-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, JPlFSw5lxD3LPsGyE5GtHAtpsf4q4Ek8xMPRFy92z7UXbLNfoHQdWfqDzroEALZl 5mwySpXXrYrCPkTHVFHcbA== 0000950109-95-001369.txt : 19950427 0000950109-95-001369.hdr.sgml : 19950427 ACCESSION NUMBER: 0000950109-95-001369 CONFORMED SUBMISSION TYPE: PRES14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950616 FILED AS OF DATE: 19950424 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEI INTERNATIONAL TRUST CENTRAL INDEX KEY: 0000835597 STANDARD INDUSTRIAL CLASSIFICATION: STATE OF INCORPORATION: MA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: PRES14A SEC ACT: 1934 Act SEC FILE NUMBER: 811-05601 FILM NUMBER: 95530717 BUSINESS ADDRESS: STREET 1: 2 OLIVER ST CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 8003425734 MAIL ADDRESS: STREET 1: SEI INTERNATIONAL TRUST STREET 2: 680 E SWEDESFORD RD CITY: WAYNE STATE: PA ZIP: 19087 FORMER COMPANY: FORMER CONFORMED NAME: SEI WEALTH MANAGEMENT TRUST DATE OF NAME CHANGE: 19900129 PRES14A 1 NOTICE & PROXY SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [_] Check the appropriate box: [X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY [_] Definitive Proxy Statement RULE 14C-5(d)(2)) [_] Definitive Additional Materials [_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12 SEI INTERNATIONAL TRUST ------------------------------------------------------------------------ (Name of Registrant as Specified In Its Charter) SEI INTERNATIONAL TRUST ------------------------------------------------------------------------ (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A. [_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a- 6(i)(3). [_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [_] Fee paid previously with preliminary materials. [_] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: Notes: PRELIMINARY PROXY SEI INTERNATIONAL TRUST 2 OLIVER STREET BOSTON, MA 02109 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS JUNE 16, 1995 Notice is hereby given that a Special Meeting of Shareholders of the Portfolios (each a "Portfolio" and, together, the "Portfolios") of SEI International Trust (the "Trust") will be held at the offices of SEI Financial Management Company ("SFM"), 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on Friday, June 16, 1995, at 10:00 a.m. At the meeting, Shareholders of the Trust will be asked to consider and act on proposed amendments to the Trust's investment limitations, a new management structure, new advisory and sub-advisory agreements, and other matters detailed below (the "Proposals"). The enclosed proxy card permits Shareholders to vote for or against all those Proposals that apply to that Portfolio by checking a single box or to vote on each applicable Proposal separately. SECTION I. Proposals 1 through 13 are interrelated in that they reflect a determination by the Trust's Board of Trustees that the Trust's various investment limitations be updated, simplified and restructured to the extent permitted by applicable law to provide management and investment flexibility, and to minimize the need for Shareholder meetings to change certain investment limitations in the future, as described in the accompanying Proxy Statement. These investment limitations apply in nearly all cases to each Portfolio of the Trust and govern the activities of each Portfolio on a stand-alone basis. Each Portfolio's Shareholders will vote separately (i.e., by Portfolio) on these Proposals. The specifics of these 13 Proposals are as follows: 1. Proposal to combine each Portfolio's fundamental limitation concerning diversification with each Portfolio's fundamental limitation concerning the acquisition of more than 10% of the outstanding voting securities of any one issuer, and to amend certain other language. 2. Proposal to amend each Portfolio's fundamental limitation concerning industry concentration. 3. Proposal to amend each Portfolio's fundamental limitation concerning borrowing. 4. Proposal to amend each Portfolio's fundamental limitation concerning making loans. 5. Proposal to reclassify each Portfolio's fundamental limitation concerning pledging assets as non-fundamental, and to amend certain language. 6. Proposal to reclassify each Portfolio's fundamental limitation concerning investment in securities for the purpose of exercising control as non-fundamental. 7. Proposal to amend each Portfolio's fundamental limitation concerning investment in real estate and commodities. 8. Proposal to reclassify each Portfolio's fundamental limitation concerning short sales and margins sales as non-fundamental, and to amend certain language. 9. Proposal to reclassify each Portfolio's fundamental imitation concerning investment in securities of investment companies as non- fundamental, and to amend certain language. 10. Proposal to amend each Portfolio's fundamental limitation concerning the issuance of senior securities. 11. Proposal to reclassify each Portfolio's fundamental limitation concerning investment in securities of an issuer whose securities are owned by officers and trustees of the Trust as non-fundamental. 12. Proposal to reclassify each Portfolio's fundamental limitation concerning investment of more than 5% of the total assets in securities of companies with less than three years of operating history as non- fundamental. 13. Proposal to reclassify each Portfolio's fundamental limitation concerning investment in restricted securities as non-fundamental, and to amend certain language. SECTION II. Proposals 14 through 16 relate to a new management structure approved by the Trust's Board of Trustees wherein SFM, which already acts as investment adviser for two Portfolios of the Trust, will act as investment adviser for all other Portfolios of the Trust, and, in turn, appoint and replace investment sub- advisers for such Portfolios, if such structure is approved by vote of the Shareholders of each Portfolio voting on these Proposals. This structure requires an order of exemption from the SEC before becoming operative. 14. Proposal to authorize the Board of Trustees to appoint additional or replacement investment sub-advisers for the International Fixed Income Portfolio without seeking approval of the Portfolio's Shareholders of the contracts pursuant to which such sub-advisers serve. 15. Proposal to authorize the Board of Trustees to appoint additional or replacement investment sub-advisers for the European Equity Portfolio without seeking approval of the Portfolio's Shareholders of the contracts pursuant to which such sub-advisers serve. 16. Proposal to authorize the Board of Trustees to appoint additional or replacement investment sub-advisers for the Pacific Basin Equity Portfolio without seeking approval of the Portfolio's Shareholders of the contracts pursuant to which such sub-advisers serve. SECTION III. Proposals 17 through 19 relate to approval by Shareholders of the selection of SFM as Investment Adviser to certain Portfolios and the approval of a form of investment advisory agreement for these Portfolios, as described in the accompanying Proxy Statement. A copy of the general form of Investment Advisory Agreement is attached as Exhibit A to the Proxy Statement. 17. Proposal to approve the selection of SFM as the Investment Adviser for the Trust's International Fixed Income Portfolio, and to approve the Investment Advisory Agreement between the Trust, on behalf of the International Fixed Income Portfolio, and SFM. 18. Proposal to approve the selection of SFM as the Investment Adviser for the Trust's European Equity Portfolio, and to approve the Investment Advisory Agreement between the Trust, on behalf of the European Equity Portfolio, and SFM. 19. Proposal to approve the selection of SFM as the Investment Adviser for the Trust's Pacific Basin Equity Portfolio, and to approve the Investment Advisory Agreement between the Trust, on behalf of the Pacific Basin Equity Portfolio, and SFM. SECTION IV. In connection with the approval of SFM as Investment Adviser, Proposals 20 through 22 solicit Shareholder approval of the selection of the current investment advisers for the Portfolios voting on these Proposals as investment sub-advisers for those Portfolios and of a form of investment sub-advisory agreement for each of those Portfolios. A copy of the general form of investment sub-advisory agreement is attached as Exhibit B to the Proxy Statement. If the management structure discussed in Sections II and III of the Proxy Statement is approved, the Trustees would be able, without Shareholder approval, to replace these sub-advisers and/or appoint additional sub-advisers and to approve new investment sub-advisory agreements whose terms are different from those of the investment sub-advisory agreement attached as Exhibit B to the Proxy Statement. 20. Proposal to approve the selection of Strategic Fixed Income, L.P. ("Strategic") as an investment sub-adviser for the International Fixed Income Portfolio, and to approve the form of investment sub-advisory agreement between SFM and Strategic. 21. Proposal to approve the selection of Morgan Grenfell Investment Services Limited ("Morgan Grenfell") as an investment sub-adviser for the European Equity Portfolio, and to approve the form of investment sub- advisory agreement between SFM and Morgan Grenfell. 22. Proposal to approve the selection of Schroder Capital Management International Limited ("Schroder") as an investment sub-adviser for the Pacific Basin Equity Portfolio, and to approve the form of investment sub- advisory agreement between SFM and Schroder. SECTION V. 23. Such other business as may properly come before the Meeting or any adjourned session thereof. By Order of the Board of Trustees Richard W. Grant, Secretary All Shareholders are cordially invited to attend the Meeting. However, if you are unable to be present at the Meeting, you are requested to mark, sign, and date the enclosed Proxy and return it promptly in the enclosed envelope so that the Meeting may be held and a maximum number of shares may be voted. Shareholders of record at the close of business on April 20, 1995 are entitled to notice of and to vote at the Meeting or any adjournment thereof. , 1995 PRELIMINARY PROXY SEI INTERNATIONAL TRUST 2 OLIVER STREET BOSTON, MA 02109 ----------------- PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Trustees of SEI International Trust (the "Trust") for use at the Special Meeting of Shareholders to be held on June 16, 1995 at 10:00 a.m. at the offices of SEI Financial Management Company ("SFM"), 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, and at any adjourned session thereof (such meeting and any adjournment thereof are hereinafter referred to as the "Meeting"). Shareholders of each Portfolio (each a "Portfolio" and, together, the "Portfolios") of the Trust ("Shareholders") of record at the close of business on April 20, 1995 are entitled to vote at the Meeting. The table below sets forth the approximate number of units of beneficial interest ("shares") issued and outstanding for each Portfolio of the Trust:
NET ASSETS SHARES OUTSTANDING PORTFOLIO AS OF APRIL 20, 1995 AS OF APRIL 20, 1995 --------- -------------------- -------------------- Core International Equity Emerging Markets Equity International Fixed Income European Equity Pacific Basin Equity
Each share is entitled to one vote and each fractional share is entitled to a proportionate fractional vote on each matter as to which such shares to be voted at the Meeting. In addition to the solicitation of proxies by mail, Trustees and officers of the Trust and officers and employees of SFM, the current Manager and Shareholder Servicing Agent for the Trust, may solicit proxies in person or by telephone. Persons holding shares as nominees will, upon request, be reimbursed for their reasonable expenses incurred in sending soliciting materials to their principals. [THE COST OF SOLICITATION WILL BE BORNE BY THE .] The proxy and this Proxy Statement are being mailed to Shareholders on or about May 8, 1995. Shares represented by duly executed proxies will be voted in accordance with the instructions given. Proxies may be revoked at any time before they are exercised by a written revocation received by the President of the Trust at 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, by properly executing a later-dated proxy, or by attending the Meeting and voting in person. FOR THOSE SHAREHOLDERS WHO WISH TO VOTE FOR OR AGAINST ALL OF THE PROPOSALS TO WHICH HIS OR HER SHARES RELATE, EACH PROXY CARD MAY BE COMPLETED BY CHECKING A SINGLE BOX. HOWEVER, EACH PROXY CARD ALSO SETS FORTH EACH APPLICABLE PROPOSAL, WHICH CAN BE VOTED ON SEPARATELY. 1 INTRODUCTION The Trust is organized as a Massachusetts business trust and is not required to hold annual meetings of Shareholders. The Meeting is being called in order to permit the Shareholders of the Trust to vote on a number of issues related to the investment limitations of the Portfolios of the Trust, as well as to vote on a new management structure, approve the selection of a new investment adviser and new sub-advisers for certain Portfolios, and adopt new investment advisory and sub-advisory agreements in connection with the approval of those new relationships. The Proposals contained in Section I of this Proxy Statement (Proposals 1 through 13) must be acted upon by the Shareholders of each Portfolio of the Trust. Shareholders of the Core International Equity and Emerging Markets Equity Portfolios (the "SFM-Advised Portfolios") of the Trust are not required to act upon the Proposals contained in Sections II, III and IV of this Proxy Statement since those Portfolios are already set up to operate under the management structure discussed in those Sections. Accordingly, Shareholders of the SFM-Advised Portfolios need only consider the information contained in Sections I and V of this Proxy Statement. The Proposals contained in Sections II and III of this Proxy Statement (Proposals 14 through 19) require action by the Shareholders of the International Fixed Income, European Equity, and Pacific Basin Equity Portfolios of the Trust (the "Non-SFM-Advised Portfolios"). Before becoming operative, the new management structure discussed in those Sections requires an order of exemption from the Securities and Exchange Commission ("SEC"). The summary voting tables below set forth the action required by the Shareholders of the Non-SFM-Advised Portfolios of the Trust on each of the Proposals contained in Sections II and III: APPROVAL OF PROPOSALS AUTHORIZING THE BOARD OF TRUSTEES TO APPOINT ADDITIONAL OR REPLACEMENT INVESTMENT SUB-ADVISERS WITHOUT SHAREHOLDER APPROVAL.
PROPOSAL NUMBER PORTFOLIO - - --------------- --------- 14 International Fixed Income 15 European Equity 16 Pacific Basin Equity
2 APPROVAL OF SFM AS INVESTMENT ADVISER FOR THE NON-SFM-ADVISED PORTFOLIOS AND APPROVAL OF THE PROPOSED INVESTMENT ADVISORY AGREEMENT.
PROPOSAL NUMBER PORTFOLIO - - --------------- --------- 17 International Fixed Income 18 European Equity 19 Pacific Basin Equity
The Proposals contained in Section IV of this Proxy Statement (Proposals 20 through 22) require the Shareholders of the Non-SFM-Advised Portfolios to approve the selection of the current investment adviser for each Portfolio voting on these Proposals as investment sub-advisers for those Portfolios and the new form of investment sub-advisory agreement for the Non-SFM-Advised Portfolios. The summary voting table below sets forth the action required by the Shareholders of the Non-SFM-Advised Portfolios of the Trust on each of the Proposals in Section IV of this Proxy Statement: APPROVAL OF NEW SUB-ADVISERS FOR THE NON-SFM-ADVISED PORTFOLIOS AND APPROVAL OF THE PROPOSED INVESTMENT SUB-ADVISORY AGREEMENTS:
PROPOSAL NUMBER PORTFOLIO PROPOSED SUB-ADVISER --------------- --------- -------------------- 20 International Fixed Income Strategic Fixed Income, L.P. 21 European Equity Morgan Grenfell Investment Services Limited 22 Pacific Basin Equity Schroder Capital Management International Limited
SECTION I. The Proposals in Section I relate to certain changes to the fundamental investment limitations of the Trust. Essentially, the Proposals regarding the Trust's investment limitations are designed to establish a new set of fundamental investment limitations and non-fundamental investment limitations for each of the Portfolios by amending and/or reclassifying certain of the existing fundamental investment limitations as non-fundamental. The Investment Company Act of 1940 (the "1940 Act") and the securities laws of certain states require investment companies to adopt certain investment policies, including investment limitations that can be changed only by a Shareholder vote. Investment companies may also elect to designate other policies as policies that may be changed only by a Shareholder vote. Both types of policies are referred to as "fundamental" policies. In addition, investment companies may elect to designate other policies as policies that may be changed by the Board of Trustees, without a Shareholder vote, and such policies are referred to as non-fundamental policies. For purposes of fundamental and non-fundamental policies, each separate series of an investment company is treated as a separate investment company and each adopts its own fundamental and non- fundamental policies and limitations. 3 Certain fundamental investment policies and limitations for the Portfolios are set forth in the Trust's prospectuses and statement of additional information. The Trustees believe that reclassifying some limitations as non- fundamental and/or modifying other fundamental limitations as set forth below should: (1) reflect the more flexible positions currently taken by state regulatory agencies; (2) increase the Portfolios' flexibility when choosing investments in the future; and (3) enhance, through such increased flexibility, the Portfolios' performance potential. By reducing to a minimum those limitations that can be changed only by Shareholder vote, the Trust would be able to avoid the costs and delay associated with calling a Shareholder meeting solely to change a policy, and the Trustees believe that SFM's ability to manage the Portfolios in a changing regulatory and investment environment will be substantially enhanced. As a result, investment management opportunities will be increased. Moreover, by conforming these limitations to those of other portfolios managed by SFM, the Trustees believe that the Trust will be able to improve its compliance efforts, operate more efficiently within SFM's management system, and receive consistent treatment from the SEC and other regulatory authorities. Accordingly, the Trustees have authorized the amendment and/or reclassification of certain of the Portfolios' investment limitations for the following purposes: (l) to simplify, update and clarify limitations of the Portfolios that are required to be fundamental; (2) to eliminate or reclassify any fundamental limitations that are not required to be fundamental under applicable law; and (3) to clarify the applicability of the fundamental limitations to each Portfolio. Limitations that are not required to be fundamental are proposed to be reclassified as non-fundamental limitations in the same or modified form, depending on the circumstances. As a result, the Trustees will have the flexibility to change certain limitations in response to changing regulatory requirements without Shareholder approval. THE FUNDAMENTAL NATURE OF EACH PORTFOLIO'S INVESTMENT OBJECTIVE, AS DISTINGUISHED FROM ITS INVESTMENT LIMITATIONS, WILL NOT BE CHANGED. The amendments to the fundamental limitations will become effective immediately upon Shareholder approval. For each Portfolio, if a Proposal is not approved by vote of the Shareholders of the Portfolio, the current limitation as applied to that Portfolio will remain unchanged. 1. PROPOSAL TO COMBINE EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING DIVERSIFICATION WITH EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING THE ACQUISITION OF MORE THAN 10% OF THE OUTSTANDING VOTING SECURITIES OF ANY ONE ISSUER, AND TO AMEND CERTAIN OTHER LANGUAGE. At the Meeting, Shareholders of each Portfolio will vote separately regarding the combination of each Portfolio's fundamental limitation with respect to diversification, which currently is stated as follows: No Portfolio may 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 the total assets of the Portfolio would be invested in the securities of such issuer. This restriction applies to 75% of each Portfolio's total assets. For purposes of this investment limitation, each foreign government issuer is deemed a separate issuer. This restriction does not apply to the International Fixed Income Portfolio. with each Portfolio's fundamental limitation with respect to the acquisition of more than 10% of the outstanding voting securities of any one issuer, which is currently stated as follows: 4 No Portfolio may acquire more than 10% of the voting securities of any one issuer. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitations with the following fundamental limitation concerning diversification: With respect to 75% of its total assets, no Portfolio may (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 Portfolio. The primary purpose of this Proposal is to amend the language of the limitation as stated above to consolidate the Trust's fundamental limitation concerning diversification with its fundamental limitation concerning acquiring more than 10% of the outstanding voting securities of any one issuer. Subject to certain statutory exceptions for securities of the U.S. government and its agencies and instrumentalities, this increased investment flexibility will remain in effect with respect to 25% of each Portfolio's total assets. The current 5% limitation applicable to purchases of securities of a single issuer and 10% limitation applicable to purchases of voting securities of a single issuer will be confined to 75% of each Portfolio's total assets. Certain State "blue sky" laws at one time prohibited a fund from registering its shares for sale if the fund intended to invest more than 5% of total assets in a single issuer or to hold more than 10% of the voting securities of a single issuer. Each Portfolio adopted fundamental limitations to incorporate these restrictions. Because the applicable regulations regarding these limitations have been eliminated, Shareholder approval is sought to permit each Portfolio to invest, consistent with the limitations found in the 1940 Act, a higher proportion of its assets in securities issued by a single issuer and to hold a higher proportion of voting securities of a single issuer. If the Proposal is approved, each Portfolio would be required to invest 75% of its total assets so that no more than 5% of total assets would be invested in any one issuer, and so that each Portfolio owned no more than 10% of the voting securities of any such issuer. As to the remaining 25% of total assets, there would be no direct limitation on the amount of assets each Portfolio could invest in any single issuer or the amount of voting securities of a single issuer that each Portfolio could hold, so long as such position did not contravene each Portfolio's policy regarding investment for the purpose of exercising control over an issuer. This would permit each Portfolio, for example, to invest 25% of its total assets in a single issuer's securities, or to invest 10% of its total assets in securities of one issuer and 15% in securities of another issuer. The Trustees believe that having increased flexibility to acquire larger positions in the securities of individual issuers may provide opportunities to enhance each Portfolio's performance. At the same time, investing a larger percentage of a Portfolio's assets in a single issuer's securities increases the Portfolio's exposure to credit and other risks associated with that issuer's financial condition and business operations, including market risk and the risk of bankruptcy or default. Despite these amendments to each Portfolio's fundamental limitation on diversification, the Portfolios will continue to conform to the "diversification" requirements for regulated investment companies under the Internal Revenue Code of 1986, as amended (the "Code"). 5 If the Proposal is approved, the new fundamental diversification limitation may not be changed with respect to a Portfolio without a vote of Shareholders of that Portfolio. Adoption of the proposed limitation regarding diversification is not expected to affect the way in which the Portfolios are managed, the investment performance of the Portfolios, or the instruments in which they invest. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 1. 2. PROPOSAL TO AMEND EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING INDUSTRY CONCENTRATION. At the Meeting, Shareholders of each Portfolio will vote separately regarding the amendment of each Portfolio's fundamental limitation with respect to industry concentration, which is currently stated as follows: No Portfolio may purchase any securities which would cause more than 25% of the total assets of the Portfolio to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that this limitation does not apply to investments in obligations issued or guaranteed by the United States Government or its agencies and instrumentalities. For purposes of this limitation, (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 the same industry. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitation with the following amended fundamental limitation concerning industry concentration: No Portfolio may 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. The primary purpose of this Proposal is to amend the language of the limitation to conform its language to that of other funds managed by SFM. While the new limitation does not include the discussion of specific industries as did the former limitation, the Portfolios will continue to utilize the same definitions. However, instead of reciting the definitions inside of the limitation, the amended limitation will be consistent with those used by other Trusts advised by SFM, and will contain only the language required by the 1940 Act. As a result, the proposed limitation is not substantially different from the current limitation. 6 Adoption of the proposed limitation is not expected to have a material impact on the management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. If approved, the amended fundamental limitation regarding industry concentration cannot be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 2. 3. PROPOSAL TO AMEND EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING BORROWING. At the Meeting, the Shareholders of each Portfolio will vote separately regarding the amendment of each Portfolio's fundamental limitation regarding borrowing, which currently is stated as follows: No Portfolio may borrow money, except for temporary or emergency purposes and then only in an amount not exceeding 10% of the value of total assets. This borrowing provision is included solely to facilitate the orderly sale of portfolio securities to accommodate heavy redemption requests if they should occur and is not for investment purposes. All borrowing will be repaid before making additional investments and any interest paid on such borrowing will reduce income. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitation with the following amended fundamental limitation concerning borrowing: No Portfolio may borrow money in an amount exceeding 33 1/3% of the value of its total assets, provided that, for purposes of this limitation, investment strategies which either obligate a Portfolio to purchase securities or require a Portfolio to segregate assets are not considered to be borrowings. To the extent that its borrowings exceed 5% of its assets, (i) all borrowings will be repaid before making additional investments and any interest paid on such borrowings will reduce income, and (ii) asset coverage of at least 300% is required. The primary purpose of this Proposal is to amend and update each Portfolio's limitation on borrowing to clarify its application in light of current law and interpretations thereof by regulatory authorities. As amended, the limitation will afford each Portfolio increased flexibility in making investment decisions, and may enable the Portfolios to take advantage of changing market conditions. Adoption of the proposed limitation is not expected to have a material impact on the management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. If the Proposal is approved, the amended fundamental limitation regarding borrowing cannot be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 3. 4. PROPOSAL TO AMEND EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING MAKING LOANS. At the Meeting, Shareholders of each Portfolio will vote separately regarding the amendment of each Portfolio's fundamental limitation concerning loans, which is currently stated as follows: 7 No Portfolio may make loans, except that each Portfolio may (i) purchase or hold debt instruments in accordance with its investment objective and policies; (ii) engage in securities lending as described in the Prospectus and Statement of Additional Information; and (iii) enter into repurchase agreements, provided that repurchase agreements and time deposits maturing in more than seven days, and other illiquid securities which are not readily marketable or are restricted, are not to exceed, in the aggregate, 10% of the total assets of the Core International Equity, European Equity, Pacific Basin Equity, or International Fixed Income Portfolios. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current limitation with the following fundamental investment limitation governing lending: No Portfolio may make loans if, as a result, more than 33 1/3% of its total assets would be lent to other parties, except that each Portfolio 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. The primary purpose of this Proposal is to amend and update each Portfolio's limitation on lending to clarify its application in light of current law and interpretations thereof by regulatory authorities. As amended, the limitation will afford each Portfolio increased flexibility in making investment decisions, and may enable the Portfolios to take advantage of changing market conditions. With respect to investments in illiquid securities, the new limitation will not include any restrictions. Instead, the Trustees have adopted a separate non-fundamental limitation concerning illiquid securities which is detailed below. Adoption of the proposed limitation on lending is not expected to have a material impact on the way in which the Portfolios are managed, the investment performance of the Portfolios, or the instruments in which they invest. If the Proposal is approved, the new fundamental lending limitation cannot be changed with respect to a Portfolio without a vote of the Shareholders of that Portfolio. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 4. --- 5. PROPOSAL TO RECLASSIFY EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING PLEDGING ASSETS AS NON-FUNDAMENTAL, AND TO AMEND CERTAIN LANGUAGE. At the Meeting, the Shareholders of each Portfolio will vote separately to reclassify as non-fundamental each Portfolio's fundamental limitation concerning pledging, mortgaging or hypothecating its assets, which currently is stated as follows: No Portfolio may pledge, mortgage or hypothecate assets except to secure temporary borrowing permitted by [the Portfolio's fundamental limitation on borrowing] in aggregate amounts not to exceed 10% of total assets of such Portfolio taken at current value at the time of the incurrence of such loan. 8 Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitation with the following non-fundamental limitation concerning pledging, mortgaging or hypothecating its assets: No Portfolio may pledge, mortgage or hypothecate assets except to secure borrowings permitted by the Portfolio's fundamental limitation on borrowing. The primary purpose of the Proposal is to remove an unnecessary fundamental limitation that is not required to be fundamental. This non-fundamental limitation on pledging assets, when considered in conjunction with the amended fundamental limitation on lending, will afford the Portfolios greater investment flexibility and may allow the Portfolios to take advantage of changing market conditions. Adoption of the proposed limitation is not expected to have a material impact on the management of any of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. If the Proposal is approved, the non-fundamental limitation concerning pledging, mortgaging or hypothecating can be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 5. --- 6. PROPOSAL TO RECLASSIFY EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING INVESTMENT IN SECURITIES FOR THE PURPOSE OF EXERCISING CONTROL AS NON- FUNDAMENTAL. At the Meeting, the Shareholders of each Portfolio will vote separately regarding the reclassification as non-fundamental each Portfolio's fundamental limitation concerning investment in securities for the purpose of exercising control over management of any company, which currently is stated as follows: No Portfolio may invest in companies for the purpose of exercising control. The Portfolios have no present intention to invest in companies for the purpose of exercising control. However, if the Proposal is approved, the non- fundamental limitation regarding investing for the purpose of exercising control over management of any company can be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. In the future, the Portfolios may elect to invest in companies in order to exercise control over management. Reclassification of the fundamental limitation as a non-fundamental limitation will not affect the current management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. 9 THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 6. --- 7. PROPOSAL TO AMEND EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING INVESTMENT IN REAL ESTATE AND COMMODITIES. At the Meeting, Shareholders of each Portfolio will vote separately regarding the amendment of each Portfolio's fundamental limitation with respect to investing in real estate and commodities, which is currently stated as follows: No Portfolio may purchase or sell real estate, real estate limited partnership interests, commodities or commodities contracts. However, subject to the permitted investments, the Portfolios may purchase obligations issued by companies which invest in real estate, commodities or commodities contracts. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitation with the following amended fundamental limitation concerning investment in real estate and commodities: No Portfolio may purchase or sell real estate, physical commodities, or commodities contracts, except that each Portfolio 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. The primary purpose of this Proposal is to amend and update each Portfolio's limitation on investing in real estate and commodities to clarify its application in light of current law and interpretations thereof by regulatory authorities. If the Proposal is approved, the amended fundamental limitation regarding investment in real estate and commodities cannot be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. Adoption of the proposed limitation concerning real estate is not expected to significantly affect the way in which the Portfolios are managed or the way in which securities or instruments are selected for the Portfolios. However, to the extent that the Portfolios invest to a greater degree in real estate related securities, it will be subject to the risks of the real estate market. The Portfolios do not expect to acquire real estate. However, the proposed limitation would clarify several points. First, the proposed limitation would make it explicit that the Portfolios may acquire a security or other instrument that is secured by a mortgage or other right to foreclose on real estate, in the event of a default. Second, the proposed limitation would clarify the fact that the Portfolios may invest in securities issued or guaranteed by companies engaged in acquiring, constructing, financing, developing, or operating real estate projects (e.g., securities of issuers that develop various industrial, commercial, or residential real estate projects such as factories, office buildings, or apartments). Any investments in these securities or other instruments are, of course, subject to each Portfolio's investment objective and policies, as well as to other limitations regarding diversification and concentration in particular industries. 10 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 Portfolio 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 Portfolio may buy and sell futures contracts and related options to manage its exposure to changing interest rates and securities prices. A Portfolio 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. A put option 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 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. A Portfolio may purchase put and call options 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 Portfolio may seek to purchase in the future. A Portfolio 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 Portfolio, loss of the premium paid may be offset by an increase in the value of the Portfolio's securities or by a decrease in the cost of acquisition of securities by the Portfolio. With respect to the portion of the limitation pertaining to commodities contracts and financial futures and options, the amendments will allow each Portfolio to adopt non-fundamental policies that correlate with its investment style. While the Portfolios have no present intention to substantially increase their level of investment in commodities contracts and futures and options, the amended limitation will afford them increased flexibility to adapt rapidly to changing market conditions. Adoption of the proposed limitation is not expected to have a material impact on the management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 7. --- 8. PROPOSAL TO RECLASSIFY EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING SHORT SALES AND MARGIN SALES AS NON-FUNDAMENTAL, AND TO AMEND CERTAIN LANGUAGE. At the Meeting, Shareholders of each Portfolio will vote separately to reclassify the limitation with respect to purchases on margin, and short sales as non-fundamental and to amend certain language in the limitation. The limitation is currently stated as follows: 11 No Portfolio may make short sales of securities, maintain a short position or purchase securities on margin, except as described with respect to the International Fixed Income Portfolio in its Prospectus and except that each Portfolio may obtain short-term credits as necessary for the clearance of security transactions. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental investment limitation with the following non- fundamental limitation that conforms with legal requirements imposed by applicable law: No Portfolio may purchase securities on margin or effect short sales, except that each Portfolio 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 requirement imposed by Section 18 of the 1940 Act. The primary purpose of reclassifying the Proposal is to remove any unnecessary fundamental limitation that is not required to be fundamental. In a short sale, an investor sells a borrowed security and has a corresponding obligation to the lender to return the identical security. In an investment technique known as a short sale "against the box," an investor sells securities short while owning the same securities in the same amount, or having the right to obtain equivalent securities. The investor could have the right to obtain equivalent securities, for example, through its ownership of warrants, options, or convertible bonds. The proposed non-fundamental limitation would clarify that short sales against the box are not deemed to constitute short sales of securities. Certain state regulations currently prohibit mutual funds from entering into any short sales other than short sales against the box. If the proposal is approved, however, the Board of Trustees would be able to change each Portfolio's proposed non-fundamental limitation in the future, without a vote of Shareholders, if state regulations were to change to permit other types of short sales, or if waivers from existing requirements were available, subject to appropriate disclosure to investors. Pursuant to this limitation, each Portfolio may make short sales in accordance with asset segregation requirements imposed by the SEC staff. However, until certain state regulations are changed to permit otherwise, the Portfolios will only sell short against the box. In the event that these state regulations are eliminated, and upon appropriate disclosure by a Portfolio, the Portfolios may engage in other types of short sales. Margin purchases involve the purchase of securities with money borrowed from a broker. "Margin" is the cash or eligible securities that the borrower places with a broker as collateral against the loan. Each Portfolio's current fundamental limitation prohibits the Portfolio from purchasing securities on margin, except that each Portfolio may purchase securities on margin to obtain such short-term credits as may be necessary for the clearance of transactions, and may make initial and variation margin payments in connection with the purchase and sale of futures contracts and options on futures contracts. Reclassification of this fundamental limitation on short selling is unlikely to affect each Portfolio's investment techniques at this time. Similarly, although reclassification of each Portfolio's fundamental limitation on margin purchases is unlikely to affect the Portfolio's investment techniques at this time, 12 in the event of a change in federal regulatory requirements, each Portfolio may alter its investment practices in the future. Any substantial change in a Portfolio's investment strategies will be disclosed to Shareholders. The Board of Trustees believes that efforts to standardize this investment limitation will facilitate investment compliance efforts and are in the best interests of Shareholders. If the Proposal is approved, the non-fundamental limitation concerning short sales and purchases on margin can be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 8. --- 9. PROPOSAL TO RECLASSIFY EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING INVESTMENT IN SECURITIES OF INVESTMENT COMPANIES AS NON-FUNDAMENTAL, AND TO AMEND CERTAIN LANGUAGE. At the Meeting, the Shareholders of each Portfolio will vote separately to approve certain amended language and to reclassify as non-fundamental the Portfolio's fundamental limitation concerning investment in securities of any investment company, which currently is stated as follows: No Portfolio may purchase securities of other investment companies except as permitted by the 1940 Act and the rules and regulations thereunder and may only purchase securities of money market funds. Under these rules and regulations, a Portfolio is prohibited from acquiring the securities of other investment companies if, as a result of such acquisition, the Portfolio owns more than 3% of the total voting stock of the company; securities issued by any one investment company represent more than 5% of the total Portfolio assets; or securities (other than treasury stock) issued by all investment companies represent more than 10% of the total assets of the Portfolio. A Portfolio's purchase of such investment company securities results in the bearing of expenses such that shareholders would indirectly bear a proportionate share of the operating expenses of such investment companies, including advisory fees. This investment restriction does not apply to the Emerging Market Equity Portfolio. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitation with the following non-fundamental limitation concerning investment in securities of investment companies: No Portfolio may invest its assets in securities of any investment company, except (i) by purchase in the open market involving only customary brokers' commissions, (ii) in connection with mergers, acquisitions of assets, or consolidations, or (iii) as otherwise permitted by the 1940 Act. The primary purpose of this Proposal is to amend and update each Portfolio's limitation on investing in investment companies to clarify its application in light of current law and interpretations thereof by regulatory authorities. If the Proposal is approved, each Portfolio's policy regarding investment in securities of investment companies can be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. 13 The ability of mutual funds to invest in other investment companies is restricted by the 1940 Act and by some state blue sky laws. Each Portfolio's current fundamental limitation recites certain of federal and state restrictions. The federal restrictions will remain applicable to each Portfolio whether or not they are recited in a fundamental limitation. In addition, the Portfolios will comply with all currently applicable state regulations. However, should such state regulations be relaxed or eliminated in the future, having the limitation as non-fundamental will allow the Trustees to change the limitation without the vote of the Shareholders. This will afford the Portfolios increased flexibility in making investment decisions, and may allow the Portfolios to respond rapidly to changing market conditions. Reclassification of the above fundamental limitation as non-fundamental is not expected to have any impact on each Portfolio's investment practices or the securities or instruments in which each Portfolio invests, except to the extent that regulatory requirements may change in the future. However, the Board of Trustees believes that the efforts to standardize investment limitations will facilitate investment compliance efforts and are in the best interests of the Shareholders. The Proposal would make the investment policy consistent for all Portfolios. Adoption of the proposed limitation is not expected to have a material impact on the management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 9. --- 10. PROPOSAL TO AMEND EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING THE ISSUANCE OF SENIOR SECURITIES. At the Meeting, Shareholders of each Portfolio will vote separately regarding the amendment of each Portfolio's fundamental limitation with respect to the issuance of senior securities, which is currently stated as follows: No Portfolio may issue senior securities (as defined in the 1940 Act) except in connection with permitted borrowing as described in the Prospectuses and the Statement of Additional Information or as permitted by rule, regulation or order of the SEC. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitation with the following amended fundamental limitation concerning the issuance of senior securities: No Portfolio may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. The primary purpose of this Proposal is to amend and update each Portfolio's limitation on senior securities to clarify its application in light of current law and interpretations thereof by regulatory authorities. In addition, the amended fundamental limitation will conform to the limitations of other investment companies managed by SFM. 14 Although the definition of a "senior security" involves complex statutory and regulatory concepts, a senior security is generally thought of as an obligation of a fund which has a claim to the fund's assets or earnings that takes precedence over the claims of the fund's shareholders. The 1940 Act generally prohibits mutual funds from issuing senior securities; however, as long as certain conditions are satisfied, mutual funds are permitted to engage in certain types of transactions that might be considered to result in the issuance of "senior securities". For example, a transaction which obligates a fund to pay money at a future date (e.g. the purchase of securities to be settled on a date that is further away than the normal settlement period) may be considered a "senior security." A mutual fund, however, is permitted to enter into this type of transaction if it maintains a segregated account containing liquid securities in an amount equal to its obligation to pay cash for the securities at a future date. Each Portfolio will utilize transactions that may be considered "senior securities" only in accordance with applicable regulatory requirements under the 1940 Act. In addition, the Trust may issue additional classes of shares in accordance with Rule 18f-3 under the 1940 Act. If the Proposal is approved, the amended fundamental limitation regarding the issuance of senior securities cannot be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. Adoption of the proposed limitation on senior securities is not expected to affect the way in which each Portfolio is managed, the investment performance of each Portfolio, or the securities or instruments in which each Portfolio invests. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 10. --- 11. PROPOSAL TO RECLASSIFY EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING INVESTMENT IN SECURITIES OF AN ISSUER WHOSE SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES OF THE TRUST AS NON-FUNDAMENTAL. At the Meeting, the Shareholders of each Portfolio will vote separately regarding reclassifying as a non-fundamental policy the Portfolio's fundamental limitation concerning investment in securities of an issuer if those officers and Trustees of the Trust or its investment adviser owning more than 1/2 of 1% of such securities together own more than 5% of such securities. This limitation is currently stated as follows: No Portfolio may purchase or retain securities of an issuer if, to the knowledge of the Trust, an officer, trustee, partner or director of the Trust or any investment adviser of the Trust owns beneficially more than 1/2 of the 1% of the shares or securities of such issuer and all such officers, trustees, partners and directors owning more than 1/2 of 1% of such shares or securities together own more than 5% of such shares or securities. The purpose of this Proposal is to reclassify the limitation as non- fundamental. This investment limitation was originally adopted to address State Blue Sky regulations in connection with the registration of shares of the Portfolios for sale. Only one state currently requires such a limitation. The Trustees believe that this fundamental investment limitation should be eliminated since, while it has 15 not precluded investments in the past, its elimination will potentially increase each Portfolio's flexibility when choosing investments in the future. If the Proposal is approved, each Portfolio's non-fundamental limitation regarding investment in securities of an issuer whose securities are owned to a certain extent by officers and Trustees of the Trust can be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio in response to regulatory, market, legal, or other developments. Reclassification of the fundamental limitation as a non-fundamental limitation is not expected to affect the management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 11. --- 12. PROPOSAL TO RECLASSIFY EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING INVESTMENT OF MORE THAN 5% OF ITS TOTAL ASSETS IN SECURITIES OF COMPANIES WITH LESS THAN THREE YEARS OF OPERATING HISTORY AS NON-FUNDAMENTAL. At the Meeting, the Shareholders of each Portfolio will vote separately regarding reclassifying as a non-fundamental policy the Portfolio's fundamental limitation concerning investment of more than 5% of its total assets in securities of companies which have (with predecessors) a record of less than three years' continuous operation, which currently is stated as follows: No Portfolio may purchase securities of any company which has (with predecessors) a record of less than three years continuing operations if, as a result, more than 5% of the total assets (taken at current value) would be invested in such securities. The purpose of this Proposal is to reclassify the limitation as non- fundamental. Newly formed issuers or "unseasoned issuers" are issuers with less than three years' continuous operation. The purpose of the fundamental limitation on investments in unseasoned issuers is to comply with State blue sky laws and limit the risks associated with investing in companies that have no proven track record in business and whose prospects are uncertain. The proposed non-fundamental investment limitation will clarify that each Portfolio's unseasoned issuers limitation is applicable only to securities issued by newly-formed entities engaged in a trade or business with a prior history of operations of less than three years, and not to U.S. government and foreign government securities. The adoption of a standard non-fundamental limitation will facilitate compliance efforts and will enable the Portfolios to respond more promptly if applicable state laws change in the future. If the Proposal is approved, each Portfolio's non-fundamental limitation regarding investment of more than 5% of total assets in securities of companies with less than three years of operating history can be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. 16 Reclassification of the limitation as a non-fundamental limitation is not expected to affect the management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 12. --- 13. PROPOSAL TO RECLASSIFY EACH PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING INVESTMENT IN RESTRICTED SECURITIES AS NON-FUNDAMENTAL, AND TO AMEND CERTAIN LANGUAGE. At the Meeting, the Shareholders of each Portfolio will vote separately to approve certain amended language and to reclassify as non-fundamental each Portfolio's fundamental limitation concerning investment in restricted securities, which is currently stated as follows: No Portfolio may purchase restricted securities (securities which must be registered under the Securities Act of 1993, as amended, before they may be offered or sold to the public) or other illiquid securities except as described in the Prospectuses and the Statement of Additional Information. Subject to Shareholder approval, the Trustees intend to replace each Portfolio's current fundamental limitation with the following non-fundamental limitation concerning the purchase of restricted securities: No Portfolio may purchase securities which are not readily marketable or which must be registered under the 1933 Act, as amended, before they may be sold to the public, if, in the aggregate, more than 15% of its total assets would be invested in such restricted securities. The primary purpose of this Proposal is to amend and update each Portfolio's limitation on investing in restricted securities to clarify its application in light of current law and interpretations thereof by regulatory authorities. As amended, the limitation will afford each Portfolio increased flexibility in making investment decisions, and may enable the Portfolios to take advantage of changing market conditions. If the Proposal is approved, the new non-fundamental limitation regarding investing in restricted securities can be changed with respect to a Portfolio without the vote of the Shareholders of that Portfolio. Adoption of the proposed limitation regarding investing in restricted securities is not expected to affect the management of the Portfolios, the investment performance of the Portfolios, or the securities or instruments in which each of the Portfolios may invest. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 13. --- In addition to the foregoing limitations, the Trustees have adopted a new non-fundamental limitation for each Portfolio concerning investment in illiquid securities. The new limitation provides that: 17 No Portfolio may purchase illiquid securities, i.e., securities that cannot be disposed of for their approximate carrying value in seven days or less (which term includes repurchase agreements and time deposits maturing in more than seven days) if, in the aggregate, more than 15% of its total assets would be invested in illiquid securities. Notwithstanding the foregoing, securities eligible to be re-sold under Rule 144A of the 1933 Act may be treated as liquid securities under procedures adopted by the Board of Trustees. Since the Portfolios currently have a similar fundamental limitation on investing in illiquid securities, which is contained in their fundamental limitation on making loans, it is not expected that this new limitation will have any impact on the Portfolios' investment techniques, performance, or management. However, as a non-fundamental limitation, the Trustees can change this limitation with respect to a Portfolio without the vote of the Shareholders of that Portfolio. SECTION II. Section 15(a) of the 1940 Act requires that all contracts pursuant to which persons serve as investment advisers to investment companies be approved by shareholders. As interpreted, this requirement would apply to appointment of sub-advisers to the Non-SFM-Advised Portfolios of the Trust. However, in certain cases, the SEC has granted conditional exemptions from the shareholder approval requirements and the Trust has applied for such an exemption. If the exemption is granted, and if these Proposals are approved, the Board of Trustees would, without Shareholder approval, be able to appoint additional or replacement sub-advisers (herein, "Managers"). The Board would not, however, be able to replace SFM as investment adviser to each Portfolio of the Trust without complying with the 1940 Act and applicable regulations governing Shareholder approval of advisory contracts. The Proposals contained in Sections II and III of this Proxy Statement are intended to facilitate the efficient operation of the "Manager of Managers" structure. Assuming SFM, which currently serves as Investment Adviser and Manager of Managers for each of the SFM-Advised Portfolios, is approved as investment adviser to the Non-SFM-Advised Portfolios, it will continuously monitor the performance of the Managers and may from time to time recommend that the Board of Trustees replace one or more Managers or appoint additional Managers, depending on SFM's assessment of what combination of Managers it believes will optimize each Portfolio's chances of achieving its investment objective. Accordingly, while there is no way of knowing exactly how often SFM may recommend, and the Board approve, the selection of an additional Manager, or the replacement of an existing Manager, both of which would typically require a Shareholder meeting, it is not unlikely that the Manager of Managers structure would result in more frequent Shareholder meetings than would otherwise be the case. Shareholder meetings entail substantial costs which could reduce the hoped for benefits of the Manager of Managers structure. These costs must be weighed against the benefits of Shareholder scrutiny of proposed contracts with additional or replacement Managers; however, even in the absence of Shareholder approval, any proposal to add or replace Managers would receive careful review. First, SFM would assess each Portfolio's needs and, if it believed additional or replacement Managers could benefit the Portfolio, would systematically search the relevant universe of available investment Managers. Second, any recommendations made by SFM would have to be approved by a majority of the Trustees, including a majority of the Trustees who are not "interested persons" within the meaning of the 1940 Act. Finally, any selections of additional or replacement Managers would have to comply with conditions contained in the SEC exemption, if it is granted. 18 14. AUTHORIZATION FOR THE BOARD OF TRUSTEES TO APPOINT INVESTMENT SUB-ADVISERS FOR THE INTERNATIONAL FIXED INCOME PORTFOLIO OF THE TRUST WITHOUT SEEKING APPROVAL BY THE PORTFOLIO'S SHAREHOLDERS OF THE CONTRACTS PURSUANT TO WHICH SUCH SUB-ADVISERS SERVE. This Proposal will allow SFM to serve as Manager of Managers for the International Fixed Income Portfolio of the Trust. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 14. --- 15. AUTHORIZATION FOR THE BOARD OF TRUSTEES TO APPOINT INVESTMENT SUB-ADVISERS FOR THE EUROPEAN EQUITY PORTFOLIO OF THE TRUST WITHOUT SEEKING APPROVAL BY THE PORTFOLIO'S SHAREHOLDERS OF THE CONTRACTS PURSUANT TO WHICH SUCH SUB- ADVISERS SERVE. This Proposal will allow SFM to serve as Manager of Managers for the European Equity Portfolio of the Trust. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 15. --- 16. AUTHORIZATION FOR THE BOARD OF TRUSTEES TO APPOINT INVESTMENT SUB-ADVISERS FOR THE PACIFIC BASIN EQUITY PORTFOLIO OF THE TRUST WITHOUT SEEKING APPROVAL BY THE PORTFOLIO'S SHAREHOLDERS OF THE CONTRACTS PURSUANT TO WHICH SUCH SUB-ADVISERS SERVE. This Proposal will allow SFM to serve as Manager of Managers for the Pacific Basin Equity Portfolio of the Trust. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 16. --- SECTION III. The Board of Trustees is recommending that Shareholders of the Non-SFM- Advised Portfolios of the Trust approve SFM as the investment adviser of the Non-SFM-Advised Portfolios of the Trust and approve the form of investment advisory agreement (the "Investment Advisory Agreement") between the Trust and SFM relating to the Non-SFM-Advised Portfolios (which is attached as Exhibit A to this Proxy Statement). The Trustees of the Trust, including all of the Trustees who are not "interested persons" of the Trust, approved the Investment Advisory Agreement with respect to the Non-SFM-Advised Portfolios at a meeting held on March 6, 1995. SFM already serves as investment adviser to the SFM- Advised Portfolios pursuant to an Investment Advisory Agreement dated December 16, 1994, between SFM and the Trust, on behalf of each of the SFM-Advised Portfolios. 19 Other than the identity of the investment adviser, there are no material differences between the Investment Advisory Agreement and the existing investment advisory agreements of the Non-SFM-Advised Portfolios of the Trust. In particular, the aggregate compensation to SFM and any sub-advisers will not exceed that which the current adviser(s) would have received under their respective agreements. While the level of compensation paid to SFM by each Portfolio for advisory services will be .15% higher than that paid to the current advisers, SFM will reduce its management fee by .15% for each Portfolio. As a result, the compensation received by SFM under the Investment Advisory Agreement and the Management Agreement will not increase from the level currently received by SFM for its management services, and the overall cost to each Portfolio of advisory and management services will not be increased. Duties Under the Investment Advisory Agreement. Under the Investment Advisory Agreement, SFM will serve as investment adviser to the Non-SFM-Advised Portfolios and will provide its proprietary investment adviser selection, monitoring, and asset allocation services to the Non-SFM-Advised Portfolios. SFM, in turn, will enter into investment sub-advisory agreements with one or more sub-advisers (each a "Manager" and, collectively, the "Managers") to exercise investment discretion over the assets (or a portion of the assets) of each Portfolio. Consistent with its goal of using multiple Managers to carry out each Portfolio's investment objective and policies, SFM in the future may provide specific portfolio security advice with respect to all or some portion of each Portfolio's assets. SFM will perform internal due diligence on prospective Managers for each Portfolio and monitor Manager performance using its proprietary investment adviser selection and monitoring process. SFM will be responsible for communicating performance targets and evaluations to Managers, supervising each Manager's compliance with each Portfolio's fundamental investment objectives and policies, authorizing Managers to engage in certain investment techniques for each Portfolio, and recommending to the Board of Trustees whether sub- advisory agreements should be renewed, modified or terminated. SFM also will recommend to the Board the addition of new Managers as it deems appropriate. (See Section II, above.) For its services, SFM will receive an advisory fee from each Portfolio based on the Portfolio's assets. SFM will then pay the Managers out of this fee. Under this structure, the Trust will be operated in a manner that is distinctly different from virtually all other investment companies. Most investment companies operate under a structure in which a single related group of companies provide investment advisory, administrative, and distribution services. Typically, the investment company pays the advisory fee to its investment adviser which, in turn, compensates internal portfolio Managers who make specific securities selections. In contrast, the Trust will offer investors an opportunity to access, on a pooled investment basis, the core elements of SFM's investment adviser selection, monitoring, and asset allocation services. Under this "Manager of Managers" approach, SFM will recommend and, if the Board approves the recommendation, monitor for each Portfolio one or more Managers using a range of investment styles. (See Section II, above.) Duration and Termination. Unless terminated earlier, the Investment Advisory Agreement shall continue in effect as to each Portfolio until on or about December 16, 1996, and thereafter, for periods of one year for so long as such continuance is specifically approved with respect to a Portfolio at least 20 annually (i) by the vote of the holders of a majority of the outstanding shares of the such Portfolio or by the Trustees of the Trust, and (ii) by the vote of a majority of those Trustees of the Trust who are not parties to the Investment Advisory Agreement or "interested persons" (as that term is defined in the 1940 Act, as amended) of any party thereto, cast in person at a meeting called for the purpose of voting on such approval. The Investment Advisory Agreement will terminate automatically in the event of its assignment. It is terminable at any time without penalty by the Trustees of the Trust or with respect to the Portfolio by a vote of a majority of the outstanding shares of each such Portfolio on not less than 30 days nor more than 60 days written notice to SFM. In addition, it is terminable by SFM upon 90 days written notice to the Trust. SFM will discharge its responsibilities subject to the supervision of, and policies set by, the Trustees of the Trust. The Investment Advisory Agreement provides that SFM 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 by SFM of its obligations or duties thereunder. Description of the Investment Adviser. SFM is a wholly-owned subsidiary of SEI Corporation ("SEI"), a financial services company located in Wayne, Pennsylvania. The principal business address of SFM is 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658. SEI was founded in 1968 and is a leading provider of investment solutions to banks, institutional investors, investment advisers, and insurance companies. Affiliates of SFM have provided consulting advice to institutional investors for more than 20 years, including advice regarding selection and evaluation of investment advisers. As of March 31, 1995, SFM acted in a similar "manager of managers" role with respect to $665 million of client assets, which includes the SFM-Advised Portfolios of the Trust. SFM has served as Manager of Managers of the Core International Equity Portfolio since December 16, 1994 and of the Emerging Markets Equity Portfolio since January 17, 1995. SFM currently serves as investment adviser, manager and/or administrator to more than 26 investment companies, including more than 220 portfolios, which investment companies had more than $48 billion in assets as of March 31, 1995. In addition to serving as investment adviser to the SFM-Advised Portfolios, SFM serves as Manager of the Trust pursuant to a Management Agreement dated August 30, 1988. In connection with its role as Manager, SFM provides the Trust with overall management services, regulatory reporting, all necessary office space, equipment, personnel, and facilities, and acts as transfer agent, dividend disbursing agent, and shareholder servicing agent. For its management services under the current management arrangement, SFM is entitled to a fee which is calculated daily and paid monthly at an annual rate of .60% of the average daily net assets of the International Fixed Income Portfolio, and .80% of the average daily net assets of the European Equity and the Pacific Basin Equity Portfolios. SFM and the Managers may waive all or a portion of their respective fees in order to limit the operating expenses of a Portfolio. Any such waiver is voluntary and may be terminated at any time in their sole discretion. 21 For the fiscal year ended February 28, 1995, the Portfolios to SFM the following management fees:
PORTFOLIO FEES PAID (000) FEE WAIVERS (000) --------- --------------- ----------------- Core International Equity.................. $2,653 $93 Emerging Markets Equity.................... $ (8) $11 International Fixed Income................. $ 122 $84 European Equity............................ $ 108 $57 Pacific Basin Equity....................... $ 83 $76
Once the Manager of Managers structure is in place, SFM will reduce its management fee by .15% for each Portfolio in order to compensate for the increased advisory and sub-advisory fees payable under that structure. The table below sets forth information about the proposed level of fees payable to SFM both as Adviser and Manager, and to the Managers, assuming that the Shareholders approve the Manager of Managers structure:
ADVISORY FEE ADVISORY FEE PAID PAID TO SUB-ADVISER TO SFM ADMINISTRA- UNDER FORMER UNDER NEW TION ADVISORY ADVISORY SUB-ADVISORY FEE FEE PAID TO PORTFOLIO SUB-ADVISER AGREEMENT AGREEMENT PAID BY SFM SFM * --------- ------------------- ----------------- ------------ ----------------- ----------- International Strategic Fixed .30% .45% .30% .45% Fixed Income, L.P. Income European Morgan Grenfell .325% .475% .325% .65% Equity Investment Services Pacific Basin Schroder Capital .40% on first 100 .55% .40% on first 100 .65% Equity Management million, .30% on million, .30% on Limited next 50 million, next 50 million, .20% thereafter .20% thereafter
- - -------- * In each case, the contractual administration fee payable to SFM has been lowered by .15% in order to compensate for the increased level of advisory and sub-advisory fees payable under the Manager of Managers structure. However, the total level of fees payable to SFM, as well as the overall level of expenses for each Portfolio, will remain the same. Listed below are the names and principal occupations of each of the directors and the principal executive officers of SFM. The principal business address of each director and the principal executive officers, as it relates to their duties at SFM, is 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658. 22
NAME TITLE ---- ----- Alfred P. West, Jr. . Director, Chairman & Chief Executive Officer Henry H. Greer....... Director, President & Chief Operating Officer Carmen V. Romeo...... Director, Executive Vice President & Treasurer Richard B. Lieb...... Executive Vice President Edward Loughlin...... Executive Vice President, President--Insurance Asset Services Division & Asset Management Services Division Charles A. Marsh..... Executive Vice President Carl A. Guarino...... Senior Vice President Chris Brookmeyer..... Controller Kevin P. Robins...... Senior Vice President, General Counsel & Secretary
At a meeting held on March 6, 1995, the Board of Trustees reviewed SFM's qualifications to act as investment adviser for the Non-SFM-Advised Portfolios of the Trust, placing particular emphasis on its proposed role in recommending, monitoring and terminating Managers, subject to Board of Trustee oversight, and its performance as investment adviser for the SFM-Advised Portfolios of the Trust. The Trustees received written and oral information regarding SFM's key personnel, its experience in selection and evaluation of investment Managers and research performed by SFM and others that had led SFM to recommend a "Manager of Managers" structure (i.e., one in which SFM would act as the investment adviser and one or more Managers would assume substantial day-to-day investment responsibilities; see Section II, above). In recommending that the Shareholders approve the Investment Advisory Agreement, the Trustees carefully evaluated the experience of SFM's key personnel in institutional investing and the quality of services SFM is expected to provide to the Portfolios, including, but not limited to: (1) the fee and expense ratios of comparable mutual funds; (2) the performance of the Portfolios since commencement of operations; (3) the nature and quality of the services expected to be rendered to the Portfolios by SFM; (4) the distinct investment objective and policies of the Portfolios; (5) that the total compensation payable to SFM by the Portfolios under the Investment Advisory Agreement and the Management Agreement will be at the same rate as the compensation payable to SFM and the proposed sub-advisers under the existing Investment Advisory Agreement and the Management Agreement; (6) the history, reputation, qualification and background of SFM as well as the qualifications of its personnel and its financial condition; (7) its performance record; (8) the benefits expected to be realized as a result of the Manager of Managers structure; and (9) other factors deemed relevant. The Trustees also reviewed the fees to be paid to SFM in comparison to those being charged in the relevant segment of the mutual fund business, including any benefits received by SFM or its affiliates in connection with soft dollars payments. In the event Shareholders of a Portfolio do not approve the selection of SFM as investment adviser and the Investment Advisory Agreement between the Trust, on behalf of the Non-SFM-Advised Portfolios, and SFM, or if the Shareholders of a Portfolio do not approve the Manager of Managers structure discussed in Section II of the Proxy Statement, at the Special Meeting to which this Proxy Statement relates, or any adjournment thereof, the Trustees will consider the appropriate course of action. 23 17. APPROVAL OF THE INVESTMENT ADVISER AND THE INVESTMENT ADVISORY AGREEMENT FOR THE INTERNATIONAL FIXED INCOME PORTFOLIO OF THE TRUST. Description of the Portfolio. The International Fixed Income Portfolio seeks to provide capital appreciation and current income through investment primarily in high quality, non-U.S. dollar denominated government and corporate fixed income securities or debt obligations. Under normal circumstances, at least 65% of the International Fixed Income Portfolio's assets will be invested in high quality foreign government and foreign corporate fixed income securities or debt obligations of issuers located in at least three countries other than the United States. Termination of the Current Investment Advisory Agreement. Strategic Fixed Income, L.P. ("Strategic") currently serves as investment adviser to the International Fixed Income Portfolio pursuant to an investment advisory agreement. The Board of Trustees voted on March 6, 1995 to terminate this agreement based upon the Board's determination that selection of SFM to provide investment advisory services as described herein will be in the best interests of the International Fixed Income Portfolio. The Board also approved SFM as the new investment adviser, and Strategic as the new sub-adviser, effective upon approval by Shareholders. Compensation. Under the proposed Investment Advisory Agreement, the Trust would pay SFM a fee, which is calculated daily and paid monthly, at an annual rate of .45% of the average daily net assets of the International Fixed Income Portfolio. As SFM did not previously serve as investment adviser to the International Fixed Income Portfolio, the aggregate investment advisory fee paid to SFM during the last fiscal year was $0. Strategic received $86,000. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 17. --- 18. APPROVAL OF THE INVESTMENT ADVISER AND THE INVESTMENT ADVISORY AGREEMENT FOR THE EUROPEAN EQUITY PORTFOLIO OF THE TRUST. Description of the Portfolio. The European Equity Portfolio seeks to provide long-term capital appreciation by investing primarily in a diversified portfolio of equity securities of European issuers. Under normal circumstances, at least 65% of the European Equity Portfolio's assets will be invested in equity securities of European issuers. Termination of the Current Investment Advisory Agreement. Morgan Grenfell Investment Services Limited ("Morgan Grenfell") currently serves as investment adviser to the European Equity Portfolio pursuant to an investment advisory agreement. The Board of Trustees voted on March 6, 1995 to terminate this agreement based upon the Board's determination that selection of SFM to provide investment advisory services as described herein will be in the best interests of the European Equity Portfolio. The Board also approved SFM as the new investment adviser, and Morgan Grenfell as the new sub-adviser, effective upon approval by Shareholders. Compensation. Under the proposed Investment Advisory Agreement, the Trust would pay SFM a fee, which is calculated daily and paid monthly, at an annual rate of .475% of the average daily net assets of the European Equity Portfolio. As SFM did not previously serve as investment adviser to the European Equity Portfolio, the aggregate investment advisory fee paid to SFM during the last fiscal year was $0. Morgan Grenfell received $67,000. 24 THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 18. --- 19. APPROVAL OF THE INVESTMENT ADVISER AND THE INVESTMENT ADVISORY AGREEMENT FOR THE PACIFIC BASIN EQUITY PORTFOLIO OF THE TRUST. Description of the Portfolio. The Pacific Basin Equity Portfolio seeks to provide long-term capital appreciation by investing primarily in a diversified portfolio of equity securities of Pacific Basin issuers. Under normal circumstances, at least 65% of the Pacific Basin Equity Portfolio's assets will be invested in equity securities of Pacific Basin issuers. Termination of the Current Investment Advisory Agreement. Schroder Capital Management International Limited ("Schroder") currently serves as investment adviser to the Pacific Basin Equity Portfolio pursuant to an investment advisory agreement. The Board of Trustees voted on March 6, 1995 to terminate this agreement based upon the Board's determination that selection of SFM to provide investment advisory services as described herein will be in the best interests of the Pacific Basin Equity Portfolio. The Board also approved SFM as the new investment adviser, and Schroder as the new sub-adviser, effective upon approval by Shareholders. Compensation. Under the proposed Investment Advisory Agreement, the Trust would pay SFM a fee, which is calculated daily and paid monthly, at an annual rate of .55% of the average daily net assets of the Pacific Basin Equity Portfolio. As SFM did not previously serve as investment adviser to the Pacific Basin Equity Portfolio, the aggregate investment advisory fee paid to SFM during the last fiscal year was $0. Schroder received $80,000. THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 19. --- SECTION IV. The Board of Trustees is recommending that Shareholders of the Non-SFM- Advised Portfolios of the Trust approve each investment sub-adviser recommended in Proposals 20 through 22 as investment sub-advisers of the Non- SFM-Advised Portfolios and approve the form of investment sub-advisory agreement (the "Investment Sub-Advisory Agreement") between SFM and the proposed investment sub-advisers (which is attached as Exhibit B to this Proxy Statement). The Sub-Advisers. The entities described in Proposals 20 through 22 will serve as investment sub-advisers (each, a "Sub-Adviser," and, collectively, the "Sub-Advisers") to the Non-SFM-Advised Portfolios. Under the Manager of Managers structure, SFM will have general oversight responsibility for the investment advisory services provided to the Portfolios, including formulating the Portfolios' investment policies and analyzing economic trends affecting the Portfolios. In addition, SFM will be responsible for managing the allocation of assets among the Portfolio's Sub-Advisers and directing and evaluating the investment services provided by the Sub-Advisers, including their adherence to each Portfolio's respective investment objectives and policies and each Portfolio's investment performance. In accordance with each Portfolio's investment objectives and policies, and under the supervision of 25 SFM and the Trust's Board of Trustees, each Sub-Adviser will be responsible for the day-to-day investment management of all or a discrete portion of the assets of a Portfolio. The Sub-Advisers are authorized to make investment decisions for the Portfolios and place orders on behalf of the Portfolios to effect the investment decisions made. In addition, SFM will monitor the compliance of each Sub-Adviser with regulatory and tax regulations, such as those relating to portfolio concentration and diversification. For the most part, compliance with these requirements by each Sub-Adviser with respect to its portion of a Portfolio will assure compliance by the Portfolio as a whole. In addition, SFM will monitor positions taken by each Sub-Adviser and will notify Sub-Advisers of any developing situations to help ensure that investments do not run afoul of the short-short test or the wash sale rules. To the extent that having multiple Sub-Advisers responsible for investing separate portions of a Portfolio's assets creates the need for coordination among the Sub-Advisers, there is an increased risk that the Portfolio will not comply with these regulatory and tax requirements. It is possible that different Sub-Advisers for the same Portfolio could take opposite actions within a short period of time with respect to a particular security. For example, one Sub-Adviser could buy a security for a Portfolio and shortly thereafter another Sub-Adviser could sell the same security from the portion of the Portfolio's assets allocated to it. If in these circumstances the securities could be transferred from one Sub-Adviser's portion of the Portfolio to another, the Portfolio could avoid transaction costs and could avoid creating possible wash sales and short-short gains under the Code. Such transfers are not practicable, but the Sub-Advisers and SFM do not believe that there will be material adverse effects on a Portfolio as a result. First, it does not appear likely that there will be substantial overlap in the securities acquired for a Portfolio by the various Sub-Advisers. Moreover, the Sub- Advisers would probably only rarely engage in the types of offsetting transactions described above, especially within a short time period. Therefore, it is a matter of speculation whether offsetting transactions would result in any significant increases in transaction costs or have significant tax consequences. With respect to the latter, SFM and the Sub-Advisers will establish procedures with respect to the short-short test which are designed to prevent realization of short-short gains in excess of Code limits. It is true that wash sales could occur in spite of the efforts of SFM, but the Board of Trustees believes that the benefits of using multiple managers outweighs the consequences of any wash sales. SFM is currently seeking an exemptive order from the SEC that would permit SFM, with the approval of the Trust's Board of Trustees, to retain Sub-Advisers for a Portfolio without submitting the accompanying sub-advisory agreement to a vote of the Portfolio's shareholders. If granted, the exemptive relief will permit the non-disclosure of amounts payable by SFM under such sub-advisory agreements. The Trust will notify shareholders in the event of any change in the identity of the Sub-Adviser for a Portfolio. Until or unless this exemptive order is granted, if one of the Sub-Advisers is terminated or departs from a Portfolio with multiple advisers, the Portfolio will handle such termination or departure in one of two ways. First, the Portfolio may propose that a new investment adviser be appointed to manage that portion of the Portfolio's assets managed by the departing Sub-Adviser. In this case, the Portfolio would be required to submit to the vote of the Portfolio's shareholders the approval of a investment advisory contract with the new adviser. In the alternative, the Portfolio may decide to allocate the departing Sub-Adviser's assets among the remaining Sub-Advisers. This allocation 26 would not require new investment advisory contracts with the remaining Sub- Advisers, and consequently no shareholder approval would be necessary. If the Manager of Managers structure is approved, the Trustees will be able to instruct SFM to add or replace Sub-Advisers without Shareholder approval. The Trustees of the Trust, including all of the Trustees who are not "interested persons" of the Trust, approved the general form of the Investment Sub-Advisory Agreement with respect to the Non-SFM-Advised Portfolios on March 6, 1995. The Trustees received written and oral information from both SFM and the proposed Sub-Advisers. SFM recommended the selection of the proposed Sub- Advisers and reviewed the considerations and the search process that had led to the recommendation. The Trustees also met with representatives of the proposed Sub-Advisers and considered information about key personnel, investment philosophy and process and performance track record, among other factors. In recommending that the Shareholders approve the Investment Sub-Advisory Agreements, the Trustees carefully evaluated the investing experience of each proposed Sub-Adviser's key personnel and the quality of services each proposed Sub-Adviser can be expected to provide to the Portfolios, including, but not limited to: (1) the fee and expense ratios of comparable mutual funds; (2) the performance of the Portfolios since commencement of operations; (3) the nature and quality of the services expected to be rendered to the Portfolios by each proposed Sub-Adviser; (4) the distinct investment objective and policies of the Portfolios; (5) the fact that the compensation payable to each proposed Sub- Adviser by the Portfolios under the proposed Investment Sub-Advisory Agreements will be at the same rate as the compensation payable to the proposed Sub- Advisers under the existing Investment Advisory Agreements; (6) the history, reputation, qualification and background of each proposed Sub-Adviser as well as the qualifications of their personnel and their respective financial conditions; (7) their performance records; (8) the benefits expected to be realized as a result of the Manager of Managers structure; and (9) other factors deemed relevant. The Trustees also reviewed the fees to be paid to each Sub-Adviser in comparison to those being charged in the relevant segment of the mutual fund business, including any benefits received by any Sub-Adviser or its affiliates in connection with soft dollar payments. Duties Under each Investment Sub-Advisory Agreement. Under each Investment Sub-Advisory Agreement, the Sub-Adviser makes the investment decisions for the assets of the Portfolio allocated to it by SFM (if such Portfolio has more than one Sub-Adviser), and continuously reviews, supervises, and administers the Portfolio's investment program with respect to these assets. See "General Information About the Trust and Other Matters--Portfolio Transactions." Each Sub-Adviser is independent of SFM and discharges its responsibilities subject to the supervision of SFM and the Trustees of the Trust and in a manner consistent with each Portfolio's investment objectives, policies and limitations. Each Investment Sub-Advisory Agreement provides that each Sub- Adviser shall not be protected against any liability to the Trust, its shareholders, or SFM by reason of willful misfeasance, bad faith, or negligence on its part in the performance of its duties or from reckless disregard by such Sub-Adviser of its obligations or duties thereunder. Duration and Termination. Unless terminated earlier, each Investment Sub- Advisory Agreement shall continue in effect as to each Portfolio through June, 1997, and thereafter, for periods of one year for so long as such continuance is specifically approved at least annually (i) by the vote of the holders 27 of a majority of the outstanding shares of such Portfolio or by the Trustees of the Trust, and (ii) by the vote of a majority of those Trustees of the Trust who are not parties to the Investment Advisory Agreement or Investment Sub- Advisory Agreement or who are not "interested persons" (as that term is defined in the 1940 Act, as amended) of any party thereto, cast in person at a meeting called for the purpose of voting on such approval. If the Manager of Managers structure is approved by the Shareholders of a Portfolio, the Trustees may add and replace Sub-Advisers without Shareholder approval. This structure requires an order of exemption from the SEC before becoming operative. If SFM obtains exemptive relief from the SEC permitting it to engage a Sub-Adviser without first obtaining approval of the Investment Sub-Advisory Agreement from a majority of the outstanding voting securities of the Portfolio(s) involved, the Investment Sub-Advisory Agreement shall become effective upon its approval by the Trust's Board of Trustees. Any Sub-Adviser so selected and approved shall be without the protection accorded by shareholder approval of an investment adviser's receipt of compensation under Section 36(b) of the 1940 Act. Each Investment Sub-Advisory Agreement will terminate automatically in the event of its assignment or in the event that SFM's Investment Advisory Agreement is terminated. Each Investment Sub-Advisory Agreement is terminable at any time without penalty by the Trustees of the Trust, or, with respect to each Portfolio, by a vote of a majority of the outstanding shares of such Portfolio on not less than 30 days nor more than 60 days written notice to such Portfolio's Sub-Adviser. In addition, each Portfolio's Investment Sub-Advisory Agreement is terminable by such Portfolio's Sub-Adviser upon 90 days written notice to the Trust or SFM. In the event Shareholders of a Portfolio do not approve the adoption of an Investment Sub-Advisory Agreement at the Special Meeting to which this Proxy Statement relates, or any adjournment thereof, the Trustees will consider the appropriate course of action. 20. APPROVAL OF AN INVESTMENT SUB-ADVISER AND THE INVESTMENT SUB-ADVISORY AGREEMENT FOR THE INTERNATIONAL FIXED INCOME PORTFOLIO The Board of Trustees is recommending that Shareholders of International Fixed Income Portfolio approve Strategic as an Sub-Adviser of the Portfolio and approve the form of Investment Sub-Advisory Agreement between SFM and Strategic. Compensation. Under the Investment Sub-Advisory Agreement, SFM pays Strategic a fee, which is calculated and paid monthly, based on an annual percentage rate of the month-end market value of assets of the International Fixed Income Portfolio managed by Strategic. This rate is set at .30% of the average daily net assets of the Portfolio. For the fiscal year ended February 28, 1994, the Portfolio paid advisory fees of .25% of its average daily net assets. Description of Strategic. Strategic currently acts as the adviser for the International Fixed Income Portfolio. Strategic is a limited partnership formed in 1991 under the laws of the State of Delaware, to manage multi-currency fixed income portfolios. The general partner of the firm is Kenneth Windheim and the limited partner is Strategic Investment Management ("SIM"). As of March 1, 1995, Strategic managed approximately $4 billion in global and international fixed income portfolios. Together, as of 28 March 1, 1995, Strategic and SIM managed over $15 billion in client assets. The principal address of Strategic is 1001 Nineteenth Street North, 16th Floor, Arlington, Virginia 22209. [STRATEGIC ALSO SERVES AS INVESTMENT ADVISER TO SEVERAL OTHER REGISTERED INVESTMENT COMPANIES WITH INVESTMENT OBJECTIVES SIMILAR TO THOSE OF THE PORTFOLIO. THE APPROXIMATE NET ASSETS OF SUCH FUNDS OR PORTFOLIOS AND THE FEE PAYABLE BY EACH ARE SET FORTH BELOW:] Kenneth Windheim, President of Strategic has been the senior portfolio manager of the Portfolio since its inception in 1991. Mr. Windheim is assisted by Gregory Barnett, Director of Strategic and portfolio manager of the Portfolio since April 1994. Prior to forming Strategic, Kenneth Windheim managed a global fixed income portfolio at Prudential Asset Management. Prior to joining Strategic, Gregory Barnett was the portfolio manager for the Pilgrim Multi-Market Income Fund with active use of foreign exchange option strategies. Prior to that he was vice president and senior fixed income portfolio manager at Lexington Management. Listed below are the names and principal occupations of each of the directors and the principal executive officer of Strategic. The principal business address of each director and the principal executive officer, as it relates to their duties at Strategic is 1001 Nineteenth Street North, 16th Floor, Arlington, Virginia 22209.
NAME TITLE - - ---- -----
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 20. --- 21. APPROVAL OF AN INVESTMENT SUB-ADVISER AND THE INVESTMENT SUB-ADVISORY AGREEMENT FOR THE EUROPEAN EQUITY PORTFOLIO. The Board of Trustees is recommending that Shareholders of European Equity Portfolio approve Morgan Grenfell as an Sub-Adviser of the Portfolio and approve the form of Investment Sub-Advisory Agreement between SFM and Morgan Grenfell. Compensation. Under the Investment Sub-Advisory Agreement, SFM pays Morgan Grenfell a fee, which is calculated and paid monthly, based on an annual percentage rate of the month-end market value of assets of the European Equity Portfolio managed by Morgan Grenfell. This rate is set at .325% of the average daily net assets of the Portfolio. For the fiscal year ended February 28, 1995, the Portfolio paid Morgan Grenfell an investment advisory fee of .325% of the average daily net assets of the Portfolio. 29 Description of Morgan Grenfell. Morgan Grenfell currently acts as the adviser for the European Equity Portfolio. Morgan Grenfell, a wholly-owned subsidiary of Morgan Grenfell Asset Management Limited, managed over $9.5 billion in assets as of December 31, 1994. Morgan Grenfell Asset Management Limited, a wholly-owned subsidiary of Deutsche Bank, A.G., a German financial services conglomerate, managed over $48 billion in assets as of December 31, 1994. Morgan Grenfell has over 16 years experience in managing international portfolios for North American clients. It employs more than 15 European investment professionals. Through a proprietary investment process, Morgan Grenfell attempts to exploit perceived inefficiencies present in the European markets with original research and an emphasis on stock selection. The principal address of Morgan Grenfell is 20 Finsbury Circus, London EC2M INB, England. Morgan Grenfell also serves as investment adviser to several other registered investment companies with similar investment objectives. The approximate net assets of such funds and the fee payable by each are set forth below:
FEE FUND ASSET SIZE RECEIVED - - ---- ------------ ---------- Dean Witter Euro....................................... $729,187,233 $2,597,700 Dean Witter Variable European Growth................... $152,089,824 $ 518,236
Julian R. Johnston and Jeremy G. Lodwick share primary responsibility for the European Equity Portfolio. Mr. Johnston has 19 years experience in European equity investment. Mr. Johnston joined Morgan Grenfell in 1984 and is currently the head of Morgan Grenfell Continental European investment team. He speaks French, German, Swedish and Danish fluently. Mr. Lodwick has ten years experience in European equity investment. He joined Morgan Grenfell in 1986 and was a UK equity research analyst before moving to New York where he was a member of the client liaison and marketing team for 5 years. He returned to the London office in 1991 to manage European equity portfolios. Listed below are the names and principal occupations of each of the directors and the principal executive officer of Morgan Grenfell, the principal business address of each director and the principal executive officer, as it relates to their duties at Morgan Grenfell is 20 Finsbury Circus, London EC2M INB, England.
NAME TITLE - - ---- ----- Michael Bullock....................... Chairman, Chief Investment Officer Patrick W.W. Disney................... Chief Executive Graham David Bamping.................. Director Martin A. Hall........................ Director Julian R. Johnston.................... Director Ian D. Kelson......................... Director Richard L. Lamb....................... Director Jeremy G. Lodwick..................... Director William G.M. Thomas................... Director Patrick N.C. Walker................... Director Stephen A.J. Ward..................... Director Alan M. Wheatly....................... Director
30 THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 21. --- 22. APPROVAL OF AN INVESTMENT SUB-ADVISER AND THE INVESTMENT SUB-ADVISORY AGREEMENT FOR THE PACIFIC BASIN EQUITY PORTFOLIO. The Board of Trustees is recommending that Shareholders of Pacific Basin Equity Portfolio approve Schroder as a Sub-Adviser of the Portfolio and approve the form of Investment Sub-Advisory Agreement between SFM and Schroder. Compensation. Under the Investment Sub-Advisory Agreement, SFM pays Schroder a fee, which is calculated and paid monthly, based on an annual percentage rate of the month-end market value of assets of the Pacific Basin Equity Portfolio managed by Schroder. This rate is set at .40% of the average daily net assets of the first $100 million of the Portfolio, .30% of the average daily net assets of the $50 million of the Portfolio, and .20% of the average daily net assets of the Portfolio above $150 million for the fiscal year ended February 28, 1995. The Portfolio paid Schroder an investment advisory fee of [ %] of the average daily net assets of the Portfolio. Description of Schroder Capital Management. Schroder currently acts as the adviser for the Pacific Basin Equity Portfolio. Schroder is a wholly-owned indirect subsidiary of Schroders plc, the holding company parent of an investment banking and investment management group of companies (the "Schroder Group"). The investment management operations of the Schroder Group are located in 17 countries worldwide, including seven in Asia. As of March 31, 1995 the Schroder Group had over $[ ] billion in assets under management. As of that date, Schroder had over $[ ] billion in assets under management. The Schroder Group has research resources throughout the Asian region, consisting of offices in Tokyo, Hong Kong, Singapore, Kuala Lumpur, Seoul, Taipei and Jakarta, staffed by 38 investment professionals. Schroder's investment process emphasizes individual stock selection and company research conducted by professionals at each local office which is integrated into Schroder's global research network by the manager of research in London. The principal address of Schroder is 33 Gutter Lane, London EC2V 8 AS, England. [SCHRODER ALSO SERVES AS INVESTMENT ADVISER TO SEVERAL OTHER REGISTERED INVESTMENT COMPANIES WITH INVESTMENT OBJECTIVES SIMILAR TO THOSE OF THE PORTFOLIO. THE APPROXIMATE NET ASSETS OF SUCH FUNDS OR PORTFOLIOS AND THE FEE PAYABLE BY EACH ARE SET FORTH BELOW:] John S. Ager, a Senior Vice President and Director of SC, serves at the principal portfolio manager for the Pacific Basin Equity Portfolio. Mr. Ager has over 17 years of experience in managing client accounts invested in Asian countries. Listed below are the names and principal occupations of each of the directors and the principal executive officer of Schroder. The principal business address of each director and the principal executive officer, as it relates to their duties at Schroder is 33 Gutter Lane, London EC2V8 AS, England. 31
NAME TITLE - - ---- -----
THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 22. --- SECTION V. GENERAL INFORMATION ABOUT THE TRUST AND OTHER MATTERS Distribution. SEI Financial Services Company ("SFS"), a wholly-owned subsidiary of SEI Corporation, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658 ("SEI"), acts as the Distributor of the Trust's shares pursuant to a Distribution Agreement dated August 30, 1988 between the Trust and SFS. Alfred P. West, Jr. serves as Chairman of the Board and Chief Executive Officer of SFS and SEI, and Henry H. Greer serves as Director, President and Chief Operating Officer of SFS and SEI. William M. Doran, a Trustee of the Trust, is a Director and Secretary of SEI. Portfolio Transactions. Each Portfolio of the Trust has no obligation to deal with any dealer or group of dealers in the execution of transactions in portfolio securities. Subject to policies established by the Trustees, SFM and the Managers (the "Advisers") are responsible for placing orders to execute transactions for the Portfolios. In placing orders, it is the policy of the Trust's Portfolios 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 will generally seek reasonable competitive spreads or commissions, the Portfolios will not necessarily be paying the lowest spread or commission available. The Portfolios do not expect to use one particular dealer, but, subject to the Portfolios' policy of seeking the best net results, dealers who provide supplemental investment research to the Advisers may receive orders for transactions by the Portfolios. The Advisers are not prohibited from causing a Portfolio to pay a broker that provides brokerage and research services a commission in excess of the amount another broker might have charged for effecting a securities transaction, in accordance with applicable legal requirements. Pursuant to such requirements, the Advisers might authorize a higher commission to be paid if the Advisers determined in good faith that the amount to be paid was reasonable in relation to the services received in terms of the particular transaction or the Advisers' overall responsibilities to the Portfolios and other clients of the Advisers. Such research services must provide lawful and appropriate assistance to the Advisers in the performance of their investment decision-making responsibilities and could include: (a) furnishing advice as to the value of securities, the advisability of investing in, purchasing or selling securities, and the availability of securities or the purchasers or sellers of securities; and (b) furnishing analyses and 32 reports concerning issuers, industries, securities, economic factors and trends, portfolio strategy and the performance of accounts. Such information could be received orally or in writing and would be in addition to and not in lieu of the services required to be performed by the Advisers. The expenses of the Advisers would not necessarily be reduced as a result of the receipt of such supplemental information. This information might be useful to the Advisers in providing services to clients other than the Portfolios, and not all such information would be used by the Advisers in connection with the Portfolios. Conversely, such information provided to the Advisers by brokers and dealers through whom other clients of the Advisers effect securities transactions might be useful to the Advisers in providing services to the Portfolios. [IDENTIFY EACH BROKER AFFILIATED WITH ANY SUB-ADVISER AND DESCRIBE THE RELATIONSHIP THAT CAUSED THE BROKER TO BE AN AFFILIATED BROKER.] For the fiscal year ended February 28, 1995, the Portfolios of the Trust paid the following amounts in (i) brokerage commissions to affiliates of the Portfolio, and (ii) fees to the Distributor in connection with repurchase transactions:
TOTAL BROKERAGE AMOUNT PAID TO % PAID TO AMOUNT PAID TO PORTFOLIO COMMISSION DISTRIBUTOR DISTRIBUTOR SFS * - - --------- --------------- -------------- ----------- -------------- Core International Equity Emerging Markets Equity International Fixed Income European Equity Pacific Basin Equity
- - -------- *Fees paid by the Portfolio to SFS for repurchase transactions effected through SFS. 5% Shareholders. As of April 20, 1995, the following persons were the only persons who were record owners or, to the knowledge of the Trust, were beneficial owners of 5% or more of shares of the Portfolios of the Trust. The Trust believes that most of the shares referred to above were held by the below persons in accounts for their fiduciary, agency, or custodial customers.
SHARE OWNERSHIP NUMBER OF SHARES PERCENT - - --------------- ---------------- -------
[INSERT 5% SHAREHOLDERS TABLE] The Trust's Trustees and officers do not beneficially own any shares of the Trust. Adjournment. In the event that sufficient votes in favor of a Proposal set forth in the Notice of the Special Meeting are not received by the time scheduled for the meeting, the persons named as proxies may propose one or more adjournments of the meeting for a period or periods of not more than 60 days in the aggregate to permit further solicitation of proxies with respect to any of such Proposal. 33 Any such adjournment will require the affirmative vote of a majority of the votes cast on the question in person or by proxy at the session of the meeting to be adjourned. The persons named as proxies will vote in favor of such adjournment those proxies which they are entitled to vote in favor of such Proposals. They will vote against any such adjournment those proxies required to be voted against any such Proposals. The costs of any such additional solicitation and of any adjourned session will be borne by the Trust. Required Vote. Approval of the Proposals with respect to a Portfolio requires the affirmative vote of a majority of the outstanding shares of a Portfolio. As defined in the 1940 Act, "majority of the outstanding shares" means the vote of (i) 67% or more of a Portfolio's or the Trust's outstanding shares present at a meeting, if the holders of more than 50% of the outstanding shares of a Portfolio or the Trust are present or represented by proxy, or (ii) more than 50% of a Portfolio's or the Trust's outstanding shares, whichever is less. Abstentions and "broker non-votes" will not be counted for or against any Proposal to which it relates, but will be counted for purposes of determining whether a quorum is present. Abstentions will be counted as votes present for purposes of determining a "majority of the outstanding voting securities" present at the Meeting and will therefore have the effect of counting against the Proposal to which it relates. Shareholder Proposals. The Trust does not hold annual Shareholder Meetings. Shareholders wishing to submit proposals for inclusion in a proxy statement for a subsequent meeting should send their written proposals to the Secretary of the Trust c/o SEI Corporation, Legal Department, 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658. Reports to Shareholders. The Trust will furnish, without charge, a copy of the most recent Annual Report to Shareholders of the Trust and the most recent Semi-Annual Report succeeding such Annual Report, if any, on request. Requests should be directed to the Trust at 680 East Swedesford Road, Wayne, PA 19087- 1658, or by calling 1-800-342-5734. Other Matters. The Trustees know of no other business to be brought before the meeting. However, if any other matters properly come before the meeting, it is their intention that proxies which do not contain specific restrictions to the contrary will be voted on such matters in accordance with the judgment of the persons named in the enclosed form of proxy. ----------------- SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY. 34 EXHIBIT A INVESTMENT ADVISORY AGREEMENT SEI INTERNATIONAL TRUST AGREEMENT made this 16th day of December, 1994, by and between SEI International Trust, a Massachusetts business trust (the "Trust"), and SEI Financial Management Corporation, (the "Adviser"). WHEREAS, the Trust is an open-end management investment company registered under the Investment Company Act of 1940, as amended (the "1940 Act"), consisting of several portfolios of shares, each having its own investment policies; and WHEREAS, the Trust desires to retain the Adviser to render investment management services with respect to its Core International Equity and Emerging Markets Equity Portfolios and such other portfolios as the Trust and the Adviser may agree upon (the "Portfolios"), and the Adviser is willing to render such services: NOW, THEREFORE, in consideration of mutual covenants herein contained, the parties hereto agree as follows: 1. DUTIES OF THE ADVISER. The Trust employs the Adviser to manage the investment and reinvestment of the assets, to hire (subject to the approval of the Trust's Board of Trustees and, except as otherwise permitted under the terms of any exemptive relief obtained by the Adviser from the Securities and Exchange Commission, or by rule or regulation, a majority of the outstanding voting securities of any affected Portfolio(s)) and thereafter supervise the investment activities of one or more sub-advisers deemed necessary to carry out the investment program of any Portfolios of the Trust, and to continuously review, supervise and (where appropriate) administer the investment program of the Portfolios, to determine in its discretion (where appropriate) the securities to be purchased or sold, to provide the Administrator and the Trust with records concerning the Adviser's activities which the Trust is required to maintain, and to render regular reports to the Administrator and to the Trust's officers and Trustees concerning the Adviser's discharge of the foregoing responsibilities. The retention of a sub-adviser by the Adviser shall not relieve the Adviser of its responsibilities under this Agreement. The Adviser shall discharge the foregoing responsibilities subject to the control of the Board of Trustees of the Trust and in compliance with such policies as the Trustees may from time to time establish, and in compliance with the objectives, policies, and limitations for each such Portfolio set forth in the Trust's prospectus and statement of additional information, as amended from time to time (referred to collectively as the "Prospectus"), and applicable laws and regulations. The Trust will furnish the Adviser from time to time with copies of all amendments or supplements to the Prospectus, if any. The Adviser accepts such employment and agrees, at its own expense, to render the services and to provide the office space, furnishings and equipment and the personnel (including any sub-advisers) required by it to perform the services on the terms and for the compensation provided herein. The Adviser will not, however, pay for the cost of securities, commodities, and other investments (including brokerage commissions and other transaction charges, if any) purchased or sold for the Trust. A-1 2. DELIVERY OF DOCUMENTS. The Trust has furnished Adviser with copies properly certified or authenticated of each of the following: (a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary of State of the Commonwealth of Massachusetts (such Agreement and Declaration of Trust, as presently in effect and as it shall from time to time be amended, is herein called the "Declaration of Trust"); (b) By-Laws of the Trust (such By-Laws, as in effect on the date of this Agreement and as amended from time to time, are herein called the "By- Laws"); (c) Prospectus(es) of the Portfolio(s). 3. OTHER COVENANTS. THE ADVISER AGREES THAT IT: (a) will comply with all applicable Rules and Regulations of the Securities and Exchange Commission and will in addition conduct its activities under this Agreement in accordance with other applicable law; (b) will place orders pursuant to its investment determinations for the Portfolios either directly with the issuer or with any broker or dealer. In executing Portfolio transactions and selecting brokers or dealers, the Adviser will use its best efforts to seek on behalf of the Portfolio the best overall terms available. In assessing the best overall terms available for any transactions, the Adviser shall consider all factors that it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In evaluating the best overall terms available, and in selecting the broker-dealer to execute a particular transaction the Adviser may also consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Portfolio and/or other accounts over which the Adviser or an affiliate of the Adviser may exercise investment discretion. The Adviser is authorized, subject to the prior approval of the Trust's Board of Trustees, to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for any of the Portfolios which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer--viewed in terms of that particular transaction or terms of the overall responsibilities of the Adviser to the Portfolio. In addition, the Adviser is authorized to allocate purchase and sale orders for the portfolio securities to brokers or dealers (including brokers and dealers that are affiliated with the Adviser or the Trust's principal underwriter) to take into account the sale of shares of the Trust if the Adviser believes that the quality of the transaction and the commission are comparable to what they would be with other qualified firms. In no instance, however, will any Portfolio's securities be purchased from or sold to the Adviser, any sub- adviser engaged with respect to that Portfolio, the Trust's principal underwriter, or any affiliated person of either the Trust, the Adviser, and sub-adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the Securities and Exchange Commission and the 1940 Act. A-2 4. COMPENSATION OF THE ADVISER. For the services to be rendered by the Adviser as provided by Sections 1 and 2 of this Agreement, the Trust shall pay to the Adviser compensation at the rate(s) specified in the Schedule(s) which are attached hereto and made a part of this Agreement. Such compensation shall be paid to the Adviser at the end of each month, and calculated by applying a daily rate, based on the annual percentage rates as specified in the attached Schedule(s), to the assets of the Portfolio. The fee shall be based on the average daily net assets for the month involved. The Adviser may, in its discretion and from time to time, waive a portion of its fee. All rights of compensation under this Agreement for services performed as of the termination date shall survive the termination of this Agreement. 5. EXCESS EXPENSES. If the expenses for any Portfolio for any fiscal year (including fees and other amounts payable to the Adviser, but excluding interest, taxes, brokerage costs, litigation, and other extraordinary costs) as calculated every business day would exceed the expense limitations imposed on investment companies by any applicable statute or regulatory authority of any jurisdiction in which Shares are qualified for offer and sale, the Adviser shall bear such excess cost. However, the Adviser will not bear expenses of the Trust or any Portfolio which would result in the Trust's inability to qualify as a regulated investment company under provisions of the Internal Revenue Code. Payment of expenses by the Adviser pursuant to this Section 5 shall be settled on a monthly basis (subject to fiscal year end reconciliation) by a waiver of the Adviser's fees provided for hereunder, and such waiver shall be treated as a reduction in the purchase price of the Adviser's services. 6. REPORTS. The Trust and the Adviser agree to furnish to each other, if applicable, current prospectuses, proxy statements, reports to shareholders, certified copies of their financial statements, and such other information with regard to their affairs as each may reasonably request. The Adviser further agrees to furnish to the Trust, if applicable, the same such documents and information pertaining to any sub-adviser as the Trust may reasonably request. 7. STATUS OF THE ADVISER. The services of the Adviser to the Trust are not to be deemed exclusive, and the Adviser shall be free to render similar services to others so long as its services to the Trust are not impaired thereby. The Adviser shall be deemed to be an independent contractor and shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust in any way or otherwise be deemed an agent of the Trust. To the extent that the purchase or sale of securities or other investments of any issuer may be deemed by the Adviser to be suitable for two or more accounts managed by the Adviser, the available securities or investments may be allocated in a manner believed by the Adviser to be equitable to each account. It is recognized that in some cases this may adversely affect the price paid or received by the Trust or the size or position obtainable for or disposed by the Trust or any Portfolio. 8. CERTAIN RECORDS. Any records required to be maintained and preserved pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the 1940 Act which are prepared or maintained by the Adviser (or any sub-adviser) on behalf of the Trust are the property of the Trust and will be surrendered promptly to the Trust on request. The Adviser further agrees to preserve for the periods prescribed in Rule 31a-2 under the 1940 Act the records required to be maintained under Rule 31a-I under the 1940 Act. A-3 9. LIMITATION OF LIABILITY OF THE ADVISER. The duties of the Adviser shall be confined to those expressly set forth herein, and no implied duties are assumed by or may be asserted against the Adviser hereunder. The Adviser shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission in carrying out its duties hereunder, except a loss resulting from willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties hereunder, except as may otherwise be provided under provisions of applicable state law which cannot be waived or modified hereby. (As used in this Section 9, the term "Adviser" shall include directors, officers, employees and other corporate agents of the Adviser as well as that corporation itself). 10. PERMISSIBLE INTERESTS. Trustees, agents, and shareholders of the Trust are or may be interested in the Adviser (or any successor thereof) as directors, partners, officers, or shareholders, or otherwise; directors, partners, officers, agents, and shareholders of the Adviser are or may be interested in the Trust as Trustees, officers, shareholders or otherwise; and the Adviser (or any successor) is or may be interested in the Trust as a shareholder or otherwise subject to the provisions of applicable law. All such interests shall be fully disclosed between the parties on an ongoing basis and in the Trust's Prospectus as required by law. In addition, brokerage transactions for the Trust may be effected through affiliates of the Adviser or any sub-adviser if approved by the Board of Trustees, subject to the rules and regulations of the Securities and Exchange Commission. 11. DURATION AND TERMINATION. This Agreement, unless sooner terminated as provided herein, shall remain in effect until two years from date of execution, and thereafter, for periods of one year so long as such continuance thereafter is specifically approved at least annually (a) by the vote of a majority of those Trustees of the Trust who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Trustees of the Trust or by vote of a majority of the outstanding voting securities of each Portfolio; provided, however, that if the shareholders of any Portfolio fail to approve the Agreement as provided herein, the Adviser may continue to serve hereunder in the manner and to the extent permitted by the 1940 Act and rules and regulations thereunder. The foregoing requirement that continuance of this Agreement be "specifically approved at least annually" shall be construed in a manner consistent with the 1940 Act and the rules and regulations thereunder. This Agreement may be terminated as to any Portfolio at any time, without the payment of any penalty by vote of a majority of the Trustees of the Trust or by vote of a majority of the outstanding voting securities of the Portfolio on not less than 30 days nor more than 60 days written notice to the Adviser, or by the Adviser at any time without the payment of any penalty, on 90 days written notice to the Trust. This Agreement will automatically and immediately terminate in the event of its assignment. As used in this Section 11, the terms "assignment", "interested persons", and a "vote of a majority of the outstanding voting securities" shall have the respective meanings set forth in the 1940 Act and the rules and regulations thereunder, subject to such exemptions as may be granted by the Securities and Exchange Commission. 12. GOVERNING LAW. This Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts, without regard to conflict of law principles; provided, however that nothing herein shall be construed as being inconsistent with the 1940 Act. A-4 13. NOTICE: Any notice, advice or report to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid addressed by the party giving notice to the other party at the last address furnished by the other party: To the Adviser at: SEI Financial Management Corporation 680 East Swedesford Road Wayne, PA 19087 Attn: Legal Department To the Trust at: SEI Financial Management Corporation 680 East Swedesford Road Wayne, PA 19087 Attn: Legal Department 14. SEVERABILITY. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. 15. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to this Agreement's subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. A copy of the Declaration of Trust of the Trust is on file with the Secretary of State of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees, and is not binding upon any of the Trustees, officers, or shareholders of the Trust individually but binding only upon the assets and property of the Trust. No Portfolio of the Trust shall be liable for the obligations of any other Portfolio of the Trust. Without limiting the generality of the foregoing, the Adviser shall look only to the assets of a particular Portfolio for payment of fees for services rendered to that Portfolio. Where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is altered by a rule, regulation or order of the Commission, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above. SEI International Trust SEI Financial Management Corporation By: ____________________________________ By: _______________________________ Attest: ________________________________ Attest: ___________________________ A-5 SCHEDULE A TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI INTERNATIONAL TRUST AND SEI FINANCIAL MANAGEMENT CORPORATION Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual rate as follows: Emerging Markets Equity Portfolio 1.05% Core International Equity Portfolio (formerly, International Equity Portfolio) .475%
A-6 SCHEDULE B TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI INTERNATIONAL TRUST AND SEI FINANCIAL MANAGEMENT CORPORATION Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual rate as follows: International Fixed Income .45% Pacific Basin Equity .55% European Equity .475%
A-7 EXHIBIT B INVESTMENT SUB-ADVISORY AGREEMENT SEI INTERNATIONAL TRUST AGREEMENT made this day of , 1995, by and among SEI Financial Management Corporation, (the "Adviser") and (the "Sub-Adviser"). WHEREAS, SEI International Trust, a Massachusetts business trust (the "Trust") is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated December 16, 1994 (the "Advisory Agreement") with the Trust, pursuant to which the Adviser will act as investment adviser to the Portfolio (the "Portfolio"), which is a series of the Trust; and WHEREAS, the Adviser, with the approval of the Trust, desires to retain the Sub-Adviser to provide investment advisory services to the Adviser in connection with the management of the Portfolio, and the Sub-Adviser is willing to render such investment advisory services. NOW, THEREFORE, the parties hereto agree as follows: 1. DUTIES OF THE SUB-ADVISER. Subject to supervision by the Adviser and the Trust's Board of Trustees, the Sub-Adviser shall manage all of the securities and other assets of the Portfolio entrusted to it hereunder (the "Assets"), including the purchase, retention and disposition of the Assets, in accordance with the Portfolio's investment objectives, policies and restrictions as stated in the Portfolio's prospectus and statement of additional information, as currently in effect and as amended or supplemented from time to time (referred to collectively as the "Prospectus"), and subject to the following: (a) The Sub-Adviser shall provide supervision of the Assets and determine from time to time what Assets will be purchased, retained or sold by the Portfolio, and what portion of the Assets will be invested or held uninvested in cash. (b) In the performance of its duties and obligations under this Agreement, the Sub-Adviser shall act in conformity with the Trust's Declaration of Trust (as defined herein) and the Prospectus and with the instructions and directions of the Adviser and of the Board of Trustees of the Trust and will conform to and comply with the requirements of the 1940 Act, the Internal Revenue Code of 1986, and all other applicable federal and state laws and regulations, as each is amended from time to time. (c) The Sub-Adviser shall determine the Assets to be purchased or sold by the Portfolio and will place orders with or through such persons, brokers or dealers to carry out the policy with respect to brokerage set forth in the Portfolio's Registration Statement (as defined herein) and Prospectus or as the Board of Trustees or the Adviser may direct from time to time, in conformity with federal securities laws. In executing Portfolio transactions and selecting brokers or dealers, the Sub-Adviser will use its best efforts to seek on behalf of the Portfolio the best overall terms B-1 available. In assessing the best overall terms available for any transaction, the Sub-Adviser shall consider all factors that it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In evaluating the best overall terms available, and in selecting the broker-dealer to execute a particular transaction the Sub-Adviser may also consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the Portfolio and/or other accounts over which the Sub-Adviser or an affiliate of the Sub-Adviser may exercise investment discretion. The Sub-Adviser is authorized, subject to the prior approval of the Trust's Board of Trustees, to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for the Portfolio which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Sub-Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer-- viewed in terms of the particular transaction or terms of the overall responsibilities of the Sub-Adviser to the Portfolio. In addition, the Sub- Adviser if authorized to allocate purchase and sale orders for securities to brokers or dealers (including brokers and dealers that are affiliated with the Adviser, Sub-Adviser or the Trust's principal underwriter) to take into account the sale of shares of the Trust if the Sub-Adviser believes that the quality of the transaction and the commission are comparable to what they would be with other qualified firms. In no instance, however, will the Portfolio's Assets be purchased from or sold to the Adviser, Sub- Adviser, the Trust's principal underwriter, or any affiliated person of either the Trust, Adviser, the Sub-Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the Securities and Exchange Commission and the 1940 Act. (d) The Sub-Adviser shall maintain all books and records with respect to transactions involving the Assets required by subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act and shall render to the Adviser or Board of Trustees such periodic and special reports as the Adviser or Board of Trustees may reasonably request. The Sub-Adviser shall keep the books and records relating to the Assets required to be maintained by the Sub-Adviser under this Agreement and shall timely furnish to the Adviser all information relating to the Sub-Adviser's services under this Agreement needed by the Adviser to keep the other books and records of the Portfolio required by Rule 31a-1 under the 1940 Act. The Sub- adviser shall also furnish to the Adviser and other information relating to the Assets that is required to be filed by the Adviser or the Trust with the Securities and Exchange Commission ("SEC") or sent to shareholders under the 1940 Act (including the rules adopted thereunder) or any exemptive or other relief that the Adviser or the Trust obtains from the SEC. The Sub-Adviser agrees that all records that it maintains on behalf of the Portfolio are property of the Portfolio and the Sub-Adviser will surrender promptly to the Portfolio any of such records upon the Portfolio's request; provided, however, that the Sub-Adviser may retain a copy of such records. In addition, for the duration of this Agreement, the Sub-Adviser shall preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records as are required to be maintained by it pursuant to this Agreement, and shall transfer said records to any successor Sub-Adviser upon the termination of his Agreement (or, if there is no successor Sub-Adviser, to the Adviser). B-2 (c) The Sub-Adviser shall provide the Portfolio's custodian on each business day with information relating to all transactions concerning the Portfolio's Assets and shall provide the Adviser with such information upon request of the Adviser. (f) The investment management services provided by the Sub-Adviser under this Agreement are not to be deemed exclusive and the Sub-Adviser shall be free to render similar services to others, as long as such services to not impair the services rendered to the Adviser or the Trust. (g) The Sub-Adviser shall promptly notify the Adviser of any financial condition that is likely to impair the Sub-Adviser's ability to fulfill its commitment under this Agreement. Services to be furnished by the Sub-Adviser under this Agreement may be furnished through the medium of any of the Sub-Adviser's partners, officers or employees. 2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility for all services to be provided to the Portfolio pursuant to the Advisory Agreement and shall oversee and review the Sub-Adviser's performance of its duties under this Agreement; provided, however, that nothing herein shall be construed to relieve the Sub-Adviser of responsibility for compliance with the Portfolio's investment objectives, policies, and restrictions, as provided in Section 1 hereunder, in connection with its management of the Assets. 3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with copies properly certified or authenticated of each of the following documents: (a) The Trust's Agreement and Declaration of Trust, as filed with the Secretary of State of the Commonwealth of Massachusetts (such Agreement and Declaration of Trust, as in effect on the date of this Agreement and as amended from time to time, herein called the "Declaration of Trust"); (b) By-Laws of the Trust (such By-Laws, as in effect on the date of this Agreement and as amended from time to time, are herein called the "By- Laws"); (c) Prospectus(es) of the Portfolio. 4. COMPENSATION TO THE SUB-ADVISER. For the services to be provided by the Sub-Adviser pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept as full compensation therefor, a sub- advisory fee at the rate specified in the Schedule(s) which is attached hereto and made part of this Agreement. The fee will be calculated based on the average monthly market value of the Assets under the Sub-Adviser's management and will be paid to the Sub-Adviser monthly. Except as may otherwise be prohibited by law or regulation (including any SEC staff current interpretation thereon), the Sub-Adviser may, in its discretion and from time to time, waive a portion of its fee. 5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The Sub-Adviser shall not be liable for any error of judgment or for any loss suffered by the Adviser in connection with performance of its obligations under this Agreement, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services (in which case any award of damages shall be limited to the period and the amount set forth in Section 36(b)(3) of the 1940 Act), or a loss resulting from willful misfeasance, bad faith or negligence on the Sub- Adviser's part in the performance of its duties or from reckless disregard of its obligations and duties under this Agreement, except as may otherwise be provided under provisions of applicable state law which cannot be waived or modified hereby. B-3 6. REPORTS. During the term of this Agreement, the Adviser agrees to furnish the Sub-Adviser at its principal office all prospectuses, proxy statements, reports to stockholders, sales literature or other materials prepared for distribution to stockholders of the Portfolios, the Trust or the public that refer to the Sub-Adviser or its clients in any way prior to use thereof and not to use material if the Sub-Adviser reasonably objects in writing within five business days (or such other period as may be mutually agreed) after receipt thereof. The Sub-Adviser's right to object to such materials is limited to the portions of such materials that expressly relate to the Sub-Adviser, its services and its clients. The Adviser agrees to use its reasonable best efforts to ensure that materials prepared by its employees or agents or its affiliates that refer to the Sub-Adviser or its clients in any way are consistent with those materials previously approved by the Sub-Adviser as referenced in the first sentence of this paragraph. Sales literature may be furnished to the Sub- Adviser by first class or overnight mail, facsimile transmission equipment or hand delivery. 7. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the Adviser from and against any and all claims, losses, liabilities or damages (including reasonable attorney's fees and other related expenses) howsoever arising from or in connection with this Agreement or the performance by the Sub-Adviser of its duties hereunder, provided, however, that the Sub-Adviser shall not be required to indemnify or otherwise hold the Adviser harmless under this Section 7 where the claim against, or the loss, liability or damage experienced by the Adviser, is caused by or is otherwise directly related to the Adviser's own willful misfeasance, bad faith or negligence, or to the reckless disregard of its duties under this Agreement. 8. DURATION AND TERMINATION. This Agreement shall become effective upon its approval by the Trust's Board of Trustees and by the vote of a majority of the outstanding voting securities of the Portfolio; provided, however, that at any time the Adviser shall have obtained exemptive relief from the SEC permitting it to engage a Sub-Adviser without first obtaining approval of the Agreement from a majority of the outstanding voting securities of the Portfolio(s) involved, the Agreement shall become effective upon its approval by the Trust's Board of Trustees. Any Sub-Adviser so selected and approved shall be without the protection accorded by shareholder approval of an investment adviser's receipt of compensation under Section 36(b) of the 1940 Act. This Agreement shall continue in effect for a period of more than two years from the date hereof only so long as continuance is specifically approved at least annually in conformance with the 1940 Act, provided, however, that this Agreement may be terminated with respect to the Portfolio (a) by the Portfolio at any time, without the payment of any penalty, by the vote of a majority of Trustees of the Trust or by the vote of a majority of the outstanding voting securities of the Portfolio, (b) by the Adviser at any time, without the payment of any penalty, on not more than 60 days' nor less than 30 days' written notice to the Sub-Adviser, or (c) by the Sub-Adviser at any time, without the payment of any penalty, on 90 days' written notice to the Adviser. This Agreement shall terminate automatically and immediately in the event of its assignment, or in the event of a termination of the Adviser's agreement with the Trust. As used in this Section 8, the terms "assignment" and "vote of a majority of the outstanding voting securities" shall have the respective meanings set forth in the 1940 Act and the rules and regulations thereunder, subject to such exceptions as may be granted by the Commission under the 1940 Act. B-4 9. GOVERNING LAW. This Agreement shall be governed by the internal laws of the Commonwealth of Massachusetts, without regard to conflict of law principles; provided, however, that nothing herein shall be construed as being inconsistent with the 1940 Act. 10. SEVERABILITY. Should any part of this Agreement be held invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. 11. NOTICE: Any notice, advice or report to be given pursuant to this Agreement shall be deemed sufficient if delivered or mailed by registered, certified or overnight mail, postage prepaid addressed by the party giving notice to the other party at the last address furnished by the other party: To the Adviser at: SEI Financial Management Corporation 680 East Swedesford Road Wayne, PA 19087 Attention: Legal Department To the Sub-Adviser at: 12. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to this Agreement's subject matter. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts shall, together, constitute only one instrument. A copy of the Declaration of Trust of the Trust is on file with the Secretary of State of the Commonwealth of Massachusetts, and notice is hereby given that the obligations of this instrument are not binding upon any of the Trustees, officers or shareholders of the Portfolio or the Trust. Where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is altered by a rule, regulation or order of the Commission, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below as of the day and year first written above. SEI Financial Management Corporation By: By: Title: Title: B-5 SCHEDULE A TO THE SUB-ADVISORY AGREEMENT BETWEEN SEI FINANCIAL MANAGEMENT CORPORATION AND Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an annual rate as follows: Portfolio . %
B-6 SEI INTERNATIONAL TRUST Core International Equity Portfolio Special Meeting of the Shareholders THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE VOTED "FOR" THE PROPOSALS UNLESS OTHERWISE INDICATED The undersigned Shareholder(s) of the Core International Equity Portfolio ("the "Portfolio") of SEI International Trust (the "Trust") hereby appoint David G. Lee and Robert B. Carroll, and each of them, as proxies of the undersigned, with full power of substitution, to vote at a Special Meeting of Shareholders of the Trust, to be held in the offices of SEI Financial Management Corporation ("SFM"), 680 E. Swedesford Road, Wayne, Pennsylvania 19087-1658, on Friday, June 16, 1995 at 10:00 a.m., and at any and all adjournments thereof, upon all shares of beneficial interest of said Trust in respect of which the undersigned will be entitled to vote, with all powers the undersigned would possess if personally present, and especially to vote with respect to: THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE FOLLOWING PROPOSALS: If you wish to vote "For" or "Against" all of the Proposals relating to your shares of the Portfolio of the Trust, or if you wish to "Abstain" from voting on each such Proposal, please fill out the box below: ======================================================================= The proxies are authorized to vote upon all of the Proposals relating to the Core International Equity Portfolio of the Trust. ____For ____Against ____Abstain ======================================================================= If you complete the box above, you do not need to vote on the individual Proposals listed below. If you complete both the box and the Proposals below, the proxies will use the voting instructions indicated below for each Proposal. PROPOSAL 1. Proposal to combine the Portfolio's fundamental limitation concerning diversification with the Portfolio's fundamental limitation concerning the acquisition of more than 10% of the outstanding voting securities of any one issuer, and to amend certain other language. ____For ____Against ____Abstain PROPOSAL 2. Proposal to amend the Portfolio's fundamental limitation concerning industry concentration. ____For ____Against ____Abstain PROPOSAL 3. Proposal to amend the Portfolio's fundamental limitation concerning borrowing. ____For ____Against ____Abstain PROPOSAL 4. Proposal to amend the Portfolio's fundamental limitation concerning making loans. ____For ____Against ____Abstain PROPOSAL 5. Proposal to reclassify the Portfolio's fundamental limitation concerning pledging assets as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 6. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities for the purpose of exercising control as non-fundamental. ____For ____Against ____Abstain PROPOSAL 7. Proposal to amend the Portfolio's fundamental limitation concerning investment in real estate and commodities. ____For ____Against ____Abstain PROPOSAL 8. Proposal to reclassify the Portfolio's fundamental limitation concerning short sales and margins sales as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 9. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of investment companies as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 10. Proposal to amend the Portfolio's fundamental limitation concerning the issuance of senior securities. ____For ____Against ____Abstain PROPOSAL 11. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of an issuer whose securities are owned by officers and trustees of the Trust as non- fundamental. ____For ____Against ____Abstain PROPOSAL 12. Proposal to reclassify the Portfolio's fundamental limitation concerning investment of more than 5% of the total assets in securities of companies with less than three years of operating history as non-fundamental. ____For ____Against ____Abstain PROPOSAL 13. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in restricted securities as non- fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 23. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. ____For ____Against ____Abstain This proxy, when properly executed, will be voted in the manner directed herein by the undersigned Shareholder. Receipt of Notice of Special Meeting and Proxy Statement is hereby acknowledged. Dated:_________________, 1995 ____________________________ Signature of Shareholder ________________________________ Signature (Joint owners) Please sign name or names exactly as printed above to authorize the voting of your shares as indicated above. Where shares are registered with joint owners, all joint owners should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer and give your full title. If a partnership, please sign in partnership name-by authorized person. If no direction is given when the duly executed proxy is returned, such shares will be voted in accordance with the recommendations of the Board of Trustees FOR the Proposals. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. SEI INTERNATIONAL TRUST Emerging Markets Equity Portfolio Special Meeting of the Shareholders THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE VOTED "FOR" THE PROPOSALS UNLESS OTHERWISE INDICATED The undersigned Shareholder(s) of the Emerging Markets Equity Portfolio (the "Portfolio") of SEI International Trust (the "Trust") hereby appoint David G. Lee and Robert B. Carroll, and each of them, as proxies of the undersigned, with full power of substitution, to vote at a Special Meeting of Shareholders of the Trust, to be held in the offices of SEI Financial Management Corporation ("SFM"), 680 E. Swedesford Road, Wayne, Pennsylvania 19087-1658, on Friday, June 16, 1995 at 10:00 a.m., and at any and all adjournments thereof, upon all shares of beneficial interest of said Trust in respect of which the undersigned will be entitled to vote, with all powers the undersigned would possess if personally present, and especially to vote with respect to: THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE FOLLOWING PROPOSALS: If you wish to vote "For" or "Against" all of the Proposals relating to your shares of the Portfolio of the Trust, or if you wish to "Abstain" from voting on each such Proposal, please fill out the box below: ======================================================================= The proxies are authorized to vote upon all of the Proposals relating to the Emerging Markets Equity Portfolio of the Trust. ____For ____Against ____Abstain ======================================================================= If you complete the box above, you do not need to vote on the individual Proposals listed below. If you complete both the box and the Proposals below, the proxies will use the voting instructions indicated below for each Proposal. PROPOSAL 1. Proposal to combine the Portfolio's fundamental limitation concerning diversification with the Portfolio's fundamental limitation concerning the acquisition of more than 10% of the outstanding voting securities of any one issuer, and to amend certain other language. ____For ____Against ____Abstain PROPOSAL 2. Proposal to amend the Portfolio's fundamental limitation concerning industry concentration. ____For ____Against ____Abstain PROPOSAL 3. Proposal to amend the Portfolio's fundamental limitation concerning borrowing. ____For ____Against ____Abstain PROPOSAL 4. Proposal to amend the Portfolio's fundamental limitation concerning making loans. ____For ____Against ____Abstain PROPOSAL 5. Proposal to reclassify the Portfolio's fundamental limitation concerning pledging assets as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 6. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities for the purpose of exercising control as non-fundamental. ____For ____Against ____Abstain PROPOSAL 7. Proposal to amend the Portfolio's fundamental limitation concerning investment in real estate and commodities. ____For ____Against ____Abstain PROPOSAL 8. Proposal to reclassify the Portfolio's fundamental limitation concerning short sales and margins sales as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 9. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of investment companies as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 10. Proposal to amend the Portfolio's fundamental limitation concerning the issuance of senior securities. ____For ____Against ____Abstain PROPOSAL 11. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of an issuer whose securities are owned by officers and trustees of the Trust as non- fundamental. ____For ____Against ____Abstain PROPOSAL 12. Proposal to reclassify the Portfolio's fundamental limitation concerning investment of more than 5% of the total assets in securities of companies with less than three years of operating history as non-fundamental. ____For ____Against ____Abstain PROPOSAL 13. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in restricted securities as non- fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 23. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. ____For ____Against ____Abstain This proxy, when properly executed, will be voted in the manner directed herein by the undersigned Shareholder. Receipt of Notice of Special Meeting and Proxy Statement is hereby acknowledged. Dated:_________________, 1995 ____________________________ Signature of Shareholder ________________________________ Signature (Joint owners) Please sign name or names exactly as printed above to authorize the voting of your shares as indicated above. Where shares are registered with joint owners, all joint owners should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer and give your full title. If a partnership, please sign in partnership name-by authorized person. If no direction is given when the duly executed proxy is returned, such shares will be voted in accordance with the recommendations of the Board of Trustees FOR the Proposals. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. SEI INTERNATIONAL TRUST International Fixed Income Portfolio Special Meeting of the Shareholders THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE VOTED "FOR" THE PROPOSALS UNLESS OTHERWISE INDICATED The undersigned Shareholder(s) of the International Fixed Income Portfolio (the "Portfolio") of SEI International Trust (the "Trust") hereby appoint David G. Lee and Robert B. Carroll, and each of them, as proxies of the undersigned, with full power of substitution, to vote at a Special Meeting of Shareholders of the Trust, to be held in the offices of SEI Financial Management Corporation ("SFM"), 680 E. Swedesford Road, Wayne, Pennsylvania 19087-1658, on Friday, June 16, 1995 at 10:00 a.m., and at any and all adjournments thereof, upon all shares of beneficial interest of said Trust in respect of which the undersigned will be entitled to vote, with all powers the undersigned would possess if personally present, and especially to vote with respect to: THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE FOLLOWING PROPOSALS: If you wish to vote "For" or "Against" all of the Proposals relating to your shares of the Portfolio of the Trust, or if you wish to "Abstain" from voting on each such Proposal, please fill out the box below: ======================================================================= The proxies are authorized to vote upon all of the Proposals relating to the International Fixed Income Portfolio of the Trust. ____For ____Against ____Abstain ======================================================================= If you complete the box above, you do not need to vote on the individual Proposals listed below. If you complete both the box and the Proposals below, the proxies will use the voting instructions indicated below for each Proposal. PROPOSAL 1. Proposal to combine the Portfolio's fundamental limitation concerning diversification with the Portfolio's fundamental limitation concerning the acquisition of more than 10% of the outstanding voting securities of any one issuer, and to amend certain other language. ____For ____Against ____Abstain PROPOSAL 2. Proposal to amend the Portfolio's fundamental limitation concerning industry concentration. ____For ____Against ____Abstain PROPOSAL 3. Proposal to amend the Portfolio's fundamental limitation concerning borrowing. ____For ____Against ____Abstain PROPOSAL 4. Proposal to amend the Portfolio's fundamental limitation concerning making loans. ____For ____Against ____Abstain PROPOSAL 5. Proposal to reclassify the Portfolio's fundamental limitation concerning pledging assets as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 6. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities for the purpose of exercising control as non-fundamental. ____For ____Against ____Abstain PROPOSAL 7. Proposal to amend the Portfolio's fundamental limitation concerning investment in real estate and commodities. ____For ____Against ____Abstain PROPOSAL 8. Proposal to reclassify the Portfolio's fundamental limitation concerning short sales and margins sales as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 9. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of investment companies as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 10. Proposal to amend the Portfolio's fundamental limitation concerning the issuance of senior securities. ____For ____Against ____Abstain PROPOSAL 11. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of an issuer whose securities are owned by officers and trustees of the Trust as non- fundamental. ____For ____Against ____Abstain PROPOSAL 12. Proposal to reclassify the Portfolio's fundamental limitation concerning investment of more than 5% of the total assets in securities of companies with less than three years of operating history as non-fundamental. ____For ____Against ____Abstain PROPOSAL 13. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in restricted securities as non- fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 14. Proposal to authorize the Board of Trustees to appoint additional or replacement investment sub-advisers for the Portfolio without seeking approval of the Portfolio's Shareholders of the contracts pursuant to which such sub-advisers serve. ____For ____Against ____Abstain PROPOSAL 17. Proposal to approve the selection of SFM as the Investment Adviser for the Trust, as described in the attached Proxy Statement, and to approve the adoption of the Investment Advisory Agreement between the Trust, on behalf of the Portfolio, and SFM. ____For ____Against ____Abstain PROPOSAL 20. Proposal to approve the selection of Strategic Fixed Income, L.P. ("Strategic") as an Investment Sub-Adviser for the Portfolio, as described in the attached Proxy Statement, and to approve the adoption of the Investment Sub-Advisory Agreement between SFM and Strategic. ____For ____Against ____Abstain PROPOSAL 23. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. ____For ____Against ____Abstain This proxy, when properly executed, will be voted in the manner directed herein by the undersigned Shareholder. Receipt of Notice of Special Meeting and Proxy Statement is hereby acknowledged. Dated:_________________, 1995 ____________________________ Signature of Shareholder ________________________________ Signature (Joint owners) Please sign name or names exactly as printed above to authorize the voting of your shares as indicated above. Where shares are registered with joint owners, all joint owners should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer and give your full title. If a partnership, please sign in partnership name-by authorized person. If no direction is given when the duly executed proxy is returned, such shares will be voted in accordance with the recommendations of the Board of Trustees FOR the Proposals. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. SEI INTERNATIONAL TRUST European Equity Portfolio Special Meeting of the Shareholders THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE VOTED "FOR" THE PROPOSALS UNLESS OTHERWISE INDICATED The undersigned Shareholder(s) of the European Equity Portfolio (the "Portfolio") of SEI International Trust (the "Trust") hereby appoint David G. Lee and Robert B. Carroll, and each of them, as proxies of the undersigned, with full power of substitution, to vote at a Special Meeting of Shareholders of the Trust, to be held in the offices of SEI Financial Management Corporation ("SFM"), 680 E. Swedesford Road, Wayne, Pennsylvania 19087-1658, on Friday, June 16, 1995 at 10:00 a.m., and at any and all adjournments thereof, upon all shares of beneficial interest of said Trust in respect of which the undersigned will be entitled to vote, with all powers the undersigned would possess if personally present, and especially to vote with respect to: THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE FOLLOWING PROPOSALS: If you wish to vote "For" or "Against" all of the Proposals relating to your shares of the Portfolio of the Trust, or if you wish to "Abstain" from voting on each such Proposal, please fill out the box below: ======================================================================= The proxies are authorized to vote upon all of the Proposals relating to the European Equity Portfolio of the Trust. ____For ____Against ____Abstain ======================================================================= If you complete the box above, you do not need to vote on the individual Proposals listed below. If you complete both the box and the Proposals below, the proxies will use the voting instructions indicated below for each Proposal. PROPOSAL 1. Proposal to combine the Portfolio's fundamental limitation concerning diversification with the Portfolio's fundamental limitation concerning the acquisition of more than 10% of the outstanding voting securities of any one issuer, and to amend certain other language. ____For ____Against ____Abstain PROPOSAL 2. Proposal to amend the Portfolio's fundamental limitation concerning industry concentration. ____For ____Against ____Abstain PROPOSAL 3. Proposal to amend the Portfolio's fundamental limitation concerning borrowing. ____For ____Against ____Abstain PROPOSAL 4. Proposal to amend the Portfolio's fundamental limitation concerning making loans. ____For ____Against ____Abstain PROPOSAL 5. Proposal to reclassify the Portfolio's fundamental limitation concerning pledging assets as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 6. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities for the purpose of exercising control as non-fundamental. ____For ____Against ____Abstain PROPOSAL 7. Proposal to amend the Portfolio's fundamental limitation concerning investment in real estate and commodities. ____For ____Against ____Abstain PROPOSAL 8. Proposal to reclassify the Portfolio's fundamental limitation concerning short sales and margins sales as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 9. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of investment companies as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 10. Proposal to amend the Portfolio's fundamental limitation concerning the issuance of senior securities. ____For ____Against ____Abstain PROPOSAL 11. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of an issuer whose securities are owned by officers and trustees of the Trust as non- fundamental. ____For ____Against ____Abstain PROPOSAL 12. Proposal to reclassify the Portfolio's fundamental limitation concerning investment of more than 5% of the total assets in securities of companies with less than three years of operating history as non-fundamental. ____For ____Against ____Abstain PROPOSAL 13. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in restricted securities as non- fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 15. Proposal to authorize the Board of Trustees to appoint additional or replacement investment sub-advisers for the Portfolio without seeking approval of the Portfolio's Shareholders of the contracts pursuant to which such sub-advisers serve. ____For ____Against ____Abstain PROPOSAL 18. Proposal to approve the selection of SFM as the Investment Adviser for the Trust, as described in the attached Proxy Statement, and to approve the adoption of the Investment Advisory Agreement between the Trust, on behalf of the Portfolio, and SFM. ____For ____Against ____Abstain PROPOSAL 21. Proposal to approve the selection of Morgan Grenfell Investment Services Limited ("Morgan Grenfell") as an Investment Sub-Adviser for the Portfolio, as described in the attached Proxy Statement, and to approve the adoption of the Investment Sub-Advisory Agreement between SFM and Morgan Grenfell. ____For ____Against ____Abstain PROPOSAL 23. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. ____For ____Against ____Abstain This proxy, when properly executed, will be voted in the manner directed herein by the undersigned Shareholder. Receipt of Notice of Special Meeting and Proxy Statement is hereby acknowledged. Dated:_________________, 1995 ____________________________ Signature of Shareholder ________________________________ Signature (Joint owners) Please sign name or names exactly as printed above to authorize the voting of your shares as indicated above. Where shares are registered with joint owners, all joint owners should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer and give your full title. If a partnership, please sign in partnership name-by authorized person. If no direction is given when the duly executed proxy is returned, such shares will be voted in accordance with the recommendations of the Board of Trustees FOR the Proposals. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. SEI INTERNATIONAL TRUST Pacific Basin Equity Portfolio Special Meeting of the Shareholders THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES AND WILL BE VOTED "FOR" THE PROPOSALS UNLESS OTHERWISE INDICATED The undersigned Shareholder(s) of the Pacific Basin Equity Portfolio (the "Portfolio") of SEI International Trust (the "Trust") hereby appoint David G. Lee and Robert B. Carroll, and each of them, as proxies of the undersigned, with full power of substitution, to vote at a Special Meeting of Shareholders of the Trust, to be held in the offices of SEI Financial Management Corporation ("SFM"), 680 E. Swedesford Road, Wayne, Pennsylvania 19087-1658, on Friday, June 16, 1995 at 10:00 a.m., and at any and all adjournments thereof, upon all shares of beneficial interest of said Trust in respect of which the undersigned will be entitled to vote, with all powers the undersigned would possess if personally present, and especially to vote with respect to: THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE FOLLOWING PROPOSALS: If you wish to vote "For" or "Against" all of the Proposals relating to your shares of the Portfolio of the Trust, or if you wish to "Abstain" from voting on each such Proposal, please fill out the box below: ======================================================================= The proxies are authorized to vote upon all of the Proposals relating to the Pacific Basin Equity Portfolio of the Trust. ____For ____Against ____Abstain ======================================================================= If you complete the box above, you do not need to vote on the individual Proposals listed below. If you complete both the box and the Proposals below, the proxies will use the voting instructions indicated below for each Proposal. PROPOSAL 1. Proposal to combine the Portfolio's fundamental limitation concerning diversification with the Portfolio's fundamental limitation concerning the acquisition of more than 10% of the outstanding voting securities of any one issuer, and to amend certain other language. ____For ____Against ____Abstain PROPOSAL 2. Proposal to amend the Portfolio's fundamental limitation concerning industry concentration. ____For ____Against ____Abstain PROPOSAL 3. Proposal to amend the Portfolio's fundamental limitation concerning borrowing. ____For ____Against ____Abstain PROPOSAL 4. Proposal to amend the Portfolio's fundamental limitation concerning making loans. ____For ____Against ____Abstain PROPOSAL 5. Proposal to reclassify the Portfolio's fundamental limitation concerning pledging assets as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 6. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities for the purpose of exercising control as non-fundamental. ____For ____Against ____Abstain PROPOSAL 7. Proposal to amend the Portfolio's fundamental limitation concerning investment in real estate and commodities. ____For ____Against ____Abstain PROPOSAL 8. Proposal to reclassify the Portfolio's fundamental limitation concerning short sales and margins sales as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 9. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of investment companies as non-fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 10. Proposal to amend the Portfolio's fundamental limitation concerning the issuance of senior securities. ____For ____Against ____Abstain PROPOSAL 11. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in securities of an issuer whose securities are owned by officers and trustees of the Trust as non- fundamental. ____For ____Against ____Abstain PROPOSAL 12. Proposal to reclassify the Portfolio's fundamental limitation concerning investment of more than 5% of the total assets in securities of companies with less than three years of operating history as non-fundamental. ____For ____Against ____Abstain PROPOSAL 13. Proposal to reclassify the Portfolio's fundamental limitation concerning investment in restricted securities as non- fundamental, and to amend certain language. ____For ____Against ____Abstain PROPOSAL 16. Proposal to authorize the Board of Trustees to appoint additional or replacement investment sub-advisers for the Portfolio without seeking approval of the Portfolio's Shareholders of the contracts pursuant to which such sub-advisers serve. ____For ____Against ____Abstain PROPOSAL 19. Proposal to approve the selection of SFM as the Investment Adviser for the Trust, as described in the attached Proxy Statement, and to approve the adoption of the Investment Advisory Agreement between the Trust, on behalf of the Portfolio, and SFM. ____For ____Against ____Abstain PROPOSAL 22. Proposal to approve the selection of Schroder Capital Management International Limited ("Schroder") as an Investment Sub-Adviser for the Portfolio, as described in the attached Proxy Statement, and to approve the adoption of the Investment Sub-Advisory Agreement between SFM and Schroder. ____For ____Against ____Abstain PROPOSAL 23. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting. ____For ____Against ____Abstain This proxy, when properly executed, will be voted in the manner directed herein by the undersigned Shareholder. Receipt of Notice of Special Meeting and Proxy Statement is hereby acknowledged. Dated:_________________, 1995 ____________________________ Signature of Shareholder ________________________________ Signature (Joint owners) Please sign name or names exactly as printed above to authorize the voting of your shares as indicated above. Where shares are registered with joint owners, all joint owners should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer and give your full title. If a partnership, please sign in partnership name-by authorized person. If no direction is given when the duly executed proxy is returned, such shares will be voted in accordance with the recommendations of the Board of Trustees FOR the Proposals. PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----