investment adviser's receipt of compensation under Section 36(b) of the
1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of such Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the other party, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the other party. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of a termination of the Adviser's agreement with the Trust. As used
in this Section 8, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the Commission under the 1940 Act.
9. Governing Law. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
5
<PAGE>
10. Severability. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
11. Notice. Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Drive
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Mellon Equity Associates, LLP
500 Grant Street, Suite 3700
Pittsburgh, Pa 15258
Attention: President
12. Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
Where the effect of a requirement of the 1940 Act reflected in any provision of
this Agreement is altered by a rule, regulation or order of the Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION MELLON EQUITY ASSOCIATES, LLP
By: /s/ Todd B. Cipperman By: /s/ William P. Rydell
-------------------------------- --------------------------------
Name: Todd B. Cipperman Name: William P. Rydell
------------------------------ ------------------------------
Title: Vice President Title: President
------------------------------- -----------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
MELLON EQUITY ASSOCIATES, LLP
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate of up to:
Small Cap Fund .45%
7
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this ____ day of September, 1998, between SEI Investments
Management Corporation, (the "Adviser") and Spyglass Asset Management (the
"Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996, (the "Advisory Agreement") with the Trust, pursuant to
which the Adviser will act as investment adviser to the Small Cap Fund (the
"Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction of
the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Portfolio, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In executing Portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on behalf of the
Portfolio the best overall terms available. In
<PAGE>
assessing the best overall terms available for any transaction, the
Sub-Adviser shall consider all factors that it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker-dealer to execute a particular
transaction, the Sub-Adviser may also consider the brokerage and research
services provided (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934). Consistent with any guidelines
established by the Board of Trustees of the Trust, the Sub-Adviser is
authorized to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction for
the Portfolio which is in excess of the amount of commission another broker
or dealer would have charged for effecting that transaction if, but only
if, the Sub-Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer - - viewed in terms of that particular
transaction or terms of the overall responsibilities of the Sub-Adviser to
the Portfolio. In addition, the Sub-Adviser is authorized to allocate
purchase and sale orders for securities to brokers or dealers (including
brokers and dealers that are affiliated with the Adviser, Sub-Adviser or
the Trust's principal underwriter) to take into account the sale of shares
of the Trust if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be with
other qualified firms. In no instance, however, will the Portfolio's
Assets be purchased from or sold to the Adviser, Sub-Adviser, the Trust's
principal underwriter, or any affiliated person of either the Trust,
Adviser, the Sub-Adviser or the principal underwriter, acting as principal
in the transaction, except to the extent permitted by the Securities and
Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records upon the Portfolio's request; provided, however, that the
2
<PAGE>
Sub-Adviser may retain a copy of such records. In addition, for the
duration of this Agreement, the Sub-Adviser shall preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to this Agreement, and shall
transfer said records to any successor sub-adviser upon the termination of
this Agreement (or, if there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
3
<PAGE>
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-
Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser s management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio(s) involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of
4
<PAGE>
a termination of the Adviser's agreement with the Trust. As used in this
Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Spyglass Asset Management
P.O. Box 2864
3454 Oak Valley Court, Suite 209
Toledo, Ohio 43606
Attention: Roger Stamper
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION SPYGLASS ASSET MANAGEMENT
By: /s/ Todd B. Cipperman By: /s/ Roger H. Stamper
-------------------------------- ------------------------------
Name: Todd B. Cipperman Name: Roger H. Stamper
------------------------------- ------------------------------
Title: Vice President Title: President
----------------------------- -----------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
SPYGLASS ASSET MANAGEMENT
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
SEI Institutional Investments Trust
Small Cap Fund 0.50%
7
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this ____ day of September, 1998 between SEI Investments
Management Corporation, (the "Adviser") and Morgan Stanley Asset Management Inc.
(the "Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust"), is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996(the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the Emerging Markets Equity
Portfolio (the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of a portion of the Portfolio, and the Sub-Adviser is
willing to render such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage the portion of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall determine from time to time what Assets will be
purchased, retained or sold by the Portfolio, and what portion of the
Assets will be invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time. The Sub-
Adviser shall manage the Assets (which represent a portion of the
Portfolio) as if they were a separate operating Portfolio and the Sub-
Adviser shall comply with the Trust's Declaration of Trust, the 1940 Act,
the Internal Revenue Code of 1986, and the Portfolio's investment
objectives, policies and restrictions with respect to the Assets.
<PAGE>
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In executing Portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on behalf of the
Portfolio the best overall terms available. In assessing the best overall
terms available for any transaction, the Sub-Adviser shall consider all
factors that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and on a continuing
basis. In evaluating the best overall terms available, and in selecting
the broker-dealer to execute a particular transaction, the Sub-Adviser may
also consider the brokerage and research services provided (as those terms
are defined in Section 28(e) of the Securities Exchange Act of 1934).
Consistent with any guidelines established by the Board of Trustees of the
Trust, the Sub-Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Portfolio which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Sub-Adviser determines in good faith that
such commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer - - viewed in terms
of that particular transaction or terms of the overall responsibilities of
the Sub-Adviser to the Portfolio. In addition, the Sub-Adviser is
authorized to allocate purchase and sale orders for securities to brokers
or dealers (including brokers and dealers that are affiliated with the
Adviser, Sub-Adviser or the Trust's principal underwriter) to take into
account the sale of shares of the Trust if the Sub-Adviser believes that
the quality of the transaction and the commission are comparable to what
they would be with other qualified firms. In no instance, however, will
the Portfolio's Assets be purchased from or sold to the Adviser,
Sub-Adviser, the Trust's principal underwriter, or any affiliated person of
either the Trust, Adviser, the Sub-Adviser or the principal underwriter,
acting as principal in the transaction, except to the extent permitted by
the Securities and Exchange Commission ("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or
2
<PAGE>
sent to shareholders under the 1940 Act (including the rules adopted
thereunder) or any exemptive or other relief that the Adviser or the Trust
obtains from the SEC. The Sub-Adviser agrees that all records that it
maintains on behalf of the Portfolio are property of the Portfolio and the
Sub-Adviser will surrender promptly to the Portfolio any of such records
upon the Portfolio's request; provided, however, that the Sub-Adviser may
retain a copy of such records. In addition, for the duration of this
Agreement, the Sub-Adviser shall preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any such records as are required to be
maintained by it pursuant to this Agreement, and shall transfer said
records to any successor sub-adviser upon the termination of this Agreement
(or, if there is no successor sub-adviser, to the Adviser).
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio, provided that the custodian provides
services in the markets in which the securities are traded or held and
promptly forwards the proxy solicitation material to the Sub-Adviser. The
Adviser shall instruct the custodian and other parties providing services
to the Portfolio to promptly forward misdirected proxies to the Sub-
Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's affiliates,
partners, officers or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
3
<PAGE>
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the
"By-Laws");
(c) Prospectus(es) of the Portfolio.
The Adviser shall furnish the Sub-Adviser with copies of any revisions or
supplements to the documents specified in this Section 3 at, or, if
practicable, before the time the revisions or supplements become effective.
No revisions shall be made nor supplements issued regarding the Portfolio
or the Sub-Adviser without the prior review and approval of the
Sub-Adviser. No written materials naming or relating to the Sub-Adviser,
its employees or its affiliated companies, other than materials provided or
approved by the Sub-Adviser, shall be used by the Adviser, the Trust or
their affiliates in offering or marketing shares of the Trust. The Adviser
agrees to furnish the Sub-Adviser with any materials or information which
the Sub-Adviser may reasonably request to enable it to perform its
functions under this Agreement.
The Sub-Adviser has furnished the Adviser with a copy of Part II of its
current Form ADV.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-
Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser's management and will be paid to the Sub-Adviser monthly.
Except as may otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser may, in its
discretion and from time to time, waive a portion of its fee.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 5 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance of the Adviser's obligations
under this Agreement, or arisisng from the conduct of any other sub-
4
<PAGE>
adviser to the Portfolio or the Trust that is not based upon the
obligations of the Sub-Adviser under this Agreement including, but not
limited to any liability with respect to the portion of the Portfolio's
assets not allocated to the Sub-Adviser; provided, however, that the
Adviser's obligation under this Section 5 shall be reduced to the extent
that the claim against, or the loss, liability or damage experienced by the
Sub-Adviser, is caused by or is otherwise directly related to the Sub-
Adviser's own willful misfeasance, bad faith or negligence, or to the
reckless disregard of its duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the
Securities and Exchange Commission permitting it to engage a Sub-Adviser
without first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Portfolio(s) involved, the Agreement
shall become effective upon its approval by the Trust's Board of Trustees.
Any Sub-Adviser so selected and approved shall be without the protection
accorded by shareholder approval of an investment adviser's receipt of
compensation under Section 36(b) of the 1940 Act.
This Agreement shall continue in effect for a period of more than two years
from the date hereof only so long as continuance is specifically approved
at least annually in conformance with the 1940 Act; provided, however, that
this Agreement may be terminated with respect to the Portfolio (a) by the
Portfolio at any time, without the payment of any penalty, by the vote of a
majority of Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Portfolio, (b) by the Adviser at any
time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. This Agreement shall terminate
automatically and immediately in the event of its assignment, or in the
event of a termination of the Adviser's agreement with the Trust. As used
in this Section 6, the terms "assignment" and "vote of a majority of the
outstanding voting securities" shall have the respective meanings set forth
in the 1940 Act and the rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
8. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
9. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid
5
<PAGE>
addressed by the party giving notice to the other party at the last address
furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Morgan Stanley Asset Management Inc.
1221 Avenue of the Americas
New York, NY 10020
Attention: Jackie Carr
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts, and notice is hereby given that the
obligations of this instrument are not binding upon any of the Trustees,
officers or shareholders of the Portfolio or the Trust.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION MORGAN STANLEY ASSET MANAGEMENT INC.
By: /s/ Cynthia M Parrish By: /s/ Andy Skov
-------------------------------- -------------------------------
Name: Cynthia M. Parrish Name: Andy Skov
------------------------------ -----------------------------
Title: Vice President Title: Principal
----------------------------- ---------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
MORGAN STANLEY ASSET MANAGEMENT INC.
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
SEI Institutional Investments Trust
Emerging Markets Equity Fund 0.70%
7
<PAGE>
INVESTMENT SUB-ADVISORY AGREEMENT
SEI INSTITUTIONAL INVESTMENTS TRUST
AGREEMENT made this ____ day of September, 1998, between SEI Investments
Management Corporation, (the "Adviser") and Nicholas-Applegate Capital
Management (the "Sub-Adviser").
WHEREAS, SEI Institutional Investments Trust, a Massachusetts business
trust (the "Trust") is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated June 14, 1996 (the "Advisory Agreement") with the Trust, pursuant to which
the Adviser will act as investment adviser to the Emerging Markets Equity Fund
(the "Portfolio"), which is a series of the Trust; and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in connection
with the management of the Portfolio, and the Sub-Adviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage all of the
securities and other assets of the Portfolio entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of the Assets,
in accordance with the Portfolio's investment objectives, policies and
restrictions as stated in the Portfolio's prospectus and statement of
additional information, as currently in effect and as amended or
supplemented from time to time (referred to collectively as the
"Prospectus"), and subject to the following:
(a) The Sub-Adviser shall, in consultation with and subject to the direction of
the Adviser, determine from time to time what Assets will be purchased,
retained or sold by the Portfolio, and what portion of the Assets will be
invested or held uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust
(as defined herein) and the Prospectus and with the instructions and
directions of the Adviser and of the Board of Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, and all other applicable federal and state
laws and regulations, as each is amended from time to time.
(c) The Sub-Adviser shall determine the Assets to be purchased or sold by the
Portfolio as provided in subparagraph (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Portfolio's Registration Statement
(as defined herein) and Prospectus or as the Board of Trustees or the
Adviser may direct from time to time, in conformity with federal securities
laws. In executing Portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek on behalf of the
Portfolio the best overall terms available. In assessing the best overall
terms available for any transaction, the Sub-Adviser shall consider all
factors that it deems relevant, including the breadth of the market in the
security, the price of the security, the financial
<PAGE>
condition and execution capability of the broker or dealer, and the
reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available,
and in selecting the broker-dealer to execute a particular transaction, the
Sub-Adviser may also consider the brokerage and research services provided
(as those terms are defined in Section 28(e) of the Securities Exchange Act
of 1934). Consistent with any guidelines established by the Board of
Trustees of the Trust, the Sub-Adviser is authorized to pay to a broker or
dealer who provides such brokerage and research services a commission for
executing a portfolio transaction for the Portfolio which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if, but only if, the Sub-Adviser determines in
good faith that such commission was reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer - -
viewed in terms of that particular transaction or terms of the overall
responsibilities of the Sub-Adviser to the Portfolio. In addition, the
Sub-Adviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser, Sub-Adviser or the Trust's principal
underwriter) to take into account the sale of shares of the Trust if the
Sub-Adviser believes that the quality of the transaction and the commission
are comparable to what they would be with other qualified firms. In no
instance, however, will the Portfolio's Assets be purchased from or sold to
the Adviser, Sub-Adviser, the Trust's principal underwriter, or any
affiliated person of either the Trust, Adviser, the Sub-Adviser or the
principal underwriter, acting as principal in the transaction, except to
the extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Assets required by subparagraphs (b)(5), (6),
(7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall provide to the Adviser or the Board of Trustees such
periodic and special reports, balance sheets or financial information, and
such other information with regard to its affairs as the Adviser or Board
of Trustees may reasonably request.
The Sub-Adviser shall keep the books and records relating to the Assets
required to be maintained by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to the Sub-Adviser's
services under this Agreement needed by the Adviser to keep the other books
and records of the Portfolio required by Rule 31a-1 under the 1940 Act.
The Sub-Adviser shall also furnish to the Adviser any other information
relating to the Assets that is required to be filed by the Adviser or the
Trust with the SEC or sent to shareholders under the 1940 Act (including
the rules adopted thereunder) or any exemptive or other relief that the
Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all
records that it maintains on behalf of the Portfolio are property of the
Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any
of such records upon the Portfolio's request; provided, however, that the
Sub-Adviser may retain a copy of such records. In addition, for the
duration of this Agreement, the Sub-Adviser shall preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such records as are
required to be maintained by it pursuant to this Agreement, and shall
transfer said records to any successor Sub-Adviser upon the termination of
this Agreement (or, if there is no successor Sub-Adviser, to the Adviser).
2
<PAGE>
(e) The Sub-Adviser shall provide the Portfolio's custodian on each business
day with information relating to all transactions concerning the
Portfolio's Assets and shall provide the Adviser with such information upon
request of the Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free
to render similar services to others, as long as such services do not
impair the services rendered to the Adviser or the Trust.
(g) The Sub-Adviser shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement. The Sub-Adviser will notify the Adviser
of any change in its partners within a reasonable time.
(h) The Sub-Adviser shall review all proxy solicitation materials and be
responsible for voting and handling all proxies in relation to the
securities held in the Portfolio. The Adviser shall instruct the custodian
and other parties providing services to the Portfolio to promptly forward
misdirected proxies to the Sub-Adviser.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers
or employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the Trust's Declaration
of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the
1940 Act, the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to
time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following
documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary
of State of the Commonwealth of Massachusetts (such Agreement and
Declaration of Trust, as in effect on the date of this Agreement and as
amended from time to time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the "By-
Laws");
(c) Prospectus(es) of the Portfolio.
4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the
Sub-Adviser pursuant to this Agreement, the Adviser will pay the
Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation
therefor, a sub-advisory fee at the rate specified in the Schedule(s) which
is attached hereto and made part of this Agreement. The fee will be
calculated based on the average monthly market value of the Assets under
the Sub-Adviser's
3
<PAGE>
management and will be paid to the Sub-Adviser monthly. Except as may
otherwise be prohibited by law or regulation (including any then current
SEC staff interpretation), the Sub-Adviser may, in its discretion and from
time to time, waive a portion of its fee.
5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be
liable for any error of judgment or for any loss suffered by the Adviser in
connection with the performance of its obligations under this Agreement,
except a loss resulting from a breach of fiduciary duty with respect to the
receipt of compensation for services (in which case any award of damages
shall be limited to the period and the amount set forth in Section 36(b)(3)
of the 1940 Act), or a loss resulting from willful misfeasance, bad faith
or negligence on the Sub-Adviser's part in the performance of its duties or
from reckless disregard of its obligations and duties under this Agreement,
except as may otherwise be provided under provisions of applicable state
law which cannot be waived or modified hereby.
6. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser's
obligation under this Section 6 shall be reduced to the extent that the
claim against, or the loss, liability or damage experienced by the Adviser,
is caused by or is otherwise directly related to the Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) howsoever arising
from or in connection with the performance of the Adviser's obligations
under this Agreement; provided, however, that the Adviser's obligation
under this Section 6 shall be reduced to the extent that the claim against,
or the loss, liability or damage experienced by the Sub-Adviser, is caused
by or is otherwise directly related to the Sub-Adviser's own willful
misfeasance, bad faith or negligence, or to the reckless disregard of its
duties under this Agreement.
7. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of
the outstanding voting securities of the Portfolio; provided, however, that
at any time the Adviser shall have obtained exemptive relief from the SEC
permitting it to engage a Sub-Adviser without first obtaining approval of
the Agreement from a majority of the outstanding voting securities of the
Portfolio(s) involved, the Agreement shall become effective upon its
approval by the Trust's Board of Trustees. Any Sub-Adviser so selected and
approved shall be without the protection accorded by shareholder approval
of an investment adviser's receipt of compensation under Section 36(b) of
the 1940 Act. This Agreement shall continue in effect for a period of
more than two years from the date hereof only so long as continuance is
specifically approved at least annually in conformance with the 1940 Act;
provided, however, that this Agreement may be terminated with respect to
the Portfolio (a) by the Portfolio at any time, without the payment of any
penalty, by the vote of a majority of Trustees of the Trust or by the vote
of a majority of the outstanding voting securities of the Portfolio, (b) by
the Adviser at any time, without the payment of any penalty, on not more
than 60 days' nor less than 30 days' written notice to the
4
<PAGE>
Sub-Adviser, or (c) by the Sub-Adviser at any time, without the payment of
any penalty, on 90 days' written notice to the Adviser. This Agreement
shall terminate automatically and immediately in the event of its
assignment, or in the event of a termination of the Adviser's agreement
with the Trust. As used in this Section 7, the terms "assignment" and
"vote of a majority of the outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to such exceptions as may be granted by the Commission
under the 1940 Act.
8. GOVERNING LAW. This Agreement shall be governed by the internal laws of
the Commonwealth of Massachusetts, without regard to conflict of law
principles; provided, however, that nothing herein shall be construed as
being inconsistent with the 1940 Act.
9. SEVERABILITY. Should any part of this Agreement be held invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement shall
not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
10. NOTICE: Any notice, advice or report to be given pursuant to this
Agreement shall be deemed sufficient if delivered or mailed by registered,
certified or overnight mail, postage prepaid addressed by the party giving
notice to the other party at the last address furnished by the other party:
To the Adviser at: SEI Investments Management Corporation
One Freedom Valley Road
Oaks, PA 19456
Attention: Legal Department
To the Sub-Adviser at: Nicholas-Applegate Capital Management
600 West Broadway, 29th Floor
San Diego, CA 92101
Attention: General Counsel
11. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but such counterparts shall, together,
constitute only one instrument.
12. MISCELLANEOUS. The name "Nicholas-Applegate" is a registered trademark of
the Sub-Adviser, and any use or continued use of the name by the Adviser is
subject to the Sub-Adviser's continuing, consent, in its sole discretion,
which consent will not be withheld during the term of this Agreement.
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of the Commonwealth of Massachusetts, and notice is hereby
given that the obligations of this instrument are not binding upon any of the
Trustees, officers or shareholders of the Portfolio or the Trust.
5
<PAGE>
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is altered by a rule, regulation or order of the
SEC, whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first written
above.
SEI INVESTMENTS MANAGEMENT CORPORATION NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
By: /s/ Todd B. Cipperman By: /s/ E. Blake Moore Jr.
------------------------------- --------------------------------
Name: Todd B. Cipperman Name: E. Blake Moore Jr.
------------------------------ -------------------------------
Title: Vice President Title: General Counsel
----------------------------- ------------------------------
6
<PAGE>
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
SEI INVESTMENTS MANAGEMENT CORPORATION
AND
NICHOLAS-APPLEGATE CAPITAL MANAGEMENT
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
annual rate as follows:
Emerging Markets Equity Fund .65% while assets are less than $200 million
.60% once assets equal at least $200 million.
For purposes of calculating fees, assets in all client accounts advised by the
Advisor and managed by the Sub-Advisor will be aggregated.
7
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Post-Effective Amendment
No. 3 to the Registration Statement of SEI Institutional Investments Trust on
Form N-1A (File No. 33-58041) of our report dated July 16, 1998 on our audit
of the financial statements and financial highlights of the Fund, which
report is included in the Annual Report to Shareholders for the year ended
May 31, 1998 which is incorporated by reference in the Post-Effective
Amendment to the Registration Statement. We also consent to the reference to
our Firm under the caption "Financial Highlights" in the Prospectus and
"Counsel and Independent Accountants" in the Statement of Additional
Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, Pennsylvania
September 23, 1998
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ William M. Doran Date: 5/11/98
- --------------------------------- ----------------
William M. Doran, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ F. Wendell Gooch Date: 5/12/98
- --------------------------------- ----------------
F. Wendell Gooch, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Frank E. Morris Date:
- --------------------------------- ----------------
Frank E. Morris, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ James M. Storey Date: 5/11/98
- --------------------------------- ----------------
James M. Storey, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Robert A. Nesher Date: 5/12/98
- --------------------------------- ----------------
Robert A. Nesher, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Kevin P. Robins and Mark Nagle, each of them singly,
his true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution, to sign for him and in his name, place and stead, and in the
capacity indicated below, to sign any and all Registration Statements and all
amendments thereto relating to the offering of the Trust's shares under the
provisions of the Investment Company Act of 1940 and/or the Securities Act of
1933, each such Act as amended, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
acting alone, full power and authority to do and perform each and every act and
thing requisite or necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Edward D. Loughlin Date: 5/13/98
- --------------------------------- ----------------
Edward D. Loughlin, President and
Chief Executive Officer
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Edward D. Loughlin, Kevin P. Robins and Mark Nagle,
each of them singly, his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, to sign for him and in his name, place
and stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ George J. Sullivan Date: 5/11/98
- --------------------------------- ----------------
George J. Sullivan, Trustee
<PAGE>
SEI LIQUID ASSET TRUST
SEI TAX EXEMPT TRUST
SEI DAILY INCOME TRUST
SEI INDEX FUNDS
SEI INSTITUTIONAL MANAGED TRUST
SEI INSTITUTIONAL INTERNATIONAL TRUST
SEI ASSET ALLOCATION TRUST
SEI INSTITUTIONAL INVESTMENTS TRUST
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned trustee and/or
officer of the above referenced funds (the "Trusts"), each a business trust
organized under the laws of The Commonwealth of Massachusetts, hereby
constitutes and appoints Edward D. Loughlin and Kevin P. Robins, each of them
singly, his true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, to sign for him and in his name, place and
stead, and in the capacity indicated below, to sign any and all Registration
Statements and all amendments thereto relating to the offering of the Trust's
shares under the provisions of the Investment Company Act of 1940 and/or the
Securities Act of 1933, each such Act as amended, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, acting alone, full power and authority to do and
perform each and every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal as
of the date set forth below.
/s/ Mark E. Nagle Date:
- --------------------------------- ----------------
Mark E. Nagle, Controller and
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000939934
<NAME> SEI INSTITUTIONAL INVESTMENTS TRUST
<SERIES>
<NUMBER> 010
<NAME> LARGE CAP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 923353
<INVESTMENTS-AT-VALUE> 1166414
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 7200
<TOTAL-ASSETS> 1173614
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (24277)
<TOTAL-LIABILITIES> (24277)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 876941
<SHARES-COMMON-STOCK> 70302
<SHARES-COMMON-PRIOR> 34662
<ACCUMULATED-NII-CURRENT> 2266
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 27241
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 242889
<NET-ASSETS> 1149337
<DIVIDEND-INCOME> 11612
<INTEREST-INCOME> 1661
<OTHER-INCOME> 0
<EXPENSES-NET> (2671)
<NET-INVESTMENT-INCOME> 10602
<REALIZED-GAINS-CURRENT> 38324
<APPREC-INCREASE-CURRENT> 167479
<NET-CHANGE-FROM-OPS> 216405
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (9415)
<DISTRIBUTIONS-OF-GAINS> (14826)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46459
<NUMBER-OF-SHARES-REDEEMED> (12452)
<SHARES-REINVESTED> 1634
<NET-CHANGE-IN-ASSETS> 710519
<ACCUMULATED-NII-PRIOR> 1080
<ACCUMULATED-GAINS-PRIOR> 3744
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3325
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4175
<AVERAGE-NET-ASSETS> 831228
<PER-SHARE-NAV-BEGIN> 12.66
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