SEI INSTITUTIONAL INVESTMENTS TRUST, 497, 2000-10-03

SEI INSTITUTIONAL INVESTMENTS TRUST
497, 2000-10-03

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<PAGE>
ABOUT THIS PROSPECTUS
------------------------------------------------------------------------

SEI Institutional Investments Trust is a mutual fund that offers a number of
separate investment portfolios (Funds). The Funds have individual investment
goals and strategies and are designed primarily for institutional investors and
financial institutions and their clients that have signed an Investment
Management Agreement (as discussed below). This prospectus gives you important
information about the shares of the Funds that you should know before investing.
Please read this prospectus and keep it for future reference.

THIS PROSPECTUS HAS BEEN ARRANGED INTO DIFFERENT SECTIONS SO THAT YOU CAN EASILY
REVIEW THIS IMPORTANT INFORMATION. ON THE NEXT PAGE, THERE IS SOME GENERAL
INFORMATION YOU SHOULD KNOW ABOUT RISK AND RETURN THAT IS COMMON TO EACH OF THE
FUNDS. FOR MORE DETAILED INFORMATION ABOUT THE FUNDS, PLEASE SEE:

LARGE CAP FUND.......................................................4
LARGE CAP VALUE FUND.................................................6
LARGE CAP GROWTH FUND................................................8
SMALL CAP FUND......................................................10
INTERNATIONAL EQUITY FUND...........................................12
EMERGING MARKETS EQUITY FUND........................................14
CORE FIXED INCOME FUND..............................................16
HIGH YIELD BOND FUND................................................18
INTERNATIONAL FIXED INCOME FUND.....................................20
MORE INFORMATION ABOUT FUND INVESTMENTS.............................22
INVESTMENT ADVISER AND SUB-ADVISERS.................................23
PURCHASING AND SELLING FUND SHARES..................................28
DIVIDENDS AND DISTRIBUTIONS.........................................30
TAXES...............................................................30
FINANCIAL HIGHLIGHTS................................................31
HOW TO OBTAIN MORE INFORMATION ABOUT SEI INSTITUTIONAL INVESTMENTS
TRUST.......................................................Back Cover
<PAGE>
2 PROSPECTUS

GLOBAL ASSET ALLOCATION

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

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

ELIGIBLE INVESTORS

Eligible investors are principally institutions, 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, that have entered into an Investment
Management Agreement (an "Agreement") with SIMC (collectively, "Eligible
Investors").

Under each Agreement, SIMC will consult with the Eligible Investor to define its
investment objectives, desired returns and tolerance for risk, and to develop a
plan for the allocation of its assets. Each 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.
<PAGE>
PROSPECTUS 3

RISK/RETURN INFORMATION COMMON TO THE FUNDS

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

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

The value of your investment in a Fund is based on the market prices of the
securities the Fund holds. These prices change daily due to economic and other
events that affect particular companies and other issuers. These price
movements, sometimes called volatility, may be greater or lesser depending on
the types of securities a Fund owns and the markets in which they trade. The
estimated level of volatility for each Fund is set forth in the Fund Summaries
that follow. The effect on a Fund's share price of a change in the value of a
single security holding will depend on how widely the Fund's holdings are
diversified.
<PAGE>
4 PROSPECTUS

LARGE CAP FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Large Cap Fund invests primarily in common stocks of U.S. companies with
market capitalizations of more than $1 billion. The Fund uses a multi-manager
approach, relying on a number of Sub-Advisers with differing investment
philosophies to manage portions of the Fund's portfolio under the general
supervision of SIMC. Each Sub-Adviser, in managing its portion of the Fund's
assets, follows a distinct investment discipline. For example, the Sub-Advisers
may include both value managers (i.e., managers that select stocks they believe
are undervalued in light of such fundamental characteristics as earnings, book
value or return on equity), and growth managers (i.e., managers that select
stocks they believe have significant growth potential based on revenue and
revenue growth and other factors). The Fund's portfolio is diversified as to
issuers and industries.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. These factors contribute to price volatility, which is the
principal risk of investing in the Fund.

The Fund is also subject to the risk that large capitalization securities may
underperform other segments of the equity market or the equity markets as a
whole.
<PAGE>
PROSPECTUS 5

LARGE CAP FUND

PERFORMANCE INFORMATION

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

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
23.28% -12.54%
(12/31/98) (9/30/98))
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO JUNE 30, 2000, WAS -0.55%.

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

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (6/14/96)
<S> <C> <C>
---------------------------------------------------------------------------
LARGE CAP FUND 19.73% 26.24%
---------------------------------------------------------------------------
FRANK RUSSELL 1000 INDEX* 20.91% 26.47%**
---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. UNLIKE A MUTUAL FUND, AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER
AND DOES NOT PAY ANY COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS
PERFORMANCE WOULD BE LOWER. THE FRANK RUSSELL 1000 INDEX IS A WIDELY-RECOGNIZED,
CAPITALIZATION-WEIGHTED (COMPANIES WITH LARGER MARKET CAPITALIZATIONS HAVE MORE
INFLUENCE THAN THOSE WITH SMALLER MARKET CAPITALIZATIONS) INDEX OF THE 1,000
LARGEST U.S. COMPANIES.
** THE INCEPTION DATE FOR THE INDEX IS JUNE 30, 1996.

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

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.08%
------
Total Annual Fund Operating Expenses 0.48%*
</TABLE>

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

<TABLE>
<S> <C>
LARGE CAP FUND 0.26%
</TABLE>

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

EXAMPLE

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

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Large Cap Fund $49 $154 $269 $604
</TABLE>

<PAGE>
6 PROSPECTUS

LARGE CAP VALUE FUND

FUND SUMMARY

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

INVESTMENT STRATEGY OF THE FUND

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that its large capitalization value
securities may underperform other segments of the equity market or the equity
markets as a whole.
<PAGE>
PROSPECTUS 7

LARGE CAP VALUE FUND

PERFORMANCE INFORMATION

There is no performance information for the Fund since it was not in operation
for a full calendar year as of September 30, 2000.
--------------------------------------------------------------------------------
FUND FEES AND EXPENSES

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.35%
Distribution (12b-1) Fees None
Other Expenses 0.11%
------
Total Annual Fund Operating Expenses 0.46%*
</TABLE>

<TABLE>
<S> <C>
LARGE CAP VALUE FUND 0.28%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Large Cap Value Fund $47 $148
</TABLE>

<PAGE>
8 PROSPECTUS

LARGE CAP GROWTH FUND

FUND SUMMARY

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

INVESTMENT STRATEGY OF THE FUND

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

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that large capitalization growth securities
may underperform other segments of the equity market or the equity markets as a
whole.
<PAGE>
PROSPECTUS 9

LARGE CAP GROWTH FUND

PERFORMANCE INFORMATION

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<CAPTION>
CLASS A SHARES
<S> <C>
Investment Advisory Fees 0.40%
Distribution (12b-1) Fees None
Other Expenses 0.36%
------
Total Annual Fund Operating Expenses 0.76%*
</TABLE>

<TABLE>
<S> <C>
LARGE CAP GROWTH FUND 0.28%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Large Cap Growth Fund $78 $243
</TABLE>

<PAGE>
10 PROSPECTUS

SMALL CAP FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The Small Cap Fund invests primarily in common stocks of U.S. companies with
market capitalizations of less than $2 billion. The Fund uses a multi-manager
approach, relying upon a number of Sub-Advisers with differing investment
philosophies to manage portions of the Fund's portfolio under the general
supervision of SIMC. Each Sub-Adviser, in managing its portion of the Fund's
assets, follows a distinct investment discipline. For example, the Sub-Advisers
may include both value managers (i.e., managers that select stocks they believe
are undervalued in light of such fundamental characteristics as earnings, book
value or return on equity), and growth managers (i.e., managers that select
stocks they believe have significant earnings growth potential based on revenue
and earnings growth and other factors). The Fund's portfolio is diversified as
to issuers and industries.

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The Fund is also subject to the risk that small capitalization securities may
underperform other segments of the equity market or the equity markets as a
whole. The smaller capitalization companies the Fund invests in may be more
vulnerable to adverse business or economic events than larger, more established
companies. In particular, these small companies may have limited product lines,
markets, and financial resources, and may depend upon a relatively small
management group. Therefore, small cap stocks may be more volatile than those of
larger companies. These securities are traded over the counter or listed on an
exchange and may or may not pay dividends.
<PAGE>
PROSPECTUS 11

SMALL CAP FUND

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
20.38% -22.68%
(12/31/98) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO JUNE 30, 2000, WAS 11.23%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Frank Russell 2000 Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (6/14/96)
<S> <C> <C>
---------------------------------------------------------------------------
SMALL CAP FUND 22.88% 13.51%
---------------------------------------------------------------------------
FRANK RUSSELL 2000 INDEX* 21.26% 12.84%**
---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. UNLIKE A MUTUAL FUND, AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER
AND DOES NOT PAY ANY COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS
PERFORMANCE WOULD BE LOWER. THE FRANK RUSSELL 2000 INDEX IS A WIDELY-RECOGNIZED,
CAPITALIZATION-WEIGHTED (COMPANIES WITH LARGER MARKET CAPITALIZATIONS HAVE MORE
INFLUENCE THAN THOSE WITH SMALLER MARKET CAPITALIZATIONS) INDEX OF THE 2,000
SMALLEST U.S. COMPANIES OUT OF THE 3,000 LARGEST COMPANIES.
** THE INCEPTION DATE FOR THE INDEX IS JUNE 30, 1996.

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

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
Investment Advisory Fees 0.65%
Distribution (12b-1) Fees None
Other Expenses 0.08%
------
Total Annual Fund Operating Expenses 0.73%*
</TABLE>

<TABLE>
<S> <C>
SMALL CAP FUND 0.53%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Small Cap Fund $75 $233 $406 $906
</TABLE>

<PAGE>
12 PROSPECTUS

INTERNATIONAL EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Medium to High
------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple specialist sub-advisers, the
Fund invests in equity securities of foreign
companies
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The International Equity Fund invests primarily in common stocks and other
equity securities of foreign companies. The Fund primarily invests in companies
located in developed countries, but may also invest in companies located in
emerging markets. The Fund uses a multi-manager approach, relying upon a number
of Sub-Advisers with differing investment philosophies to manage portions of the
Fund's portfolio under the general supervision of SIMC. The Fund is diversified
as to issuers, market capitalization, industry, and country.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. In the case of foreign stocks, these fluctuations will
reflect international economic and political events, as well as changes in
currency valuations relative to the U.S. dollar. These factors contribute to
price volatility, which is the principal risk of investing in the Fund.

Investing in issuers located in foreign countries poses additional risks since
political and economic events unique to a country or region will affect those
markets and their issuers. These events will not necessarily affect the U.S.
economy or similar issuers located in the United States. In addition,
investments in foreign countries are generally denominated in a foreign
currency. As a result, changes in the value of those currencies compared to the
U.S. dollar may affect (positively or negatively) the value of a Fund's
investments. These currency movements may happen separately from and in response
to events that do not otherwise affect the value of the security in the issuer's
home country. These various risks will be even greater for investments in
emerging market countries since political turmoil and rapid changes in economic
conditions are more likely to occur in these countries.

The Fund is also subject to the risk that international equity securities of
developed countries may underperform other segments of the equity market or the
equity markets as a whole.
<PAGE>
PROSPECTUS 13

INTERNATIONAL EQUITY FUND

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
20.81% -15.10%
(12/31/99) (9/30/98)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO JUNE 30, 2000, WAS -4.70%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999 to those of the Morgan Stanley MSCI EAFE Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (6/14/96)
<S> <C> <C>
---------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND 39.89% 16.25%
---------------------------------------------------------------------------
MORGAN STANLEY MSCI EAFE INDEX* 26.96% 13.65%**
---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. UNLIKE A MUTUAL FUND, AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER
AND DOES NOT PAY ANY COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS
PERFORMANCE WOULD BE LOWER. THE MORGAN STANLEY MSCI EAFE INDEX IS A
WIDELY-RECOGNIZED, CAPITALIZATION-WEIGHTED (COMPANIES WITH LARGER MARKET
CAPITALIZATIONS HAVE MORE INFLUENCE THAN THOSE WITH SMALLER CAPITALIZATIONS)
INDEX OF OVER 900 SECURITIES LISTED ON THE STOCK EXCHANGES IN EUROPE, AUSTRALIA
AND THE FAR EAST.
** THE INCEPTION DATE FOR THE INDEX IS JUNE 30, 1996.

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

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
Investment Advisory Fees 0.51%
Distribution (12b-1) Fees None
Other Expenses 0.13%
-------
Total Annual Fund Operating Expenses 0.64%*
</TABLE>

<TABLE>
<S> <C>
INTERNATIONAL EQUITY FUND 0.48%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
International Equity Fund $ 65 $205 $357 $798
</TABLE>

<PAGE>
14 PROSPECTUS

EMERGING MARKETS EQUITY FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation
------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY Very High
------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing multiple specialist sub-advisers, the
Fund invests in equity securities of emerging
markets companies
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The Emerging Markets Equity Fund invests primarily in common stocks and other
equity securities of foreign companies located in emerging market countries. The
Fund uses a multi-manager approach, relying upon a number of Sub-Advisers with
differing investment philosophies to manage portions of the Fund's portfolio
under the general supervision of SIMC. The Fund is diversified as to issuers,
market capitalization, industry and country.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

Since it purchases equity securities, the Fund is subject to the risk that stock
prices will fall over short or extended periods of time. Historically, the
equity markets have moved in cycles, and the value of the Fund's securities may
fluctuate drastically from day to day. Individual companies may report poor
results or be negatively affected by industry and/or economic trends and
developments. The prices of securities issued by such companies may suffer a
decline in response. In the case of foreign stocks, these fluctuations will
reflect international economic and political events, as well as changes in
currency valuations relative to the U.S. dollar. These factors contribute to
price volatility, which is one principal risk of investing in the Fund.

Emerging market countries are countries that the World Bank or the United
Nations considers to be emerging or developing. Emerging markets may be more
likely to experience political turmoil or rapid changes in market or economic
conditions than more developed countries. In addition, the financial stability
of issuers (including governments) in emerging market countries may be more
precarious than in other countries. As a result, there will tend to be an
increased risk of price volatility associated with the Fund's investments in
emerging market countries, which may be magnified by currency fluctuations
relative to the U.S. dollar.

The Fund is also subject to the risk that emerging market equity securities may
underperform other segments of the equity market or the equity markets as a
whole.
<PAGE>
PROSPECTUS 15

EMERGING MARKETS EQUITY FUND

PERFORMANCE INFORMATION

As of September 30, 2000, the Emerging Markets Equity Fund had not commenced
operations, and did not have a performance history.
--------------------------------------------------------------------------------
FUND FEES AND EXPENSES

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
Investment Advisory Fees 1.05%
Distribution (12b-1) Fees None
Other Expenses 0.51%*
-------
Total Annual Fund Operating Expenses 1.56%**
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.

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

<TABLE>
<S> <C>
EMERGING MARKETS EQUITY FUND 1.40%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
Emerging Markets Equity Fund $159 $493
</TABLE>

<PAGE>
16 PROSPECTUS

CORE FIXED INCOME FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

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

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

The prices of the Fund's fixed income securities respond to economic
developments, particularly interest rate changes, as well as to perceptions
about the creditworthiness of individual issuers, including governments.
Generally, the Fund's fixed income securities will decrease in value if interest
rates rise and vice versa, and the volatility of lower rated securities is even
greater than that of higher rated securities. Also, longer-term securities are
generally more volatile, so the average maturity or duration of these securities
affects risk.

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

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

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

The Fund is also subject to the risk that U.S. fixed income securities may
underperform other segments of the fixed income market or the fixed income
markets as a whole.
<PAGE>
PROSPECTUS 17

CORE FIXED INCOME FUND

PERFORMANCE INFORMATION

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

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
4.05% -1.17%
(9/30/98) (6/30/99)
</TABLE>

* THE PERFORMANCE INFORMATION SHOWN ABOVE IS BASED ON A CALENDAR YEAR. THE
FUND'S TOTAL RETURN FROM JANUARY 1, 2000, TO JUNE 30, 2000, WAS 4.47%.

This table compares the Fund's average annual total returns for the periods
ended December 31, 1999, to those of the Lehman Brothers Aggregate Bond Index.

<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (6/14/96)
<S> <C> <C>
---------------------------------------------------------------------------
CORE FIXED INCOME FUND -1.35% 6.62%
---------------------------------------------------------------------------
LEHMAN BROTHERS AGGREGATE BOND INDEX* -0.83% 6.34%**
---------------------------------------------------------------------------
</TABLE>

* AN INDEX MEASURES THE MARKET PRICES OF A SPECIFIC GROUP OF SECURITIES IN A
PARTICULAR MARKET OR SECURITIES IN A MARKET SECTOR. YOU CANNOT INVEST DIRECTLY
IN AN INDEX. UNLIKE A MUTUAL FUND, AN INDEX DOES NOT HAVE AN INVESTMENT ADVISER
AND DOES NOT PAY ANY COMMISSIONS OR EXPENSES. IF AN INDEX HAD EXPENSES, ITS
PERFORMANCE WOULD BE LOWER. THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS A
WIDELY-RECOGNIZED, MARKET-WEIGHTED (HIGHER MARKET VALUE BONDS HAVE MORE
INFLUENCE THAN LOWER MARKET VALUE BONDS) INDEX OF U.S. GOVERNMENT OBLIGATIONS,
CORPORATE DEBT SECURITIES AND AAA RATED MORTGAGE-BACKED SECURITIES. ALL
SECURITIES IN THE INDEX ARE RATED INVESTMENT GRADE (BBB) OR HIGHER, WITH
MATURITIES OF AT LEAST 1 YEAR.
** THE INCEPTION DATE FOR THE INDEX IS JUNE 30, 1996.

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

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
Investment Advisory Fees 0.30%
Distribution (12b-1) Fees None
Other Expenses 0.10%
------
Total Annual Fund Operating Expenses 0.40%*
</TABLE>

<TABLE>
<S> <C>
CORE FIXED INCOME FUND 0.18%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Core Fixed Income Fund $41 $128 $224 $505
</TABLE>

<PAGE>
18 PROSPECTUS

HIGH YIELD BOND FUND

FUND SUMMARY

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

INVESTMENT STRATEGY

The High Yield Bond Fund invests primarily in fixed income securities rated
below investment grade ("junk bonds"), including corporate bonds and debentures,
convertible and preferred securities, and zero coupon obligations. In managing
the Fund's assets, the Sub-Adviser selects securities that offer a high current
yield as well as total return potential. The Fund's securities are diversified
as to issuers and industries. The Fund's average weighted maturity may vary, and
will generally not exceed ten years. There is no limit on the maturity or on the
credit quality of any security.

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

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

The Fund is also subject to the risk that high yield securities may underperform
other segments of the fixed income market or the fixed income markets as a
whole.
<PAGE>
PROSPECTUS 19

HIGH YIELD BOND FUND

PERFORMANCE INFORMATION

As of September 30, 2000, the High Yield Bond Fund had not commenced operations,
and did not have a performance history.
--------------------------------------------------------------------------------
FUND FEES AND EXPENSES

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
Investment Advisory Fees 0.49%
Distribution (12b-1) Fees None
Other Expenses 0.14%*
-------
Total Annual Fund Operating Expenses 0.63%**
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.

<TABLE>
<S> <C>
HIGH YIELD BOND FUND 0.47%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
High Yield Bond Fund $64 $202
</TABLE>

<PAGE>
20 PROSPECTUS

INTERNATIONAL FIXED INCOME FUND

FUND SUMMARY

<TABLE>
<S> <C>
INVESTMENT GOAL Capital appreciation and current income
------------------------------------------------------------------------------------------------------
SHARE PRICE VOLATILITY High
------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGY Utilizing a specialist sub-adviser, the Fund
invests in investment grade fixed income
securities of foreign government and corporate
issuers
------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT STRATEGY

The International Fixed Income Fund invests primarily in foreign government,
corporate, and mortgage-backed securities. In selecting investments for the
Fund, the Sub-Adviser chooses investment grade securities issued by corporations
and governments located in various developed foreign countries, looking for
opportunities for capital appreciation and gain, as well as current income. The
Fund's portfolio is not hedged against currency fluctuations relative to the
U.S. dollar. There are no restrictions on the Fund's average portfolio maturity
or on the maturity of any specific security.

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

WHAT ARE THE RISKS OF INVESTING IN THE FUND?

Investing in issuers located in foreign countries poses distinct risks since
political and economic events unique to a country or region will affect those
markets and their issuers. These events will not necessarily affect the U.S.
economy or similar issuers located in the United States. In addition,
investments in foreign countries are generally denominated in a foreign
currency. As a result, changes in the value of those currencies compared to the
U.S. dollar may affect (positively or negatively) the value of a Fund's
investments. These currency movements may happen separately from and in response
to events that do not otherwise affect the value of the security in the issuer's
home country. These various risks will be even greater for investments in
emerging market countries since political turmoil and rapid changes in economic
conditions are more likely to occur in these countries.

The Fund also is subject to the risk that fixed income securities may
underperform other segments of the fixed income market or the fixed income
markets as a whole.

The Fund is non-diversified, which means that it may invest in the securities of
relatively few issuers. As a result, the Fund may be more susceptible to a
single adverse economic or political occurrence affecting one or more of these
issuers, and may experience increased volatility due to its investments in those
securities.
<PAGE>
PROSPECTUS 21

INTERNATIONAL FIXED INCOME FUND

PERFORMANCE INFORMATION

As of September 30, 2000, the International Fixed Income Fund had not commenced
operations, and did not have a performance history.
--------------------------------------------------------------------------------
FUND FEES AND EXPENSES

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

ANNUAL FUND OPERATING EXPENSES
(EXPENSES DEDUCTED FROM FUND ASSETS)

<TABLE>
<S> <C>
Investment Advisory Fees 0.45%
Distribution (12b-1) Fees None
Other Expenses 0.32%*
-------
Total Annual Fund Operating Expenses 0.77%**
</TABLE>

* OTHER EXPENSES ARE BASED ON ESTIMATED AMOUNTS FOR THE CURRENT FISCAL YEAR.

<TABLE>
<S> <C>
INTERNATIONAL FIXED INCOME FUND 0.61%
</TABLE>

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

EXAMPLE

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
<S> <C> <C>
International Fixed Income Fund $79 $246
</TABLE>

<PAGE>
22 PROSPECTUS

MORE INFORMATION ABOUT FUND INVESTMENTS

This prospectus describes the Funds' primary strategies, and the Funds will
normally invest at least 65% of their assets in the types of securities
described in this prospectus. However, each Fund also may invest in other
securities, use other strategies and engage in other investment practices. These
investments and strategies, as well as those described in this prospectus, are
described in detail in the Funds' Statement of Additional Information (SAI).

The investments and strategies described throughout this prospectus are those
that the Sub-Advisers use under normal conditions. During unusual economic or
market conditions, or for temporary defensive or liquidity purposes, each Fund
may invest up to 100% of its assets in cash, money market instruments,
repurchase agreements and short-term obligations that would not ordinarily be
consistent with a Fund's objectives. A Fund will do so only if the Adviser or
Sub-Adviser believes that the risk of loss outweighs the opportunity for capital
gains and higher income. Of course, there is no guarantee that any Fund will
achieve its investment goal.

INVESTMENT ADVISER AND SUB-ADVISERS

SEI INVESTMENTS MANAGEMENT CORPORATION (SIMC) ACTS AS THE MANAGER OF MANAGERS OF
THE FUNDS, AND IS RESPONSIBLE FOR THE INVESTMENT PERFORMANCE OF THE FUNDS SINCE
IT ALLOCATES EACH FUND'S ASSETS TO ONE OR MORE SUB-ADVISERS AND RECOMMENDS
HIRING OR CHANGING SUB-ADVISERS TO THE BOARD OF TRUSTEES.

Each Sub-Adviser makes investment decisions for the assets it manages and
continuously reviews, supervises and administers its investment program. SIMC
oversees the Sub-Advisers to ensure compliance with the Funds' investment
policies and guidelines, and monitors each Sub-Adviser's adherence to its
investment style. The Board of Trustees supervises SIMC and the Sub-Advisers;
establishes policies that they must follow in their management activities; and
oversees the hiring and termination of Sub-Advisers recommended by SIMC. SIMC
pays the Sub-Advisers out of the investment advisory fees it receives (described
below).

SIMC, an SEC-registered adviser, serves as the Adviser to the Funds. As of
July 31, 2000, SIMC had approximately $32.6 billion in assets under management.
For the fiscal year ended May 31, 2000, SIMC received investment advisory fees
as follows:

<TABLE>
<S> <C>
Large Cap Fund 0.40%
Large Cap Value Fund 0.35%*
Large Cap Growth Fund 0.40%**
Small Cap Fund 0.65%
International Equity Fund 0.35%
Emerging Markets Equity Fund 1.05%***
Core Fixed Income Fund 0.30%
High Yield Bond Fund 0.49%***
International Fixed Income Fund 0.45%***
</TABLE>

* Commenced operations on January 31, 2000.
** Commenced operations on February 28, 2000.
*** Not in operation as of May 31, 2000.
<PAGE>
PROSPECTUS 23

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

SUB-ADVISERS AND PORTFOLIO MANAGERS

LARGE CAP FUND:

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

IRIDIAN ASSET MANAGEMENT LLC: David L. Cohen, Principal, of Iridian Asset
Management LLC ("Iridian") serves as portfolio manager for a portion of the
assets of the Large Cap Fund. Mr. Cohen joined Iridian in 1995, and has 15 years
of investment experience. Since 1995, Mr. Cohen has also been a Portfolio
Manager at Arnhold and S. Bleichroeder Advisers, Inc.

LSV ASSET MANAGEMENT: Josef Lakonishok, Robert Vishny and Menno Vermeulen of LSV
Asset Management ("LSV"), serve as portfolio managers of a portion of the assets
of the Large Cap Fund. They are officers and partners of LSV. An affiliate of
SIMC owns an interest in LSV. SIMC pays LSV a fee, which is calculated and paid
monthly, based on an annual rate of 0.20% of the average monthly market value of
the assets of the Fund managed by LSV.

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

PROVIDENT INVESTMENT COUNSEL, INC.: George E. Handtmann III, CFA, CIC, of
Provident Investment Counsel, Inc., ("Provident"), serves as the lead portfolio
manager of a portion of the assets of the Large Cap Fund. As lead portfolio
manager, Mr. Handtmann is responsible for the day to day management of the Fund.
He leads and is assisted in this effort by a team of portfolio managers. Mr.
Handtmann has been employed by Provident since 1982, and is currently an
Executive Managing Director, and an officer of the firm.

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

TCW INVESTMENT MANAGEMENT COMPANY: Glen E. Bickerstaff of TCW Investment
Management Company ("TCW") serves as portfolio manager of a portion of the
assets of the Large Cap Fund. Mr. Bickerstaff is a Managing Director of TCW, and
has over 18 years of investment experience dedicated to investing in large cap
growth securities. Mr. Bickerstaff joined TCW in May, 1998 after 10 years at
Transamerica Investment Services, where he served as Vice President and Senior
Portfolio Manager.

LARGE CAP VALUE FUND:

IRIDIAN ASSET MANAGEMENT LLC: David L. Cohen, Principal, of Iridian Asset
Management LLC ("Iridian") serves as portfolio manager for a portion of the
assets of the Large Cap Value Fund. Mr. Cohen joined Iridian in 1995, and has 15
years of investment experience. Since 1995, Mr. Cohen has also been a Portfolio
Manager at Arnhold and S. Bleichroeder Advisers, Inc.

LSV ASSET MANAGEMENT: Josef Lakonishok, Robert Vishny and Menno Vermeulen of LSV
Asset Management ("LSV"), serve as portfolio managers of a portion of the assets
of the Large Cap Value Fund. They are officers and partners of LSV. An affiliate
of SIMC owns an interest in LSV. SIMC pays LSV a fee, which is calculated and
paid monthly, based on an annual rate of 0.20% of the average monthly market
value of the assets of the Fund managed by LSV.
<PAGE>
24 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS

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

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

LARGE CAP GROWTH FUND:

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

PROVIDENT INVESTMENT COUNSEL, INC.: George E. Handtmann III, CFA, CIC, of
Provident Investment Counsel, Inc., ("Provident"), serves as the lead portfolio
manager of a portion of the assets of the Large Cap Growth Fund. As lead
portfolio manager, Mr. Handtmann is responsible for the day to day management of
the Fund. He leads and is assisted in this effort by a team of portfolio
managers. Mr. Handtmann has been employed by Provident since 1982, and is
currently an Executive Managing Director, and an officer of the firm.

TCW INVESTMENT MANAGEMENT COMPANY: Glen E. Bickerstaff of TCW Investment
Management Company ("TCW") serves as portfolio manager of a portion of the
assets of the Large Cap Growth Fund. Mr. Bickerstaff is a Managing Director of
TCW, and has over 18 years of investment experience dedicated to investing in
large cap growth securities. Mr. Bickerstaff joined TCW in May, 1998 after 10
years at Transamerica Investment Services, where he served as Vice President and
Senior Portfolio Manager.

SMALL CAP FUND:

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

BOSTON PARTNERS ASSET MANAGEMENT, L.P.: Wayne J. Archambo, C.F.A., of Boston
Partners Asset Management, L.P. ("BPAM"), serves as portfolio manager of a
portion of the assets of the Small Cap Fund. He has been employed by BPAM since
its organization, and has 17 years experience investing in equities. Prior to
joining BPAM, Mr. Archambo was employed at The Boston Company Asset Management,
Inc. ("TBCAM"), from 1989 through April 1995. He created TBCAM's small cap value
product in 1992.

CHARTWELL INVESTMENT PARTNERS: David C. Dalrymple, Managing Partner and Senior
Portfolio Manager, and Babak Zenouzi, Partner and Senior Portfolio Manager, of
Chartwell Investment Partners ("Chartwell"), serve as portfolio managers for a
portion of the assets of the Small Cap Fund. Mr. Dalyrymple has been with
Chartwell since 1997. Prior to joining Chartwell, Mr. Dalyrymple was a Portfolio
Manager with Delaware Investment Advisers from 1991-1997. Mr. Zenouzi joined the
firm in November 1999 after seven years with Delaware Investment Advisers, where
he served as a Portfolio Manager. Mr. Dalyrymple and Mr. Zenouzi both have 14
years of investment experience.

LSV ASSET MANAGEMENT: Josef Lakonishok, Robert Vishny and Menno Vermeulen of LSV
Asset Management ("LSV"), serve as portfolio managers of a portion of the assets
of the Small Cap Fund. They are officers and partners of LSV. An affiliate of
<PAGE>
PROSPECTUS 25

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS
SIMC owns an interest in LSV. SIMC pays LSV a fee, which is calculated and paid
monthly, based on an annual rate of 0.50% of the average monthly market value of
the assets of the Fund managed by LSV.

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

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

MCKINLEY CAPITAL MANAGEMENT, INC.: Robert B. Gillam, Frederic H. Parke and
Sheldon Lien of McKinley Capital Management, Inc. ("McKinley Capital") serve as
portfolio managers to a portion of the assets of the Small Cap Fund. Mr. Gillam
has been the Chief Investment Officer at McKinley Capital since the firm's
inception in 1990, and has over 20 years of investment experience. Mr. Parke
joined McKinley Capital in 1997. Prior to joining McKinley Capital, Mr. Parke
was a Trader and Portfolio Manager at TransGlobal Investments from 1995 to 1997.
Mr. Parke has 19 years of investment experience. Mr. Lien has been with McKinley
Capital since 1995.

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

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

SAWGRASS ASSET MANAGEMENT, LLC: Dean McQuiddy, C.P.A., of Sawgrass Asset
Management, LLC ("Sawgrass"), serves as portfolio manager of a portion of the
assets of the Small Cap Fund. Mr. McQuiddy, a founding Principal of Sawgrass,
has 14 years of investment experience. Prior to joining Sawgrass, he created the
Barnett Small Cap Growth Product.

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

WALL STREET ASSOCIATES: William Jeffery III and Kenneth F. McCain of Wall Street
Associates ("WSA") serve as portfolio managers of a portion of the assets of the
Small Cap Fund. Each is a controlling principal of WSA. They each have over 27
years of investment management experience. David Baratta, who joined WSA in
1999, also serves as a portfolio manager of a
<PAGE>
26 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS
portion of the assets of the Small Cap Fund. Prior to joining WSA, Mr. Baratta
was a portfolio manager of Morgan Grenfell, Inc. for 5 years. He has over 18
years of investment experience.

INTERNATIONAL EQUITY FUND:

ACADIAN ASSET MANAGEMENT, INC: A committee of investment professionals at
Acadian Asset Management, Inc. manages a portion of the assets of the
International Equity Fund.

BLACKROCK INTERNATIONAL, LTD.: Albert B. Morillo, Managing Director and Senior
Portfolio Manager, heads an investment committee at BlackRock International,
Ltd. ("BlackRock International") that serves as portfolio manager of the portion
of the International Equity Fund's assets managed by BlackRock International.
Prior to joining BlackRock International in January 2000, Mr. Morillo was the
head of the European Team at Scottish Widows Investment Management.

CAPITAL GUARDIAN TRUST COMPANY: A committee of investment professionals at
Capital Guardian Trust Company manages a portion of the assets of the
International Equity Fund.

JARDINE FLEMING INTERNATIONAL MANAGEMENT, INC.: Piers Litherland of Jardine
Fleming International Management Inc. ("JFIMI") serves as portfolio manager for
a portion of the assets of the International Equity Fund. Mr. Litherland has
been with JFIMI for 13 years, and has over 22 years of investment experience.

MARTIN CURRIE INC.: Michael Thomas and Keith Donaldson of Martin Currie Inc.
("Martin Currie") serve as portfolio managers of a portion of the assets of the
International Equity Fund. Mr. Thomas joined Martin Currie in 1989, and has 26
years of investment experience. Prior to joining Martin Currie in 1997, Mr.
Donaldson was the vice president and head of Japanese equity sales at Morgan
Stanley from 1996 to 1997, and head of research at Salomon Brothers in Tokyo
from 1990 to 1996. Mr. Donaldson has 20 years of investment experience.

OECHSLE INTERNATIONAL ADVISORS, LLC: S. Dewey Keesler, Jr., of Oechsle
International Advisors, LLC ("Oechsle"), serves as portfolio manager of a
portion of the assets of the International Equity Fund. Prior to joining Oechsle
in 1995, Mr. Keesler was a Portfolio Manager and Investment Director for the
State of Wisconsin Investment Board and has over 17 years of investment
experience.

EMERGING MARKETS EQUITY FUND:

THE BOSTON COMPANY ASSET MANAGEMENT: D. Kirk Henry, CFA and Senior Vice
President, of the Boston Company Asset Management ("The Boston Company") serves
as portfolio manager of a portion of the assets of the Emerging Markets Equity
Fund. Since joining The Boston Company in 1994, Mr. Henry has had primary
responsibility for the firm's Emerging Markets Equity product and International
Equity strategies.

MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.: Robert L. Meyer, Michael
Perl and Andy Skov of Morgan Stanley Dean Witter Investment Management Inc.
("MSDW") serve as portfolio managers of a portion of the assets of the Emerging
Markets Equity Fund. Mr. Meyer is a Managing Director and joined MSDW in 1989
after working for the law firm of Irell & Manella. Mr. Perl is a Principal and
joined MSDW in 1998 after 6 years at Bankers Trust Australia, where he served as
a Portfolio Manager. Mr. Skov is a Managing Director and joined MSDW in 1999
after 4 years as an Associate at Bankers Trust Company.

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT: Arthur E. Nicholas of Nicholas-Applegate
Capital Management ("Nicholas-Applegate") serves as portfolio manager of a
portion of the assets of the Emerging Markets Equity Fund. Mr. Nicholas is the
founder and Chief Investment Officer of the firm, and oversees the Firm's
investment teams. The Emerging Markets team also consists of Larry Speidell,
Pedro Marcal, Ernesto Ramos, and Jessica Goncalves. Mr. Speidell is a partner of
Nicholas-Applegate and has been employed by Nicholas Applegate since 1994. Mr.
Marcal is a partner of Nicholas-Applegate and has
<PAGE>
PROSPECTUS 27

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS
been employed by Nicholas-Applegate since 1994. Mr. Ramos has been employed by
Nicholas-Applegate since 1994. Ms. Goncalves has been employed by
Nicholas-Applegate since 1995.

SCHRODER INVESTMENT MANAGEMENT NORTH AMERICA INC.: A team of investment
professionals at Schroder Investment Management North America Inc. ("Schroders")
manages a portion of the assets of the Emerging Markets Equity Fund. Giles
Neville is the product manager for the Emerging Markets Committee at Schroders.
Mr. Neville has over 12 years of investment experience.

CORE FIXED INCOME FUND:

BLACKROCK FINANCIAL MANAGEMENT, INC.: Keith Anderson and Andrew Phillips of
BlackRock Financial Management, Inc. ("BlackRock"), serve as portfolio managers
of a portion of the assets of the Core Fixed Income Fund. Mr. Anderson is a
Managing Director, Chief Investment Officer, Fixed Income and Co-Chair of
Investment Strategy Group at BlackRock, and has 17 years' experience investing
in fixed income securities. Mr. Phillips is also a Managing Director and
portfolio manager with primary responsibility for the management of the firm's
investment activities in fixed-rate mortgage securities with over 14 years of
experience investing in fixed income securities.

ROBERT W. BAIRD & CO., INCORPORATED: Charles B. Groeschell of Robert W. Baird &
Co., Incorporated ("Baird") serves as portfolio manager of the portion of the
Core Fixed Income Fund's assets managed by Baird. Prior to joining Baird in
February 2000, Mr. Groeschell was a Senior Vice President and portfolio manager
at Firstar Investment Management & Research Company, LLC. Mr. Groeschell has
over 17 years of investment experience.

WESTERN ASSET MANAGEMENT COMPANY: A committee of investment professionals at
Western Asset Management Company manages a portion of the assets of the Core
Fixed Income Fund.

HIGH YIELD BOND FUND:

CREDIT SUISSE ASSET MANAGEMENT LLC/AMERICAS: Richard J. Lindquist, C.F.A., of
Credit Suisse Asset Management LLC ("CSAM") serves as portfolio manager of the
High Yield Bond Fund. Mr. Lindquist joined CSAM in 1995 as a result of CSAM's
acquisition of CS First Boston Investment Management, and has had 15 years of
investment management experience, all of which were with high yield bonds. Prior
to joining CS First Boston, Mr. Lindquist was with Prudential Insurance Company
of America where he managed high yield funds totaling approximately $1.3
billion.

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.: Robert Levine, CFA,
President and Chief Executive Officer of Nomura Corporate Research and Asset
Management Inc. ("Nomura") and Richard A. Buch, Managing Director and Senior
Portfolio Manager of Nomura, are responsible for the management of Nomura's high
yield bond portfolios and research analysis. Prior to joining Nomura, Mr. Levine
was President of Kidder, Peabody High Yield Asset Management, Inc. and Managing
Director of Kidder, Peabody & Co., where he created their first high yield bond
mutual fund. Prior to joining Nomura, Mr. Buch was with Kidder, Peabody & Co.
where he served as Senior Vice President of the Kidder, Peabody Asset
Management, Inc. Mr. Levine and Mr. Buch each have over 20 years of investment
experience.

INTERNATIONAL FIXED INCOME FUND:

STRATEGIC FIXED INCOME, LLC: Kenneth Windheim, Gregory Barnett and David Jallits
of Strategic Fixed Income, LLC ("Strategic"), serve as portfolio managers of the
International Fixed Income Fund. Mr. Windheim is the President and Chief
Investment Officer of Strategic. Prior to joining Strategic, Mr. 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, Mr. 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, Mr. Jallits was
Senior
<PAGE>
28 PROSPECTUS

INVESTMENT ADVISER, SUB-ADVISERS AND PORTFOLIO MANAGERS
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.
<PAGE>
PROSPECTUS 29

PURCHASING AND SELLING FUND SHARES

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

The Funds offer shares only to Eligible Investors that have signed an Investment
Management Agreement with SIMC. Under each Agreement, SIMC will consult with the
Eligible Investor to define its investment objectives, desired returns and
tolerance for risk, and to develop a plan for the allocation of its assets. Each
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.

For information on how to open an account and set up procedures for placing
transactions, call 1-800-DIAL-SEI.

HOW TO PURCHASE FUND SHARES

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

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

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

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

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

Each Fund calculates its NAV once each Business Day at the regularly-scheduled
close of normal trading on the NYSE (normally, 4:00 p.m. Eastern time). So, for
you to receive the current Business Day's NAV, generally the Funds (or an
authorized agent) must receive your purchase order before 4:00 p.m. Eastern
time.

HOW THE FUNDS CALCULATE NAV

NAV for one Fund share is the value of that share's portion of all of the net
assets of the Fund. In calculating NAV, a Fund generally values its investment
fund at market price. If market prices are unavailable or the Funds think that
they are unreliable, fair value prices may be determined in good faith using
methods approved by the Board of Trustees. Some Funds hold securities that are
listed on foreign exchanges. These securities may trade on weekends or other
days when the Funds do not calculate NAV. As a result, the market value of these
Funds' investments may change on days when you cannot purchase or sell Fund
shares.
<PAGE>
30 PROSPECTUS

PURCHASING AND SELLING FUND SHARES

MINIMUM PURCHASES

To purchase shares for the first time, Eligible Investors must invest at least
$100,000 in any Fund. A Fund may accept investments of smaller amounts at its
discretion.

HOW TO SELL YOUR FUND SHARES

If you hold Fund Shares, you may sell your shares on any Business Day by
following the procedures established when you opened your account or accounts.
If you have questions, call 1-800-DIAL-SEI. If you own your shares through an
account with a broker or other institution, contact that broker or institution
to sell your shares. Your financial institution or intermediary may charge a fee
for its services. The sale price of each share will be the next NAV determined
after the Funds (or their authorized intermediary) receive your request.

RECEIVING YOUR MONEY

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

REDEMPTIONS IN KIND

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

SUSPENSION OF YOUR RIGHT TO SELL YOUR SHARES

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

TELEPHONE TRANSACTIONS

Purchasing and selling Fund shares over the telephone is extremely convenient,
but not without risk. Although the Funds have certain safeguards and procedures
to confirm the identity of callers and the authenticity of instructions, the
Funds are not responsible for any losses or costs incurred by following
telephone instructions the Funds reasonably believe to be genuine. If you or
your financial institution transact with the Funds over the telephone, you will
generally bear the risk of any loss.
<PAGE>
PROSPECTUS 31

DIVIDENDS AND DISTRIBUTIONS

DISTRIBUTION OF FUND SHARES

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

DIVIDENDS AND DISTRIBUTIONS

The Funds distribute their investment income periodically as a dividend to
shareholders. It is the policy of the International Fixed Income, Emerging
Markets Equity, and International Equity Funds to pay dividends periodically (at
least once annually), the Core Fixed Income and High Yield Bond Funds to pay
dividends monthly, and the Small Cap, Large Cap, Large Cap Value, and Large Cap
Growth Funds to pay dividends quarterly. The Funds make distributions of capital
gains, if any, at least annually.

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

TAXES

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

At least annually, each Fund will distribute substantially all of its net
investment income and net realized capital gains, if any. The dividends and
distributions you receive may be subject to federal, state and local taxation,
depending upon your tax situation. If so, they are taxable whether or not you
reinvest them. Income distributions are generally taxable at ordinary income tax
rates. Capital gains distributions are generally taxable at the rates applicable
to long-term capital gains. EACH SALE OF FUND SHARES IS A TAXABLE EVENT.

The International Equity, Emerging Markets Equity, and International Fixed
Income Funds may be able to pass along a tax credit for foreign income taxes
they pay. The Funds will notify you if they give you this credit.

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

FINANCIAL HIGHLIGHTS

The tables that follow present performance information about the shares of the
Large Cap, Large Cap Value, Large Cap Growth, Small Cap, International Equity,
and Core Fixed Income Funds. This information is intended to help you understand
each Fund's financial performance for the past five years, or, if shorter, the
period of the Fund's operations. Some of this information reflects financial
information for a single Fund share. The total returns in the tables represent
the rate that you would have earned (or lost) on an investment in a Fund,
assuming you reinvested all of your dividends and distributions.

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

FOR THE PERIODS ENDED MAY 31
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED DISTRIBUTIONS NET
NET ASSET GAINS/ DISTRIBUTIONS FROM ASSET
VALUE NET (LOSSES) FROM NET REALIZED VALUE
BEGINNING INVESTMENT ON INVESTMENT CAPITAL END OF
OF PERIOD INCOME SECURITIES INCOME GAINS PERIOD
---------- ---------- ---------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
LARGE CAP FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ $18.82 $0.20 $ 1.48 $(0.19) $(0.83) $19.48
1999................................ 16.35 0.20 2.88 (0.20) (0.41) 18.82
1998................................ 12.66 0.18 3.98 (0.18) (0.29) 16.35
1997(1)............................. 10.00 0.17 2.63 (0.14) -- 12.66
--------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE FUND
--------------------------------------------------------------------------------------------------------------------
2000(2)............................. $10.00 $0.06 $ 0.34 $(0.02) $ -- $10.38
--------------------------------------------------------------------------------------------------------------------
SMALL CAP FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ $11.35 $0.09 $ 2.30 $(0.08) $ -- $13.66
1999................................ 13.12 0.03 (0.89) (0.04) (0.87) 11.35
1998................................ 10.86 0.07 2.78 (0.07) (0.52) 13.12
1997(1)............................. 10.00 0.06 0.85 (0.05) -- 10.86
--------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ $11.58 $0.24 $ 2.40 $(0.14) $(0.47) $13.61
1999................................ 11.35 0.10 0.65 (0.17) (0.35) 11.58
1998................................ 10.69 0.19 0.86 (0.16) (0.23) 11.35
1997(1)............................. 10.00 0.14 0.61 (0.05) (0.01) 10.69
--------------------------------------------------------------------------------------------------------------------
CORE FIXED INCOME FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ $10.22 $0.61 $(0.40) $(0.61) $ -- $ 9.82
1999................................ 10.57 0.62 (0.18) (0.63) (0.16) 10.22
1998................................ 10.13 0.64 0.50 (0.64) (0.06) 10.57
1997(1)............................. 10.00 0.64 0.17 (0.64) (0.04) 10.13
--------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------------------------------------------
2000(3)............................. $10.00 $0.01 $(0.04) $(0.01) $ -- $ 9.96

RATIO OF NET
RATIO OF RATIO INVESTMENT
RATIO OF NET OF EXPENSES INCOME TO
EXPENSES INVESTMENT TO AVERAGE AVERAGE NET
NET ASSETS TO INCOME TO NET ASSETS ASSETS PORTFOLIO
TOTAL END OF AVERAGE AVERAGE (EXCLUDING (EXCLUDING TURNOVER
RETURN+ PERIOD (000) NET ASSETS NET ASSETS WAIVERS) WAIVERS) RATE
------- ------------ ---------- ---------- -------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>

LARGE CAP FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ 9.10% $3,184,226 0.26% 1.12% 0.48% 0.90% 64%
1999................................ 19.40 1,669,945 0.26 1.16 0.48 0.94 60
1998................................ 33.36 1,149,337 0.32 1.28 0.50 1.10 72
1997(1)............................. 28.22 438,818 0.34 1.65 0.53 1.46 71
--------------------------------------------------------------------------------------------------------------------
LARGE CAP VALUE FUND
--------------------------------------------------------------------------------------------------------------------
2000(2)............................. 4.00% $ 218,548 0.28% 2.47% 0.46% 2.29% 21%
--------------------------------------------------------------------------------------------------------------------
SMALL CAP FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ 21.06% $ 774,284 0.53% 0.73% 0.73% 0.53% 159%
1999................................ (5.81) 338,839 0.54 0.33 0.73 0.14 154
1998................................ 26.68 302,355 0.59 0.61 0.75 0.45 120
1997(1)............................. 9.18 123,941 0.60 0.70 0.79 0.51 163
--------------------------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ 22.82% $1,186,706 0.43% 1.08% 0.64% 0.87% 74%
1999................................ 6.93 690,389 0.43 1.40 0.66 1.17 82
1998................................ 10.40 554,421 0.53 2.21 0.70 2.04 109
1997(1)............................. 7.56 384,663 0.63 1.73 0.82 1.54 120
--------------------------------------------------------------------------------------------------------------------
CORE FIXED INCOME FUND
--------------------------------------------------------------------------------------------------------------------
2000................................ 2.07% $1,999,815 0.18% 6.20% 0.40% 5.98% 383%
1999................................ 4.15 1,046,367 0.18 5.81 0.41 5.58 393
1998................................ 11.60 763,236 0.20 6.13 0.41 5.92 324
1997(1)............................. 8.28 349,304 0.21 6.60 0.42 6.39 194
--------------------------------------------------------------------------------------------------------------------
LARGE CAP GROWTH FUND
--------------------------------------------------------------------------------------------------------------------
2000(3)............................. (0.24)% $ 232,400 0.28% 0.58% 0.76% 0.10% 13%
</TABLE>

Amounts designated as "--" are either $0 or have been rounded to $0.
+ Returns are for the period indicated and have not been annualized.
(1) Commenced operations on June 14, 1996. All ratios for the period have been
annualized.
(2) Commenced operations on January 31, 2000. All ratios for the period have
been annualized
(3) Commenced operations on February 28, 2000. All ratios for the period have
been annualized
<PAGE>

SET
INVESTMENTS
THE ART OF PEOPLE. THE SCIENCE OF RESULTS.

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

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI dated September 30, 2000, includes more detailed information
about SEI Institutional Investments Trust. The SAI is on file with the
SEC and is incorporated by reference into this prospectus. This means
that the SAI, for legal purposes, is part of this prospectus.

ANNUAL AND SEMI-ANNUAL REPORTS

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

TO OBTAIN MORE INFORMATION:

By Telephone: Call 1-800-DIAL-SEI

By Mail: Write to the Funds at:
One Freedom Vally Drive
Oaks, PA 19456

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

FROM THE SEC: You can obtain the SAI or the Annual Report and
Semi-Annual Reports, as well as other information about SEI
Institutional Investments Trust, from the EDGAR Database on the
SEC'c website ("http//www.sec.gov"). You may review and copy
documents at the SEC Public Reference Room in Washington, DC (for
information on the operation of the Public Reference Room, call
1-202-942-8090). You may request documents by mail from the SEC,
upon payment of a duplicating fee, by writing to: Securities and
Exchange Commission, Public Reference Section, Washington, DC
20549-0102. You may also obtain this information, upon payment of a
duplicating fee, by e-mailing the SEC at the following public address
[email protected].

The Trust's Investment Company Act registration number is 811-7257.

SEI-F-145(9/00)

SEI
INVESTMENTS
PROSPECTUS AS OF SEPTEMBER 30, 2000

SEI INSTITUTIONAL
INVESTMENTS TRUST

------------------------
Large Cap Fund
------------------------

------------------------
Large Cap Value Fund
------------------------

------------------------
Large Cap Growth
Fund
------------------------

------------------------
Small Cap Fund
------------------------

------------------------
International Equity
Fund
------------------------

------------------------
Emerging Markets
Equity Fund
------------------------

------------------------
Core Fixed Income
Fund
------------------------

------------------------
High Yield Bond Fund
------------------------

------------------------
International Fixed
Income Fund

The Securities and Exchange
Commision has not approved or
disapproved these securities or
passed upon the adequacy of this
prospectus. Any representation to
the contrary is a criminal offense.

<PAGE>
SEI INSTITUTIONAL INVESTMENTS TRUST

Adviser:

SEI Investments Management Corporation

Administrator:

SEI Investments Fund Management

Distributor:

SEI Investments Distribution Co.

Sub-Advisers:

Acadian Asset Management, Inc.
Alliance Capital Management L.P.
Artisan Partners Limited Partnership
BlackRock Financial Management, Inc.
BlackRock International, Ltd.
The Boston Company Asset Management
Boston Partners Asset Management, L.P.
Capital Guardian Trust Company
Chartwell Investment Partners
Credit Suisse Asset Management, LLC/Americas
Iridian Asset Management LLC
Jardine Fleming International Management, Inc.
LSV Asset Management, L.P.
Martin Currie Inc.
Mazama Capital Management, Inc.
McKinley Management Capital, Inc.
Mellon Equity Associates, LLP
Morgan Stanley Dean Witter Investment
Management Inc.
Nicholas-Applegate Capital Management
Nomura Corporate Research and
Asset Management Inc.
Oechsle International Advisers, LLC
Provident Investment Counsel, Inc.
Robert W. Baird & Co., Incorporated
RS Investment Management, L.P.
Sanford C. Bernstein & Co., Inc.
Sawgrass Asset Management, LLC
Security Capital Global Capital Management
Group Incorporated
Schroder Investment Management
North America Inc.
Strategic Fixed Income, LLC
TCW Investment Management Company
Wall Street Associates
Western Asset Management Company

This STATEMENT OF ADDITIONAL INFORMATION is not a Prospectus. It is intended
to provide additional information regarding the activities and operations of the
SEI Institutional Investments Trust (the "Trust") and should be read in
conjunction with the Trust's Prospectus dated September 30, 2000. A Prospectus
may be obtained through SEI Investments Distribution Co., Oaks, Pennsylvania
19456.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
The Trust................................................................. S-3
Investment Objectives and Policies........................................ S-3
Description of Permitted Investments and Risk Factors..................... S-7
Description of Ratings.................................................... S-23
Investment Limitations.................................................... S-25
The Administrator and Transfer Agent...................................... S-26
The Adviser and Sub-Advisers.............................................. S-28
Distribution.............................................................. S-32
Trustees and Officers of the Trust........................................ S-32
Performance............................................................... S-35
Purchase and Redemption of Shares......................................... S-36
Taxes..................................................................... S-38
Fund Transactions......................................................... S-40
Description of Shares..................................................... S-42
Limitation of Trustees' Liability......................................... S-42
Code of Ethics............................................................ S-42
Voting.................................................................... S-43
Shareholder Liability..................................................... S-43
5% Shareholders........................................................... S-43
Master/Feeder Option...................................................... S-45
Custodian................................................................. S-45
Experts................................................................... S-45
Legal Counsel............................................................. S-45
Financial Statements...................................................... S-45
</TABLE>

September 30, 2000

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.

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.

This Statement of Additional Information relates to the following funds:
Large Cap, Large Cap Value, Large Cap Growth, 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").

INVESTMENT OBJECTIVES AND POLICIES

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 advisers believe are appropriate in light of
the Fund's objective. The Fund may also purchase illiquid securities, shares of
other investment companies and real estate investment trusts ("REITs"),
when-issued and delayed-delivery securities and zero coupon obligations. The
Fund may also borrow money and lend its securities to qualified borrowers.

LARGE CAP VALUE FUND--The investment objective of the Large Cap Value 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 a diversified portfolio of high quality, income producing common
stocks of large companies (I.E., companies with market capitalizations of more
than $1 billion) which, in the opinion of the advisers, are undervalued in the
marketplace at the time of purchase. In general, the advisers characterize high
quality securities as those that have above-average reinvestment rates. The
advisers also consider other factors, such as earnings and dividend growth
prospects, as well as industry outlook and market share. Any remaining assets
may be invested in other equity securities and in investment grade fixed income
securities. Investment grade fixed income securities are securities that are
rated at least BBB by Standard & Poor's Corporation ("S&P") or Baa by Moody's
Investors Service, Inc. ("Moody's"). The Fund may also borrow money, invest in
illiquid securities, when-issued and delayed-delivery securities, shares of real
estate investment trusts REITs, and shares of other investment companies, and
lend its securities to qualified buyers.

LARGE CAP GROWTH FUND--The investment objective of the Large Cap Growth Fund
is capital appreciation.

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Under normal market conditions, the Fund will invest at least 65% of its
total assets in equity securities of large companies (I.E., companies with
market capitalizations of more than $1 billion) which, in the opinion of the
advisers, possess significant growth potential. Any remaining assets may be
invested in investment grade fixed income securities or in equity securities of
smaller companies that the Fund's advisers believe are appropriate in light of
the Fund's objective. The Fund may also borrow money, invest in illiquid
securities, when-issued and delayed-delivery securities, shares of REITs, and
shares of other investment companies, and lend its securities to qualified
buyers.

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 advisers believe are appropriate in light of
the Fund's objective. The Fund may also purchase illiquid securities, shares of
other investment companies and REITs, 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 advisers consider 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, sales made 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 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.

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When in the Fund's adviser'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 advisers believe to be the average duration of the
domestic bond market as a whole. The advisers base their analysis of the average
duration of the domestic bond market on bond market indices which they believe
to be representative. The advisers currently use the Lehman Aggregate Bond Index
for this purpose.

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 nationally recognized
statistical rating organization ("NRSRO") at the time of purchase, or, if not
rated, determined to be of comparable quality by the Fund's advisers. 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 advisers' 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
adviser 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 and REITs, 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

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forward foreign currency contracts, and lend its securities to qualified buyers.
The Fund's advisers may vary the average maturity of the securities in the Fund
without limit, and there is no restriction on the maturity of any individual
security.

The Fund's advisers will consider ratings, but it will perform its own
analyses and will not rely principally on ratings. The Fund's advisers will
consider, among other things, the price of the security and the financial
history and condition, the prospects and the management of an issuer in
selecting securities for the Fund.

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 may also invest in securities
of companies located in and governments of emerging market countries. 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. 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. Furthermore, although the
Fund will concentrate its investments in relatively developed countries, the
Fund may invest up to 20% of its assets in fixed income securities of issuers
in, or denominated in the currencies of, developing countries and that are
investment-grade securities or determined by the advisers to be of comparable
quality to such securities and debt obligations at the time of purchase.

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 advisers' 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.

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DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS

AMERICAN DEPOSITARY RECEIPTS ("ADRs"), EUROPEAN DEPOSITARY RECEIPTS
("EDRs"), CONTINENTAL DEPOSITARY RECEIPTS ("CDRs") 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. 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--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
assets and issuing such debt. 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. A Fund may also invest in other asset-backed securities that may be
created in the future if the advisers determine that they are suitable.

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.

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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 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.

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.

EQUITY-LINKED WARRANTS--Equity linked warrants provide a way for investors
to access markets where entry is difficult and time consuming due to regulation.
Typically, a broker issues warrants to an investor and then purchases shares in
the local market and issues a call warrant hedged on the underlying

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holding. If the investor exercises his call and closes his position the shares
are sold and the warrant redeemed with the proceeds.

Each warrant represents one share of the underlying stock, therefore, the
price, performance and liquidity of the warrant are all directly linked to the
underlying stock. The warrants can be redeemed for 100% of the value of the
underlying stock (less transaction costs). Being American style warrants, they
can be exercised at any time. The warrants are U.S. dollar denominated and
priced daily on several international stock exchanges.

There are risks associated with equity-linked warrants: The investor will
bear the full counterparty risk to the issuing broker, (but the sub-advisers can
mitigate this by only purchasing from issuers with the highest credit rating).
They also have a longer settlement period because they go through the same
registration process as the underlying shares (about three weeks) and during
this time the shares cannot be sold. There is currently no active trading market
for equity-linked warrants. Certain issuers of such warrants may be deemed to be
"investment companies" as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"). As a result, the Fund's investment in such warrants
may be limited by certain investment restrictions contained in the 1940 Act.

The International Equity and Emerging Markets Equity Funds each may invest
in equity-linked warrants.

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 in volumes typical on a national
securities exchange. Consequently, the securities of smaller companies may have
limited market stability and may be subject to more abrupt or erratic market
movements than securities of larger, more established growth companies or the
market averages in general.

FIXED INCOME 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 NRSRO, or, if not rated, are
determined to be of comparable quality by the Fund's advisers. 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

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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 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 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, 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. 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.

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.

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. 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. Forward currency contracts do not eliminate fluctuations
in the values of fund securities but rather allow a

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Fund to establish a rate of exchange for a future point in time. 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.

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 adviser 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--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 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.

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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.

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 advisers 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 advisers 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 advisers,
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."

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. 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 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

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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 advisers could find it more difficult to
sell these securities or may be able to sell the securities only at prices lower
than if such securities were widely traded. Furthermore, 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.

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.

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-

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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.

MORTGAGE-BACKED SECURITIES--The Funds may invest in mortgage-backed
securities issued by GNMA and certain 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. Mortgage-backed
securities are instruments that entitle the holder to a share of all interest
and principal payments from mortgages underlying the security. The mortgages
backing these securities include conventional fifteen and thirty-year fixed-rate
mortgages, graduated payment mortgages, adjustable rate mortgages and balloon
mortgages. During periods of declining interest rates, prepayment of mortgages
underlying mortgage-backed securities can be expected to accelerate. Prepayment
of mortgages which underlie securities purchased at a premium often results in
capital losses, while prepayment of mortgages purchased at a discount often
results in capital gains. Because of these unpredictable prepayment
characteristics, it is often not possible to predict accurately the average life
or realized yield of a particular issue. Although certain mortgage-backed
securities are guaranteed by a third party or otherwise similarly secured, the
market value of the security, which may fluctuate, is not so secured. If a Fund
purchases a mortgage-backed security at a premium, that portion may be lost if
there is a decline in the market value of the security whether resulting from
changes in interest rates or prepayments in the underlying mortgage collateral.
As with other interest-bearing securities, the prices of such securities are
inversely affected by changes in interest rates. However, though the value of a
mortgage-backed security may decline when interest rates rise, the converse is
not necessarily true since in periods of declining interest rates the mortgages
underlying the securities are prone to prepayment. 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.

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 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.

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

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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.

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.

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.

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

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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. 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 a Fund sells the security becomes
insolvent, the Fund's right to repurchase the security may be restricted. Other
risks involved in entering into mortgage dollar rolls include the risk that the
value of the security may change adversely over the term of the mortgage dollar
roll and that the security a Fund is required to repurchase may be worth less
than the security that the Fund originally held.

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

OBLIGATIONS OF SUPRANATIONAL AGENCIES--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. Obligations of Supranational entities 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--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 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.

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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. 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 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.

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.

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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 advisers believe present
minimum credit risks, and the Fund's advisers 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 sponsored by the U.S. Treasury. Receipts
are sold as zero coupon securities which means that they are sold at a
substantial discount and redeemed at face value at their maturity date without
interim cash payments of interest or principal. This discount is accreted over
the life of the security, and such accretion will constitute the income earned
on the security for both accounting and tax purposes. Because of these features,
such securities may be subject to greater interest rate volatility than interest
paying fixed income securities.

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<PAGE>
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 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--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 advisers 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
advisers will monitor compliance with this requirement. Under all repurchase
agreements entered into by a Fund, the Custodian or its agent must take
possession of the underlying collateral. However, if the seller defaults, a Fund
could realize a loss on the sale of the underlying security to the extent the
proceeds of the sale are less than the resale price. In addition, even though
the Bankruptcy Code provides protection for most repurchase agreements, if the
seller should be involved in bankruptcy or insolvency proceedings, a Fund may
incur delay and costs in selling the security and may suffer a loss of principal
and interest if the Fund is treated as an unsecured creditor. Repurchase
Agreements are considered loans under the 1940 Act.

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 advisers to be of good
standing and when, in the judgment of the Fund's

S-19
<PAGE>
advisers, 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. 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--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 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. 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.

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--Obligations issued or guaranteed by
agencies of the U.S. Government, including, among others, the Federal Farm
Credit Bank, the Federal Housing Administration and the Small Business
Administration, and obligations issued or guaranteed by instrumentalities of the
U.S. Government, including, among others, the FHLMC, the Federal Land Banks and
the U.S. Postal

S-20
<PAGE>
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). 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."

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.
These 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 advisers will
monitor on an ongoing basis the earning power, cash flow, and liquidity ratios
of the issuers of such instruments and will similarly monitor the ability of an
issuer of a demand instrument to pay principal and interest on demand. There is
a risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand notice
exceeding seven days may be considered illiquid if there is no secondary market
for such security.

In case of obligations which include a put feature at the option of the debt
holder, the date of the put may be used as an effective maturity date for the
purpose of determining weighted average fund maturity.

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

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<PAGE>
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.

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 (the "Securities
Act"). 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 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 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.

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<PAGE>
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. 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.

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.

S-23
<PAGE>
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>

<TABLE>
<S> <C>
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>

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<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. 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.

4. 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.

5. Purchase or sell real estate, physical commodities, or commodities
contracts, except that each Fund may purchase (i) marketable securities
issued by companies which own or invest in real estate (including real
estate investment trusts), commodities, or commodities contracts, and
(ii) commodities contracts relating to financial instruments, such as
financial futures contracts and options on such contracts.

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

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

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<PAGE>
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 this Statement of Additional Information.

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, automobile
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.

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, 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

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

The Administration Agreement provides that SEI Management 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

S-26
<PAGE>
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
including, but without limitation to: The Achievement Funds Trust, The Advisors'
Inner Circle Fund, Alpha Select Funds, Amerindo Funds Inc., The Arbor Fund, ARK
Funds, Armada Funds, The Armada Advantage Fund, Bishop Street Funds, CNI Charter
Funds, CUFUND, The Expedition Funds, First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., Friends Ivory
Funds, HighMark Funds, Huntington Funds, Huntington VA Funds, The Nevis Fund
Inc., Oak Associates Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund,
Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional Managed Trust, SEI Institutional International
Trust, SEI Insurance Products Trust, SEI Liquid Asset Trust, SEI Tax Exempt
Trust, STI Classic Funds, STI Classic Variable Trust, TIP Funds, UAM Funds
Trust, UAM Funds, Inc. and UAM Funds Inc. II.

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 Code. The term
"expenses" is defined in such laws or regulations, and generally excludes
brokerage commissions, distribution expenses, taxes, interest and extraordinary
expenses.

For the fiscal years ended May 31, 1998, 1999, and 2000 the Funds paid fees
to SEI Management as follows:

<TABLE>
<CAPTION>
FEES WAIVED
FEES PAID (REIMBURSED)
(000) (000)
---------------------- ----------------------
FUND 1998 1999 2000 1998 1999 2000
-------------------------------------------------- ---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Fund.................................... $110 $680 $1,265 $305 $680 $1,265
Large Cap Value Fund.............................. *** *** $ 20* *** *** $ 20*
Large Cap Growth Fund............................. *** *** $ 20** *** *** $ 20**
Small Cap Fund.................................... $ 30 $161 $ 273 $ 83 $161 $ 273
International Equity Fund......................... $186 $306 $ 470 $ 48 $306 $ 470
Emerging Markets Equity Fund...................... *** *** *** *** *** ***
Core Fixed Income Fund............................ $ 75 $443 $ 749 $202 $443 $ 749
High Yield Bond Fund.............................. *** *** *** *** *** ***
International Fixed Income Fund................... *** *** *** *** *** ***
</TABLE>

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

* Commenced operations on January 31, 2000

** Commenced operations on February 28, 2000

*** Not in operation during such period.

S-27
<PAGE>
THE ADVISER AND THE SUB-ADVISERS

SEI Investments Management Corporation ("SIMC" or the "Adviser") is a
wholly-owned subsidiary of SEI Investments a financial services company. The
principal business address of SIMC and SEI Investments is Oaks, Pennsylvania,
19456. SEI Investments was founded in 1968, and is a leading provider of
investment solutions to banks, institutional investors, investment advisers and
insurance companies. Affiliates of SIMC have provided consulting advice to
institutional investors for more than 20 years, including advice regarding
selection and evaluation of money managers. SIMC and its affiliates currently
serve as adviser to more than 50 investment companies, including more than 460
portfolios, with more than $32.6 billion in assets as of July 31, 2000.

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

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

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

<TABLE>
<S> <C>
Large Cap Fund...................................................................... 0.40%
Large Cap Value Fund................................................................ 0.35%*
Large Cap Growth Fund............................................................... 0.40%**
Small Cap Fund...................................................................... 0.65%
International Equity Fund........................................................... 0.51%
Emerging Markets Equity Fund........................................................ 1.05%***
Core Fixed Income Fund.............................................................. 0.30%
High Yield Bond Fund................................................................ 0.49%***
International Fixed Income Fund..................................................... 0.45%***
</TABLE>

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

* Commenced operations on January 31, 2000

** Commenced operations on February 28, 2000

*** Not in operation as of May 31, 2000.

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

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

S-28
<PAGE>
The continuance of each Advisory and Sub-Advisory Agreement must be
specifically approved at least annually (i) by the vote of a majority of the
outstanding shares of that Fund or by the Trustees, and (ii) by the vote of a
majority of the Trustees who are not parties to such Agreement or "interested
persons" of any party thereto, cast in person at a meeting called for the
purpose of voting on such approval. Each Agreement will terminate automatically
in the event of its assignment, and is terminable at any time without penalty by
the Trustees of the Trust or, with respect to a Fund, by a majority of the
outstanding shares of that Fund, on not less than 30 days' nor more than 60
days' written notice to the Adviser or Sub-Advisers, or by the Adviser or
Sub-Advisers 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 Sub-Advisers for a Fund without submitting the Sub-Advisory
agreement to a vote of the Fund's shareholders. The exemptive relief permits the
non-disclosure of amounts payable by SIMC under such Sub-Advisory agreements.
The Trust will notify shareholders in the event of any change in the identity of
the Sub-Advisers for a Fund.

For the fiscal years ended May 31, 1998, 1999, and 2000 the Funds paid SIMC
fees as follows:

<TABLE>
<CAPTION>
FEES PAID FEE WAIVERS
(000) (000)
-------------------------- --------------------------
FUND 1998 1999 2000 1998 1999 2000
-------------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Fund.................................... $2,125 $5,439 $4,426 $1,199 $2,243 $4,173
Large Cap Value Fund.............................. *** *** $ 62* *** *** $ 52*
Large Cap Growth Fund............................. *** *** $ 77** *** *** $ 68**
Small Cap Fund.................................... $1,191 $2,091 $ 819 $ 290 $ 450 $ 788
International Equity Fund......................... $1,644 $2,658 $2,113 $ 744 $1,064 $1,504
Emerging Markets Equity Fund...................... *** *** *** *** *** ***
Core Fixed Income Fund............................ $ 706 $3,124 $2,678 $ 958 $1,575 $2,475
High Yield Bond Fund.............................. *** *** *** *** *** ***
International Fixed Income Fund................... *** *** *** *** *** ***
</TABLE>

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

* Commenced operations on January 31, 2000

** Commenced operations on February 28, 2000

*** Not in operation during such period.

THE SUB-ADVISERS

ACADIAN ASSET MANAGEMENT, INC.--Acadian Asset Management, Inc. ("Acadian")
serves as a Sub-Adviser for a portion of the assets of the International Equity
Fund. Acadian was founded in 1977, and manages approximately $3.6 billion in
assets invested globally as of July 31, 2000.

ALLIANCE CAPITAL MANAGEMENT L.P.--Alliance Capital Management L.P.
("Alliance") serves as a Sub-Adviser for a portion of the assets of the Large
Cap and Large Cap Growth Funds. As of July 31, 2000, Alliance managed over
$475 billion in assets.

ARTISAN PARTNERS LIMITED PARTNERSHIP--Artisan Partners Limited Partnership
("Artisan") serves as a Sub-Adviser for a portion of the assets of the Small Cap
Fund. As of July 31, 2000, Artisan had approximately $9.8 billion in assets
under management.

BLACKROCK FINANCIAL MANAGEMENT, INC.--BlackRock Financial Management, Inc.
("BlackRock") serves as a Sub-Adviser for a portion of the assets of the Core
Fixed Income Fund. As of June 30, 2000, BlackRock had $177 billion in assets
under management.

S-29
<PAGE>
BLACKROCK INTERNATIONAL LTD.--BlackRock International Ltd. ("BlackRock
International") serves as a Sub-Adviser for a portion of the assets of the
International Equity Fund. As of July 31, 2000, BlackRock International had $7.5
billion in assets under management.

THE BOSTON COMPANY ASSET MANAGEMENT--The Boston Company Asset Management
("BCAM") serves as a Sub-Adviser to a portion of the assets of the Emerging
Markets Equity Fund. As of June 30, 2000, BCAM had approximately $27.5 billion
in assets under management.

BOSTON PARTNERS ASSET MANAGEMENT COMPANY, L.P.--Boston Partners Asset
Management Company, L.P. ("BPAM") serves as a Sub-Adviser for a portion of the
assets of the Small Cap Fund. As of June 30, 2000, BPAM had approximately
$9.5 billion in assets under management.

CAPITAL GUARDIAN TRUST COMPANY--Capital Guardian Trust Company ("CGTC")
serves as a Sub-Adviser for a portion of the assets of the International Equity
Fund. CGTC has managed international portfolios since 1978, and as of June 30,
2000, had approximately $583 billion in assets under management.

CHARTWELL INVESTMENT PARTNERS--Chartwell Investment Partners ("Chartwell")
serves as a sub-adviser to a portion of the assets of the Small Cap Fund. As of
June 30, 2000, Chartwell had approximately $4.5 billion in assets under
management.

CREDIT SUISSE ASSET MANAGEMENT, LLC/AMERICAS--Credit Suisse Asset
Management, LLC/Americas ("Credit Suisse") serves as the Sub-Adviser for the
High Yield Bond Fund. Credit Suisse together with its predecessor firms, has
been engaged in the investment advisory business for more than 50 years. As of
June 30, 2000, Credit Suisse managed approximately $69.7 billion in assets.

IRIDIAN ASSET MANAGEMENT LLC--Iridian Asset Management LLC ("Iridian")
serves as a sub-adviser to a portion of the assets of the Large Cap Fund and
Large Cap Value Fund. As of June 30, 2000, Iridian had approximately
$8.4 billion in assets under management.

JARDINE FLEMING INTERNATIONAL MANAGEMENT, INC.--Jardine Fleming
International Management, Inc. ("Jardine Fleming") serves as a sub-adviser to a
portion of the assets of the International Equity Fund. As of June 30, 2000,
Jardine Fleming had approximately $267 million in assets under management.

LSV ASSET MANAGEMENT, L.P.--LSV Asset Management, L.P. ("LSV") serves as a
Sub-Adviser to a portion of the assets of the Large Cap and Large Cap Value
Funds. The general partners of LSV developed a quantitative value investment
philosophy that has been used to manage assets over the past 7 years. As of
June 30, 2000, LSV managed approximately $5.7 billion in client assets.

MARTIN CURRIE INC.--Martin Currie Inc. ("Martin Currie") serves as a
sub-adviser to a portion of the assets of the International Equity Fund. As of
June 30, 2000, Martin Currie had approximately $16.7 billion in assets under
management.

MAZAMA CAPITAL MANAGEMENT, INC.--Mazama Capital Management, Inc. ("Mazama")
serves as Sub-Adviser for a portion of the assets of the Small Cap Fund. As of
June 30, 2000, Mazama had $685 million in assets under management.

MELLON EQUITY ASSOCIATES, LLP--Mellon Equity Associates, LLP ("Mellon
Equity") serves as a Sub-Adviser to a portion of the assets of each of the Large
Cap, Large Cap Value, and Small Cap Funds. Mellon Equity had discretionary
management authority with respect to approximately $39.1 billion of assets as of
June 30, 2000.

MCKINLEY CAPITAL MANAGEMENT, INC.--McKinley Capital Management, Inc.
("McKinley Capital") serves as a Sub-Adviser to a portion of the assets of the
Small Cap Fund. McKinley Capital was founded in 1990 and is wholly-owned by its
employees. As of June 30, 2000, McKinley Capital had approximately $4.8 billion
in assets under management.

S-30
<PAGE>
MORGAN STANLEY DEAN WITTER INVESTMENT MANAGEMENT INC.--Morgan Stanley Dean
Witter Investment Management Inc. ("MSDW") acts as a Sub-Adviser for a portion
of the assets of the Emerging Markets Equity Fund. MSDW had approximately
$177 billion in assets under management as of July 31, 2000.

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT--Nicholas-Applegate Capital Management
("Nicholas-Applegate") serves as a Sub-Adviser to a portion of the assets of the
Small Cap Fund. As of July 31, 2000, Nicholas-Applegate had discretionary
management authority with respect to approximately $42.1 billion in assets.

NOMURA CORPORATE RESEARCH AND ASSET MANAGEMENT INC.--Nomura Corporate
Research and Asset Management Inc. ("Nomura") serves as a Sub-Adviser to a
portion of the assets of the High Yield Bond Fund. As of June 30, 2000, Nomura
had approximately $2.5 billion in assets under management.

OECHSLE INTERNATIONAL ADVISORS, LLC--Oechsle International Advisors, LLC
("Oechsle") serves as a Sub-Adviser to a portion of the assets of the
International Equity Fund. As of July 31, 2000, Oechsle had approximately
$18.7 billion in assets under management.

PROVIDENT INVESTMENT COUNSEL, INC.--Provident Investment Counsel, Inc.
("Provident") serves as a Sub-Adviser for a portion of the assets of the Large
Cap and Large Cap Growth Funds. As of June 30, 2000, Provident had over
$21.1 billion in client assets under management.

ROBERT W. BAIRD & CO., INCORPORATED--Robert W. Baird & Co., Incorporated
("Baird") serves as a Sub-Adviser for a portion of the assets of the Core Fixed
Income Fund. As of June 30, 2000, Baird had $4.1 billion in assets under
management.

RS INVESTMENT MANAGEMENT, L.P.--RS Investment Management, L.P. ("RSIM"),
acts as a Sub-Adviser for a portion of the assets of the Small Cap Fund. As of
June 30, 2000, RSIM had approximately $11.9 billion in assets under management.

SANFORD C. BERNSTEIN & CO., INC.--Sanford C. Bernstein & Co., Inc.
("Bernstein"), serves as a Sub-Adviser to a portion of the assets of the Large
Cap and Large Cap Value Funds. Bernstein was founded in 1967, and as of
June 30, 2000, had approximately $81.2 billion in assets under management.

SAWGRASS ASSET MANAGEMENT, L.L.C.--Sawgrass Asset Management, L.L.C.
("Sawgrass") serves as a Sub-Adviser for a portion of the assets of the Small
Cap Fund. As of June 30, 2000, Sawgrass had approximately $1.1 million in assets
under management.

SECURITY CAPITAL GLOBAL CAPITAL MANAGEMENT GROUP INCORPORATED--Security
Capital Global Capital Management Group Incorporated ("Security Capital") serves
as a Sub-Adviser to a portion of the assets of the Small Cap Fund. As of June
30, 2000, Security Capital had approximately $1.9 billion in assets under
management.

SCHRODER INVESTMENT MANAGEMENT NORTH AMERICA INC.--Schroder Investment
Management North America Inc. ("Schroders") serves as a Sub-Adviser for a
portion of the assets of the Emerging Markets Equity Fund. As of July 31, 2000,
Schroders had $13.3 billion in assets under management.

STRATEGIC FIXED INCOME, L.L.C.--Strategic Fixed Income, L.L.C. ("Strategic")
serves as the Sub-Adviser for the International Fixed Income Fund. As of
June 30, 2000, Strategic managed $4.1 billion of client assets.

TCW INVESTMENT MANAGEMENT COMPANY--TCW Investment Management Company ("TCW")
acts as a Sub-Adviser for a portion of the assets of the Large Cap and Large Cap
Growth Funds. As of June 30, 2000, TCW had approximately $82.3 billion of assets
under management.

WALL STREET ASSOCIATES--Wall Street Associates ("WSA") serves as a
Sub-Adviser for a portion of the assets of the Small Cap Fund. As of June 30,
2000, WSA had approximately $2.5 billion in assets under management.

WESTERN ASSET MANAGEMENT COMPANY--Western Asset Management Company
("Western") serves as a Sub-Adviser for a portion of the assets of the Core
Fixed Income Fund. As of June 30, 2000, Western managed approximately
$65.3 billion in client assets.

S-31
<PAGE>
For the fiscal years ended May 31, 1998, 1999, and 2000 SIMC paid the
Sub-Advisers as follows:

<TABLE>
<CAPTION>
FEES PAID FEE WAIVERS
(000) (000)
-------------------------- --------------------------
FUND 1998 1999 2000 1998 1999 2000
---------------------------------------------------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Large Cap Fund............................................ $1,777 $2,842 $5,691 $ 0 $ 0 $ 0
Large Cap Value Fund...................................... *** *** $ 76* *** *** $ 0*
Large Cap Growth Fund..................................... *** *** $ 81** *** *** $ 0**
Small Cap Fund............................................ $1,062 $1,549 $2,731 $ 0 $ 0 $ 0
International Equity Fund................................. $1,644 $3,561 $2,680 $ 0 $ 0 $ 0
Emerging Markets Equity Fund.............................. *** *** *** *** *** ***
Core Fixed Income Fund.................................... $ 655 $1,142 $1,816 $ 0 $ 0 $ 0
High Yield Bond Fund...................................... *** *** *** *** *** ***
International Fixed Income Fund........................... *** *** *** *** *** ***
</TABLE>

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

* Commenced operations on January 31, 2000

** Commenced operations on February 28, 2000

*** Not in operation during such period.

DISTRIBUTION

The Distributor, a wholly-owned subsidiary of SEI Investments, 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.

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.

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.

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

S-32
<PAGE>
also serve as officers of some or all of the following: The Achievement Funds
Trust, The Advisors' Inner Circle Fund, Alpha Select Funds, The Arbor Fund, ARK
Funds, Armada Funds, The Armada Advantage Fund, Bishop Street Funds, CNI Charter
Funds, CUFUND, The Expedition Funds, First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., Friends Ivory
Funds, HighMark Funds, Huntington Funds, Huntington VA Funds, The Nevis Fund,
Inc., Oak Associates Funds, The PBHG Funds, Inc., PBHG Insurance Series Fund,
Inc., The Pillar Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI
Index Funds, SEI Institutional International Trust, SEI Institutional Managed
Trust, SEI Insurance Products Trust, SEI Liquid Asset Trust, SEI Tax Exempt
Trust, STI Classic Funds, STI Classic Variable Trust, TIP Funds, UAM Funds
Trust, UAM Funds, Inc. and UAM Funds, Inc. II, each of which is an open-end
management investment company managed by SEI Investments Fund Management or its
affiliates and is 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 Adviser, the
Administrator and the Distributor, 1981-1994. Trustee of The Advisors' Inner
Circle Fund, The Arbor Fund, Bishop Street Funds, The Expedition Funds, Pillar
Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI
Institutional International Trust, SEI Insurance Products Trust, SEI
Institutional Managed Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.

WILLIAM M. DORAN (DOB 05/26/40)--Trustee*--1701 Market Street, Philadelphia,
PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel to the Trust,
SEI Investments, the Adviser, the Administrator and the Distributor. Director of
SEI Investments since 1974; Secretary of SEI Investments since 1978. Trustee of
The Advisors' Inner Circle Fund, The Arbor Fund, The Expedition Funds, SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
International Trust, SEI Insurance Products Trust, SEI Institutional Managed
Trust, SEI Liquid Asset Trust and SEI Tax Exempt Trust.

F. WENDELL GOOCH (DOB 12/03/32)--Trustee**--President, Orange County
Publishing Co., Inc.; Publisher, Paoli News and Paoli Republican; and Editor,
Paoli Republican, October 1981-January 1997. President, H&W Distribution, Inc.,
since July 1984. Executive Vice President, Trust Department, Harris Trust and
Savings Bank and Chairman of the Board of Directors of The Harris Trust Company
of Arizona before January 1981. Trustee of SEI Asset Allocation Trust, SEI Daily
Income Trust, SEI Index Funds, SEI Institutional International Trust, SEI
Insurance Products Trust, SEI Institutional Managed Trust, SEI Liquid Asset
Trust, SEI Tax Exempt Trust, STI Classic Funds and STI Classic Variable Trust.

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

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

ROSEMARIE B. GRECO (DOB 03/31/46)--Trustee**--Principal, Grecoventures
(consulting firm) since August 1997. President, Corestates Financial Corp.,
1991-1997; Chief Executive Officer and President, Corestates Bank, N.A.,
1991-1997; Director, Sonoco, Inc.; Director, PECO Energy; Director, Radian,
Inc.; Trustee, Pennsylvania Real Estate Investment Trust; Director, Cardone
Industries, Inc.; Director,

S-33
<PAGE>
Genuardi Markets, Inc.; Director, PRWT Comserve, Inc. Trustee of SEI Asset
Allocation Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional
International Trust, SEI Institutional Investments Trust, SEI Institutional
Managed Trust, SEI Insurance Products Trust, SEI Liquid Asset Trust and SEI Tax
Exempt Trust.

EDWARD D. LOUGHLIN (DOB 03/07/51)--President and Chief Executive
Officer--Executive Vice President and President--Asset Management Division of
SEI Investments since 1993. Executive Vice President of the Adviser and the
Administrator since 1994. Senior Vice President of the Distributor, 1986-1991;
Vice President of the Distributor, 1981-1986.

TIMOTHY D. BARTO (DOB 03/28/68)--Vice President and Assistant
Secretary--Employed by SEI Investments since October 1999. Vice President and
Assistant Secretary of the Adviser, Administrator and Distributor since December
1999, Associate at Dechert Price & Rhoads (1997-1999). Associate at Richter,
Miller & Finn (1994-1997).

TODD B. CIPPERMAN (DOB 02/14/66)--Vice President and Assistant
Secretary--Senior Vice President and General Counsel of SEI Investments. Senior
Vice President, General Counsel and Secretary of the Adviser, the Administrator
and the Distributor since 2000, Vice President and Assistant Secretary of SEI
Investments, the Adviser, the Administrative and the Distributor, 1995-2000.
Associate, Dewey Ballantine (law firm), 1994-1995. Associate, Winston & Strawn
(law firm), 1991-1994.

JAMES R. FOGGO (DOB 06/30/64)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of SEI Investments since January 1998. Vice
President of the Adviser, Administrator and Distributor since May 1999.
Associate, Paul Weiss, Rifkind, Wharton & Garrison (law firm), 1998. Associate,
Baker & McKenzie (law firm), 1995-1998. Associate, Battle Fowler L.L.P. (law
firm), 1993-1995. Operations Manager, The Shareholder Services Group, Inc.,
1986-1990.

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

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

ROBERT S. LUDWIG (DOB 3/12/50)--Vice President and Assistant
Secretary--Employed by SEI Investments since 1985. Senior Vice President and
Chief Investment Officer of SEI Asset Management Group since 1995. Chairman of
SEI Investment Policy Committee since 1995. Manager of Product Development for
SEI's institutional mutual funds and repurchase trading desk from 1985 to 1995.
Held various product management and development positions at Chase Econometrics
and Interactive Data Corporation from 1974 to 1985.

CHRISTINE M. MCCULLOUGH (DOB 12/02/60)--Vice President and Assistant
Secretary--Employed by SEI Investments since November 1, 1999. Vice President
and Assistant Secretary of the Adviser, the Administrator and the Distributor
since December 1999. Associate at White and Williams LLP, 1991-1999. Associate
at Montgomery, McCracken, Walker & Rhoads, 1990-1991.

CYNTHIA M. PARRISH (DOB 10/23/59)--Vice President and Assistant
Secretary--Vice President and Assistant Secretary of SEI Investments, the
Adviser, the Administrator and the Distributor since August 1997. Branch Chief,
Division of Enforcement, U.S. Securities and Exchange Commission,
January 1995-August 1997. Senior Counsel--Division of Enforcement, U.S.
Securities and Exchange Commission, September 1992-January 1995. Staff
Attorney--Division of Enforcement, U.S. Securities and Exchange Commission,
September 1990-September 1992.

S-34
<PAGE>
RICHARD W. GRANT (DOB 10/25/45)--Secretary--1701 Market Street,
Philadelphia, PA 19103. Partner, Morgan, Lewis & Bockius LLP (law firm), counsel
to the Trust, SEI Investments, the Adviser, the Administrator and the
Distributor.

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

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

*Messrs. Nesher and Doran are Trustees who may be deemed to be "interested
persons" of the Trust as the term is defined in the 1940 Act.

**Messrs. Gooch, Storey, Sullivan and Ms. Greco serve as members of the Audit
Committee of the Trust.

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

Compensation of officers and affiliated Trustees of the Trust is paid by the
Administrator. The Trust pays the fees for unaffiliated Trustees. For the fiscal
year ended May 31, 2000, the Trust paid the following amounts to the Trustees.

<TABLE>
<CAPTION>
AGGREGATE PENSION OR
COMPENSATION RETIREMENT BENEFITS TOTAL COMPENSATION FROM
FROM REGISTRANT ACCRUED AS ESTIMATED ANNUAL REGISTRANT AND TRUST
NAME OF FOR FISCAL YEAR PART OF BENEFITS UPON COMPLEX PAID TO TRUSTEES FOR
PERSON, POSITION ENDED 5/31/00 FUND EXPENSES RETIREMENT FISCAL YEAR ENDED 5/31/00
----------------------------------- ------------------ ------------------- ---------------- ----------------------------
<S> <C> <C> <C> <C>
F. Wendell Gooch, Trustee.......... $14,000 $0 $0 $110,000 for services on
9 boards
James M. Storey, Trustee........... $14,000 $0 $0 $110,000 for services on
9 boards
Robert A. Nesher, Trustee.......... $ 0 $0 $0 $0 for services on 9 boards
William M. Doran, Trustee.......... $ 0 $0 $0 $0 for services on 9 boards
George J. Sullivan, Trustee........ $14,000 $0 $0 $110,000 for services on
9 boards
Rosemarie B. Greco................. $ 3,000 $0 $0 $28,000 for services on
9 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

S-35
<PAGE>
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.

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, 2000, the yields for the Large
Cap, Large Cap Value, Large Cap Growth, Small Cap and Core Fixed Income Funds
were 1.05%, 2.22%, 0.48%, 0.86% and 6.86%, 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, 2000, and for the one year period ended May 31, 2000
were as follows:

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN
FUND ONE YEAR SINCE INCEPTION
--------------------------------------------------------------------------- -------- ---------------
<S> <C> <C>
Large Cap Fund............................................................. 9.10% 22.39%*
Large Cap Value Fund....................................................... **** 4.00%**
Large Cap Growth Fund...................................................... **** (0.24)%***
Small Cap Fund............................................................. 21.06% 12.18%*
Core Fixed Income Fund..................................................... 2.07% 6.52%*
International Equity Fund.................................................. 22.82% 11.86%*
Emerging Markets Equity Fund............................................... **** ****
High Yield Bond Fund....................................................... **** ****
International Fixed Income Fund............................................ **** ****
</TABLE>

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

* Inception date of June 14, 1996.

** Inception date of January 31, 2000.

*** Inception date of February 28, 2000.

****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 advisers
in advertisements and/or sales literature for the Trust.

PURCHASE AND REDEMPTION OF SHARES

Each Fund's securities are valued by SEI Management pursuant to valuations
provided by an independent pricing service (generally the last quoted sale
price). Fund's 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

S-36
<PAGE>
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.

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

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 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. A Shareholder may recognize a gain or loss for federal
income tax purposes in making the exchange.

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, 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.

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 Adviser, the Administrator, the Distributor,
the Sub-Advisers and/or the Custodian are not open for business. Currently, the
following

S-37
<PAGE>
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 advisers 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 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. If a Fund's distributions exceed its taxable income and
capital gains realized during a taxable year, all or a portion of the
distributions made in the same

S-38
<PAGE>
taxable year may be recharacterized as a return of capital to shareholders. A
return of capital distribution will generally not be taxable, but will reduce
each shareholder's cost basis in the Fund and result in a higher reported
capital gain or lower reported capital loss when those shares on which the
distribution was received are sold.

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. In addition, the loss realized on a sale or other
disposition of shares will be disallowed to the extent a shareholder repurchases
(or enters into a contract or option to repurchase) shares within a period of 61
days (beginning 30 days before and ending 30 days after the disposition of the
shares). This loss disallowance rule will apply to shares received through the
reinvestment of dividends during the 61-day period.

For non-corporate shareholders, 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 (including certain holding period
limitations). The board reserves the right not to maintain the qualification of
a Fund as a regulated investment company if it determines such course of action
to be beneficial to shareholders.

In the case of corporate shareholders, Fund distributions (other than
capital gains distributions) generally qualify for the dividends-received
deduction to the extent of the gross amount of qualifying dividends received by
the Fund for the year. Generally, and subject to certain limitations (including
certain holding period limitations), a dividend will be treated as a qualifying
dividend if it has been received from a domestic corporation. All dividends
(including the deducted portion) must be included in your alternative minimum
taxable income calculation.

A Fund may invest in complex securities. These investments may be subject to
numerous special and complex tax rules. These rules could affect whether gains
and losses recognized by a Fund are treated as ordinary income or capital gain,
accelerate the recognition of income to a Fund and/or defer such Fund's ability
to recognize losses. In turn, those rules may affect the amount, timing or
character of the income distributed to you by such Fund.

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.
Non-U.S. investors in a Fund may be subject to U.S. withholding and estate tax
and are encouraged to consult their tax advisor prior to investing in a Fund.

All dividends (including the deducted portion) must be included in your
alternative minimum taxable income calculation.

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

S-39
<PAGE>
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 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. Many
states grant tax-free status to dividends paid to you from interest earned on
direct obligation of the U.S. government, subject in some states to minimum
investment requirements that must be met by a Fund. Investment in Government
National Mortgage Association or Fannie Mae securities, banker's acceptances,
commercial paper and repurchase agreements collateralized by U.S. government
securities do not generally qualify for such tax-free treatment. The rules on
exclusion of this income are different for corporate shareholders.

FUND TRANSACTIONS

The Trust has no obligation to deal with any broker or dealer or group of
brokers or dealers in the execution of transactions in fund securities. Subject
to policies established by the Trustees, the advisers are responsible for
placing orders to execute fund transactions. In placing orders, it is the
Trust's policy to seek to obtain the best net results taking into account such
factors as price (including the applicable dealer spread), size, type and
difficulty of the transaction involved, the firm's general execution and
operational facilities, and the firm's risk in positioning the securities
involved. While the advisers generally seek reasonably competitive spreads or
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 advisers
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

S-40
<PAGE>
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 advisers 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.

The Trust does not expect to use one particular dealer, but a Fund's
advisers may, consistent with the interests of the Fund, select brokers on the
basis of the research services they provide to the Fund's advisers. Such
services may include analysis of the business or prospects of a company,
industry or economic sector or statistical and pricing services. Information so
received by the advisers will be in addition to and not in lieu of the services
required to be performed by a Fund's advisers under the Advisory and/or
Sub-Advisory Agreements. If in the judgement of a Fund's advisers the Funds, or
other accounts managed by the Fund's advisers, will be benefitted by
supplemental research services, the Fund's advisers are authorized to pay
brokerage commissions to a broker furnishing such services which are in excess
of commissions which another broker may have charged for effecting the same
transaction. The expenses of a Fund's advisers will not necessarily be reduced
as a result of the receipt of such supplemental information.

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, 2000, the Funds paid the following
brokerage fees:

<TABLE>
<CAPTION>
TOTAL $ AMOUNT % OF TOTAL % OF TOTAL
OF BROKERAGE BROKERAGE BROKERED
TOTAL $ AMOUNT COMMISSIONS COMMISSIONS TRANSACTIONS
OF BROKERAGE PAID TO PAID TO EFFECTED THROUGH
COMMISSION AFFILIATES AFFILIATES AFFILIATES
FUND PAID IN 2000 IN 2000 IN 2000 IN 2000
--------------------------------------------- -------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C>
Large Cap Fund............................... $ 126 $ 0 $ 0 3%
Large Cap Value Fund......................... $ 193* $ 0* $ 0* 8%*
Large Cap Growth Fund........................ $ 126** $ 0** $ 0** 3%**
Small Cap Fund............................... $ 2,157 $ 0 $ 0 1%
Core Fixed Income Fund....................... $ 233 $ 0 $ 0 0%
High Yield Bond Fund......................... *** *** *** ***
International Fixed Income Fund.............. *** *** *** ***
Emerging Markets Equity Fund................. *** *** *** ***
International Equity Fund.................... $ 2,434 $ 0 $ 0 0%
</TABLE>

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

* Commenced operations on January 31, 2000

** Commenced operations on February 28, 2000

*** Not in operation during such period.

S-41
<PAGE>
The portfolio turnover rate for each Fund for the fiscal years ended
May 31, 1999 and 2000 was as follows:

<TABLE>
<CAPTION>
TURNOVER
RATE
----------
FUND 1999 2000
-------------------------------------------------- ---- ----
<S> <C> <C>
Large Cap Fund.................................... 60% 64%
Large Cap Value Fund.............................. * *
Large Cap Growth Fund............................. ** **
Small Cap Fund.................................... 154% 159%
International Equity Fund......................... 82% 74%
Emerging Markets Equity Fund...................... *** ***
Core Fixed Income Fund............................ 393% 383%
High Yield Bond Fund.............................. *** ***
International Fixed Income Fund................... *** ***
</TABLE>

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

* Commenced operations on January 31, 2000

** Commenced operations on February 28, 2000

*** Not in operation during such period.

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.

CODE OF ETHICS

The Board of Trustees of the Trust has adopted a Code of Ethics pursuant to
Rule 17j-1 under the 1940 Act. In addition, the Investment Adviser and
Distributor have adopted Code of Ethics pursuant to Rule 17j-1. These Codes of
Ethics apply to the personal investing activities of trustees, officers and
certain employees ("access persons"). Rule 17j-1 and the Codes are designed to
prevent unlawful practices in connection with the purchase or sale of securities
by access persons. Under each Code of Ethics, access persons are permitted to
engage in personal securities transactions, but are required to report their
personal securities transactions for monitoring purposes. In addition, certain
access persons are required to obtain approval before investing in initial
public offerings or private placements. Copies of these Codes of Ethics are on
file with the SEC and are available to the public.

S-42
<PAGE>
VOTING

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 annual meetings of shareholders, but approval will
be sought for certain changes in the operation of the Trust and for the election
of Trustees under certain circumstances. In addition, a Trustee may be removed
by the remaining Trustees or by shareholders at a special meeting called upon
written request of shareholders owning at least 10% of the outstanding shares of
the Trust. In the event that such a meeting is requested, the Trust will provide
appropriate assistance and information to the shareholders requesting the
meeting.

Where the 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.

As of September 1, 2000, SEI Trust Company owned a controlling interest (as
defined by the 1940 Act) in the Trust's Large Cap, Small Cap, Core Fixed Income,
and International Equity Funds.

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.

5% SHAREHOLDERS

As of September 1, 2000, the following persons were the only persons who
were record owners (or to the knowledge of the Trust, beneficial owners) of 5%
or more of the shares of the Funds. The Trust believes that most of the shares
referred to 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 119,824,629.7670 69.18%
Attn: Jackie Esposito
One Freedom Valley Drive
Oaks, PA 19087-1610

Mac & Co. 14,612,559.6640 8.44%
APSF 1852692
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
LARGE CAP VALUE FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
-------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
SEI Trust Company 6,875,558.1380 30.94%
One Freedom Valley Drive
Oaks, PA 19456

Mellon Trust 4,883,317.1290 21.97%

First Union National Bank 1,324,346.2890 5.96%

Amsouth FBO Russell Corp. 1,790,134.3900 8.06%

First Union National Bank 6,531,775.0440 29.39%
</TABLE>

<TABLE>
<CAPTION>
LARGE CAP GROWTH FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
-------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
SEI Trust Company 9,811,858.3270 42.71%
One Freedom Valley Drive
Oaks, PA 19456

Amsouth FBO Russell Corp. 2,536,924.4840 11.04%

First Union National Bank 9,345,067.0700 40.68%
</TABLE>

<TABLE>
<CAPTION>
SMALL CAP FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
-------------------------------------------------------------------- ----------------- ---------------
<S> <C> <C>
SEI Trust Company 22,851,049.1920 39.26%
Attn: Jackie Esposito
One Freedom Valley Drive
Oaks, PA 19087-1610

Bankers Trust TTEE of the Cincinnati Bell 4,420,495.3710 7.59%
Pension Plan Trust
Attn: Mike Stack
100 Plaza One
Jersey City, New Jersey 07311-3999

State Street Bank 4,372,158.4380 7.51%
FBO Air Products-Chemicals Inc.
Pension Plan
Attn: Laura Mcauliffe
One Enterprise Drive
North Quincy, MA 02171-2126

Mac & Co. 3,141,504.9760 5.40%
A/C HMPF1852762
Attn: Marsha Ondo
Mutual Funds Operation
P.O. Box 3198
Pittsburgh, PA 15230-3198

First Union National Bank 7,098,077.0500 12.19%
Attn: Sophia Katz
600 Penn Street 2nd FL North
Reading, PA 19607
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
------------------------------------------------------------------ ------------------- ---------------
<S> <C> <C>
SEI Trust Company 54,126,285.3840 60.20%
Attn: Jackie Esposito
One Freedom Valley Drive
Oaks, PA 19087-1610

Bankers Trust 4,948,464.5830 5.50%
Attn: Jennifer Davis
100 Plaza One Mail Stop 3046
Jersey City, NJ 07311-3999

Mac & Co. 6,182,442.3750 6.88%
APSF 1852692
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15320-3198

Northern Trust 5,704,745.5130 6.35%
FBO Harnischfeger Master Retirement
50 S. LaSalle
Chicago, IL 60675-0001

First Union National Bank 4,502,932.6750 5.01%
Attn: Sophia Katz
600 Penn Street 2nd Fl North
Reading, PA 19607
</TABLE>

<TABLE>
<CAPTION>
CORE FIXED INCOME FUND:
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF FUND
------------------------------------------------------------------ ------------------- ---------------
<S> <C> <C>
SEI Trust Company 161,378,595.8530 73.34%
Attn: Jackie Esposito
One Freedom Valley Drive
Oaks, PA 19087-1610

Bank of New York 12,346,625.1040 5.61%
Attn: Steve Bonora
One Wall Street 12th Fl
New York, NY 10286-0001
</TABLE>

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. 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.

S-45
<PAGE>
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.

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, 2000,
including notes thereto and the report of PricewaterhouseCoopers, LLP thereon,
are herein incorporated by reference from the Trust's 2000 Annual Report. A copy
of the 2000 Annual Report must accompany the delivery of this Statement of
Additional Information.

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