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:

[ ]  Preliminary Proxy Statement
[X]  Definitive Proxy Statement
[ ]  Definitive Additional Materials
[ ]  Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12

                            SEI INTERNATIONAL TRUST
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                    (Name of Registrant as Specified In Its Charter)

                                     same
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                  (Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

[ ]  $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:
 
         N/A
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     2)  Aggregate number of securities to which transaction applies:

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     3)  Per unit price or other underlying value of transaction computed
         pursuant to Exchange Act Rule 0-11

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     4)  Proposed maximum aggregate value of transaction:

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[X]  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: $ 125
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     2)  Form, Schedule or Registration Statement No.: Preliminary Proxy
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     3)  Filing Party: SEI International Trust
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     4)  Date Filed: March 6, 1996
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                       IMPORTANT SHAREHOLDER INFORMATION
 
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                     INTERNATIONAL FIXED INCOME PORTFOLIO
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THE DOCUMENT YOU HOLD IN YOUR HANDS CONTAINS YOUR PROXY STATEMENT AND PROXY
CARD. A PROXY CARD IS, IN ESSENCE, A BALLOT. WHEN YOU VOTE YOUR PROXY, IT
TELLS US HOW TO VOTE ON YOUR BEHALF ON IMPORTANT ISSUES RELATING TO YOUR
PORTFOLIO. IF YOU SIMPLY SIGN THE PROXY CARD WITHOUT SPECIFYING A VOTE, YOUR
SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
TRUSTEES.
 
WE URGE YOU TO SPEND A FEW MINUTES WITH THE PROXY STATEMENT, FILL OUT YOUR
PROXY CARD, AND RETURN IT TO US. VOTING YOUR PROXY, AND DOING SO PROMPTLY,
ENSURES THAT THE PORTFOLIO WILL NOT NEED TO CONDUCT ADDITIONAL MAILINGS. WHEN
SHAREHOLDERS DO NOT RETURN THEIR PROXIES IN SUFFICIENT NUMBERS, WE HAVE TO
MAKE FOLLOW-UP SOLICITATIONS, WHICH MAY COST YOUR PORTFOLIO MONEY.
 
PLEASE TAKE A FEW MOMENTS TO EXERCISE YOUR RIGHT TO VOTE. THANK YOU.
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                            SEI INTERNATIONAL TRUST

 
                            SEI INTERNATIONAL TRUST
 
                     INTERNATIONAL FIXED INCOME PORTFOLIO
 
Dear Shareholder,
 
The attached proxy statement solicits your vote as a Shareholder of the
International Fixed Income Portfolio (the "Portfolio") of SEI International
Trust (the "Trust"). The SEI I Board of Trustees has recommended several
important proposals, but due to the lack of participation last year, we are
bringing these matters to your attention a second time. We need your vote.
 
Even if you are not currently a Shareholder in the Portfolio, you were a
Shareholder of record as of March 4, 1996, and are entitled to vote. A special
meeting of Shareholders of the International Fixed Income Portfolio has been
scheduled for April 30, 1996. It is easy to participate. Simply fill out and
sign the enclosed proxy card, and return it promptly in the enclosed envelope
so that the maximum number of shares may be voted.
 
This proxy statement is designed to give you information relating to each of
the proposals on which you are asked to vote. We encourage you to support the
Trustees' recommendations. The proposals described in the proxy statement
relate to the following matters:
 
I.   Approving certain changes to the fundamental policies of the Portfolio.
 
II.  Authorizing the Board of Trustees of the Trust to approve additional and
     replacement sub-advisers for the Portfolio without approval of the
     Shareholders.
 
III. Approving the selection of SEI Financial Management Corporation ("SFM")
     as investment adviser for the Portfolio and the corresponding investment
     advisory agreement between the Trust, on behalf of the Portfolio, and
     SFM.
 
IV.  Approving the selection of the current investment adviser, Strategic Fixed
     Income, L.P., as sub-adviser to the Portfolio.
 
The enhancements to the portfolio are evidence of our continuing commitment to
maintaining competitive returns and managing the risk of your portfolio.
 
Your vote is important to us. Please do not hesitate to call 1-800-DIAL SEI if
you have any questions about the proposals under consideration. Thank you for
taking the time to consider these important proposals and for your investment
in the SEI Funds.
 
Sincerely,
 
/s/ David G. Lee

David G. Lee
President and Chief Executive Officer

 
 
                            SEI INTERNATIONAL TRUST
                                2 OLIVER STREET
                               BOSTON, MA 02109
 
                   NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                                APRIL 30, 1996
 
  Notice is hereby given that a Special Meeting of Shareholders (the
"Shareholders") of the International Fixed Income Portfolio (the "Portfolio")
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 Tuesday, April 30, 1996, at 3:30 p.m.
 
  At the meeting, Shareholders of the Portfolio will be asked to consider and
act on proposed amendments to the Portfolio's investment limitations, a new
management structure, new advisory and sub-advisory agreements, and other
matters detailed below (the "Proposals"). The specifics of these Proposals,
which are more fully described in the attached Proxy Statement, are as
follows:
 
    1. To eliminate the Portfolio's fundamental limitations concerning
  diversification and the acquisition of more than 10% of the outstanding
  voting securities of any one issuer.
 
    2. To amend the Portfolio's fundamental limitation concerning industry
  concentration.
 
    3. To amend the Portfolio's fundamental limitation concerning borrowing
  to enhance the Portfolio's ability to borrow money.
 
    4. To amend the Portfolio's fundamental limitation concerning making
  loans to enhance the Portfolio's ability to make loans.
 
    5. To reclassify the Portfolio's fundamental limitation concerning
  pledging assets as non-fundamental, and to amend certain language.
 
     6. To reclassify the Portfolio's fundamental limitation concerning
  investment in securities for the purpose of exercising control as non-
  fundamental.
 
     7. To amend the Portfolio's fundamental limitation concerning investment
  in real estate and commodities to clarify the Portfolio's ability to invest
  in commodities contracts relating to financial instruments.
 
     8. To reclassify the Portfolio's fundamental limitation concerning short
  sales and margins sales as non-fundamental, and to amend certain language.
 
     9. To reclassify the Portfolio's fundamental limitation concerning
  investment in securities of investment companies as non-fundamental, and to
  amend certain language.
 
    10. To amend the Portfolio's fundamental limitation concerning the
  issuance of senior securities to clarify the Portfolio's ability to issue
  senior securities.

 
    11. 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.
 
    12. 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.
 
    13. To reclassify the Portfolio's fundamental limitation concerning
  investment in restricted securities as non-fundamental, and to amend
  certain language.
 
    14. To authorize the Board of Trustees to appoint additional or
  replacement investment sub-advisers for the Portfolio without seeking
  approval of the Shareholders of the contracts pursuant to which such sub-
  advisers serve.
 
 
    15. To approve the selection of SFM as the investment adviser for the
  Portfolio, and to approve the Investment Advisory Agreement between the
  Trust, on behalf of the Portfolio, and SFM.
 
    16. To approve the selection of Strategic Fixed Income, L.P.
  ("Strategic") as an investment sub-adviser for the Portfolio, and to
  approve the form of investment sub-advisory agreement between SFM and
  Strategic.
 
  Proposals 1 through 13 are interrelated in that they reflect a determination
by the Trust's Board of Trustees to recommend that the Portfolio's various
investment limitations be updated and restructured to the extent permitted by
applicable law to provide management efficiency 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 govern the activities of the Portfolio on a
stand-alone basis.
 
  Proposal 14 relates to a new management structure approved by the Trust's
Board of Trustees wherein SFM, which already acts as investment adviser for
four Portfolios of the Trust, will act as investment adviser for the
Portfolio, and subject to approval by the Board of Trustees, will appoint and
replace investment sub-advisers for the Portfolio, if such structure is
approved by vote of the Shareholders of the Portfolio. This structure requires
an order of exemption from the Securities and Exchange Commission (the "SEC")
before becoming operative.
 
  Proposal 15 relates to approval by Shareholders of the selection of SFM as
investment adviser to the Portfolio and the approval of a form of investment
advisory agreement for this Portfolio, as described in the accompanying Proxy
Statement. A copy of the Investment Advisory Agreement is attached as Exhibit
A to the Proxy Statement.
 
  In connection with the approval of SFM as investment adviser, Proposal 16
solicits Shareholder approval of the selection of the current investment
adviser for the Portfolio as investment sub-adviser for the Portfolio and of a
form of investment sub-advisory agreement for the Portfolio. 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 and an SEC order is obtained, the
Trustees would be able, without Shareholder approval, to replace the sub-
adviser 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.
 
  In accordance with their own discretion, the proxies are authorized to vote
on 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 March 4, 1996 are
entitled to notice of and to vote at the Meeting or any adjournment thereof.
 
March 25, 1996

 
 
                            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 April 30, 1996 at
3:30 p.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 the International Fixed Income Portfolio
(the "Portfolio") of the Trust ("Shareholders") of record at the close of
business on March 4, 1996 are entitled to vote at the Meeting. As of March 4,
1996, the Portfolio had    units of beneficial interest ("shares") issued and
outstanding.
 
  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. Shareholders of each class of the Portfolio will vote
together on each Proposal.
 
  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, and third parties hired for such
purpose, 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 Trust, except that SFM will bear the cost of
the portion of the Proxy Statement relating to the approval of SFM as
investment adviser. The proxy card and this Proxy Statement are being mailed
to Shareholders on or about March 25, 1996.
 
  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.
 
                                       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 Portfolio to vote on a number of issues
related to the investment limitations of the Portfolio, as well as to vote on
a new management structure, approve the selection of a new investment adviser
and a new sub-adviser, and adopt new investment advisory and sub-advisory
agreements in connection with the approval of those new relationships (the
"Proposals").
 
  Before becoming operative, the new management structure discussed in
Proposals 14 and 15 requires an order of exemption from the Securities and
Exchange Commission (the "SEC"). The summary voting table below sets forth the
action required by the Shareholders:
 


   PROPOSAL NUMBER(S)                           ISSUE
   ------------------                           -----
                   
          1-13        Proposals 1 through 13 are interrelated in that they
                      reflect a determination by the Trust's Board of Trustees
                      to recommend that the Portfolio's various investment
                      limitations be updated and restructured to the extent
                      permitted by applicable law to provide management
                      efficiency 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 govern the activities of the Portfolio on a
                      stand-alone basis.
           14         To authorize the Board of Trustees to appoint additional
                      or replacement investment sub-advisers without
                      Shareholder approval of such sub-advisers' contracts.
                      This proposal relates to the "Manager of Managers"
                      structure wherein SFM, which already acts as investment
                      adviser to four other Portfolios of the Trust, will act
                      as investment adviser for the Portfolio and recommended
                      to the Trustees which investment sub-advisers to appoint
                      and replace for the Portfolio. Apart from Shareholder
                      approval, this structure requires an order of exemption
                      from the SEC before becoming operative.
           15         To authorize SFM to act as investment Adviser to the
                      Portfolio and approve the investment advisory agreement
                      between the Portfolio and SFM. This proposal relates to
                      the implementation of the "Manager of Managers"
                      structure.
           16         To approve the selection of Strategic Fixed Income, L.P.
                      ("Strategic") as an investment sub-adviser for the
                      Portfolio, and to approve the form of investment sub-
                      advisory agreement between SFM and Strategic.

 
                                       2

 
SECTION I.
 
  The Proposals in Section I relate to certain changes to the fundamental
investment limitations of the Portfolio. Essentially, the Proposals regarding
the Portfolio's investment limitations are designed to establish a new set of
fundamental investment limitations and non-fundamental investment limitations
for the Portfolio by amending certain of the existing fundamental investment
limitations, reclassifying some of them as non-fundamental and eliminating
several others. The Investment Company Act of 1940, as amended (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. The Portfolio is treated as a separate investment company and adopts
its own fundamental and non-fundamental policies and limitations.
 
  The Portfolio's fundamental investment policies and limitations are set
forth in the prospectuses and statement of additional information. The
Trustees have elected to reclassify some limitations as non-fundamental and/or
modify or eliminate other fundamental limitations as set forth in order to:
(1) update the policies and limitations to reflect regulatory developments;
(2) improve the Portfolio's ability to adapt to developments in the securities
markets; and (3) improve management efficiency by making the Portfolio's
limitations consistent with those of the Trust's other Portfolios. In some
cases, the Portfolio adopted fundamental limitations to comply with federal or
state regulatory requirements that have changed. The Trustees have determined
that it is not in the Portfolio's interest to have Shareholders vote whenever
regulatory changes require or permit the Portfolio to change their investment
limitations. To the extent that Shareholders vote to reclassify certain
limitations as non-fundamental, the Trustees will be able to change these
limitations without future Shareholder votes.
 
  In addition, securities markets are evolving rapidly and the Portfolio's
adviser needs flexibility, subject to Trustee oversight and general
considerations of prudence, to keep up with developments. Finally, it is more
efficient from a management and compliance point of view if the Portfolio has
the same limitations as other Portfolios of the Trust to the extent feasible.
For this reason, the Trustees believe that investment limitations should only
be fundamental where specifically required by law. THE FUNDAMENTAL NATURE OF
THE 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 the Portfolio, if a Proposal is not
approved by vote of the Shareholders of the Portfolio, the current limitation
will remain unchanged.
 
1. PROPOSAL TO ELIMINATE THE PORTFOLIO'S FUNDAMENTAL LIMITATIONS CONCERNING
   DIVERSIFICATION AND THE ACQUISITION OF MORE THAN 10% OF THE OUTSTANDING
   VOTING SECURITIES OF ANY ONE ISSUER.
 
                                       3

 
  At the Meeting, Shareholders of the Portfolio will vote regarding the
elimination of the Portfolio's fundamental limitations on diversification and
on acquiring more than 10% of the voting securities of an issuer. These
limitations currently read 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.
 
    No Portfolio may acquire more than 10% of the voting securities of any
  one issuer.
 
  It is proposed that the Portfolio's current fundamental limitations be
eliminated as they are unnecessary for "non-diversified" funds such as the
Portfolio. As a non-diversified fund, the Portfolio is not subject to the
diversification provisions of the 1940 Act. Eliminating these limitations will
afford the Portfolio increased flexibility to acquire larger positions in the
securities of individual issuers, and may provide opportunities to enhance the
Portfolio's performance. At the same time, investing a larger percentage of
the 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. After elimination of the limitations described
above, the Portfolio will continue to be classified as non-diversified.
 
  Elimination of the limitations regarding diversification is not expected to
affect the way in which the Portfolio is managed, the investment performance
of the Portfolio, or the instruments in which it invests. The Portfolio will
continue to attempt to conform to the "diversification" requirements for
regulated investment companies under the Internal Revenue Code of 1986, as
amended (the "Code").
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 1.
 
2. PROPOSAL TO AMEND THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING
   INDUSTRY CONCENTRATION.
 
  At the Meeting, Shareholders of the Portfolio will vote regarding the
amendment of the Portfolio's fundamental limitation with respect to industry
concentration, which currently is 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
 
                                       4

 
  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.
 
  It is proposed that the Portfolio's current fundamental limitation be
replaced 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 Portfolio 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.
 
  Adoption of the proposed limitation is not expected to have a material
impact in the foreseeable future on the management of the Portfolio, the
investment performance of the Portfolio, or the securities or instruments in
which the Portfolio may invest. If approved, the amended fundamental
limitation regarding industry concentration cannot be changed with respect to
the Portfolio without the vote of the Shareholders.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 2.
 
3. PROPOSAL TO AMEND THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING
   BORROWING.
 
  At the Meeting, the Shareholders of the Portfolio will vote regarding the
amendment of the 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.
 
  It is proposed that the Portfolio's current fundamental limitation be
replaced 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
 
                                       5

 
  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 the 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 the Portfolio increased flexibility in making investment
decisions, and may enable the Portfolio to take advantage of changing market
conditions.
 
  Under positions established by the SEC staff, investment strategies which
obligate a Portfolio to purchase securities at a future date or otherwise
require that a Portfolio segregate assets, are considered to be "borrowings."
However, by segregating assets equal to the amount of such "borrowings" as
required by Section 18 of the 1940 Act, these investment strategies will not
result in the issuance of "senior securities" by the Portfolio and, as a
result, will not lead the Portfolio to be leveraged in the traditional sense
since the Portfolio's ability to borrow is reduced by one dollar for every
dollar of its assets that is segregated.
 
  Adoption of the proposed limitation is not expected to have a material
impact in the foreseeable future on the management of the Portfolio, the
investment performance of the Portfolio, or the securities or instruments in
which the Portfolio may invest. If the Proposal is approved, the amended
fundamental limitation regarding borrowing cannot be changed with respect to
the Portfolio without the vote of the Shareholders.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 3.
 
4. PROPOSAL TO AMEND THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING MAKING
   LOANS.
 
  At the Meeting, Shareholders of the Portfolio will vote regarding the
amendment of the Portfolio's fundamental limitation concerning loans, which is
currently stated as follows:
 
    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.
 
  It is proposed that the Portfolio's current limitation be replaced 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.
 
                                       6

 
  The primary purpose of this Proposal is to amend and update the 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 the Portfolio increased flexibility in making investment
decisions, and may enable the Portfolio to take advantage of changing market
conditions. In addition, the new limitation will clarify the Portfolio's
ability to lend its securities. In securities lending transactions, although
there may be risks of delay in recovery of the loaned securities or even loss
of rights in the collateral should the borrower of the securities, fail
financially or become insolvent, a Portfolio may be able to realize additional
income.
 
  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 investments in illiquid securities which
is detailed below.
 
  Adoption of the proposed limitation on lending is not expected to have a
material impact in the foreseeable future on the way in which the Portfolio is
managed, the investment performance of the Portfolio, or the instruments in
which it invests. If the Proposal is approved, the new fundamental lending
limitation cannot be changed without a future vote of Shareholders.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 4.
 
5. PROPOSAL TO RECLASSIFY THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING
   PLEDGING ASSETS AS NON-FUNDAMENTAL, AND TO AMEND CERTAIN LANGUAGE.
 
  At the Meeting, the Shareholders of the Portfolio will vote to reclassify as
non-fundamental the 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.
 
  It is proposed that this limitation concerning pledging, mortgaging or
hypothecating its assets be amended to read as follows:
 
    No Portfolio may pledge, mortgage or hypothecate assets except to secure
  borrowings permitted by the Portfolio's fundamental limitation on
  borrowing.
 
  The Trustees recommend that the Shareholders vote to reclassify the
limitation since it is not legally required to be fundamental. The proposed
non-fundamental limitation on pledging assets, when considered in conjunction
with the amended fundamental limitation on lending, will afford the Portfolio
greater flexibility and may allow the Portfolio to take advantage of changing
market conditions. However, when a Portfolio pledges its assets, there may be
risks of delay in recovery of the assets pledged, or even loss of rights in
the pledged assets should the party to whom the assets have been pledged fail
financially or become insolvent.
 
                                       7

 
  Nonetheless, if approved, this Proposal is not expected to have a material
impact on the management of the Portfolio, the investment performance of the
Portfolio, or the securities or instruments in which the Portfolio may invest,
and it is not expected that the Portfolio's overall policy with respect to
pledging assets will change in the near future. If the Proposal is approved, the
non-fundamental limitation concerning pledging, mortgaging or hypothecating
assets can be changed with respect to the Portfolio without the vote of the
Shareholders. Any change in the Portfolio's investment strategies will be
disclosed to Shareholders.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 5.
                                                    ---
6. PROPOSAL TO RECLASSIFY THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING
   INVESTMENT IN SECURITIES FOR THE PURPOSE OF EXERCISING CONTROL AS NON-
   FUNDAMENTAL.
 
  At the Meeting, the Shareholders of the Portfolio will vote regarding the
reclassification as non-fundamental the 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.
 
  Reclassification of the fundamental limitation as a non-fundamental limitation
will not affect the current management of the Portfolio, the investment
performance of the Portfolio, or the securities or instruments in which the
Portfolio may invest. The Portfolio has no present intention to invest in
companies for the purpose of exercising control, and it is not expected that the
Portfolio's policy with respect to investing in companies for the purpose of
exercising control will change in the near future. 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
the Portfolio without the vote of the Shareholders of the Portfolio so that, in
the future, the Portfolio may invest in companies in order to exercise control
over management. Should the Portfolio elect to invest in companies for the
purpose of exercising control, there is a risk that the investment adviser may
not be qualified to exercise control over a company in a manner that increases
Shareholder value. In addition, by exercising control over a company the
Portfolio would be subject to increased filing fees under the Securities Act of
1933, as well as additional administrative expenses associated with controlling
a company.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 6.
                                                    ---
7. PROPOSAL TO AMEND THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING
   INVESTMENT IN REAL ESTATE AND COMMODITIES.
 
  At the Meeting, Shareholders of the Portfolio will vote regarding the
amendment of the 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.
 
                                       8

 
  It is proposed that the Portfolio's current fundamental limitation be
replaced 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 the 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 the Portfolio without the vote of the Shareholders.
 
  Adoption of the proposed limitation concerning real estate is not expected
to significantly affect the way in which the Portfolio is managed or the way
in which securities or instruments are selected for the Portfolio. The
Portfolio will not acquire real estate. However, the proposed limitation would
clarify several points. First, the proposed limitation would make it explicit
that the Portfolio 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
Portfolio 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 the Portfolio's investment objective
and policies, as well as to other limitations regarding diversification and
concentration in particular industries. Moreover, to the extent that the
Portfolio invests to a greater degree in real estate related securities, it
will be subject to the risks of the real estate market.
 
  Adoption of the proposed limitations regarding commodities and commodities
contracts is intended to allow the Portfolio to engage to the extent permitted
by law in transactions involving commodities contracts relating to financial
instruments (i.e., financial futures contracts and options on such contracts).
Thus, while the Portfolio may not acquire physical commodities or futures
contracts thereon, the Portfolio may, if approved by the Board of Trustees and
disclosed in its Prospectus, invest in financial futures and options.
 
  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.
To the extent approved by the Board of Trustees, the 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. Similarly, the Portfolio may
buy and sell futures contracts and related options to manage its exposure to
changing interest rates and securities prices. The Portfolio that engages in
futures transactions 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
 
                                       9

 
national futures exchanges. Further, the Portfolio will limit its use of
futures to the extent necessary to qualify for exemption from regulation by
the Commodities Futures Trading Commission.
 
  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. The 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. The
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.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 7.
 
8. PROPOSAL TO RECLASSIFY THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING
   SHORT SALES AND MARGIN SALES AS NON-FUNDAMENTAL, AND TO AMEND CERTAIN
   LANGUAGE.
 
  At the Meeting, Shareholders of the Portfolio will vote 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:
 
    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.
 
  It is proposed that the Portfolio's current fundamental investment be
replaced 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.
 
                                      10

 
  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 the
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, the
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 Portfolio will only sell
short against the box. In the event that these state regulations are
eliminated, and upon appropriate disclosure by the Portfolio, the Portfolio
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. The Portfolio's current
fundamental limitation prohibits the Portfolio from purchasing securities on
margin, except that the 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.
 
  Since the Portfolio has no present intention to make short sales other than
short sales against the box, reclassification of this fundamental limitation
is unlikely to affect the Portfolio's investment techniques at this time.
Similarly, although reclassification of the Portfolio's fundamental limitation
on margin purchases is unlikely to affect the Portfolio's investment
techniques at this time, in the event of a change in federal regulatory
requirements, the Portfolio may alter its investment practices in the future.
Any substantial change in the Portfolio's investment strategies will be
disclosed to Shareholders. In addition, it is believed that efforts to
standardize this investment limitation will facilitate investment compliance
efforts and are in the best interests of Shareholders.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 8.
                                                    ---
9. PROPOSAL TO RECLASSIFY THE 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 the Portfolio will vote 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
 
                                      11

 
  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.
 
  It is proposed that the Portfolio's current fundamental limitation be replaced
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 the 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, the Portfolio's policy regarding investment in
securities of investment companies can be changed with respect to the Portfolio
without the vote of the Shareholders.
 
  The ability of mutual funds to invest in other investment companies is
restricted by the 1940 Act and by some state blue sky laws. The Portfolio's
current fundamental limitation recites certain of federal and state
restrictions. The federal restrictions will remain applicable to the Portfolio
whether or not they are recited in a fundamental limitation. In addition, the
Portfolio 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 Portfolio increased
flexibility in making investment decisions, and may allow the Portfolio to
respond rapidly to changing market conditions.
 
  Under both the previous limitation and the new non-fundamental limitation,
investment company shares that are purchased by the Portfolio will be subject to
the operating expenses of such investment companies, including advisory fees.
Because of restrictions on direct investment by U.S. entities in certain
countries, investment in other investment companies may be the most practical or
only manner in which an international or global fund can invest in the
securities markets of those countries. The Portfolio will only invest in other
investment companies if SFM or the Portfolio's sub-adviser determines that the
potential benefits of such investment exceed the associated costs.
 
  Reclassification of the above fundamental limitation as non-fundamental is not
expected to have any current impact on the Portfolio's investment practices or
the securities or instruments in which the Portfolio invests, and it is not
expected that the Portfolio's policy with regard to investing in other
investment companies will change in the near future.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 9.
                                                    ---
                                      12

 
10. PROPOSAL TO AMEND THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING THE
    ISSUANCE OF SENIOR SECURITIES.
 
  At the Meeting, Shareholders of the Portfolio will vote regarding the
amendment of the 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.
 
  It is proposed that the Portfolio's current fundamental limitation be replaced
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 the 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.
 
  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, high-
grade debt securities in an amount equal to its obligation to pay cash for the
securities at a future date. The Portfolio will utilize transactions that may be
considered to result in the creation of "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 the Portfolio
without the vote of the Shareholders. Adoption of the proposed limitation on
senior securities is not expected to affect the way in which the Portfolio is
managed, the investment performance of the Portfolio, or the securities or
instruments in which the Portfolio invests.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 10.
                                                    ---
                                       13

 
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.
 
  At the Meeting, the Shareholders of the Portfolio will vote 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 Portfolio for sale. Only one state currently requires such a limitation.
It is believed that this fundamental investment limitation should be
reclassified since, while it has not precluded investments in the past, its
reclassification potentially will increase the Portfolio's flexibility when
choosing investments in the future.
 
  If the Proposal is approved, the 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 the Portfolio without the vote of the Shareholders, as any such
changes may be necessary or desirable 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 Portfolio, the investment performance of the Portfolio, or the securities
or instruments in which the Portfolio may invest, for the Trustees do not
expect that the Portfolio's policy with regard to the purchase of securities
owned by officers and Trustees of the Trust will change in the near future.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 11.
                                                    ---
12. PROPOSAL TO RECLASSIFY THE 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 the Portfolio will vote 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.
 
                                      14

 
  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 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 the 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 government securities. The adoption of a
standard non-fundamental limitation will facilitate compliance efforts and will
enable the Portfolio to respond more promptly if applicable state laws change
in the future.
 
  If the Proposal is approved, the 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
the Portfolio without the vote of the Shareholders. Reclassification of the
limitation as a non-fundamental limitation is not expected to affect the
management of the Portfolio, the investment performance of the Portfolio, or
the securities or instruments in which the Portfolio may invest, for the
Trustees do not expect that the Portfolio's policy with regard to the purchase
of securities of companies with less than three years operating history will
change in the near future.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 12.
                                                    --- 
13. PROPOSAL TO RECLASSIFY THE PORTFOLIO'S FUNDAMENTAL LIMITATION CONCERNING
    INVESTMENT IN RESTRICTED SECURITIES AS NON-FUNDAMENTAL, AND TO AMEND
    CERTAIN LANGUAGE.
 
  At the Meeting, the Shareholders of the Portfolio will vote to approve
certain amended language and to reclassify as non-fundamental the 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 the
Portfolio's current fundamental limitation with the following non-fundamental
limitation concerning the purchase of restricted securities:
 
    No Portfolio may purchase securities 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. Securities exempted from registration upon re-sale
  by Rule 144A under the 1933 Act are not deemed to be restricted securities
  for purposes of this limitation.
 
  The primary purpose of this Proposal is to amend and update the 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 the Portfolio increased flexibility in
making investment decisions, and may enable the Portfolio to take advantage of
changing market conditions. Rule 144A
 
                                       15

 
securities are restricted securities that have not been registered under the
1933 Act but which may be traded by certain qualified institutional investors,
including investment companies. Certain state blue sky laws limit the ability
of investment companies to invest in restricted securities, which as defined
therein include Rule 144A securities. While the Portfolio will continue to
conform to all applicable state regulations, in the event that these state
regulations are changed to permit the Portfolio to invest to a greater extent
in restricted securities, upon approval by the Trustees, the Portfolio may do
so without a further Shareholder vote. Any change in the Portfolio's
investment strategies will be disclosed to Shareholders.
 
  If the Proposal is approved, the new non-fundamental limitation regarding
investing in restricted securities can be changed with respect to the
Portfolio without the vote of the Shareholders. Nevertheless, adoption of the
proposed limitation regarding investing in restricted securities is not
expected to affect the management of the Portfolio, the investment performance
of the Portfolio, or the securities or instruments in which the Portfolio may
invest, for the Trustees do not expect that the Portfolio's policy with regard
to restricted securities will change in the near future.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 13.
                                                    --- 
  In addition to the foregoing fundamental and non-fundamental limitations,
the Trustees have approved the adoption of a new non-fundamental limitation
for the Portfolio. The new non-fundamental limitation, which relates to
investments in illiquid securities, is consistent with the current regulatory
requirements for investments in these types of securities. The non-fundamental
limitation on illiquid securities provides that:
 
    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.
 
  The Portfolio currently has a similar fundamental limitation on investing in
illiquid securities, which is contained in the fundamental limitation on
making loans. (See Proposal 4, above.) Since the Portfolio is still subject to
the same state regulations which limit the Portfolio's investment in illiquid
securities, it is not expected that this new limitation will have any impact
on the Portfolio's investment techniques, performance, or management. However,
as a non-fundamental limitation, the Trustees can change this limitation with
respect to the Portfolio without the vote of the Shareholders.
 
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 Portfolio for which SFM will act as investment adviser.
The SEC has granted conditional exemptions from the shareholder approval
requirements. The Trust has applied for such an exemption, and if the
exemption is granted and these Proposals are approved, the Board
 
                                      16

 
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 the 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 other Portfolios of the Trust, is approved
as investment adviser to the Portfolio, 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 the 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. However, if the SEC grants the exemption, the Trustees will not be
required to call a Shareholder Meeting each time a new sub-adviser is approved.
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 the 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.
 
14. AUTHORIZATION FOR THE BOARD OF TRUSTEES TO APPOINT INVESTMENT SUB-ADVISERS
    FOR THE PORTFOLIO WITHOUT SEEKING APPROVAL BY THE PORTFOLIO'S SHAREHOLDERS
    OF THE CONTRACTS PURSUANT TO WHICH SUCH SUB-ADVISERS SERVE.
 
  This Proposal will facilitate the appointment of additional and replacement
sub-advisers without a Shareholder vote if SFM serves as Manager of Managers
for the Portfolio. This arrangement requires the SEC's approval of SFM's
application to implement the Manager of Managers structure.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 14.
                                                    ---
 
                                       17

 
SECTION III.
 
  The Board of Trustees is recommending that Shareholders of the Portfolio
approve SFM as the investment adviser of the Portfolio and approve the form of
investment advisory agreement (the "Investment Advisory Agreement") between
the Trust and SFM relating to the Portfolio (which is attached as Exhibit A to
this Proxy Statement). The description of the Investment Advisory Agreement in
this Proxy Statement is qualified in its entirety by reference to Exhibit A.
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 Portfolio at a meeting held on March 6, 1995. SFM already
serves as investment adviser to each of the other Portfolios of the Trust
pursuant to an Investment Advisory Agreement dated December 16, 1994, between
SFM and the Trust, on behalf of those Portfolios.
 
  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 other Portfolios of the Trust. While the
level of compensation paid to SFM by the Portfolio for advisory services will
be .15% higher than that paid to the current advisers, SFM's contractual
management fee will be reduced by .15% for the 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 the Portfolio of
advisory and management services will not be increased. (See "Description of
the Investment Adviser," below.)
 
  Duties Under the Investment Advisory Agreement. Under the Investment
Advisory Agreement, SFM will serve as investment adviser to the Portfolio and
will provide its proprietary investment adviser selection, monitoring, and
asset allocation services to the Portfolio. Subject to Board approval, 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 the
Portfolio. Consistent with its goal of using multiple Managers to carry out
the Portfolio's investment objective and policies, SFM in the future may
provide specific portfolio security advice with respect to all or some portion
of the Portfolio's assets.
 
  SFM will perform internal due diligence on prospective Managers for the
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 the Portfolio's fundamental investment
objectives and policies, authorizing Managers to engage in certain investment
techniques for the 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 the 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,
 
                                      18

 
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 Trustees
approve the recommendation, monitor for the 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 the Portfolio until on or about
December, 1996, and thereafter, for periods of one year for so long as such
continuance is specifically approved with respect to the Portfolio at least
annually (i) by the vote of the holders of a majority of the outstanding
shares of the 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
the 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 liable for any error of judgement or mistake of
law or for any loss arising out of any investment or for any act or omission
in carrying out its duties thereunder, except a loss resulting from willful
misfeasance, bad faith, or gross negligence in the performance of its duties,
or by reason of 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 at 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 August 31, 1995, SFM acted in a similar "manager of managers"
role with respect to $2.2 billion of client assets, including ten other
portfolios of the Trust. SFM has served as Manager of Managers of the
International Equity Portfolio since December 16, 1994, the Emerging Markets
Equity Portfolio since January 17, 1995, the European Equity Portfolio since
August 15, 1995 and the Pacific Basin Equity Portfolio since August 15, 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 $51 billion in assets as of September 30,
1995.
 
  In addition to serving as investment adviser to the ten other portfolios,
SFM serves as Administrator of the Trust pursuant to the Management Agreement
dated August 30, 1988. In connection with its role as Administrator, SFM
provides the Trust with overall management services, regulatory reporting, all
necessary office space, equipment, personnel, and facilities, and acts as
transfer agent for Institutional Class shares, dividend disbursing agent, and
shareholder servicing agent.
 
                                      19

 
  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 Portfolio. SFM and the Managers
may waive all or a portion of their respective fees in order to limit the
operating expenses of the Portfolio. Any such waiver is voluntary and may be
terminated at any time in their sole discretion.
 
  For the fiscal year ended February 28, 1996, the Portfolio paid to SFM the
following administration fees:
 


   PORTFOLIO                                   FEES PAID (000) FEE WAIVERS (000)
   ---------                                   --------------- -----------------
                                                         
   International Equity.......................     $1,312            $119
   Emerging Markets Equity....................     $    0            $201*
   International Fixed Income.................     $  232            $140
   European Equity............................     $  265            $115
   Pacific Basin Equity.......................     $  206            $148

- --------
* In addition, SFM reimbursed expenses of $29,000.
 
  Once the Manager of Managers structure is in place, SFM's management fee
will be reduced by .15% for the Portfolio operating under that structure 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 Administrator, and to the sub-adviser,
assuming that the Shareholders approve the Manager of Managers structure:
 


                               ADVISORY FEE
                                   PAID     ADVISORY FEE
                                 TO SUB-      PAYABLE
                                 ADVISER       TO SFM                    ADMINISTRA-
                               UNDER FORMER  UNDER NEW        SUB-           TION
                                 ADVISORY     ADVISORY    ADVISORY FEE  FEE PAYABLE TO
  PORTFOLIO      SUB-ADVISER    AGREEMENT    AGREEMENT   PAYABLE BY SFM     SFM *
  ---------    --------------- ------------ ------------ -------------- --------------
                                                         
International  Strategic Fixed     .30%         .45%          .30%           .45%
 Fixed         Income, L.P.
 Income

- --------
* The contractual administration fee payable to SFM for the Portfolio 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 the Portfolio, will remain the same.
 
                                      20

 
  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.
 


   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, Asset Management
                         Group
   Charles A. Marsh..... Executive Vice President
   Carl A. Guarino...... Senior Vice President
   Kevin P. Robins...... Senior Vice President, General Counsel & Secretary

 
  Trustees' Consideration. At a meeting held on March 6, 1995, the Board of
Trustees reviewed SFM's qualifications to act as investment adviser for the
Portfolio, 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 Portfolio. 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 Portfolio,
including, but not limited to: (1) the fee and expense ratios of comparable
mutual funds; (2) the performance of the Portfolio since commencement of
operations; (3) the nature and quality of the services expected to be rendered
to the Portfolio by SFM; (4) the distinct investment objective and policies of
the Portfolio; (5) that the total compensation payable to SFM by the Portfolio
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 the Portfolio do not approve the selection of
SFM as investment adviser and the Investment Advisory Agreement between the
Trust, on behalf of the Portfolio, and SFM, or if the Shareholders of the
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.
 
                                      21

 
15. APPROVAL OF THE INVESTMENT ADVISER AND THE INVESTMENT ADVISORY AGREEMENT
    FOR THE PORTFOLIO.
 
  Description of the Portfolio. The 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
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" or the "Sub-Adviser") currently serves as investment
adviser to the Portfolio pursuant to an investment advisory agreement. The
Board of Trustees voted on March 6, 1995, and December 4, 1995 to terminate
this agreement based upon the Board's determination that the selection of SFM
to provide investment advisory services as described herein will be in the
best interests of the 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 Portfolio. As SFM did not
previously serve as investment adviser to the Portfolio, the aggregate
investment advisory fee paid to SFM during the last fiscal year was $0.
Strategic received    .
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 15.
                                                    ---
SECTION IV.
 
  The Board of Trustees is recommending that Shareholders of the Portfolio
approve the investment sub-adviser recommended in Proposal 16 as investment
sub-adviser of the Portfolio and approve the form of investment sub-advisory
agreement (the "Investment Sub-Advisory Agreement") between SFM and the
proposed investment sub-adviser which is attached as Exhibit B to this Proxy
Statement. The description of the Investment Sub-Advisory Agreement in this
Proxy Statement is qualified in its entirety by reference to Exhibit B.
 
  The Sub-Adviser. Strategic will serve as investment sub-adviser to the
Portfolio. Under the Manager of Managers structure, SFM will have general
oversight responsibility for the investment advisory services provided to the
Portfolio, including formulating the Portfolio's investment policies and
analyzing economic trends affecting the Portfolio. SFM will be responsible for
directing and evaluating the investment services provided by the Manager,
including their adherence to the Portfolio's investment objectives and
policies and the Portfolio's investment performance. In accordance with the
Portfolio's investment objectives and policies, and under the supervision of
SFM and the Trust's Board of Trustees, the Manager will be responsible for the
day-to-day investment management of all or a discrete portion of the assets of
the Portfolio. The Manager is authorized to make investment decisions for the
Portfolio and place orders on behalf of the Portfolio to effect the investment
decisions made.
 
                                      22

 
  In addition, SFM will monitor the compliance of the Manager with regulatory
and tax regulations, such as those relating to portfolio concentration and
diversification. For the most part, compliance with these requirements by the
Manager with respect to its portion of the Portfolio will assure compliance by
the Portfolio as a whole. In addition, SFM will monitor positions taken by the
Manager and will notify the Manager 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 Managers responsible for
investing separate portions of the Portfolio's assets creates the need for
coordination among the Managers, there is an increased risk that the Portfolio
will not comply with these regulatory and tax requirements.
 
  It is possible that different Managers for the same Portfolio could take
opposite actions within a short period of time with respect to a particular
security. For example, one Manager could buy a security for the Portfolio and
shortly thereafter another Manager 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 Manager'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 Managers and SFM do not believe that
there will be material adverse effects on the Portfolio as a result. First, it
does not appear likely that there will be substantial overlap in the
securities acquired for the Portfolio by the various Managers. Moreover, the
Managers 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 Managers 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 Managers
for the 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 Manager for the Portfolio. Until or unless this
exemptive order is granted, if one of the Managers is terminated or departs
from the Portfolio, the Portfolio will handle such termination or departure in
one of two ways. First, the Portfolio may propose that a new Manager be
appointed to manage that portion of the Portfolio's assets managed by the
departing Manager. 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 Manager's assets among the remaining Managers. This
allocation would not require new investment advisory contracts with the
remaining Managers, 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 Managers 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 Portfolio on March 6, 1995, and
December 4, 1995. The Trustees received written and oral information from both
SFM
 
                                      23

 
and Strategic. SFM recommended the selection of the Sub-Adviser and reviewed
the considerations that had led to the recommendation. The Trustees also met
with representatives of the Sub-Adviser and considered information about key
personnel, investment philosophy and process and performance track record,
among other factors. In recommending that the Shareholders approve the
proposed investment sub-advisory agreement, the Trustees carefully evaluated
the investing experience of the Sub-Adviser's key personnel and the quality of
services the Sub-Adviser can be expected to provide to the Portfolio,
including, but not limited to: (1) the fee and expense ratios of comparable
mutual funds; (2) the performance of the Portfolio since commencement of
operations; (3) the nature and quality of the services expected to be rendered
to the Portfolio by the Sub-Adviser; (4) the distinct investment objective and
policies of the Portfolio; (5) the fact that the compensation payable to the
Sub-Adviser by the Portfolio under the proposed Investment Sub-Advisory
Agreement will be at the same rate as the compensation payable to the proposed
Sub-Adviser under the existing investment advisory agreement; (6) the history,
reputation, qualification and background of the Sub-Adviser, as well as the
qualifications of its personnel and its financial condition; (7) its
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 the Sub-Adviser in comparison to
those being charged in the relevant segment of the mutual fund business,
including any benefits received by the Sub-Adviser or its affiliates in
connection with soft dollar payments.
 
  Duties Under the Investment Sub-Advisory Agreement. Under the Investment
Sub-Advisory Agreement, the Sub-Adviser makes the investment decisions for the
assets of the Portfolio allocated to it by SFM 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." The 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 the Portfolio's investment objectives,
policies and limitations.
 
  Duration and Termination. Unless terminated earlier, the Investment Sub-
Advisory Agreement shall continue in effect through April, 1998, 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 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 the Portfolio, the
Trustees may add and replace Managers 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 Manager 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 Manager 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.
 
  The 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. The Investment Sub-Advisory
 
                                      24

 
Agreement 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 such Portfolio on not less than 30 days' nor more than
60 days' written notice to such Portfolio's Manager. In addition, the
Portfolio's Investment Sub-Advisory Agreement is terminable by the Portfolio's
Sub-Adviser upon 90 days' written notice to the Trust or SFM.
 
  Strategic will discharge its duties subject to the supervision of, and
policies set by, the Board of Trustees and SFM. The investment sub-advisory
agreement provides that Strategic 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 on its part
in the performance of its obligations or duties, or from reckless disregard of
its obligations or duties, under this Agreement, except as may otherwise be
provided under provisions of applicable state law to the extent such
provisions cannot be waived or modified hereby.
 
  In the event Shareholders of the Portfolio do not approve the adoption of an
Investment Sub-Advisory Agreement at the Meeting to which this Proxy Statement
relates, or any adjournment thereof, the Trustees will consider the
appropriate course of action.
 
16. 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 the Portfolio
approve Strategic as a Sub-Adviser to the Portfolio and approve the form of
investment sub-advisory agreement between SFM and Strategic.
 
  Compensation. Under the Investment Sub-Advisory Agreement, SFM will pay
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 Portfolio
managed by Strategic. This rate is set at .30% of the average monthly market
value of the assets of the Portfolio. For the fiscal year ended February 28,
1996, the Portfolio paid advisory fees of  % of its average daily net assets.
 
  Description of Strategic. Strategic currently acts as the adviser for the
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 Gobi Investments Inc., 1001 19th Street, North,
Suite 1720, Arlington, Virginia 22209, which is wholly-owned by Kenneth
Windheim, the principal executive officer of Strategic, and the limited
partner is Strategic Investment Management ("SIM"). As of February, 1996,
Strategic managed approximately $5.4 billion in global and international fixed
income portfolios. Together, as of February, 1996, Strategic and SIM managed
over $11.4 billion in client assets. The principal address of Strategic, SIM,
and Gobi Investments Inc. is 1001 Nineteenth Street North, 17th Floor,
Arlington, Virginia 22209.
 
  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 and David Jallits, Directors of Strategic and portfolio
managers of the Portfolio since 1994. Prior to forming Strategic, Kenneth
Windheim managed a global fixed income portfolio at Prudential Asset
Management. Prior to joining Strategic,
 
                                      25

 
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. Prior to joining Strategic, David Jallits was Senior Portfolio
Manager for a hedge fund at Teton Partners. From 1982 to 1994, he was Vice
President and Global Fixed Income Portfolio Manager at The Putnam Companies.
 
  THE TRUSTEES RECOMMEND THAT THE SHAREHOLDERS VOTE FOR PROPOSAL 16.
                                                    --- 
SECTION V.
 
             GENERAL INFORMATION ABOUT THE TRUST AND OTHER MATTERS
 
  Distribution. SEI Financial Services Company ("SFS"), 680 East Swedesford
Road, Wayne, Pennsylvania 19087-1658, a wholly-owned subsidiary of SEI
Corporation, ("SEI"), acts as the distributor of the Trust's shares pursuant
to the 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. For the Trust's fiscal year ended February 28, 1996,
the Portfolio paid the following amounts in brokerage commissions to
affiliates of the Portfolio.
 


                            TOTAL BROKERAGE  AMOUNT PAID TO       % PAID TO
PORTFOLIO                     COMMISSION    AFFILIATED BROKER AFFILIATED BROKER
- ---------                   --------------- ----------------- -----------------
                                                     
International Fixed Income        $ 0              $ 0                 0%

 
  5% Shareholders. As of      , 1996, 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 Portfolio. 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.
 


                                                                   PERCENTAGE OF
                                                       NUMBER OF    PORTFOLIO'S
PORTFOLIO      NAME AND ADDRESS OF BENEFICIAL OWNER     SHARES        SHARES
- ---------      ------------------------------------  ------------- -------------
                                                          
International  Charles Schwab & Co. Inc.               407,550.430      5.14%
 Fixed Income  Attn: Steve Sears, Mutual Funds Dept.
               101 Montgomery Street
               San Francisco, CA 94104

               Mutual Fund Special Cust. Acct.         498,558.699      6.28%
               For Excl Benefit of Customers
               of Montgomery Securities
               600 Montgomery St., 4th Fl.
               San Francisco, CA 94111

               SEI Trust Company                     4,780,052.329     60.23%
               Attn: Jaqueline Esposito
               680 E. Swedesford
               Wayne, PA 19087

 
  The Trust's Trustees and officers do not beneficially own any shares of the
Trust.
 
                                      26

 
  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. 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 the Portfolio
requires the affirmative vote of a majority of the outstanding shares of the
Portfolio. As defined in the 1940 Act, "majority of the outstanding shares"
means the vote of (i) 67% or more of the Portfolio's or the Trust's
outstanding shares present at a meeting, if the holders of more than 50% of
the outstanding shares of the Portfolio or the Trust are present or
represented by proxy, or (ii) more than 50% of the 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 Financial Management 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 CARD
AND RETURN IT PROMPTLY.
 
                                      27

 
                                                                      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

 
                       INVESTMENT SUB-ADVISORY AGREEMENT
                            SEI INTERNATIONAL TRUST
 
  AGREEMENT made this     day of   , 1995, by and between SEI Financial
Management Corporation (the "Adviser") and Strategic Fixed Income, L.P. (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 acts as investment adviser to the International Fixed Income
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, upon the terms and
subject to the conditions set forth below.
 
  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 by the Adviser (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"), provided the
Sub-Adviser shall be given reasonable advance notice of any such amendments
and supplements, and subject to the following:
 
    (a) The Sub-Adviser, subject to the direction of the Adviser, and, at the
  request of the Adviser, in consultation with the Adviser, shall determine
  from time to time what Assets will be purchased, retained or disposed of 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 applicable requirements
  of the 1940 Act, the applicable requirements of Subchapter M of the
  Internal Revenue Code of 1986, and all other applicable federal and state
  laws and regulations, as each is amended from time to time; provided,
  however, that in no event shall the Sub-Adviser be obligated to act in
  conformity with any instruction or direction of the Adviser or of the Board
  of Trustees of the Trust if the Sub-Adviser believes in good faith (in
  consultation with counsel, where practicable) that implementation of such
  instruction or direction would involve the Sub-Adviser in a violation of
  law or willful malfeasance, bad faith or gross negligence on its part.
 
    (c) The Sub-Adviser shall determine the Assets to be purchased or
  disposed of by the Portfolio as provided in subparagraph (a) and will place
  orders with or through such brokers, dealers or banks
 
                                      B-1

 
  to carry out the policy with respect to brokerage set forth in the
  Portfolio's 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, dealers or banks
  the Sub-Adviser will use its best efforts to seek on behalf of the
  Portfolio the best overall terms available. In assessing the best overall
  terms available for any transaction, the Sub-Adviser shall consider all
  factors that it deems relevant, including the breadth of the market in the
  security, the price of the security, the financial condition and execution
  capability of the broker, dealer, or bank and the reasonableness of the
  commission, if any, both for the specific transaction and on a continuing
  basis.
 
  The Sub-Adviser is authorized to allocate purchase and sale orders for
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Adviser, Sub-Adviser or the Trust's principal underwriter)
to take into account the sale of shares of the Trust if the Sub-Adviser
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. In no instance, however,
will the Portfolio's Assets be purchased from or sold to the Adviser, Sub-
Adviser, the Trust's principal underwriter, or any affiliated person of either
the Trust, Adviser, the Sub-Adviser or the principal underwriter, acting as
principal in the transaction, except to the extent permitted by or under the
1940 Act or by the Securities and Exchange Commission ("SEC").
 
    (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, at its request, 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, at its request, any
other information relating to the Assets that is required to be filed by the
Adviser or the Trust with the SEC or sent to shareholders under the 1940 Act
(including the rules adopted thereunder) or any exemptive or other relief that
the Adviser or the Trust obtains from the SEC, in each case with respect to
the Trust, the Portfolio, or the Assets. 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); provided, however, that
the Sub-Adviser may retain a copy of such records.
 
    (e) The Sub-Adviser shall provide the Portfolio's custodian on each
  business day with information relating to all transactions concerning the
  Portfolio's Assets and shall provide the Adviser with such information upon
  request of the Adviser.
 
    (f) The Sub-Adviser and its partners and its and their respective
  partners, stockholders, directors, officers, employees and agents act, may
  continue to act and in the future may act as investment managers or
  investment advisers to others and may invest for their own accounts, and
  nothing in
 
                                      B-2

 
  this Agreement shall in any way be construed or deemed to restrict the
  right of any such person to perform investment management or investment
  advisory services for others or to invest for its own account, and the
  performance of such services for others and such investing shall not be
  deemed to violate or give rise to any duty or obligation to the Trust, the
  Portfolio or the Adviser, except as otherwise provided by law. The Sub-
  Adviser agrees to act in a manner consistent with its fiduciary obligation
  to deal fairly with all clients when taking investment actions.
 
    (g) The Sub-Adviser shall promptly notify the Adviser of any financial
  condition that is likely to materially impair the Sub-Adviser's ability to
  fulfill its commitment under this Agreement.
 
    (h) The Sub-Adviser shall review all proxy solicitation materials and be
  responsible for voting and handling all proxies in relation to the
  securities held in the Portfolio. The Adviser shall instruct the custodian
  and other parties providing services to the Portfolio to promptly forward
  misdirected proxies to the Sub-Adviser.
 
    (i) The Sub-Adviser will notify the Trust and the Adviser of any changes
  to the membership of the Sub-Adviser within a reasonable time after such
  change.
 
  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, or the officers or employees of the Sub-Adviser's general partner.
 
  2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to the Portfolio pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that, in connection with its
management of the Assets, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the applicable provisions of
the Trust's Declaration of Trust (as defined herein), the applicable
provisions of the Prospectus, the instructions and directions of the Board of
Trustees of the Trust (subject to the provisions of Section 1(b) hereunder),
the applicable requirements of the 1940 Act, the applicable requirements of
Subchapter M of the Internal Revenue Code of 1986, and all other applicable
federal and state laws and regulations, as each is amended from time to time.
 
  3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of, and will furnish the Sub-
Adviser with copies properly certified or authenticated of amendments and
supplements to, 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
 
                                      B-3

 
and made part of this Agreement. The fee will be calculated based on the
average monthly market value of the Assets under the Sub-Adviser's management
and will be paid to the Sub-Adviser monthly. Except as may otherwise be
prohibited by law or regulation (including any then-current SEC staff
interpretation), the Sub-Adviser may, in its discretion and from time to time,
waive a portion of its fee.
 
  5. LIMITATION OF LIABILITY OF THE SUB-ADVISER. The duties of the Sub-Adviser
shall be confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Sub-Adviser hereunder. The Sub-
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 on the Sub-Adviser's part in the performance of
its obligations or duties, or from reckless disregard of its obligations or
duties, under this Agreement, except as may otherwise be provided under
provisions of applicable state law to the extent such provisions cannot be
waived or modified hereby. The Adviser hereby acknowledges that it considers
the Sub-Adviser to be a corporate agenta of the Adviser within the meaning of
the last sentence of Section 9 of the Investment Advisory Agreement between
the Trust and the Adviser with respect to the Portfolio.
 
  6. REPORTS. During the term of this Agreement, the Adviser agrees to furnish
the Sub-Adviser at its principal office all Prospectuses, proxy statements,
reports to stockholders, sales literature or other materials prepared for
distribution to stockholders of the Portfolio, the Trust or the public that
refer to the Sub-Adviser, its services or its clients in any way prior to use
thereof and not to use such materials 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 or 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, its services 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) arising from
or in connection with the performance by the Sub-Adviser of its obligations or
duties under this Agreement; provided, however, that (a) the Sub-Adviser shall
not be obligated to indemnify or hold harmless the Adviser from or against any
claim, loss, liability, or damage in respect of which the Sub-Adviser is not
liable pursuant to Section 5 hereof; and (b) the Sub-Adviser's obligation
under this Section 7 shall be reduced to the extent that the claim against, or
the loss, liability or damage experienced by, the Adviser, is caused by or is
otherwise directly related to the Adviser's own willful misfeasance, bad faith
or negligence, or to the reckless disregard of its obligations or duties under
this Agreement.
 
  The Adviser shall indemnify and hold harmless the Sub-Adviser from and
against any and all claims, losses, liabilities or damages (including
reasonable attorney's fees and other related expenses) arising from or in
connection with the performance by the Adviser of its obligations or duties
under this Agreement; provided, however, that the Adviser's obligation under
this Section 7 shall be reduced to the extent that
 
                                      B-4

 
the claim against, or the loss, liability or damage experienced by, the Sub-
Adviser, is caused by or is otherwise directly related to the Sub-Adviser's
own willful misfeasance, bad faith or negligence, or to the reckless disregard
of its obligations or 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.
 
  This Agreement shall continue in effect until terminated as provided below;
provided, however, that this Agreement shall continue in effect for a period
of more than two years from the date hereof only so long as such continuance
is specifically approved at least annually in conformance with the Section
15(a)(2) of the 1940 Act. This Agreement may be terminated (a) by the
Portfolio at any time, on written notice to the Sub-Adviser, without the
payment of any penalty, by the Board 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 not less
than 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 investment advisory 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 SEC under the 1940 Act.
 
  Upon the termination of this Agreement, the Sub-Adviser shall not be
obligated to take or recommend any action with respect to the Assets.
 
  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 19087Attention:
                                            Legal Department
 
To the Sub-Adviser at:                      Strategic Fixed Income, L.P. 1001
                                            Nineteenth Street NorthSuite 1720
                                            Arlington, VA 22209 Attention:
                                            Vice President
 
                                      B-5

 
  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        Strategic Fixed Income L.P. 
                                             By: Gobi Investment, Inc.
 
 
By: ___________________________________
 
                                            By: _______________________________
 
Name: _________________________________
 
                                            Name: _____________________________
 
Title: ________________________________
                                            Title: ____________________________
 
                                      B-6

 
                                   SCHEDULE A
                                     TO THE
                             SUB-ADVISORY AGREEMENT
                                    BETWEEN
                      SEI FINANCIAL MANAGEMENT CORPORATION
                                      AND
                          STRATEGIC FIXED INCOME, L.P.
 
Pursuant to Article 4, the Adviser shall pay the Sub-Adviser compensation at an
                            annual rate as follows:
 
                                   
         International Fixed Income Portfolio  .30%

         
 
                                      B-7

 
                            SEI INTERNATIONAL TRUST
                      INTERNATIONAL FIXED INCOME PORTFOLIO

                  PROXY SOLICITED BY THE BOARD OF TRUSTEES FOR
              THE SPECIAL MEETING OF SHAREHOLDERS, APRIL 30, 1996

The undersigned, revoking previous proxies with respect to the Shares (defined
below), hereby appoints David G. Lee and Robert B. Carroll as proxies and each
of them, each with full power of substitution, to vote at the Special Meeting of
Shareholders of the International Fixed Income Portfolio (the "Portfolio") of
SEI International Trust (the "Trust") to be held in the offices of SEI Financial
Management Corporation ("SFM"), 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658, on Tuesday, April 30, 1996, at 3:30 p.m., and any adjournments or
postponements thereof (the "Meeting") all shares of beneficial interest of said
Trust that the undersigned would be entitled to vote if personally present at
the Meeting ("Shares") on the proposals set forth below respecting the proposed
amendments to (and/or reclassifications of) the Portfolio's investment
limitations, the new management structure, the new sub-advisers, and the new
advisory and sub-advisory agreements and, in accordance with their own
discretion, any other matters properly brought before the Meeting.

THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS TO:

PROPOSAL 1.    Eliminate the Portfolio's fundamental limitations concerning
               diversification and the acquisition of more than 10% of the
               outstanding voting securities of any one issuer.

               ____For   ____Against  ____Abstain

 
PROPOSAL 2.    Amend the Portfolio's fundamental limitation concerning industry
               concentration.

               ____For   ____Against  ____Abstain

PROPOSAL 3.    Amend the Portfolio's fundamental limitation concerning borrowing
               to enhance the Portfolio's ability to borrow money.

               ____For   ____Against  ____Abstain


PROPOSAL 4.    Amend the Portfolio's fundamental limitation concerning making
               loans to enhance the Portfolio's ability to make loans.

               ____For   ____Against  ____Abstain


PROPOSAL 5.    Reclassify the Portfolio's fundamental limitation concerning
               pledging assets as non-fundamental, and to amend certain
               language.

               ____For   ____Against  ____Abstain


PROPOSAL 6.    Reclassify the Portfolio's fundamental limitation concerning
               investment in securities for the purpose of exercising control as
               non-fundamental.

               ____For   ____Against  ____Abstain


PROPOSAL 7.    Amend the Portfolio's fundamental limitation concerning
               investment in real estate and commodities to clarify the
               Portfolio's ability to invest in commodities contracts relating
               to financial instruments.

               ____For   ____Against  ____Abstain


PROPOSAL 8.    Reclassify the Portfolio's fundamental limitation concerning
               short sales and margins sales as non-fundamental, and to amend
               certain language.

               ____For   ____Against  ____Abstain

                                       2

 
PROPOSAL 9.    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.   Amend the Portfolio's fundamental limitation concerning the
               issuance of senior securities to clarify the Portfolio's ability
               to issue senior securities.

               ____For   ____Against  ____Abstain


PROPOSAL 11.   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.   Reclassify the Portfolio's fundamental limitation concerning
               investment of more than 5% of total assets in securities of
               companies with less than three years of operating history as non-
               fundamental.

               ____For   ____Against  ____Abstain


PROPOSAL 13.   Reclassify the Portfolio's fundamental limitation concerning
               investment in restricted securities as non-fundamental, and to
               amend certain language.

               ____For   ____Against  ____Abstain


PROPOSAL 14.   Authorize the Board of Trustees to appoint additional or
               replacement investment sub-advisers for the Portfolio without
               seeking approval of the Shareholders of the contracts pursuant to
               which such sub-advisers serve.

               ____For   ____Against  ____Abstain

                                       3

 
PROPOSAL 15.   Approve the selection of SFM as the Investment Adviser for the
               Portfolio, and to approve the Investment Advisory Agreement
               between the Trust, on behalf of the Portfolio, and SFM.

               ____For   ____Against  ____Abstain

PROPOSAL 16.   Approve the selection of Strategic Fixed Income, L.P.
               ("Strategic") as an investment sub-advisor for the Portfolio, and
               to approve the form of investment sub-advisory agreement between
               SFM and Strategic.

               ____For   ____Against  ____Abstain


THIS PROXY WILL, WHEN PROPERLY EXECUTED, BE VOTED AS DIRECTED HEREIN BY THE
SIGNING SHAREHOLDER.  IF NO CONTRARY DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, THIS PROXY WILL BE VOTED FOR EACH OF THE FOREGOING PROPOSALS
AND WILL BE VOTED IN THE APPOINTED PROXIES' DISCRETION UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.

The undersigned acknowledges receipt with this proxy of a copy of the Notice of
Special Meeting and the Proxy Statement of the Board of Trustees.  Your
signature(s) on this proxy should be exactly as your name(s) appear on this
Proxy.  If the shares are held jointly, each holder should sign this Proxy.
Attorneys-in-fact, executors, administrators, trustees or guardians should
indicate the full title and capacity in which they are signing.


Dated:                 , 1996       --------------------------------
      -----------------             Signature of Shareholder


                                    --------------------------------
                                    Signature (Joint owners)

PLEASE DATE, SIGN AND RETURN PROMPTLY USING THE ENCLOSED, POSTAGE-PAID ENVELOPE
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING; YOU MAY, NEVERTHELESS, VOTE IN
PERSON IF YOU DO ATTEND.

                                       4