PRE 14A 1 a2141442zpre14a.txt PRE 14A UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant /X/ Filed by a party other than the Registrant / / Check the appropriate box: /X/ Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to Section 240.14a-12 SEI LIQUID ASSET TRUST SEI TAX EXEMPT TRUST SEI DAILY INCOME TRUST SEI INDEX FUNDS SEI INSTITUTIONAL MANAGED TRUST SEI INSTITUTIONAL INTERNATIONAL TRUST SEI ASSET ALLOCATION TRUST -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER. SEI LIQUID ASSET TRUST SEI TAX EXEMPT TRUST SEI DAILY INCOME TRUST SEI INDEX FUNDS SEI INSTITUTIONAL MANAGED TRUST SEI INSTITUTIONAL INTERNATIONAL TRUST SEI ASSET ALLOCATION TRUST IMPORTANT SHAREHOLDER INFORMATION This document 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 Fund(s). The proxy card may be completed by checking the appropriate box and voting for or against the specific proposals relating to your Fund(s). If you simply sign the proxy without specifying a vote, your shares will be voted in accordance with the recommendation of the Board of Trustees. Please 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 Funds will not need to conduct additional mailings. Please take a few moments to exercise your right to vote. Thank you. SEI LIQUID ASSET TRUST SEI TAX EXEMPT TRUST SEI DAILY INCOME TRUST SEI INDEX FUNDS SEI INSTITUTIONAL MANAGED TRUST SEI INSTITUTIONAL INTERNATIONAL TRUST SEI ASSET ALLOCATION TRUST Dear Shareholder, A shareholder meeting of the SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI Institutional International Trust and SEI Asset Allocation Trust and each of their portfolios (the "Funds") has been scheduled for October 27, 2004 (the "Meeting"). The Meeting will be held at the offices of SEI Investments Management Corporation ("SIMC"), One Freedom Valley Drive, Oaks, Pennsylvania 19456. If you were a shareholder of record as of the close of business on August 17, 2004, you are entitled to vote at the Meeting and any adjournment(s) of the Meeting. While you are, of course, welcome to join us at the Meeting, most shareholders cast their votes by filling out and signing the enclosed proxy card. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, WE NEED YOUR VOTE. YOUR BALLOT SHOWS WHICH PROPOSALS YOU ARE BEING ASKED TO VOTE ON. PLEASE MARK, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO THAT THE MAXIMUM NUMBER OF SHARES MAY BE VOTED. YOU MAY ALSO VOTE BY TELEPHONE OR THROUGH THE INTERNET. The attached Proxy Statement is designed to give you detailed information relating to each of the proposals on which you are asked to vote. We encourage you to support the Trustees' recommendations. The purpose of the Meeting is to consider the proposals set forth below and to transact such business as may be properly brought before the Meeting or any adjournment(s) thereof. The proposals described in the Proxy Statement relate to the following matters: - To elect Trustees for all Funds. - To approve a "manager of managers" structure for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust. - To approve SIMC as investment adviser for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust; and to approve an investment advisory agreement with SIMC and these Funds. 2 - To approve eliminating or reclassifying certain fundamental policies and restrictions for all Funds, except for: the Treasury Securities Fund of SEI Liquid Asset Trust and the Money Market, Prime Obligation, Government, Treasury and Treasury II Funds of SEI Daily Income Trust. Shareholders also will be asked to vote on such other business as may properly come before the Meeting. To implement the "manager of managers" structure described under Proposal 2, with SIMC serving as each applicable Fund's "manager of managers," shareholders must approve Proposals 2 and 3. If shareholders do not approve both Proposals, Proposals 2 and 3 will not be implemented and the Trustees will consider an alternative course of action. Your vote is important. 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/ Edward D. Loughlin Edward D. Loughlin President and Chief Executive Officer 3 IMPORTANT NOTICE Although we recommend that you read the complete Proxy Statement, for your convenience we have provided a brief overview of the proposals. The information provided under the "Questions and Answers" section below is qualified in its entirety by reference to the Proxy Statement. QUESTIONS AND ANSWERS WHY AM I RECEIVING THIS PROXY STATEMENT? The Board of Trustees is asking you to vote on the following proposals: - To elect Trustees for all Funds. - To approve a "manager of managers" structure for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust. - To approve SEI Investments Management Corporation ("SIMC") as investment adviser for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust; and to approve an investment advisory agreement with SIMC and these Funds. - To approve eliminating or reclassifying certain fundamental policies and restrictions for all Funds, except for: the Treasury Securities Fund of SEI Liquid Asset Trust and the Money Market, Prime Obligation, Government, Treasury and Treasury II Funds of SEI Daily Income Trust. WHY AM I BEING ASKED TO ELECT TRUSTEES? The Board currently consists of seven Trustees, five of whom are not "interested persons," as such term is defined under the Investment Company Act of 1940, as amended (the "1940 Act") (an "Independent Trustee"). The Board of Trustees has determined to increase the size of the Board by adding an additional Independent Trustee. Pursuant to requirements under the 1940 Act, more than two-thirds of the Trustees must have been elected by shareholders immediately upon the addition of a new Trustee. Five of the seven current Trustees of the Funds have been elected by shareholders. Immediately upon the addition of a new Trustee, less than two-thirds of the Trustees would have been elected by shareholders. Therefore, shareholder approval is required to add a new Trustee. 4 WHAT IS A "MANAGER OF MANAGERS" STRUCTURE? The Board of Trustees is proposing the implementation of a "manager of managers" structure for certain Funds, as indicated above. Under this structure, each Fund will have SIMC as an investment adviser and SIMC, subject to supervision of the Board of Trustees, will supervise one or more sub-advisers. This structure will allow the Board of Trustees, at the recommendation of SIMC, to appoint additional or replacement sub-advisers to the Funds without shareholder approval. The 1940 Act requires shareholder approval of new investment advisory agreements (including sub-advisory agreements). The U.S. Securities and Exchange Commission, however, has granted the Trusts a partial exemption from this requirement to allow the appointment of investment sub-advisers in connection with the proposed "manager of managers" structure, WITHOUT shareholder approval. Before a Fund can rely on this exemption and implement the "manager of managers" structure, the Fund's shareholders must approve the "manager of managers" structure and approve SIMC as the Fund's investment adviser. All of the other Funds in the SEI Funds family have implemented the "manager of managers" structure and the Board of Trustees has found that structure to be efficient and effective in managing those Funds. Using a "manager of managers" structure will enable the Funds to avoid the considerable expense of holding shareholder meetings to approve new or additional sub-advisers. WHY AM I BEING ASKED TO VOTE ON SIMC AS THE FUNDS' INVESTMENT ADVISER AND A NEW INVESTMENT ADVISORY AGREEMENT WITH SIMC? In connection with the implementation of the "manager of managers" structure, the Board of Trustees is also seeking shareholder approval of SIMC as each Fund's investment adviser, as indicated above, and the new investment advisory agreement with SIMC. As mentioned above, the 1940 Act requires shareholder approval of new investment advisory agreements. At a meeting held in June 2004, the Board approved the operation of the Funds under a manager of managers structure with SIMC as the Funds' investment adviser. In addition, the Board approved each Fund's current adviser as investment sub-adviser. Accordingly, if Proposals 2 and 3 are approved, each of the current advisers will serve as sub-adviser to their respective Funds in the "manager of managers" structure under new sub-advisory agreements with SIMC. The appointment of these advisers as sub-advisers does not require shareholder approval. In addition, SIMC will be able to recommend that the Board hire additional sub-advisers or replace these sub-advisers, and the Board may approve such changes without shareholder approval. HOW WILL THE IMPLEMENTATION OF THE "MANAGER OF MANAGERS" STRUCTURE AFFECT MY ACCOUNT? The implementation of the "manager of managers" structure will not directly change your account. You will remain a shareholder of your Fund just as before and each Fund will contract for advisory services as before. However, with the proposed "manager of managers" structure, the Funds will receive the benefit of SIMC's investment adviser selection, monitoring and allocation services and the Board's flexibility in approving additional or replacement sub-advisers without shareholder approval. The proposed investment advisory agreements between 5 the Trusts, on the Funds' behalf, and SIMC are substantially similar to the Trusts' previous investment advisory agreements except to the extent they contemplate sub-advisory agreements. WILL THE IMPLEMENTATION OF A "MANAGER OF MANAGERS" STRUCTURE AFFECT THE FUNDS' EXPENSES? For each Fund, SIMC is entitled to the same contractual investment advisory fee as the investment advisory fee for the previous adviser. SIMC will be responsible for paying any advisory fees to the sub-advisers. As a result, the proposed changes will not result in increased investment advisory fees. Certain Fund service providers have voluntarily agreed to waive fees to keep the Funds' total expense ratio at specific levels. SIMC and the other service providers currently expect to waive fees to keep the Funds' total expense ratios at current levels. While SIMC's and the Fund service providers' voluntary fee waivers may be discontinued at any time, SIMC and the Fund service providers have no current intention of discontinuing these voluntary fee waivers. Accordingly, implementation of a "manager of managers" structure will not result in increased Fund fees and expenses to shareholders. WHY AM I BEING ASKED TO VOTE FOR CHANGES TO MY FUND'S INVESTMENT POLICIES AND RESTRICTIONS? The Board of Trustees believes that it would benefit shareholders of the Funds to update the Funds' fundamental investment policies. Some of the Funds' policies reflect government regulations that no longer exist. In other cases, policies are more restrictive than current government regulations require. The proposed changes in investment policies will benefit shareholders by allowing the Funds to adapt more quickly to future changes in investment opportunities. It is currently expected that the proposed changes to investment policies will not have a material impact on the manner in which the Funds are managed. WILL MY VOTE MAKE A DIFFERENCE? Yes. Your vote is needed to ensure that the proposals can be acted upon. Additionally, your immediate response on the enclosed proxy card will help save the costs of any further solicitations for shareholder votes. We encourage all shareholders to participate in the governance of their Fund. HOW DO THE TRUSTEES SUGGEST THAT I VOTE? After careful consideration, the Trustees of your Fund, including the Independent Trustees who comprise a majority of each Fund's Board of Trustees, unanimously recommend that you vote "FOR" the proposals. WHOM DO I CALL IF I HAVE QUESTIONS? We will be happy to answer your questions about this proxy solicitation. Please call us at 1-800-DIAL-SEI between 9:00 a.m. and 5:00 p.m., Eastern Standard Time, Monday through Friday. 6 HOW CAN I VOTE MY SHARES? Please refer to your proxy card for instructions on how to vote. 7 SEI LIQUID ASSET TRUST SEI TAX EXEMPT TRUST SEI DAILY INCOME TRUST SEI INDEX FUNDS SEI INSTITUTIONAL MANAGED TRUST SEI INSTITUTIONAL INTERNATIONAL TRUST SEI ASSET ALLOCATION TRUST 101 FEDERAL STREET BOSTON, MA 02110 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 27, 2004 Notice is hereby given that a special meeting of shareholders (the "Meeting") of SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI Institutional International Trust and SEI Asset Allocation Trust (collectively, the "Trusts") and each of their portfolios (the "Funds") will be held at the offices of SEI Investments Management Corporation ("SIMC"), One Freedom Valley Drive, Oaks, Pennsylvania 19456, on October 27, 2004, at [MEETING TIME] (Eastern time). The purpose of the Meeting is to consider the Proposals set forth below and to transact such other business as may be properly brought before the Meeting or any adjournment(s) thereof. The specifics of these Proposals, which are more fully described in the attached Proxy Statement, are as follows: 1. To elect Trustees for all Funds. 2. To approve a "manager of managers" structure for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust. 3. To approve SIMC as investment adviser for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust; and to approve an investment advisory agreement with SIMC and these Funds. 4. To approve eliminating or reclassifying certain fundamental policies and restrictions for all Funds, except for: the Treasury Securities Fund of SEI Liquid Asset Trust and the Money Market, Prime Obligation, Government, Treasury and Treasury II Funds of SEI Daily Income Trust. 8 Shareholders also will be asked to vote on such other business as may properly come before the Meeting. Proposal 1 asks for shareholder approval of Trustees. Proposal 2 asks for shareholder approval of a "manager of managers" structure for the Bond Index Fund of SEI Index Funds, the Short-Duration Government, Intermediate-Duration Government, GNMA and Corporate Daily Income Funds of SEI Daily Income Trust, and the California Tax Exempt, Tax Free, Institutional Tax Free and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust. Under this structure, each Fund will have an investment adviser and one or more sub-advisers. This structure would allow the Trustees to appoint additional and replacement investment sub-advisers for the Funds WITHOUT obtaining shareholder approval of the sub-advisers. Proposal 3 asks for shareholder approval of SIMC as investment adviser and "manager of managers" to each Fund and the approval of an investment advisory agreement between SIMC and each Trust, on behalf of the Funds. To implement the "manager of managers" structure described under Proposal 2, with SIMC serving as each Fund's "manager of managers," shareholders must approve Proposals 2 and 3. If shareholders do not approve both Proposals, neither Proposal will be implemented and the Trustees will consider an alternative course of action. Proposal 4 asks for shareholder approval of changes to certain investment policies and restrictions of the Funds. All shareholders are 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. You may also vote by telephone or through the Internet. 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 a Trust's President at One Freedom Valley Drive, Oaks, Pennsylvania 19456, by properly executing a later-dated proxy, or by attending the Meeting and voting in person. 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(s) thereof. Shareholders of record at the close of the business on August 17, 2004 are entitled to notice of and to vote at the Meeting or any adjournment(s) thereof. BY ORDER OF THE BOARD OF TRUSTEES TIMOTHY D. BARTO, SECRETARY September 9, 2004 9 SEI LIQUID ASSET TRUST SEI TAX EXEMPT TRUST SEI DAILY INCOME TRUST SEI INDEX FUNDS SEI INSTITUTIONAL MANAGED TRUST SEI INSTITUTIONAL INTERNATIONAL TRUST SEI ASSET ALLOCATION TRUST 101 FEDERAL STREET BOSTON, MA 02110 PROXY STATEMENT This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Trustees of SEI Liquid Asset Trust ("SLAT"), SEI Tax Exempt Trust ("STET"), SEI Daily Income Trust ("SDIT"), SEI Index Funds ("INDEX"), SEI Institutional Managed Trust ("SIMT"), SEI Institutional International Trust ("SIT") and SEI Asset Allocation Trust ("SAAT") (collectively, the "Trusts") and each of their portfolios (collectively, the "Funds") for use at the special meeting of shareholders to be held on October 27, 2004 at [MEETING TIME] (Eastern time) at the offices of SEI Investments Management Corporation ("SIMC"), One Freedom Valley Drive, Oaks, Pennsylvania 19456, and at any adjourned session(s) thereof (such meeting and any adjournments thereof are hereinafter referred to as the "Meeting"). Shareholders of record of the Funds at the close of business on August 17, 2004 are entitled to vote at the Meeting ("Shareholders"). As of August 17, 2004, the net assets and the approximate number of units of beneficial interest ("shares") issued and outstanding for each Fund were as follows:
SHARES FUND NET ASSETS OUTSTANDING ---- ---------- ----------- SEI LIQUID ASSET TRUST Treasury Securities Fund $ Prime Obligation Fund $ SEI TAX EXEMPT TRUST Intermediate-Term Municipal Fund $ Short Duration Municipal Fund $ California Municipal Bond Fund $ Massachusetts Municipal Bond Fund $ New Jersey Municipal Bond Fund $ New York Municipal Bond Fund $ Pennsylvania Municipal Bond Fund $ Institutional Tax Free Fund $ Tax Free Fund $ California Tax Exempt Fund $ Pennsylvania Tax Free Fund $ Massachusetts Tax Free Money Market Fund $
10 SEI DAILY INCOME TRUST Corporate Daily Income Fund $ Short-Duration Government Fund $ Intermediate-Duration Government Fund $ GNMA Fund $ Money Market Fund $ Prime Obligation Fund $ Government Fund $ Government II Fund $ Treasury Fund $ Treasury II Fund $ SEI INDEX FUNDS Bond Index Fund $ S&P 500 Index Fund $ SEI INSTITUTIONAL MANAGED TRUST Large Cap Value Fund $ Large Cap Growth Fund $ Tax-Managed Large Cap Fund $ Small Cap Value Fund $ Small Cap Growth Fund $ Tax-Managed Small Cap Fund $ Mid-Cap Fund $ Core Fixed Income Fund $ High Yield Bond Fund $ Real Estate Fund $ SEI INSTITUTIONAL INTERNATIONAL TRUST International Equity Fund $ International Fixed Income Fund $ Emerging Markets Equity Fund $ Emerging Markets Debt Fund $ SEI ASSET ALLOCATION TRUST Diversified Conservative Income Fund $ Diversified Conservative Fund $ Diversified Global Moderate Growth Fund $ Diversified Moderate Growth Fund $ Diversified Global Growth Fund $ Diversified Global Stock Fund $ Diversified U.S. Stock Fund $ Defensive Strategy Fund $ Tax-Managed Defensive Strategy Fund $ Conservative Strategy Fund $ Tax-Managed Conservative Strategy Fund $ Moderate Strategy Fund $ Tax-Managed Moderate Strategy Fund $ Aggressive Strategy Fund $
11 Tax-Managed Aggressive Strategy Fund $ Core Market Strategy Fund $ Tax-Managed Core Market Strategy Fund $ Market Growth Strategy Fund $ Tax-Managed Market Growth Strategy Fund $
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 are to be voted at the Meeting. Each Fund will be voting separately and each Fund's votes will be counted separately for each Proposal. If a Fund approves a Proposal while one or more Funds do not approve that Proposal, the Proposal will be implemented only with respect to the Fund or Funds that have approved that Proposal. In addition to the solicitation of proxies by mail, Trustees and officers of each Trust and officers and employees of SIMC, the Shareholder Servicing Agent for the Trusts, and certain third parties hired for such purpose, may solicit proxies in person, by Internet or by telephone. The Funds will bear the costs of the Meeting and costs of any solicitation in connection with the meeting. The Funds will use Georgeson Shareholder, third party solicitor, for solicitation of proxies. Georgeson Shareholder may solicit proxies in person, by Internet or by telephone. The Funds expect to pay approximately $[SOLICITATION FEE] to Georgeson Shareholder. Persons holding shares as nominees will, upon request, be reimbursed for their reasonable expenses incurred in sending soliciting materials to their principals. The proxy card and this Proxy Statement are being mailed to Shareholders on or about September 9, 2004. 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 Trusts' President at One Freedom Valley Drive, Oaks, Pennsylvania 19456, by properly executing a later-dated proxy, or by attending the Meeting and voting in person. INTRODUCTION Each Trust is organized as a Massachusetts business trust and is not required to hold annual shareholder meetings. The Meeting is being called in order to permit Shareholders to vote on: (i) the election of Trustees; (ii) a new "manager of managers" structure for certain Funds; (iii) the selection of a new investment adviser for certain Funds; and (iv) changes to certain investment policies and restrictions for certain Funds. The summary voting table below sets forth the action required of each Fund.
NO. PROPOSAL FUND --- -------- ---- 1. TO ELECT TRUSTEES FOR ALL FUNDS All Funds; Shareholders of each Trust voting together with other Shareholders of that Trust 2. TO APPROVE A "MANAGER OF MANAGERS" STRUCTURE Bond Index Fund of INDEX; Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SDIT; and California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET. 3. TO APPROVE SIMC AS INVESTMENT Bond Index Fund of INDEX; Short-Duration
12 ADVISER, AND TO APPROVE AN INVESTMENT Government, Intermediate-Duration Government, ADVISORY AGREEMENT WITH SIMC GNMA, and Corporate Daily Income Funds of SDIT; and California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET; Shareholders of each Fund voting separately 4. TO APPROVE ELIMINATING OR RECLASSIFYING CERTAIN All Funds, except for the Treasury Securities FUNDAMENTAL POLICIES AND RESTRICTIONS Fund of SLAT and the Money Market, Prime Obligation, Government, Treasury, and Treasury II Funds of SDIT; Shareholders of each Fund voting separately
Shareholders also will be asked to vote on such other business as may properly come before the Meeting. RELATIONSHIP AMONG PROPOSALS 2 AND 3. TO IMPLEMENT THE "MANAGER OF MANAGERS" STRUCTURE WITH SIMC SERVING AS EACH FUND'S "MANAGER OF MANAGERS," SHAREHOLDERS MUST APPROVE PROPOSALS 2 AND 3. NEITHER PROPOSAL WILL BE IMPLEMENTED WITH RESPECT TO A FUND IF SHAREHOLDERS OF THAT FUND DO NOT APPROVE BOTH PROPOSALS. IF SHAREHOLDERS OF A FUND DO NOT APPROVE BOTH PROPOSALS, THE TRUSTEES WILL CONSIDER AN ALTERNATE COURSE OF ACTION FOR THE FUND. IMPLEMENTATION OF THESE PROPOSALS WILL NOT RESULT IN INCREASED FUND FEES OR EXPENSES TO SHAREHOLDERS. 13 PROPOSAL 1. TO ELECT TRUSTEES FOR ALL FUNDS. Shareholders are being asked to elect Rosemarie B. Greco, Nina Lesavoy and James M. Williams (each a "Nominee" and, collectively, the "Nominees") as Trustees for each Trust. The Board of Trustees recommends that Shareholders elect the three Nominees to serve as Trustees, each to hold office until a successor is duly elected and qualified. Rosemarie B. Greco and Nina Lesavoy are currently members of the Board. Messes. Greco and Lesavoy were each appointed to the Board by the Board of Trustees on March 20, 2000 and September 17, 2003, respectively. Mr. James M. Williams was nominated by the Nominating Committee to the Board on June 17, 2004 and appointed by the Board on [DATE OF APPOINTMENT], subject to approval of his election by Shareholders, as required under the 1940 Act. Each Nominee has consented to being named in this Proxy Statement and to serving as Trustee if elected. The Trusts know of no reason why any Nominee would be unable or unwilling to serve as Trustee if elected. INFORMATION ABOUT CURRENT TRUSTEES AND NOMINEES FOR ELECTION AS TRUSTEES. The business and affairs of each Trust, including all of the Funds, are managed under the direction of its Board of Trustees. The table below provides basic information about each Nominee and each current Trustee. The mailing address for each Nominee and each Trustee, except for the mailing address for William M. Doran, is One Freedom Valley Drive, Oaks, Pennsylvania 19456. The mailing address for Mr. Doran is 1701 Market Street, Philadelphia, PA 19103.
NUMBER OF FUNDS IN THE FUND POSITION TERM OF OFFICE PRINCIPAL OCCUPATION DURING THE PAST COMPLEX NAME AND WITH THE AND LENGTH OF FIVE YEARS AND OTHER DIRECTORSHIPS TO BE AGE TRUSTS TIME SERVED HELD BY TRUSTEE OR NOMINEE OVERSEEN ---- ------ ----------- --------------- -------- NOMINEES FOR INDEPENDENT TRUSTEES Rosemarie B. Trustee No set term; served Director, Governor's Office of Health Care Reform, 68 Greco; 58 since 1999. Commonwealth of Pennsylvania since 2003. Founder and Principal, Grecoventures Ltd. from 1999 to 2002. Interim President & Chief Executive Officer, Private Industry Council of Philadelphia, April 1998-August 1998. President, Corestates Financial Corp., 1996-1997; Chief Executive Officer and President, Corestates Bank, N.A., 1994-1997. Director of Sunoco, Inc. and Exelon Corporation. Trustee of Pennsylvania Real Estate Investment Trust, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Index Funds, SEI Liquid Asset Trust and SEI Tax Exempt Trust. Nina Lesavoy; Trustee No set term; served Partner, Cue Capital since 2002. Head of 68
14 47 since 2003. Sales, Investorforce, January 2000-December 2001. Global Partner working for the CEO, Invesco Capital, January 1998-January 2000. Head of Sales and Client Services, Chancellor Capital and later LGT Asset Management, 1986-2000. Trustee of SEI Absolute Return Master Fund, L.P., SEI Opportunity Master Fund, L.P., SEI Absolute Return Fund, L.P., SEI Opportunity Fund, L.P., SEI Asset Allocation Trust, SEI Tax Exempt Trust, SEI Daily Income Trust, SEI Institutional Managed Trust, SEI Index Funds, SEI Liquid Asset Trust, SEI Institutional International Trust and SEI Institutional Investments Trust. James M. No set term. Vice President and Chief Investment Officer, J. Paul Williams; 56 Getty Trust, Non Profit Foundation Visual Arts, since December 2002. President, Harbor Capital Investors and Harbor Mutual Funds, 2000-2002. Manager, Pension Asset Management, Ford Motor Company, 1997-1999. CURRENT INDEPENDENT TRUSTEES F. Wendell Trustee No set term; served Retired. Trustee of SEI Asset Allocation Trust, SEI 68 Gooch; 71 SDIT since 1982; SAAT Daily Income Trust, SEI Institutional International since 1995; INDEX Trust, SEI Institutional Investments Trust, SEI since 1985; SIT since Institutional Managed Trust, SEI Index Funds, SEI Liquid 1988; SIMT since 1986; Asset Trust, SEI Tax Exempt Trust, STI Classic Funds and SLAT since 1995; STET STI Classic Variable Trust. since 1982. James M. Trustee No set term; served Attorney, Solo Practitioner since 1994. Partner, Dechert 68 Storey; 73 since 1995. Price & Rhoads (law firm), September 1987-December 1993. Director of U.S. Charitable Gift Trust. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, Expedition Funds, The MDL Funds, Massachusetts Health and Education Tax-Exempt Trust, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Index Funds, SEI Liquid Asset Trust and SEI Tax Exempt Trust. George J. Trustee No set term; served Self-employed Consultant, Newfound Consultants Inc. 68 Sullivan, Jr.; since 1996. since April 1997. Trustee of State Street Navigator 61 Securities Lending Trust, The Advisors' Inner Circle Fund, The Arbor Fund, Expedition Funds, The MDL Funds, SEI Absolute Return Master Fund, L.P., SEI Opportunity Master Fund, L.P., SEI Absolute Return Fund, L.P., SEI Opportunity Fund, L.P., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Index Funds, SEI Liquid Asset Trust and SEI Tax Exempt Trust.
15 CURRENT INTERESTED TRUSTEES William M. Trustee No set term; served Self-employed Consultant. Partner, Morgan, Lewis & 68 Doran; 64 SDIT since 1982; SAAT Bockius LLP (law firm) from 1976 to 2003, counsel to the 1995; INDEX since Trusts, SEI Investments Company, SIMC, SEI Investments 1985; SIT since 1988; Fund Management and SEI Investments Distribution Co. SIMT since 1986; SLAT Director of SEI Investments Company since 1974; since 1995; STET since Secretary of SEI Investments Company since 1978. 1982. Director of SEI Investments Distribution Co. since 2003. Trustee of The Advisors' Inner Circle Fund, The Arbor Fund, Expedition Funds, The MDL Funds, SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Index Funds, SEI Liquid Asset Trust and SEI Tax Exempt Trust. Robert A. Chairman No set term; served Currently performs various services on behalf of SEI 68 Nesher; 58 SDIT since 1982; SAAT Investments Company for which Mr. Nesher is compensated. 1995; INDEX since Executive Vice President of SEI Investments Company, 1985; SIT since 1988; 1986-1994. Director and Executive Vice President of SIMT since 1986; SLAT SIMC, SEI Investments Fund Management and SEI since 1995; STET since Investments Distribution Co., 1981-1994. Trustee of The 1982. Advisors' Inner Circle Fund, The Arbor Fund, Bishop Street Funds, Expedition Funds, The MDL Funds, SEI Global Master Fund, plc, SEI Global Assets Fund, plc, SEI Global Investments Fund, plc, SEI Investments Global, Limited, SEI Absolute Return Master Fund, L.P., SEI Opportunity Master Fund, L.P., SEI Absolute Return Fund, L.P., SEI Opportunity Fund, L.P., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Institutional International Trust, SEI Institutional Investments Trust, SEI Institutional Managed Trust, SEI Index Funds, SEI Liquid Asset Trust and SEI Tax Exempt Trust.
Messrs. Nesher and Doran are Trustees who may be deemed to be "interested persons" of the Funds, as that term is defined in the 1940 Act ("Interested Trustees"), by virtue of their relationship with SIMC, which serves as investment adviser to certain Funds, and SEI Investments Distribution Co., the Funds' distributor. MEETINGS AND COMMITTEES OF THE BOARD OF TRUSTEES. The chart below provides information about the number of Board meetings held during each Trust's most recently completed fiscal year and which Board members attended such meetings. 16
NUMBER OF BOARD MEETINGS HELD DURING MOST RECENT TRUSTEES WHO ATTENDED THE TRUST AND FISCAL YEAR FISCAL YEAR MEETING --------------------- ----------- ------- SEI Liquid Asset Trust 9 The Trustees attended all meetings, except June 30, 2004 for Mr. Gooch and Ms. Greco, who were each absent from one meeting. SEI Tax Exempt Trust 8 The Trustees attended all meetings, except August 31, 2003 for Mr. Gooch and Ms. Greco, who were each absent from one meeting. SEI Daily Income Trust 9 The Trustees attended all meetings, except January 31, 2004 for Mr. Gooch and Ms. Greco, who were each absent from one meeting. SEI Index Funds 9 The Trustees attended all meetings, except March 31, 2004 for Mr. Gooch and Ms. Greco, who were each absent from one meeting. SEI Institutional Managed Trust 9 The Trustees attended all meetings, except September 30, 2003 for Mr. Gooch and Ms. Greco, who were each absent from one meeting. SEI Institutional International Trust 9 The Trustees attended all meetings, except September 30, 2003 for Mr. Gooch and Ms. Greco, who were each absent from one meeting. SEI Asset Allocation Trust 9 The Trustees attended all meetings, except March 31, 2004 for Mr. Gooch and Ms. Greco, who were each absent from one meeting.
Each Trust has a standing Audit Committee currently consisting of Messrs. Gooch, Storey and Sullivan, and Messes. Greco and Lesavoy, each of whom are not "interested persons" as such term is defined in the 1940 Act (collectively, the "Independent Trustees"). The Audit Committee assists the Trustees in their oversight of the Trusts' financial reporting. The chart below provides information about the number of Audit Committee Meetings held during each Trust's most recently completed fiscal year and which Audit Committee members attended such meetings.
NUMBER OF AUDIT COMMITTEE MEETINGS HELD DURING MOST RECENT AUDIT COMMITTEE MEMBERS TRUST AND FISCAL YEAR FISCAL YEAR WHO ATTENDED THE MEETING --------------------- ----------- ------------------------ SEI Liquid Asset Trust 4 The Audit Committee members attended all June 30, 2004 meetings. SEI Tax Exempt Trust 4 The Audit Committee members attended all August 31, 2003 meetings, except for Mr. Gooch, who was absent from one meeting. SEI Daily Income Trust 4 The Audit Committee members attended all January 31, 2004 meetings, except for Mr. Storey, who was absent from one meeting. SEI Index Funds 4 The Audit Committee members attended all March 31, 2004 meetings, except for Mr. Storey, who was absent from one meeting. SEI Institutional Managed Trust 4 The Audit Committee members attended all September 30, 2003 meetings except for Mr. Gooch, who was absent from one meeting. SEI Institutional International Trust 4 The Audit Committee members attended all September 30, 2003 meetings except for Mr. Gooch, who was absent from one meeting. SEI Asset Allocation Trust 5 The Audit Committee members attended all March 31, 2004 meetings, except for Mr. Storey, who was absent from one meeting.
17 Each Trust has a standing Nominating Committee currently consisting of the Independent Trustees. The Nominating Committee is responsible for evaluating and recommending nominees for election to the Board. The Nominating Committee meets as necessary and the chart below provides information about the number of Nominating Committee Meetings held during each Trust's most recently completed fiscal year.
NUMBER OF NOMINATING COMMITTEE MEETINGS HELD TRUST AND FISCAL YEAR DURING MOST RECENT FISCAL YEAR --------------------- ------------------------------ SEI Liquid Asset Trust 2 June 30, 2004 SEI Tax Exempt Trust 1 August 31, 2003 SEI Daily Income Trust 1 January 31, 2004 SEI Index Funds 2 March 31, 2004 SEI Institutional Managed Trust 1 September 30, 2003 SEI Institutional International Trust 1 September 30, 2003 SEI Asset Allocation Trust 2 March 31, 2004
The Nominating Committee has adopted a charter, a copy of which is attached hereto as Exhibit A. It is the Nominating Committee's policy to review shareholder recommendations for nominations to fill vacancies on the Board if such recommendations are submitted in writing and addressed to the Nominating Committee at the applicable Trust's offices. The Trusts do not have a standing compensation committee or any committee performing similar functions. COMPENSATION OF THE TRUSTEES, OFFICERS AND OTHERS. The Interested Trustees and officers of the Trusts do not receive compensation from the Trusts. The chart below provides information about the annual fee that each Independent Trustee receives from each Trust, total compensation accrued and payable to the Independent Trustees by each Trust and the "fund complex" for each Trust's most recently completed fiscal year. The "fund complex" is composed of all of the Funds and the portfolios of SEI Institutional Investments Trust.
PENSION OR RETIREMENT ANNUAL BENEFITS ESTIMATED NAME OF FEE ACCRUED AS ANNUAL TOTAL INDEPENDENT PAYABLE TOTAL PART OF BENEFITS COMPENSATION TRUSTEE AND TO COMPENSATION FUND UPON FROM FUND FISCAL YEAR TRUSTEE FROM TRUST EXPENSES RETIREMENT COMPLEX ----------- ------- ---------- -------- ---------- ------- SEI LIQUID ASSET TRUST - FISCAL YEAR ENDED JUNE 30, 2004 (* AS OF JUNE 30, 2003) F. Wendell Gooch $ 4,527 N/A N/A $ 133,000
18
PENSION OR RETIREMENT ANNUAL BENEFITS ESTIMATED NAME OF FEE ACCRUED AS ANNUAL TOTAL INDEPENDENT PAYABLE TOTAL PART OF BENEFITS COMPENSATION TRUSTEE AND TO COMPENSATION FUND UPON FROM FUND FISCAL YEAR TRUSTEE FROM TRUST EXPENSES RETIREMENT COMPLEX ----------- ------- ---------- -------- ---------- ------- James M. Storey $ 4,527 N/A N/A $ 133,000 George J. Sullivan, Jr. $ 4,527 N/A N/A $ 133,000 Rosemarie B. Greco $ 4,527 N/A N/A $ 133,000 Nina Lesavoy -- N/A N/A -- SEI TAX EXEMPT TRUST - FISCAL YEAR ENDED AUGUST 31, 2003 F. Wendell Gooch $ 18,391 N/A N/A $ 133,000 James M. Storey $ 18,391 N/A N/A $ 133,000 George J. Sullivan, Jr. $ 18,391 N/A N/A $ 133,000 Rosemarie B. Greco $ 18,391 N/A N/A $ 133,000 Nina Lesavoy -- N/A N/A -- SEI DAILY INCOME TRUST - FISCAL YEAR ENDED JANUARY 31, 2004 F. Wendell Gooch $ 14,707 N/A N/A $ 133,000 James M. Storey $ 14,707 N/A N/A $ 133,000 George J. Sullivan, Jr. $ 14,707 N/A N/A $ 133,000 Rosemarie B. Greco $ 14,707 N/A N/A $ 133,000 Nina Lesavoy $ 7,831 N/A N/A $ 66,500 SEI INDEX FUNDS - FISCAL YEAR ENDED MARCH 31, 2004 F. Wendell Gooch $ 4,114 N/A N/A $ 133,000 James M. Storey $ 4,114 N/A N/A $ 133,000 George J. Sullivan, Jr. $ 4,114 N/A N/A $ 133,000 Rosemarie B. Greco $ 4,114 N/A N/A $ 133,000 Nina Lesavoy $ 3,143 N/A N/A $ 99,750 SEI ASSET ALLOCATION TRUST - FISCAL YEAR ENDED MARCH 31, 2004 F. Wendell Gooch $ 13,888 N/A N/A $ 133,000 James M. Storey $ 13,888 N/A N/A $ 133,000 George J. Sullivan, Jr. $ 13,888 N/A N/A $ 133,000 Rosemarie B. Greco $ 13,888 N/A N/A $ 133,000 Nina Lesavoy $ 11,478 N/A N/A $ 99,750 SEI INSTITUTIONAL MANAGED TRUST - FISCAL YEAR ENDED SEPTEMBER 30, 2003 F. Wendell Gooch $ 33,250 N/A N/A $ 133,000 James M. Storey $ 33,250 N/A N/A $ 133,000 George J. Sullivan, Jr. $ 33,250 N/A N/A $ 133,000 Rosemarie B. Greco $ 33,250 N/A N/A $ 133,000 Nina Lesavoy [--] N/A N/A [--] SEI INSTITUTIONAL INTERNATIONAL TRUST - FISCAL YEAR ENDED SEPTEMBER 30, 2003 F. Wendell Gooch $ 12,578 N/A N/A $ 133,000 James M. Storey $ 12,578 N/A N/A $ 133,000 George J. Sullivan, Jr. $ 12,578 N/A N/A $ 133,000 Rosemarie B. Greco $ 12,578 N/A N/A $ 133,000 Nina Lesavoy $ [3,668] N/A N/A $ [33,250]
OWNERSHIP OF FUND SECURITIES. The table below shows the dollar range of equity securities beneficially owned by each Nominee or Trustee as of June 30, 2004. 19
AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL FUNDS OVERSEEN BY TRUSTEE OR NAME OF TRUSTEE OR DOLLAR RANGE OF EQUITY SECURITIES NOMINEE IN THE NOMINEE FOR EACH FUND FUND COMPLEX ------- ------------- -------------------- Mr. Nesher Over $100,000 (SIMT Core Fixed Income Fund) Over $100,000 Over $100,000 (SIMT Large Cap Growth Fund) Over $100,000 (SIMT Large Cap Value Fund) $1-$10,000 (SIMT Small Cap Growth Fund) Mr. Doran Mr. Gooch Over $100,000 (SIMT Small Cap Growth Fund) Over $100,000 $10,001-$50,000 (SIT International Equity Fund) Over $100,000 (SDIT Prime Obligation Fund) Mr. Storey Mr. Sullivan None None Ms. Greco None None Ms. Lesavoy Mr. Williams None None
Proposal 2. To approve a "manager of managers" structure for: the Bond Index Fund of INDEX; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SDIT; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET. The Board of Trustees recommends that Shareholders approve a "manager of managers" structure for the Bond Index Fund of INDEX; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SDIT; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET, as described below. SEC EXEMPTIVE ORDER AND SHAREHOLDER APPROVAL. Proposal 2 seeks Shareholder approval to implement a "manager of managers" structure for each Fund. Under this structure, each Fund will have an investment adviser and one or more sub-advisers. The Board of Trustees will be permitted to approve or terminate investment sub-advisers, based on the recommendation of SIMC as investment adviser, WITHOUT shareholder approval. Normally, shareholders of a mutual fund must approve investment advisory agreements for the mutual fund. To operate a "manager of managers" structure efficiently, however, the Trusts have obtained an exemption from the U.S. Securities and Exchange Commission ("SEC") from the shareholder approval requirements, subject to certain conditions. One condition of the SEC exemption order is that, before a Fund relies on the exemption and implements a "manager of managers" structure, that Fund's shareholders 20 must approve the "manager of managers" structure. All of the other Funds in the SEI Funds family have implemented this "manager of managers" structure, and SIMC currently serves as investment adviser and "manager of managers" for those Funds. DESCRIPTION OF THE PROPOSED "MANAGER OF MANAGERS" STRUCTURE. Under the proposed "manager of managers" structure, each Fund will be operated in a manner that is different from many other mutual funds. Most mutual funds operate under a structure in which a single entity, the fund's adviser, provides investment advisory services to the fund. Typically, the fund pays an advisory fee to the fund's adviser and the adviser, in turn, compensates the adviser's portfolio managers who make specific securities selections for the fund. In contrast, under the "manager of managers" structure, a Fund will pay SIMC an advisory fee and SIMC, in turn, will hire sub-advisers to provide day-to-day investment advisory services to the Fund. Under this structure, shareholders will have the benefit of SIMC's expertise in selecting and monitoring investment sub-advisers. SIMC will continuously monitor the performance of the sub-advisers and may from time to time recommend that the Board of Trustees replace one or more sub-advisers or appoint additional sub-advisers, depending on SIMC's assessment of what combination of sub-advisers it believes would optimize a Fund's chances of achieving its investment objective. The Board would be able to approve the addition or termination of sub-advisers without shareholder approval. Any proposal to add or replace sub-advisers would be reviewed as follows. First, SIMC would assess a Fund's needs and, if it believed additional or replacement sub-advisers could benefit the Fund, would systematically search the relevant universe of available investment sub-advisers. Second, any recommendations made by SIMC would have to be approved by a majority of the Trustees, including a majority of the Trustees who are not parties to the investment sub-advisory agreement or "interested persons," as defined under the 1940 Act, of any party to the investment sub-advisory agreement. Finally, any selections of additional or replacement sub-advisers would have to comply with conditions contained in the SEC exemption. The proposed "manager of managers" structure is intended to afford the Funds increased management flexibility. With the "manager of managers" structure, the Trustees will not be required to call a shareholder meeting each time a new sub-adviser is approved and A FUND WILL NOT INCUR THE CONSIDERABLE EXPENSE OF HOLDING SHAREHOLDER MEETINGS TO APPROVE SUB-ADVISERS. TRUSTEES' CONSIDERATIONS. In unanimously approving the "manager of managers" structure for the Funds and in recommending that Shareholders also approve this structure, the Trustees reviewed SIMC's expertise as a "manager of managers," including SIMC's experience in serving as "manager of managers" for the other Funds in the SEI Funds family. In addition, the Trustees considered the flexibility the Funds will have under a "manager of managers" structure to implement sub-adviser changes, without shareholder approval and without the Funds incurring the considerable costs of obtaining shareholder approval, when the Board determines that such changes are advisable. THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2. 21 Proposal 3. To approve SIMC as investment adviser for: the Bond Index Fund of INDEX; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SDIT; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET; and to approve an investment advisory agreement with SIMC and these Funds. The Board of Trustees recommends that Shareholders approve SIMC as the investment adviser of the Bond Index Fund of INDEX; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SDIT; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET, and approve the investment advisory agreements (each an "Investment Advisory Agreement" and, collectively, the "Investment Advisory Agreements") between the Trusts and SIMC relating to these Funds (which are attached as Exhibits B, C and D to this Proxy Statement). The description of the Investment Advisory Agreements in this Proxy Statement is qualified in its entirety by reference to Exhibits B, C and D. The Trustees, including all of the Trustees who are not parties to the Investment Advisory Agreements or "interested persons," as defined under the 1940 Act, of any party to the Investment Advisory Agreements, unanimously approved SIMC as investment adviser for each Fund and the Investment Advisory Agreements with respect to each Fund at a meeting held on June 17, 2004. CURRENT INVESTMENT ADVISORY ARRANGEMENTS. Standish Mellon Asset Management Company LLC ("Standish Mellon") serves as investment adviser to the Bond Index Fund of INDEX pursuant to an investment advisory agreement with INDEX dated October 2, 1995. Wellington Management Company, LLP ("Wellington Management") serves as investment adviser to the Short-Duration Government, Intermediate-Duration Government and GNMA Funds of SDIT, and the Corporate Daily Income Fund of SDIT pursuant to investment advisory agreements with SDIT dated December 15, 1986 and August 4, 1993, respectively. Weiss Peck and Greer Investments ("WPG") serves as investment adviser to the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET pursuant to an investment advisory agreement with STET dated December 31, 1995. The current investment advisory agreements are collectively referred to as the "Previous Advisory Agreements." NEW INVESTMENT ADVISORY AGREEMENTS. At a meeting of the Board of Trustees held on June 17, 2004, the Trustees approved SIMC as investment adviser to the Bond Index Fund of INDEX; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SDIT; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of STET, and those Funds' current advisers, Standish Mellon, Wellington Management and WPG, as sub-advisers to the Funds, based upon the Board's determination that the selection of SIMC to provide the investment advisory and "manager of managers" services as described herein will better optimize each Fund's chances of achieving its investment objective. Other than the identity of the investment adviser and provisions concerning the "manager of managers" structure, there are no material differences between the Investment Advisory Agreements and the Previous Advisory 22 Agreements. For example, the advisory fees are identical, and the standards of care and limitations of liability are the same, except as noted below. SIMC'S DUTIES UNDER THE INVESTMENT ADVISORY AGREEMENTS. Under the Investment Advisory Agreements, SIMC will serve as investment adviser and "manager of managers" to each Fund. SIMC will provide its proprietary investment adviser selection, monitoring, and asset allocation services to the Funds. Subject to Board approval (but not shareholder approval), SIMC, in turn, will enter into investment sub-advisory agreements with one or more sub-advisers who will make specific investment decisions with respect to the assets (or a portion of the assets) of each Fund. Under the Investment Advisory Agreements, SIMC will also continuously review and supervise each Fund's investment program. Subject to Board approval, SIMC in the future may provide specific portfolio security advice with respect to all or some portion of a Fund's assets, but SIMC does not currently expect to request such approval. SIMC will perform internal due diligence on prospective sub-advisers for each Fund and monitor sub-adviser performance using its proprietary investment adviser selection and monitoring process. SIMC will be responsible for communicating performance targets and evaluations to sub-advisers, supervising each sub-adviser's compliance with a Fund's investment objective and policies, authorizing sub-advisers to engage in certain investment techniques for a Fund, and recommending to the Board of Trustees whether investment sub-advisory agreements should be renewed, modified or terminated. SIMC also will recommend to the Board of Trustees the addition of new sub-advisers, as it deems appropriate. SUB-ADVISORY SERVICES UNDER THE "MANAGER OF MANAGERS" STRUCTURE. As discussed above, at the June 17, 2004 meeting, the Board of Trustees approved the Funds' current advisers, Standish Mellon, Wellington Management and WPG, as the investment sub-adviser to each respective Fund, subject to shareholder approval of the "manager of managers" structure described in this Proxy Statement. If Shareholders approve this structure, Standish Mellon, Wellington Management and WPG will serve as sub-advisers to each respective Fund under a sub-advisory agreement between Standish Mellon, Wellington Management and WPG and SIMC, respectively. As sub-advisers to the Funds, Standish Mellon, Wellington Management and WPG will be responsible for the day-to-day investment management of all or a discrete portion of their respective Fund's assets allocated to it by SIMC. Standish Mellon, Wellington Management and WPG will be authorized to make investment decisions for their respective Fund and place orders on each Fund's behalf to effect those investment decisions. As the "manager of managers" of each Fund, SIMC will oversee Standish Mellon, Wellington Management and WPG to ensure compliance with each Fund's investment objective and guidelines, and will monitor their adherence to each Fund's investment style. Shortly after Standish Mellon, Wellington Management and WPG begin acting as sub-advisers under this structure, each Fund will provide shareholders with information about Standish Mellon, Wellington Management and WPG and their Investment Advisory Agreements with SIMC. COMPENSATION. For its services as investment adviser and "manager of managers" of each Fund, SIMC will receive a fee from the Funds. The chart below provides information about the fees that each Fund will pay under each Investment Advisory Agreement. These are the same contractual fees that were paid to the previous advisers. SIMC will pay any sub-advisers out of 23 the investment advisory fee it receives. The Funds are not responsible for paying the sub-advisers' advisory fees.
FUND CONTRACTUAL FEE -------------------------------------------------------------------------------------------------- INDEX Bond Index Fund 0.07% SDIT Short-Duration Government Fund 0.10% up to $500 million; 0.075% between $500 SDIT Intermediate-Duration Government Fund million and $1 billion; and 0.05% over $1 billion, SDIT GNMA Fund based on the combined assets of the Intermediate-Duration Government, Short-Duration Government, and GNMA Funds SDIT Corporate Daily Income Fund 0.10% up to $500 million; 0.075% between $500 million and $1 billion; and 0.05% over $1 billion, based on the combined assets of the Corporate Daily Income and Treasury Securities Daily Income Funds STET California Tax Exempt Fund 0.05% up to $500,000,000; 0.04% next $500,000,000; STET Tax Free Fund 0.03% over $1,000,000,000, calculated by aggregating STET Institutional Tax Free Fund the assets of the California Tax Exempt, Tax Free, STET Pennsylvania Tax Free Fund Institutional Tax Free and Pennsylvania Tax Free Funds and applying this fee schedule and then allocating the fee to each of these Funds based upon their relative net assets
SIMC and its affiliates that are service providers to the Funds have voluntarily agreed to waive fees to keep the Funds' total expense ratios at specified levels. These voluntary fee waivers may be discontinued at any time; however, SIMC and its affiliates have no current intention to discontinue these voluntary fee waivers. DURATION AND TERMINATION. Unless terminated earlier, each Investment Advisory Agreement will continue in effect as to a Fund for an initial two year term, and will continue thereafter for periods of one year for so long as such continuance is specifically approved at least annually as required by the 1940 Act. Each Investment Advisory Agreement will terminate automatically in the event of its assignment. In addition, each Investment Advisory Agreement may be terminated at any time without penalty by the Trustees or by a vote of a majority of the outstanding shares of a Fund on not less than 30 days' nor more than 60 days' written notice to SIMC. In addition, each Investment Advisory Agreement is terminable by SIMC upon 90 days' written notice to the Trust. The duration and termination provisions of the Investment Advisory Agreements are identical to the duration and termination provisions of the Previous Advisory Agreements. LIMITATION OF LIABILITY. SIMC will discharge its responsibilities under the Investment Advisory Agreements subject to the general supervision of, and any policies set by, the Board of Trustees. Under the Investment Advisory Agreements, SIMC is not 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 under the Investment Advisory Agreements (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 SIMC of its obligations or duties under the Investment Advisory Agreements, except as may otherwise be provided under provisions of applicable state and Federal law to the extent such provisions cannot be waived or modified by the Investment Advisory Agreements). The limitation of liability provisions of the Investment Advisory 24 Agreements are identical to the limitation of liability provisions of the Previous Advisory Agreements with the exception of the Previous Advisory Agreement for the Short-Duration Government, Intermediate-Duration Government and GNMA Funds of SDIT, which provides that no provision of the Agreement shall be deemed to protect Wellington Management against any liability to SDIT or its shareholders to which it might otherwise be subject by reason of any willful misfeasance, bad faith or gross negligence in performance of its duties or the reckless disregard of its obligations under the agreement. DESCRIPTION OF THE INVESTMENT ADVISER. SIMC is a wholly-owned subsidiary of SEI Investments Company ("SEI"), a financial services company located at Oaks, Pennsylvania 19456. SEI was founded in 1968 and is a leading provider of investment solutions to banks, institutional investors, investment advisers, and insurance companies. SIMC, and its predecessor, began managing as a "manager of managers" in 1995 and has significant experience providing advice to investors regarding the selection and evaluation of investment advisers. As of July 31, 2004, SIMC acted in a similar "manager of managers" role with respect to $XX billion of client assets. Listed below are the names and principal occupations of each director and the principal executive officer of SIMC. The principal business address of each director and the principal executive officer, as it relates to their duties at SIMC, is One Freedom Valley Drive, Oaks, Pennsylvania 19456.
NAME TITLE ---- ----- Edward D. Loughlin Director & President Carl A. Guarino Director & Executive Vice President Robert Crudup Senior Vice President Wayne Withrow Senior Vice President Timothy D. Barto General Counsel, Vice President & Secretary Lydia A. Gavalis Vice President & Assistant Secretary Christine McCullough Vice President & Assistant Secretary Richard A. Deak Vice President & Assistant Secretary John C. Munch Assistant Secretary William E. Zitelli, Jr. Assistant Secretary Rosanne Miller Assistant Secretary Lori L. White Assistant Secretary Thomas D. Jones Compliance Officer & Assistant Secretary David Campbell Vice President Vincent Chu Vice President Jim Combs Vice President Karl Dasher Vice President & Chief Investment Officer Scott W. Dellorfano Vice President Michael Cagina Vice President Greg Gettinger Vice President Kathy Heilig Vice President & Treasurer Lori Heinel Vice President Paul Klauder Vice President Jack May Vice President Carolyn McLaurin Vice President James V. Morris Vice President
25
NAME TITLE ---- ----- Stephen Onofrio Vice President Alison Saunders Vice President Brandon Sharrett Vice President Frank Sidoti Vice President Kathryn L. Stanton Vice President Raymond B. Webster Vice President
Listed below are the names of each officer of the Funds who is an officer or employee of SIMC.
NAME POSITION WITH FUND POSITION WITH SIMC ---- ------------------ ------------------ Edward D. Loughlin President & Chief Executive Officer Director & President Timothy D. Barto Vice President & Secretary General Counsel, Vice President & Secretary Lydia A. Gavalis Vice President & Assistant Secretary Vice President & Assistant Secretary Christine M. McCullough Vice President & Assistant Secretary Vice President & Assistant Secretary William E. Zitelli, Jr. Vice President & Assistant Secretary Assistant Secretary John J. McCue Vice President Director of Portfolio Implementations & Managing Director of Money Market Investments Thomas D. Jones Chief Compliance Officer Chief Compliance Officer & Assistant Secretary
OTHER FUNDS WITH SIMILAR INVESTMENT OBJECTIVES. SIMC serves as investment adviser and "manager of managers" to the following funds that have investment objectives similar to those of the Funds. The following table provides comparative information on fees paid to SIMC for managing funds with investment objectives similar to those of the Funds.
NAME OF FUND NET ASSETS OF FUND (INVESTMENT OBJECTIVE) AS OF JUNE 30, 2004 MANAGEMENT FEE ---------------------- ------------------- --------------
TRUSTEES' CONSIDERATIONS. At a meeting of the Board of Trustees held on June 17, 2004, the Board of Trustees reviewed SIMC's qualifications to act as each Fund's investment adviser and "manager of managers," placing particular emphasis on: (i) SIMC's proposed role in recommending, monitoring and terminating sub-advisers, subject to the Board of Trustees' oversight; and (ii) SIMC's performance as "manager of managers" and investment adviser for the other Funds in the SEI Funds family. The Trustees received oral information regarding SIMC's key personnel, its experience in selection and evaluation of sub-advisers and research performed by SIMC and others that had led SIMC to recommend a "manager of managers" structure. In unanimously approving (and recommending that Shareholders approve) SIMC as investment adviser and "manager of managers" to the Bond Index Fund of INDEX; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SDIT; and the California Tax Exempt, Tax Free, Institutional Tax Free, and 26 Pennsylvania Tax Free Funds of STET and the Investment Advisory Agreements with respect to those Funds, the Trustees carefully evaluated the experience of SIMC's key personnel in serving as a "manager of managers" for other institutional funds in the SEI Funds family, and the nature and quality of services SIMC is expected to provide to the Funds. The Trustees also considered: (i) each Fund's distinct investment objective and policies; (ii) that the total compensation payable to SIMC by the Funds under the Investment Advisory Agreements will be at the same rate as the compensation payable under the Previous Advisory Agreements; (iii) the history, reputation, qualification and background of SIMC, as well as the qualifications of its personnel and its financial condition; (iv) SIMC's performance record; (v) each Fund's performance; (vi) the benefits to each Fund expected to be realized as a result of implementing the proposed "manager of managers" structure for the Fund; and (vii) other factors deemed relevant. In addition, the Trustees considered the fees to be paid to SIMC in comparison to those being charged in the relevant segment of the mutual fund business. The Trustees used this information, as well as other information they obtained independently, to help them decide whether to approve SIMC as each Fund's "manager of managers" and investment adviser and the Investment Advisory Agreements. THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3. Proposal 4. To approve eliminating or reclassifying certain fundamental policies and restrictions for all Funds, except for: the Treasury Securities Fund of SLAT and the Money Market, Prime Obligation, Government, Treasury and Treasury II Funds of SDIT. The Board of Trustees recommends that Shareholders approve eliminating or reclassifying certain fundamental investment policies for all Funds, except for: the Treasury Securities Fund of SLAT and the Money Market, Prime Obligation, Government, Treasury and Treasury II Funds of SDIT, as described below. GENERAL DESCRIPTION OF 1940 ACT REQUIREMENTS. Each Fund operates in accordance with the investment objectives, policies and restrictions described in its prospectus and statement of additional information. The 1940 Act requires that each Fund classify specific investment policies as fundamental policies and requires a shareholder vote to make changes to those policies. Other policies not enumerated in the 1940 Act can be designated by a Fund as fundamental, and if so designated, may only be changed by shareholder vote or can be designated as non-fundamental and may be changed by a vote of the Board of Trustees. Since the time each Fund was created, there have been a number of changes in the laws and regulations that govern the Funds. First, significant federal legislation in 1996 pre-empted state regulation of all mutual funds. As a result, many investment policies previously imposed on the Funds by various states are no longer required. Second, significant changes to Rule 2a-7 under the 1940 Act, which governs the investments and operations of money market funds, took effect during the 1990s. Thus, many of the current fundamental policies of the Funds reflect outdated regulatory requirements or predate the current requirements of Rule 2a-7 and are, in significant respects, more restrictive than the 1940 Act and Rule 2a-7 currently require. In addition, new types of investment techniques and money market instruments have been 27 developed, which the Funds may not be permitted to use or invest in because of their outdated fundamental policies. SIMC performed a comprehensive review of the Funds' fundamental policies, and based on the recommendations of SIMC, the Board of Trustees has approved policy revisions that are designed to: (i) simplify and modernize those policies that are required to be fundamental; and (ii) eliminate or reclassify as non-fundamental those fundamental policies that are no longer required to be fundamental or that are no longer necessary. In some cases the Board of Trustees recommends that fundamental policies be amended or eliminated completely. In certain cases, the Board of Trustees has approved non-fundamental policies that in effect reclassify all or part of a fundamental policy into a non-fundamental policy. Changes to non-fundamental policies do not require shareholder approval. While not specifically subject to shareholder approval, the non-fundamental policies approved by the Board will not take effect unless the related change to the fundamental policy is approved by shareholders. Once converted to non-fundamental, a policy may be changed without Shareholder approval. If the Board decides in the future to change or eliminate a reclassified non-fundamental policy, the change would be disclosed in the Funds' prospectus(es) or statement of additional information, as required. Approval of these changes by Shareholders would allow the Funds greater flexibility to respond to a changing investment environment. The Board of Trustees also believes that the proposed changes will enhance the Funds' investment adviser's ability to manage the Funds' investment portfolios. In addition, by reducing to a minimum those policies that can be changed only by shareholder vote, the Funds in the future may be able to avoid the costs and delay associated with a shareholder meeting. The Funds that are money market funds will continue to be subject to the requirements of Rule 2a-7. Each proposed change to a Fund's fundamental policies recommended by the Board of Trustees is discussed in detail below. In order to help you understand the proposed changes, attached as Exhibit E is a list of the Funds' current fundamental policies proposed to be replaced by new fundamental and/or non-fundamental policies or to be eliminated. VOTING REQUIREMENTS FOR PROPOSAL 4. Approval of each item of Proposal 4 requires the favorable vote of a majority of outstanding voting shares of a Fund as defined by the 1940 Act. Proposal 4 is separated into separate items. YOU MAY VOTE FOR PROPOSAL 4 AS A GROUP OR BY EACH ITEM. If you vote on Proposal 4 as a group, a Fund will record your votes as having been cast "FOR" or "AGAINST," according to your vote, each applicable item within Proposal 4. Alternatively, you may vote separately for or against each item. If you return a proxy card with a vote on the entire Proposal as a group and separate votes on specific items, your vote on the entire Proposal as a group will control and be recorded as your intended vote. If Shareholders approve some, but not all, items of Proposal 4, a Fund will have a combination of certain current fundamental policies and certain new fundamental and/or non-fundamental policies. Fundamental policies approved by the Shareholders would become 28 effective immediately after the Meeting. However, it is not expected that the changes in fundamental policies will materially change the manner in which the Funds are managed. ITEM 4 (a) - FUNDAMENTAL POLICY REGARDING DIVERSIFICATION CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding diversification.
CURRENT FUNDS FUNDAMENTAL POLICY ----- ------------------ SIMT Large Cap Growth, SIMT Large Cap Value, SIMT Tax-Managed Large Cap, SIMT With respect to 75% of its assets, Mid-Cap, SIMT Small Cap Growth, SIMT Small Cap Value, SIMT Tax-Managed Small no Fund may: (i) purchase the Cap, SIMT Core Fixed Income, SIMT High Yield Bond, SIT International Equity, SIT securities of any issuer (except Emerging Markets Equity, STET Short Duration Municipal, STET Intermediate-Term securities issued or guaranteed by Municipal, STET Pennsylvania Municipal, SDIT Corporate Daily Income, SDIT the U.S. Government, its agencies Short-Duration Government, SDIT Intermediate-Duration Government, SDIT GNMA, or instrumentalities) if, as a INDEX S&P 500 Index and INDEX Bond Index Funds result, more than 5% of its total assets would be invested in the securities of such issuer; or (ii) acquire more than 10% of the outstanding voting securities of any one issuer. SDIT Government II, STET Tax Free, STET Institutional Tax Free, STET California No Fund may purchase securities Tax Exempt and STET Pennsylvania Tax Free Funds of any issuer (except securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities), if as a result, more than 25% of its total assets would be invested in the securities of such issuer. No Fund may acquire more than 10% of the voting securities of any one issuer.
PROPOSED FUNDAMENTAL POLICY. No Fund may purchase securities of an issuer if it would cause the Fund to fail to satisfy the diversification requirements for a diversified management company under the 1940 Act, the rules or regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. ANALYSIS OF PROPOSED CHANGES. Each Fund is classified as a "diversified" mutual fund. This Proposal does not seek to change the Funds' status as diversified investment management companies, but to provide the Funds with maximum flexibility allowed for diversified investment companies under the 1940 Act. The proposed fundamental policy will require a Fund to comply with the limitations imposed by the 1940 Act on "diversified" funds. Section 5(b) of the 1940 Act prohibits a "diversified" mutual fund from purchasing securities of any one issuer if, at the time of purchase, more than 5% of the fund's total assets would be invested in securities 29 of that issuer or the fund would own or hold more than 10% of the outstanding voting securities of that issuer, except that up to 25% of the fund's total assets may be invested without regard to this limitation. The 5% limitation does not apply to securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities or to securities issued by other investment companies. In addition to the limitations imposed on "diversified" funds, money market funds are subject to additional, stricter diversification requirements imposed by Rule 2a-7 under the 1940 Act. Rule 2a-7 limits a money market fund to investing no more than 5% of its assets in the securities of a single issuer. This requirement applies with respect to 100% of a money market fund's assets, in contrast to Section 5(b) diversification requirements, which apply only with respect to 75% of a non-money market fund's assets. Rule 2a-7 does provide for a safe harbor for a fund, as a money market fund, to invest up to 25% of its assets in securities of a single issuer, but only for a period of up to three days. PROPOSED NON-FUNDAMENTAL POLICY. The Board has also approved that each Fund's current fundamental policy regarding diversification be reclassified as a non-fundamental policy. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. The Board of Trustees would be able to make changes to the non-fundamental policy in the future if deemed to be in the best interests of the Funds and their shareholders. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (b) - FUNDAMENTAL POLICY REGARDING CONCENTRATION CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding concentration.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SIMT Large Cap Growth, SIMT Large Cap Value, SIMT No Fund may purchase any securities which would cause Tax-Managed Large Cap, SIMT Mid-Cap, SIMT Small Cap more than 25% of the total assets of the Fund to be Growth, SIMT Small Cap Value, SIMT Tax-Managed Small invested in the securities of one or more issuers Cap, SIMT Core Fixed Income, SIMT High Yield Bond, SIT conducting their principal business activities in the International Equity, SIT Emerging Markets Equity, SIT same industry, provided that this limitation does not Emerging Markets Debt, SIT International Fixed Income, apply to investments in obligations issued or STET Tax Free, STET Institutional Tax Free, STET guaranteed by the U.S. Government, its agencies or California Tax Exempt, STET Intermediate-Term Municipal, instrumentalities. STET Pennsylvania Municipal Bond, STET Pennsylvania Tax Free, STET Short Duration Municipal, INDEX S&P 500 Index, INDEX Bond Index, STET California Municipal Bond, STET Massachusetts Municipal Bond, STET New Jersey Municipal Bond, and STET New York Municipal Bond Funds SDIT Corporate Daily Income, SDIT Short-Duration No Fund may purchase any securities which would cause Government, SDIT Intermediate-Duration Government, SDIT 25% or more of the total assets of the Fund to be GNMA and SDIT Government II invested in the securities of one or more issuers conducting their
30 Funds principal business activities in the same industry, provided that this limitation does not apply to investments in (a) domestic banks and (b) obligations issued or guaranteed by the U.S. Government or its agencies and instrumentalities. STET Tax Free, STET Institutional Tax Free, STET No Fund may invest more than 25% of its total assets in Intermediate-Term Municipal and STET Pennsylvania issuers within the same state or similar type projects Municipal Bond Funds (except in specified categories). For the STET Pennsylvania Municipal Bond Fund, this limitation does not apply to the extent stated in its investment objective and policies. STET Massachusetts Tax Free Money Market Fund No Fund may purchase any securities which would cause more than 25% of the total assets of the Fund, based on current value at the time of such purchase, 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 (a) obligations issued or guaranteed by the U.S. Government or its agencies and instrumentalities, or (b) obligations of state or municipal governments and their political subdivisions.
PROPOSED FUNDAMENTAL POLICY. No Fund may concentrate investments in a particular industry or group of industries, as concentration is defined under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. ANALYSIS OF PROPOSED CHANGES. The 1940 Act generally requires the Funds to adopt a fundamental policy regarding concentration of investments in particular industries. It is currently the SEC staff's position that if 25% or more of the value of a fund's assets are invested in securities of issuers in one industry, that fund's investments will be deemed to be concentrated in that industry. However, this 25% limitation does not apply to: (i) fund investments in government securities; (ii) municipal bond fund investments in industrial development and pollution control bonds; and (iii) fund investments in certain obligations of domestic banks. The proposed policy is more flexible than the current policy, and would permit the Funds to take appropriate and timely action in the future to amend the Funds' policies in response to market or regulatory changes, without the expense and delay associated with a shareholder meeting. The Board of Trustees anticipates taking such action only in the event that the SEC changes its position on the meaning of industry concentration. PROPOSED NON-FUNDAMENTAL POLICY. The Board has also approved that each Fund's current fundamental policy regarding concentration be reclassified as a non-fundamental policy. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. The Board of Trustees would be able to make changes to the non-fundamental policy in the future if deemed to be in the best interests of the 31 Funds and their shareholders. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (c) - FUNDAMENTAL POLICIES REGARDING BORROWING AND SENIOR SECURITIES CURRENT FUNDAMENTAL POLICIES. The chart below describes each Fund's current fundamental policy regarding borrowing and senior securities.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SIMT Large Cap Growth, SIMT Large Cap Value, SIMT No Fund may borrow money in an amount exceeding Tax-Managed Large Cap, SIMT Mid-Cap, SIMT Small Cap 33 1/3% of the value of its total assets, provided that, Growth, SIMT Small Cap Value, SIMT Tax-Managed Small for purposes of this limitation, investment strategies Cap, SIMT Core Fixed Income, SIMT High Yield Bond, SIT which either obligate a Fund to purchase securities or International Equity, SIT Emerging Markets Equity, SIT require a Fund to segregate assets are not considered to Emerging Markets Debt, STET Short Duration Municipal, be borrowings. To the extent that its borrowings exceed STET California Municipal Bond, STET Massachusetts 5% of its assets: (i) all borrowings will be repaid before Municipal Bond, STET New Jersey Municipal Bond and STET a Fund makes additional investments and any interest paid New York Municipal Bond Funds on such borrowings will reduce income; and (ii) asset coverage of at least 300% is required. No Fund may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. All SAAT Funds Each Fund may borrow money in an amount up to 33 1/3% of the value of its total assets, provided that, for purposes of this limitation, investment strategies which either obligate a Fund to purchase securities or require a Fund to segregate assets are not considered to be borrowings. Except where a Fund has borrowed money for temporary purposes in amounts not exceeding 5% of its assets, asset coverage of 300% is required for all borrowings. No Fund may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. SIMT Real Estate Fund No Fund 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 that either obligate the Fund to purchase securities or require the Fund to segregate assets are not considered to be borrowing. Asset coverage of at least 300% is required for all borrowing, except where the Fund has borrowed money for temporary purposes in an amount not exceeding 5% of its total assets. No Fund may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. SDIT Corporate Daily Income, SDIT Short-Duration No Fund may borrow money except for temporary or emergency Government, SDIT Intermediate-Duration purposes and then only in an amount not
32 Government, SDIT GNMA, SDIT Government II, INDEX S&P 500 exceeding 10% of the value of the total assets of that Index, INDEX Bond Index and SIT International Fixed Fund. This borrowing provision is included solely to Income Funds facilitate the orderly sale of portfolio securities to accommodate substantial redemption requests if they should occur and is not for investment purposes. All borrowings will be repaid before the Fund makes additional investments and any interest paid on such borrowings will reduce the income of that Fund. No Fund may issue senior securities (as defined in the 1940 Act) except in connection with permitted borrowings as described in the prospectuses and its statement of additional information or as permitted by rule, regulation or order of the SEC. STET Tax Free, STET Institutional Tax Free, STET No Fund may borrow money except for temporary or emergency California Tax Exempt, STET Intermediate-Term purposes and then only in an amount not exceeding 10% of Municipal, STET Pennsylvania Municipal Bond and STET the value of total assets. The California Tax Exempt Fund Pennsylvania Tax Free Funds has a fundamental policy that, to the extent such borrowing exceeds 5% of the value of the Fund's total assets, borrowing will be done from a bank and in accordance with the requirements of the 1940 Act. 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 borrowings of the Funds, in excess of 5% of its total assets, will be repaid before making additional investments and any interest paid on such borrowings will reduce income. No Fund may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. STET Massachusetts Tax Free Money Market Fund No Fund may borrow, except that the Fund may: (a) borrow from banks for temporary or emergency purposes, including the meeting of redemption requests which might otherwise require the untimely disposition of securities; and (b) to the extent consistent with the Fund's investment objective and policies, enter into reverse repurchase agreements, forward roll transactions and similar investment techniques and strategies. To the extent it engages in transactions described in (a) and (b), the Fund will be limited so that no more than 33 1/3% of its total assets (including the amount borrowed), less liabilities (not including the amount borrowed) valued at the time the borrowing is made, is derived from such transactions. No Fund may issue senior securities (as defined in the 1940 Act) except in connection with permitted borrowings as described in its statement of additional information or as permitted by the 1940 Act, and any rule, regulation or order of the SEC thereunder.
33 PROPOSED FUNDAMENTAL POLICY. No Fund may borrow money or issue senior securities (as defined in the 1940 Act), except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. ANALYSIS OF PROPOSED CHANGES. Under the 1940 Act, the Funds are required to adopt fundamental policies regarding borrowing and issuance of senior securities. The 1940 Act presently limits a fund's ability to borrow more than one-third of the value of its total assets, subject to certain coverage requirements. Over time, the SEC has acknowledged the existence of new types of investment practices that technically may be considered borrowings, but that may be permissible investment practices for a fund. The 1940 Act generally prohibits the Funds from issuing senior securities, although it provides allowances for certain borrowings and certain other investments, such as short sales or reverse repurchase agreements, if Fund assets are earmarked or segregated to cover such obligations. Currently the Funds have two separate fundamental policies for borrowing and issuance of senior securities. The current fundamental policy regarding borrowing is more restrictive than the current standards permitted under the 1940 Act. As a result, it is proposed that the Funds adopt a more flexible single fundamental policy to address both borrowing and issuance of senior securities. This would permit the Funds to take appropriate and timely action in the future to amend the Funds' non-fundamental policies, without the expense and delay associated with a shareholder meeting. PROPOSED NON-FUNDAMENTAL POLICY. The Board has also approved that each Fund's current fundamental policy regarding borrowing and issuance of senior securities be reclassified as a non-fundamental policy. The reclassification of the Funds' current fundamental policies to a non-fundamental policy is not expected to affect the management of the Funds. The Board of Trustees would be able to make changes to the non-fundamental policy in the future if deemed to be in the best interests of the Funds and their shareholders. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (d) - FUNDAMENTAL POLICY REGARDING LENDING CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding lending.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SIMT Large Cap Growth, SIMT Large Cap Value, SIMT No Fund may make loans if, as a result, more than 33 1/3% Tax-Managed Large Cap, SIMT Mid-Cap, SIMT Small Cap of its total assets would be lent to other parties, except Growth, SIMT Small Cap Value, SIMT Tax-Managed Small that each Fund may: (i) purchase or hold debt instruments Cap, SIMT Core Fixed Income, SIMT High Yield Bond, SIMT in accordance with its investment objective and policies; Real Estate, SIT International Equity, SIT Emerging (ii) enter into repurchase agreements; and (iii) lend its Markets Equity, SIT Emerging Markets Debt, STET Short securities. Duration Municipal, SIIT Large Cap, STET California Municipal Bond, STET Massachusetts
34 Municipal Bond, STET New Jersey Municipal Bond, STET New York Municipal Bond and STET Massachusetts Tax Free Money Market Funds All SAAT Funds No Fund may make loans if, as a result, more than 33 1/3% of its total assets would be loaned to other parties. SDIT Corporate Daily Income, SDIT Short-Duration No Fund may make loans, except that each Fund may purchase Government, SDIT Intermediate-Duration Government, SDIT or hold debt instruments in accordance with its investment GNMA, SDIT Government II, STET Tax Free, STET objective and policies and may enter into repurchase Institutional Tax Free, STET California Tax Exempt, agreements, provided that repurchase agreements maturing STET Intermediate-Term Municipal, STET Pennsylvania in more than seven days, restricted securities and other Municipal Bond and STET Pennsylvania Tax Free Funds illiquid securities are not to exceed, in the aggregate, 10% of the Fund's net assets (15% for STET Intermediate-Term Municipal Fund). INDEX S&P 500 Index, INDEX Bond Index and SIT No Fund may make loans, except that each Fund: (i) may International Fixed Income Funds enter into repurchase agreements, provided that repurchase agreements and time deposits maturing in more than seven days, and other illiquid securities, including securities which are not readily marketable or are restricted, are not to exceed, in the aggregate, 10% of the Fund's total assets; (ii) may engage in securities lending as described in its statement of additional information; and (iii) may purchase or hold debt instruments in accordance with its investment objective and policies.
PROPOSED FUNDAMENTAL POLICY. No Fund may make loans, except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. ANALYSIS OF PROPOSED CHANGES. Under the 1940 Act, the Funds are required to adopt fundamental policies regarding lending. Although the 1940 Act does not impose percentage limits on the amount that funds may lend, the 1940 Act prohibits funds from making loans to persons who control or are under common control with the funds, effectively prohibiting loans where conflicts of interest or undue influence are most likely present. It is proposed that the Funds adopt a more flexible fundamental policy. This fundamental lending policy would limit the Funds only as required by the 1940 Act, thereby permitting the Funds to adapt to future developments in investment practices and changes in laws and regulations without the delay and cost of a shareholder meeting. PROPOSED NON-FUNDAMENTAL POLICY. The Board has also approved that each Fund's current fundamental policy regarding lending be reclassified as a non-fundamental policy. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. The Board of Trustees would be able to make changes to the non-fundamental policy in the future if deemed to be in the best interests of the Funds and their shareholders. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. 35 ITEM 4 (e) - FUNDAMENTAL POLICY REGARDING PLEDGING AND MORTGAGING OF FUND ASSETS CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding pledging and mortgaging of Fund assets.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT Corporate Daily Income, SDIT Short-Duration No Fund may pledge, mortgage or hypothecate assets except Government, SDIT Intermediate-Duration Government, SDIT to secure temporary borrowings permitted by a Fund's GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX borrowing policy/statement of additional information in Bond Index, SIT International Fixed Income, STET Tax aggregate amounts not to exceed 10% of the net assets of Free, STET Institutional Tax Free, STET California Tax such Fund taken at fair market value at the time of the Exempt, STET Intermediate-Term Municipal, STET incurrence of such loan, and as to the INDEX S&P 500 Pennsylvania Municipal Bond and STET Pennsylvania Tax Index Fund, in connection with stock index futures trading Free Funds as provided in its statement of additional information. INDEX S&P 500 Index and INDEX Bond Index Funds No Fund may pledge, mortgage or hypothecate assets except to secure temporary borrowings as described in its statement of additional information in aggregate amounts not to exceed 10% of the net assets of the Fund taken at current value at the time of the incurrence of such loan and, as to the INDEX S&P 500 Index Fund, in connection with stock index futures trading as provided in its statement of additional information.
PROPOSED FUNDAMENTAL POLICY. None. However, the Board has approved a non-fundamental policy as discussed below. ANALYSIS OF PROPOSED CHANGE. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares. The 1940 Act does not currently require the Funds to have a fundamental policy regarding pledging and mortgaging of Fund assets. As a result, it is proposed that the current fundamental policy be eliminated. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved that the Funds' current fundamental policy regarding pledging and mortgaging of Fund assets be reclassified as a non-fundamental policy. By reclassifying the fundamental policy to non-fundamental, the Funds would be able to make a change to the non-fundamental policy without incurring the cost of a shareholder meeting. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. The Board of Trustees would be able to make changes to the non-fundamental policy in the future if deemed to be in the best interests of the Funds and their shareholders. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. 36 ITEM 4 (f) - FUNDAMENTAL POLICY REGARDING CONTROL OF AN ISSUER CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding control of an issuer.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT Corporate Daily Income, SDIT Short-Duration No Fund may invest in companies for the purpose of Government, SDIT Intermediate-Duration Government, exercising control. SDIT GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX Bond Index, SIT International Fixed Income, STET Tax Free, STET Institutional Tax Free, STET California Tax Exempt, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond and STET Pennsylvania Tax Free Funds
PROPOSED FUNDAMENTAL POLICY. None. However, the Board has approved a non-fundamental policy as discussed below. ANALYSIS OF PROPOSED CHANGE. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares. The 1940 Act does not currently require the Funds to have a fundamental policy regarding investing for the purpose of exercising control of an issuer. As a result, it is proposed that the current fundamental policy be eliminated. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved that the Funds' current fundamental policy regarding investment of Fund assets with the purpose of exercising control over an issuer be reclassified as a non-fundamental policy. By reclassifying the fundamental policy to non-fundamental, Funds would be able to make a change to the non-fundamental policy without incurring the cost of holding a shareholder meeting. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. The Board of Trustees would be able to make changes to the non-fundamental policy in the future if deemed to be in the best interests of the Funds and their shareholders. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. 37 ITEM 4 (g) - FUNDAMENTAL POLICY REGARDING PURCHASE OF REAL ESTATE AND COMMODITIES CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding purchase of real estate and commodities.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SIMT Large Cap Growth, SIMT Large Cap Value, SIMT No Fund may purchase or sell real estate, physical Tax-Managed Large Cap, SIMT Mid-Cap, SIMT Small Cap commodities, or commodities contracts, except that each Fund Growth, SIMT Small Cap Value, SIMT Tax-Managed Small may purchase: (i) marketable securities issued by companies Cap, SIMT Core Fixed Income, SIMT High Yield Bond, which own or invest in real estate (including real estate SIMT Real Estate, SIT International Equity, SIT investment trusts), commodities, or commodities contracts; Emerging Markets Equity, SIT Emerging Markets Debt, and (ii) commodities contracts relating to financial STET Short Duration Municipal, STET California instruments, such as financial futures contracts and options Municipal Bond, STET Massachusetts Municipal Bond, on such contracts. STET New Jersey Municipal Bond, STET New York Municipal Bond, INDEX S&P 500 Index and INDEX Bond Index Funds All SAAT Funds No Fund may purchase or sell real estate, physical commodities, or commodities contracts, except that each Fund may purchase commodities contracts relating to financial instruments, such as financial futures or index contracts and options on such contracts. SDIT Corporate Daily Income, SDIT Government II and No Fund may purchase or sell real estate, real estate SIT International Fixed Income Funds limited partnership interests, commodities or commodities contracts including futures contracts. However, subject to its permitted investments, each Fund may purchase obligations issued by companies which invest in real estate, commodities or commodities contracts. STET Tax Free, STET Institutional Tax Free, STET No Fund may purchase or sell real estate, real estate California Tax Exempt, STET Intermediate-Term limited partnership interests, commodities or commodities Municipal, STET Pennsylvania Municipal Bond and STET contracts including futures contracts. However, subject to Pennsylvania Tax Free Funds its permitted investments, any Fund may invest in municipal securities or other obligations secured by real estate or other interests therein. SDIT Short-Duration Government, SDIT No Fund may purchase or sell real estate, real estate Intermediate-Duration Government and SDIT GNMA Funds limited partnership interests, commodities or commodities contracts (excluding futures contracts). However, subject to its permitted investments, each Fund may purchase obligations issued by companies which invest in real estate, commodities or commodities contracts. STET Massachusetts Tax Free Money Market Fund No Fund may purchase or sell real estate, real estate limited partnership interests, commodities or commodities contracts including futures contracts. However, subject to its permitted investments, the Fund may: (a) invest in securities of issuers engaged in the real estate business or the business of investing in real estate (including interests in limited partnerships owning or otherwise engaging in the real estate business or the business of investing in real estate) and
38 securities which are secured by real estate or interests therein; (b) hold or sell real estate received in connection with securities it holds or held; or (c) trade in futures contracts and options on futures contracts (including options on currencies) to the extent consistent with the Fund's investment objective and policies.
PROPOSED FUNDAMENTAL POLICY. No Fund may purchase or sell commodities or real estate, except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. ANALYSIS OF PROPOSED CHANGES. Under the 1940 Act, the Funds are required to adopt a fundamental policy regarding investment in real estate and commodities. The 1940 Act does not prohibit the Funds from purchasing commodities. It is the SEC staff's position that an interest in real estate includes securities (other than marketable securities) of companies whose assets consist substantially of real property and interests therein, including mortgages and other liens, but does not include securities of companies whose investments in real estate are incidental to another business. The 1940 Act does not restrict investment in marketable securities of issuers who invest in real estate (E.G., Real Estate Investment Trusts or REITs). It is proposed that the Funds adopt a more flexible fundamental policy. This fundamental policy regarding the purchase of real estate and commodities would limit the Funds only as required by the 1940 Act, thereby permitting the Funds to adapt to future developments in investment practices and changes in laws and regulations without the delay and cost associated with a shareholder meeting. PROPOSED NON-FUNDAMENTAL POLICY. The Board has also approved that each Fund's current fundamental policy regarding purchase of real estate and commodities be reclassified as a non-fundamental policy. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. The Board of Trustees would be able to make changes to the non-fundamental policy in the future if deemed to be in the best interests of the Funds and their shareholders. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (h) - FUNDAMENTAL POLICY REGARDING SHORT SALES CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding short sales.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT Corporate Daily Income, SDIT Short-Duration No Fund may make short sales of securities, maintain a Government, SDIT Intermediate-Duration Government, SDIT short position or purchase securities on margin, except GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX that the Funds may obtain short-term credits as necessary Bond Index, SIT International Fixed Income, STET Tax for the clearance of security transactions. Free, STET
39 Institutional Tax Free, STET California Tax Exempt, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond and STET Pennsylvania Tax Free Funds
PROPOSED FUNDAMENTAL POLICY. None. However, the Board has approved a non-fundamental policy as discussed below. ANALYSIS OF PROPOSED CHANGE. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares. The 1940 Act does not currently require the Funds to have a fundamental policy regarding short sales. As a result, it is proposed that the current fundamental policy be eliminated. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved that the Funds' current fundamental policy regarding short sales be reclassified as a non-fundamental policy. By reclassifying the fundamental policy to non-fundamental, the Funds would be able to make a change to the non-fundamental policy without incurring the cost of holding a shareholder meeting. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. Accordingly, should Shareholders approve this Proposal, the Funds intend to adopt the non-fundamental policy described in Exhibit E. ITEM 4 (i) - FUNDAMENTAL POLICY REGARDING UNDERWRITING OF SECURITIES CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding underwriting of securities.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- All SAAT Funds, SIMT Large Cap Growth, SIMT Large Cap No Fund may act as an underwriter of securities of other Value, SIMT Tax-Managed Large Cap, SIMT Mid-Cap, SIMT issuers except as it may be deemed an underwriter in Small Cap Growth, SIMT Small Cap Value, SIMT selling a portfolio security. Tax-Managed Small Cap, SIMT Core Fixed Income, SIMT High Yield Bond, SIMT Real Estate, SIT International Equity, SIT Emerging Markets Equity, SIT Emerging Markets Debt, SIT International Fixed Income, STET Short Duration Municipal, SDIT Corporate Daily Income, SDIT Short-Duration Government, SDIT Intermediate-Duration Government, SDIT GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX Bond Index, STET Tax Free, STET Institutional Tax Free, STET California Tax Exempt, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond, STET Pennsylvania Tax Free, STET California Municipal Bond, STET
40 Massachusetts Municipal Bond, STET New Jersey Municipal Bond, STET New York Municipal Bond and STET Massachusetts Tax Free Money Market Funds
PROPOSED FUNDAMENTAL POLICY. No Fund may underwrite securities issued by other persons, except to the extent permitted under the 1940 Act, the rules and regulations thereunder or any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. ANALYSIS OF PROPOSED CHANGES. Under the 1940 Act, the Funds are required to adopt a fundamental policy regarding underwriting of securities. The SEC staff generally takes the position that funds should not engage in the business of underwriting securities. It is proposed that the Funds adopt a more flexible fundamental policy. While the Funds' current fundamental policy has not affected the Funds' investments in the past, its replacement with a more flexible fundamental policy could provide investment flexibility in the future. In addition, the Board of Trustees could take appropriate and timely action to amend non-fundamental policies, without the expense and delay associated with a shareholder meeting. Accordingly, should Shareholders approve this Proposal, the fundamental policy set forth above will take effect. ITEM 4 (j) - FUNDAMENTAL POLICY REGARDING INVESTMENTS IN SECURITIES OF OTHER INVESTMENT COMPANIES CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding investments in securities of other investment companies.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- All SAAT Funds The SAAT Funds concentrate their interests in investment company interests. SDIT Corporate Daily Income, SDIT Short-Duration No Fund may purchase securities of other investment Government, SDIT Intermediate-Duration Government and companies; provided that all Funds may purchase such SDIT GNMA Funds securities as permitted by the 1940 Act and the rules and regulations thereunder but, in any event, such Funds may not purchase securities of other open-end investment companies. INDEX S&P 500 Index, INDEX Bond Index, SIT No Fund may purchase securities of other investment International Fixed Income, STET Intermediate-Term companies except as permitted by the 1940 Act and the Municipal, STET Pennsylvania Municipal Bond and STET rules and regulations thereunder and may only purchase Pennsylvania Tax Free Funds securities of money market funds. STET Tax Free, STET Institutional Tax Free and STET No Fund may purchase securities of other investment California Tax Exempt Funds companies as permitted by the 1940 Act and the rules and regulations thereunder.
41 PROPOSED FUNDAMENTAL POLICY. None. However, the Board has approved a non-fundamental policy as discussed below. ANALYSIS OF PROPOSED CHANGES. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares. The 1940 Act does not currently require the Funds to have a fundamental policy regarding investments in securities of other investment companies. As a result, it is proposed that the current fundamental policy be eliminated. The Funds are limited in their ability to invest in shares of other investment companies by Section 12(d)(1) of the 1940 Act and by Rule 2a-7 governing money market funds. The 1940 Act generally limits a Fund to: (i) purchasing 3% of the total outstanding voting stock of a single other investment company; (ii) investing 5% of its total assets in the securities of a single other investment company; and (iii) investing 10% of its total assets in securities of all other investment companies. Rule 2a-7 imposes additional limitations on money market funds' investments in other investment companies because Rule 2a-7 limits fund investments, for money market funds, to high quality instruments that present minimal credit risk. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved that the Funds' current fundamental policy regarding investments in securities of other investment companies be reclassified as non-fundamental. By reclassifying the fundamental policy to non-fundamental, the Funds would be able to make a change to the non-fundamental policy without incurring the cost of holding a shareholder meeting. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. Accordingly, should Shareholders approve this Proposal, the Funds intend to adopt the non-fundamental policy described in Exhibit E. ITEM 4 (k) - ELIMINATE POLICY REGARDING THE INVESTING IN ISSUERS WHEN SECURITIES ARE OWNED BY OFFICERS AND TRUSTEES CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding investing in issuers when securities are owned by officers and Trustees.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT Corporate Daily Income, SDIT Short-Duration No Fund may purchase or retain securities of an issuer if, Government, SDIT Intermediate-Duration Government, SDIT to the knowledge of the Trust, an officer, trustee, GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX partner or director of the Trust or any investment adviser Bond Index, SIT International Fixed Income, STET Tax of the Trust owns beneficially more than 1/2 of 1% of the Free, STET Institutional Tax Free, STET California Tax shares or securities of such issuer and all such officers, Exempt, STET Intermediate-Term Municipal, STET trustees, partners and directors owning more than 1/2 of Pennsylvania Municipal Bond and STET Pennsylvania 1% of such shares or securities together own more than 5% Tax Free Funds of such shares or securities.
42 PROPOSED FUNDAMENTAL POLICY. None. ANALYSIS OF PROPOSED CHANGES. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares, and there is no comparable requirement under the 1940 Act. It is proposed that the fundamental policy regarding investments in issuers when officers or Trustees of the Trust own securities of such issuer for each Fund be eliminated. The elimination of this fundamental policy will maximize each Fund's investment flexibility. ITEM 4 (l) - FUNDAMENTAL POLICY REGARDING INVESTMENTS IN "UNSEASONED ISSUERS" CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding investments in "unseasoned issuers."
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT Corporate Daily Income, SDIT Short-Duration No Fund may purchase securities of any company which has Government, SDIT Intermediate-Duration Government, SDIT (with predecessors) a record of less than three years GNMA, SDIT Government II, SIT International Fixed continuing operations, except: (i) obligations issued or Income, STET Tax Free, STET Institutional Tax Free, guaranteed by the U.S. Government, its agencies STET California Tax Exempt, STET Intermediate-Term or instrumentalities; or (ii) municipal securities which Municipal, STET Pennsylvania Municipal Bond and STET are rated by at least two nationally recognized municipal Pennsylvania Tax Free Funds bond rating services if, as a result, more than 5% of the total assets (taken at fair market value and current value for the STET Funds) would be invested in such securities. INDEX S&P 500 Index and INDEX Bond Index Funds No Fund 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.
PROPOSED FUNDAMENTAL POLICY. None. ANALYSIS OF PROPOSED CHANGES. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares, and there is no comparable requirement under the 1940 Act. It is proposed that the fundamental policy regarding investments in "unseasoned issuers" for each Fund be eliminated. The elimination of this fundamental policy will maximize each Fund's investment flexibility, but is not intended to change the Funds' current operating policies. 43 ITEM 4 (m) - FUNDAMENTAL POLICY REGARDING INVESTMENTS IN OPTIONS CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding investments in options.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT Corporate Daily Income, SDIT Short-Duration No Fund may purchase warrants, puts, calls, straddles, Government, SDIT Intermediate-Duration Government, SDIT spreads or combinations thereof, except that the SDIT GNMA, SDIT Government II, INDEX S&P 500 Index and INDEX Intermediate-Duration Government and SDIT GNMA Funds may Bond Index Funds invest in options on futures contracts. STET Tax Free, STET Institutional Tax Free, STET No Fund may purchase warrants, puts, calls, straddles, California Tax Exempt, STET Intermediate-Term spreads or combinations thereof, except as permitted by Municipal, STET Pennsylvania Municipal Bond and STET its statement of additional information. Pennsylvania Tax Free Funds
PROPOSED FUNDAMENTAL POLICY. None. However, the Board has approved a non-fundamental policy as discussed below. ANALYSIS OF PROPOSED CHANGES. Under the 1940 Act, the Funds are not required to adopt a fundamental policy regarding investment in options. As a result, it is proposed that the current fundamental policy be eliminated. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved that the Funds' fundamental policy regarding investments in options be reclassified as non-fundamental. By reclassifying the fundamental policy to non-fundamental, Funds would be able to make a change to the non-fundamental policy without incurring the cost of holding a shareholder meeting. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (n) - FUNDAMENTAL POLICY REGARDING INVESTMENT IN OIL AND GAS CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding investment in oil and gas.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- All SAAT Funds, SIMT Large Cap Growth, SIMT Large Cap No Fund may invest in interests in oil, gas, or other Value, SIMT Tax-Managed Large Cap, SIMT Mid-Cap, mineral exploration or development programs and oil, gas or SIMT Small Cap Growth, SIMT Small Cap Value, SIMT mineral leases. Core Fixed Income, SIMT High Yield Bond, SIT International Equity, SIT Emerging Markets Equity, SIT Emerging Markets Debt, SIT International Fixed Income, STET California Municipal Bond, STET Massachusetts
44 Municipal Bond, STET New Jersey Municipal Bond and STET New York Municipal Bond Funds SDIT Corporate Daily Income, SDIT Short-Duration No Fund may invest in interests in oil, gas or other mineral Government, SDIT Intermediate-Duration Government, exploration or development programs. SDIT GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX Bond Index, STET Tax Free, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond and STET Pennsylvania Tax Free Funds STET Institutional Tax Free and STET California Tax No Fund may invest in interests in oil, gas or mineral Exempt Funds leases.
PROPOSED FUNDAMENTAL POLICY. None. However, the Board has approved a non-fundamental policy as discussed below. ANALYSIS OF PROPOSED CHANGE. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares. The 1940 Act does not currently require the Funds to have a fundamental policy regarding investment in oil and gas. As a result, it is proposed that the current fundamental policy be eliminated. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved that the Funds' current fundamental policy regarding investment in oil and gas be reclassified as a non-fundamental policy. By reclassifying the fundamental policy to non-fundamental, the Funds would be able to make a change to the non-fundamental policy without incurring the cost of holding a shareholder meeting. The reclassification of the Funds' current fundamental policy to a non-fundamental policy is not expected to affect the management of the Funds. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (o) - FUNDAMENTAL POLICY REGARDING INVESTMENTS IN ILLIQUID AND RESTRICTED SECURITIES CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's current fundamental policy regarding investments in illiquid and restricted securities.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT Corporate Daily Income, SDIT Short-Duration No Fund may purchase restricted securities (securities Government, SDIT Intermediate-Duration Government, SDIT which must be registered under the Securities Act of 1933 GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX before they may be offered or sold to the public) or other Bond Index and SIT International Fixed Income Funds illiquid securities except as described in the prospectuses and statement of additional information.
45 ANALYSIS OF PROPOSED CHANGES. The Funds' current fundamental policy is based on requirements imposed by the administrators of securities laws in various states. However, federal legislation passed in 1996 preempted substantive state regulation of mutual funds and the sale of their shares. The 1940 Act does not currently require the Funds to have a fundamental policy restricting investment in illiquid or restricted securities. As a result, it is proposed that the current fundamental policy be eliminated. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved that the fundamental policy regarding investments in illiquid and restricted securities be amended, by eliminating the restrictions for purchase of restricted securities and clarifying the policy for purchase of illiquid securities, and reclassified as a non-fundamental policy. Eliminating restrictions for purchase of restricted securities would provide the Funds with additional flexibility. The exception to securities registration requirements added by Rule 144A under the Securities Act of 1933 permits trading of restricted securities among institutional investors, such as the Funds, and this has created active markets in restricted securities, allowing certain restricted securities to be considered liquid under guidelines established by the Board of Trustees. In addition, making the restrictions on illiquid securities non-fundamental would give the Funds more flexibility in responding to changing regulatory requirements. For example, a number of years ago, the SEC permitted non-money market funds to increase the percentage of their assets that could be invested in illiquid securities from 10% to 15%. Should the SEC change its policy again, or should market conditions permit a change in this policy, it would be advantageous to the Funds to be able to make a change without incurring the cost of holding a shareholder meeting. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (p) - FUNDAMENTAL POLICY MAKING ALL INVESTMENT LIMITATIONS IN PROSPECTUS FUNDAMENTAL CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's fundamental policy making all investment limitations in its prospectus fundamental.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- SIMT Large Cap Value, SIMT Large Cap Growth, SIMT The Funds' investment limitations in their respective Tax-Managed Large Cap, SIMT Small Cap Value, SIMT Small prospectuses are fundamental. Cap Growth, SIMT Tax-Managed Small Cap, SIMT Mid-Cap, SIMT Core Fixed Income, SIMT High Yield Bond, STET Tax Free, STET Institutional Tax Free, STET California Tax Exempt, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond and STET Pennsylvania Tax Free Funds
46 PROPOSED FUNDAMENTAL POLICY. It is proposed that the Funds' fundamental policy making the Funds' policies fundamental be eliminated. This proposed change, however, will not result in the elimination of those fundamental policies that are required to be fundamental under the 1940 Act, as described above in Items 4(a) through 4(o). ANALYSIS OF PROPOSED CHANGES. Under the 1940 Act, the Funds are not required to adopt a policy requiring that all of its investment limitations in its prospectus be classified as fundamental. Management believes that the current policy is unduly restrictive and may effectively prevent the Funds from taking advantage of new investment opportunities that are potentially beneficial to shareholders and available to other mutual funds. The proposed new policy would enable the Funds to make changes in policies in response to new market conditions or changes in the regulatory environment, subject to Board approval. If this change is approved, the Board of Trustees may take appropriate and timely action to amend, as necessary, and without the expense and delay associated with a shareholder meeting, the Funds' policies in the event any regulatory changes occur or new types of investments become available. ITEM 4 (q) - FUNDAMENTAL POLICY REQUIRING THAT AT LEAST 65% OF THE FUND'S ASSETS BE INVESTED IN PARTICULAR TYPES OF SECURITIES CURRENT FUNDAMENTAL POLICY. The chart below describes the Fund's fundamental policy that requires the Fund to invest at least 65% of its assets in particular types of securities.
FUND CURRENT FUNDAMENTAL POLICY ----- -------------------------- SDIT GNMA Fund The Fund may not invest less than 65% of its assets in GNMA securities.
PROPOSED FUNDAMENTAL POLICY. It is proposed that the Funds' fundamental policy that requires a Fund to invest at least 65% of its assets in particular types of securities be eliminated. ANALYSIS OF PROPOSED CHANGE. Pursuant the Rule 35d-1 under the 1940 Act, the Fund is required to adopt a policy to invest, under normal circumstances, at least 80% of the value of its assets in particular types of investments, in investments in a particular industry, or investments in a particular country or geographic region, as suggested by its name. This policy may either be a fundamental policy or the Fund may adopt a policy to provide Fund shareholders with at least 60 days' prior notice of any change in this policy. The Fund has adopted a policy to invest its assets as required under the 1940 Act, and to provide shareholders with at least 60 days' prior notice of any change to its policy. Management believes that the current policy is unduly restrictive and this policy may effectively prevent the Board of Trustees from taking appropriate and timely action to amend, as necessary, and without the expense and delay associated with a shareholder meeting, the Fund's policies in the event that any regulatory changes occur or new types of investments become available. The Fund will continue to invest its assets consistent with the requirements of Rule 35d-1. 47 ITEM 4 (r) - FUNDAMENTAL POLICY REQUIRING THE MUNICIPAL FUNDS TO BE FULLY INVESTED IN OBLIGATIONS WHICH PRODUCE INTEREST THAT IS EXEMPT FROM BOTH FEDERAL AND STATE INCOME TAXES CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's fundamental policy that requires a Fund to be fully invested in obligations which produce interest that is exempt from both federal and state income taxes.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- STET California Municipal Bond Fund The Fund must be fully invested in obligations which produce interest that is exempt from both Federal and California state income taxes. STET Massachusetts Municipal Bond Fund The Fund must be fully invested in obligations which produce interest that is exempt from both Federal and Massachusetts state income taxes. STET New Jersey Municipal Bond Fund The Fund must be fully invested in obligations which produce interest that is exempt from both Federal and New Jersey state income taxes. STET New York Municipal Bond Fund The Fund must be fully invested in obligations which produce interest that is exempt from both Federal and New York state and city income taxes. STET Pennsylvania Municipal Bond Fund The Fund must be fully invested in obligations which produce interest that is exempt from both Federal and Pennsylvania state income taxes.
PROPOSED FUNDAMENTAL POLICY.
FUNDS PROPOSED FUNDAMENTAL POLICY ----- --------------------------- STET California Municipal Bond Fund At least 80% of its net assets is invested in obligations which produce interest that is exempt from both Federal and California state income taxes. STET Massachusetts Municipal Bond Fund At least 80% of its net assets is invested in obligations which produce interest that is exempt from both Federal and Massachusetts state income taxes. STET New Jersey Municipal Bond Fund At least 80% of its net assets is invested in obligations which produce interest that is exempt from both Federal and New Jersey state income taxes. STET New York Municipal Bond Fund At least 80% of its net assets is invested in obligations which produce interest that is exempt from both Federal and New York state and city income taxes. STET Pennsylvania Municipal Bond Fund At least 80% of its net assets is invested in obligations which produce interest that is exempt from both Federal and Pennsylvania state income taxes.
ANALYSIS OF PROPOSED CHANGE. Under the 1940 Act, a fund with a name that suggests that its distributions are exempt from both Federal and state income tax, such as the STET California Tax Exempt Fund, must have a fundamental policy to invest, under normal 48 circumstances, either: (i) at least 80% of the value of its assets in investments the income from which is exempt from both Federal income tax and the income tax of the named state; or (ii) its assets so that at least 80% of the income that it distributes will be exempt from both Federal income tax and the income tax of the named state. The Funds' current policy is more restrictive in that it requires that all of the Funds' assets be invested in obligations that produce income that is exempt from both Federal and state income taxes. As a result, it is proposed that the Funds' investment policy be amended to provide the Funds more flexibility. However, it is not expected that the changes in this fundamental policy will materially change the manner in which the Funds are managed. ITEM 4 (s) - FUNDAMENTAL POLICY THAT THE FUNDS MUST ABIDE BY THEIR MATURITY RESTRICTIONS AND INVEST SOLELY IN INVESTMENTS PERMITTED BY THEIR PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION CURRENT FUNDAMENTAL POLICY. The chart below describes each Fund's fundamental policy that requires a Fund to abide by its maturity restrictions and invest solely in investments permitted by its prospectus and statement of additional information.
FUNDS CURRENT FUNDAMENTAL POLICY ----- -------------------------- STET Intermediate-Term Municipal and STET The Fund must abide by its maturity restrictions and Pennsylvania Municipal Bond Funds invest solely in the permitted investments in its statement of additional information and prospectuses.
PROPOSED FUNDAMENTAL POLICY. None, however, the Board has approved a non-fundamental policy as discussed below. ANALYSIS OF PROPOSED CHANGES. Under the 1940 Act, the Funds are not required to adopt a fundamental policy requiring the Funds to abide by their maturity restriction and invest solely in investments permitted by their prospectus and statement of additional information. Management believes that the current policy is unduly restrictive and may effectively prevent the Funds from taking advantage of new investment opportunities that are potentially beneficial to shareholders and available to other mutual funds. The proposed new policy would enable the Funds to make changes in policies in response to new market conditions or changes in the regulatory environment, subject to Board approval. If this change is approved, the Board of Trustees may take appropriate and timely action to amend, as necessary, and without the expense and delay associated with a shareholder meeting, the Funds' policies in the event any regulatory changes occur or new types of investments become available. PROPOSED NON-FUNDAMENTAL POLICY. While the Funds propose eliminating the current fundamental policy, the Board has approved the reclassification of the Funds' current fundamental policy regarding investing solely in investments permitted by their prospectus and statement of additional information and abiding by their maturity restriction as a non-fundamental policy. By reclassifying the fundamental policy to non-fundamental, the Funds would be able to make a change to the non-fundamental policy without incurring the cost of holding a shareholder meeting. The reclassification of the Funds' current fundamental policy to a non-fundamental 49 policy is not expected to affect the management of the Funds. Accordingly, should Shareholders approve this Proposal, the non-fundamental policy described in Exhibit E will take effect. ITEM 4 (t) - FUNDAMENTAL POLICY THAT THE FUND MAY ONLY PURCHASE SECURITIES WITH A REMAINING MATURITY OF 365 DAYS OR LESS CURRENT FUNDAMENTAL POLICY. The chart below describes the Fund's fundamental policy that requires the Fund to only purchase securities with a remaining maturity of 365 days or less.
FUND CURRENT FUNDAMENTAL POLICY ----- -------------------------- SLAT Prime Obligation Fund The Fund may only purchase securities with a remaining maturity of 365 days or less.
PROPOSED FUNDAMENTAL POLICY. None. ANALYSIS OF PROPOSED CHANGES. Rule 2a-7 under the 1940 Act currently requires money market funds, such as the SLAT Prime Obligation Fund, to limit their investments to securities with remaining maturities of 397 days or less, and maintain a dollar-weighted average maturity of 90 days or less. The Fund's current fundamental policy is more restrictive than the 1940 Act and Rule 2a-7 currently require. As a result, it is proposed that the current fundamental policy be eliminated. The Fund will continue to be subject to the requirements of Rule 2a-7. TRUSTEES' CONSIDERATIONS. In unanimously approving the elimination or reclassification of the Funds' fundamental policies and restrictions, the Trustees considered the flexibility that the Funds would have under the proposed fundamental policies. In particular, the Trustees considered that the Funds would be able to adapt to future developments in investment practices and changes in laws and regulations without the delay and cost associated with a shareholder meeting. THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE "FOR" EACH ELEMENT OF PROPOSAL 4. 50 INFORMATION CONCERNING INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS PricewaterhouseCoopers LLP ("PwC") serves as the independent public accounting firm for SAAT, SLAT, SIMT and SIT, and Ernst & Young LLP ("E&Y" and, together with PwC, the "Independent Registered Public Accounting Firms") serves as the independent registered public accounting firm for INDEX, STET and SDIT. The Independent Registered Public Accounting Firms conduct annual audits of the Trusts' financial statements, assist in the preparation of the Trusts' federal and state income tax returns and the Trusts' filings with the SEC, and consult with the Trust as to matters of accounting and federal and state income taxation. During the Audit Committee's most recent consideration of whether to recommend the Independent Registered Public Accounting Firms as independent registered public accounting firms for the Trusts, the Audit Committee considered whether the provision of any non-audit services to the Trusts by the Independent Registered Public Accounting Firms was compatible with maintaining their independence. Representatives of PwC or E&Y are not expected to be present at the Meeting, but have been given an opportunity to make a statement if they so desire and will be available should any matter arise requiring their presence. AUDIT FEES. The aggregate fees billed for professional services rendered for the audit of the Trusts' annual financial statements for the most recent fiscal year and the review of the financial statements included in the Trusts' reports to shareholders were as follows:
TRUST AND FISCAL YEAR AGGREGATE FEES --------------------- -------------- SEI Liquid Asset Trust $ XX June 30, 2004 SEI Tax Exempt Trust $ 135,300 August 31, 2003 SEI Daily Income Trust $ XX January 31, 2004 SEI Index Funds $ 27,600 March 31, 2004 SEI Asset Allocation Trust $ 131,428 March 31, 2004 SEI Institutional Managed Trust -- September 30, 2003 SEI Institutional International Trust $ 100,450 August 31, 2003
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. [The following is the fees billed by PwC or E&Y for each Trust's most recent fiscal year for services rendered for financial information systems design and implementation services provided to the Trusts, 51 SIMC or any entity that controls, is controlled by or is under common control with SIMC that provides services to the Trusts: [$XX]]. ALL OTHER FEES. [The following is the amount of other fees PwC or E&Y billed for each Trust's most recent fiscal year for other services rendered to the Trusts, SIMC or any entity that controls, is controlled by or is under common control with SIMC that provides services to the Trusts: [$XX]]. GENERAL INFORMATION ABOUT THE TRUST AND OTHER MATTERS INFORMATION ABOUT OFFICERS OF THE TRUSTS. The chart below provides basic information about each Trust's current officers. The mailing address of each officer is One Freedom Valley Drive, Oaks, PA 19456.
NUMBER OF FUNDS IN THE FUND POSITION TERM OF OFFICE COMPLEX NAME AND WITH THE AND LENGTH OF PRINCIPAL OCCUPATION TO BE AGE TRUSTS TIME SERVED DURING THE PAST FIVE YEARS OVERSEEN Edward D. Loughlin, President and No set term; served SEI Executive Vice President and 68 53 Chief Executive Daily Income Trust since President--Asset Management Division of Officer 1982; SEI Asset Allocation SEI since 1993. Director and President of Trust since 1995; SEI SIMC since 2004. Chief Executive Officer Index Funds since 1985; of SEI Investments Fund Management and SEI Institutional Director of SEI Investments Distribution International Trust since Co. since 2003. Executive Vice President 1988; SEI Institutional of SEI Investments Fund Management, Managed Trust since 1986; 1994-2003. Executive Vice President SEI Liquid Asset Trust of SIMC, 1994-2004. since 1995; SEI Tax Exempt Trust since 1982. Timothy D. Barto, 36 Vice President No set term; served since General Counsel and Secretary of SIMC and 68 and Secretary 1999. SEI Investments Fund Management since 2004. Vice President of SIMC and SEI Investments Fund Management since 2001. Vice President and Assistant Secretary of SEI since 2001. Assistant Secretary of SIMC, SEI Investments Fund Management and SEI Investments Distribution Co. and Vice President of SEI Investments Distribution Co., 1999-2003. Associate, Dechert Price & Rhoads (law firm), 1997-1999. Lydia A. Gavalis, 40 Vice President No set term; served since Vice President and Assistant Secretary of 68 and Assistant 1998. SEI and SIMC since 1998. Assistant Secretary Secretary of SEI Investments Fund Management since 1998. Vice President of SEI Investments Fund Management and SEI Investments Distribution Co. and
52 Assistant Secretary of SEI Investments Distribution Co., 1998-2003. Christine M. Vice President No set term; served since Vice President and Assistant Secretary of 68 McCullough, 43 and Assistant 1999. SEI since 2000. Vice President and Secretary Assistant Secretary of SIMC since 1999. Vice President and Assistant Secretary of SEI Investments Fund Management and SEI Investments Distribution Co., 1999-2003. Associate, White and Williams LLP (law firm), 1991-1999. William E. Zitelli, Vice President No set term; served since Assistant Secretary of SIMC and SEI 68 Jr., 36 and Assistant 2001. Investments Fund Management since 2000. Secretary Vice President and Assistant Secretary of SEI since 2000. Vice President of SIMC, SEI Investments Fund Management and SEI Investments Distribution Co. and Assistant Secretary of SEI Investments Distribution Co., 2000-2003. Vice President, Merrill Lynch & Co. Asset Management Group, 1998-2000. John Munera, 41 Vice President No set term; served since Global AML Compliance Officer at SEI 68 and Assistant 2002. since March 2002. Middle Office Secretary Compliance Officer at SEI, July 2000 to December 2002. Supervising Examiner at Federal Reserve Bank of Philadelphia, 1998-2000. Peter (Pedro) A. Controller and No set term; served since Director, Fund Accounting and 68 Rodriguez, 42 Chief Financial 2003. Administration, SEI Investments Global Officer Funds Services, March 1997 to April 2002 and September 2002 to present. Vice President, Fund Administration, BlackRock Financial Management, April 2002 to September 2002. John J. McCue, 41 Vice President No set term; served since Director of Portfolio Implementations for 68 2004. SIMC, August 1995 to present. Managing Director of Money Market Investments for SIMC, January 2003 to present.
[TRUSTEE AND OFFICER FUND OWNERSHIP. The chart below shows the number of shares of each Fund beneficially owned by each Trustee and officer as of June 30, 2004. The Trusts do not have knowledge as to whether any Trustee has the right to acquire beneficially ownership of shares in a Fund. In cases where the amount of a Fund owned is more than 1% of the Fund's assets, the percentage is noted. Unless otherwise noted, each Trustee and officer owns less than one percent (1%) of each Fund's shares.]
AMOUNT AND NAME AND ADDRESS NATURE OF OF BENEFICIAL BENEFICIAL FUND OWNER OWNERSHIP PERCENT OF FUND ---- ----- --------- ---------------
53 DISTRIBUTION. SEI Investments Distribution Co., located at Oaks, Pennsylvania 19456, a wholly-owned subsidiary of SEI, acts as the distributor of the Funds, and is an affiliate of SIMC. [FUND TRANSACTIONS. The Bond Index Fund of INDEX, the Short-Duration Government, Intermediate-Duration Government, GNMA and Corporate Daily Income Funds of SDIT, and the California Tax Exempt, Tax Free, Institutional Tax Free and Pennsylvania Tax Free Funds of STET did not pay an brokerage commissions to any affiliate for their respective fiscal year ends.] [ADMINISTRATOR. SEI Investments Fund Management ("SIFM"), located at Oaks, Pennsylvania 19456, serves as the Funds' administrator and is a wholly-owned subsidiary of SEI and an affiliate of SIMC. The chart below provides the fees paid by the Funds to SIFM for administration services.]
TRUST AND FISCAL YEAR FEES PAID TO SIFM --------------------- ----------------- SEI Liquid Asset Trust $ 3,286,000 June 30, 2004 SEI Tax Exempt Trust $ 9,716,000 August 31, 2003 SEI Daily Income Trust $ 18,577,000 January 31, 2004 SEI Index Funds $ 3,011,000 March 31, 2004 SEI Asset Allocation Trust $ 2,429,614
54
TRUST AND FISCAL YEAR FEES PAID TO SIFM --------------------- ----------------- March 31, 2004 SEI Institutional Managed Trust $ 48,275,000 September 30, 2003 SEI Institutional International Trust $ 23,003,000 September 30, 2003
5% SHAREHOLDERS. As of August 17, 2004, the following persons were the only persons who were record owners or, to the knowledge of the Funds, were beneficial owners of 5% or more of each Fund's outstanding shares. The Funds believe that most of the shares referred to above were held by the below persons in accounts for their fiduciary, agency, or custodial customers.
NAME AND ADDRESS OF PERCENT OF FUND'S SHAREHOLDER NUMBER OF SHARES OWNED OUTSTANDING SHARES ----------- ---------------------- ------------------
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 to permit further solicitation of proxies with respect to any 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 adjournments with respect to a Proposal those proxies that they are entitled to vote in favor of such Proposal. They will vote against any such adjournment those proxies required to be voted against any such Proposals. SIMC will bear the costs of any additional solicitation and any adjourned sessions. QUORUM AND REQUIRED VOTE. In order to act upon a Proposal, a quorum is required to be present at the Meeting. A majority of the aggregate number of shares in a Fund entitled to vote at the Meeting constitutes a quorum. Any lesser number of shares, however, is sufficient for adjournments. Approval of Proposal 1 requires the affirmative vote of a majority of shares represented at the Meeting. Approval of Proposals 2, 3 and 4 with respect to a Fund requires the affirmative vote of a majority of the outstanding shares of the Fund. As defined in the 1940 Act, "majority of the outstanding shares" means the vote of: (i) 67% or more of the Fund's outstanding shares present at a meeting, if the holders of more than 50% of the outstanding shares of the Fund are present or represented by proxy; or (ii) more than 50% of the Fund's outstanding shares, whichever is less. Abstentions and "broker non-votes" will not be counted for or against a Proposal, 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 shares represented" (for Proposal 1) and "majority of the outstanding voting securities" (for Proposals 2, 3 and 4) present 55 at the Meeting and will therefore have the effect of counting against the Proposal to which it relates. SHAREHOLDER PROPOSALS. The Trusts do 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 Trusts c/o SEI Investments Management Corporation, One Freedom Valley Drive, Oaks, Pennsylvania 19456. REPORTS TO SHAREHOLDERS. THE TRUSTS WILL FURNISH, WITHOUT CHARGE, A COPY OF A FUND'S MOST RECENT ANNUAL REPORT TO SHAREHOLDERS AND ITS MOST RECENT SEMI-ANNUAL REPORT SUCCEEDING SUCH ANNUAL REPORT, IF ANY, UPON REQUEST. Requests should be directed to the Trusts at One Freedom Valley Drive, Oaks, Pennsylvania 19456, or by calling 1-800-DIAL-SEI. 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. 56 [EXHIBITS] EXHIBIT A - NOMINATING COMMITTEE CHARTER THE COMMITTEE The Nominating Committee (the "Committee") is a committee of, and established by, the Board of Trustees (the "Board") of SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI Institutional International Trust, SEI Asset Allocation Trust and SEI Institutional Investments Trust (collectively, the "Trusts"). The Committee consists of such number of members as set by the Board from time to time and its members shall be selected by the Board. The Committee shall be comprised entirely of "Independent Trustees." For purposes of this Charter, Independent Trustees shall mean members of the Board who are not interested persons of the Trusts as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended (the "1940 Act"). BOARD NOMINATIONS AND FUNCTIONS 1. The Committee shall select and nominate all persons to serve as Independent Trustees. The Committee shall evaluate candidates' qualifications for Board membership and the independence of such candidates from the investment advisers and other principal service providers for the funds of the Trusts. Persons selected must be independent in terms of both the letter and the spirit of the 1940 Act. The Committee shall also consider the effect of any relationships beyond those delineated in the 1940 Act that might impair independence, E.G., business, financial or family relationships with investment advisers or service providers. 2. The Committee also shall evaluate the qualifications of and make recommendations for "interested" Trustee candidates to the Board. 3. The Committee may adopt from time to time specific, minimum qualifications that the Committee believes a candidate must meet before being considered as a candidate for Board membership and shall comply with any rules adopted from time to time by the U.S. Securities and Exchange Commission regarding investment company nominating committees and the nomination of persons to be considered as candidates for Board membership. 4. The Committee shall review shareholder recommendations for nominations to fill vacancies on the Board if such recommendations are submitted in writing and addressed to the Committee at the applicable Trust's offices. The Committee shall adopt, by resolution, a policy regarding its procedures for considering candidates for the Board, including any recommended by shareholders. COMMITTEE NOMINATIONS AND FUNCTIONS 1. The Committee has the authority to make recommendations to the full Board for nomination for membership on any committees of the Board. 2. The Committee is responsible for the adoption and administration of any policy for retirement from Board membership. 3. The Committee has the authority to review as necessary the responsibilities of any committees of the Board, whether there is a continuing need for each committee, whether there is a need for additional committees of the Board, and whether committees should be combined or reorganized. The Committee shall make recommendations for any such action to the full Board. 4. The Committee shall, on an annual basis or at least as often as is required by law, review the performance of the Board. The Committee may invite any or all Interested Trustees or others to participate in such reviews as it deems appropriate. OTHER POWERS AND RESPONSIBILITIES 1. The Committee shall meet at least once each year or more frequently in open or executive sessions. The Committee may invite members of management, counsel, advisers and others to attend its meetings as it deems appropriate. The Committee shall have separate sessions with management and others, as and when it deems appropriate. 2. The Committee shall have the resources and authority appropriate to discharge its responsibilities, including authority to retain special counsel and other experts or consultants at the expense of the applicable Fund or Trust. 3. The Committee shall report its activities to the Board and make such recommendations as the Committee may deem necessary or appropriate. 4. A majority of the members of the Committee shall constitute a quorum for the transaction of business at any meeting of the Committee. The action of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the action of the Committee. The Committee may meet in person or by telephone, and the Committee may act by written consent, to the extent permitted by law and by the applicable Trust's by-laws. In the event of any inconsistency between this Charter and a Trust's organizational documents, the provisions of the Trust's organizational documents shall govern. 5. The Committee shall review this Charter as appropriate and recommend any changes to the full Board. 6. The Committee shall elect one of its members to serve as Chairman, who shall serve until another Chairman is elected. Adopted: June 17, 2004 EXHIBIT B - ADVISORY AGREEMENT BETWEEN SIMC AND INDEX INVESTMENT ADVISORY AGREEMENT SEI INDEX FUNDS AGREEMENT made as of the 18th day of November, 1998, by and between SEI Index Funds, a Massachusetts business trust (the "Trust"), and SEI Investments 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 the S&P 500 Index Fund and such other portfolios as the Trust and the Adviser may agree upon (the "Funds"), 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 Fund(s)) and thereafter supervise the investment activities of one or more sub-advisers deemed necessary to carry out the investment program of any Funds of the Trust, and to continuously review, supervise and (where appropriate) administer the investment program of the Funds, 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 Fund 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. 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 Fund(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 Funds either directly with the issuer or with any broker or dealer. In executing Fund transactions and selecting brokers or dealers, the Adviser will use its best efforts to seek on behalf of the Fund the best overall terms available. In assessing the best overall terms available for any transaction, 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 Fund 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 Funds 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 Fund. In addition, the Adviser is authorized to allocate purchase and sale orders for portfolio securities to brokers or dealers (including brokers and dealers that are affiliated with the 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 Fund's securities be purchased from or sold to the Adviser, any sub-adviser engaged with respect to that Fund, 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. 4. COMPENSATION OF THE ADVISER. For the services to be rendered by the Adviser as provided in 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 Fund. 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 Fund 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 Fund 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 Fund. 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-1 under the 1940 Act. 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 Fund; provided, however, that if the shareholders of any Fund 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 Fund 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 Fund 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. 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 Investments Management Corporation One Freedom Valley Drive Oaks, PA 19456 Attn: Legal Department To the Trust at: One Freedom Valley Drive Oaks, PA 19456 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 Fund of the Trust shall be liable for the obligations of any other Fund of the Trust. Without limiting the generality of the foregoing, the Adviser shall look only to the assets of a particular Fund for payment of fees for services rendered to that Fund. 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 Index Funds SEI Investments Management Corporation By: By: /s/ Cynthia Parrish /s/ Todd Cipperman -------------------------------------- -------------------------------------- Name: Name: Cynthia Parrish Todd Cipperman -------------------------------------- -------------------------------------- Title: Title: Vice President Vice President -------------------------------------- -------------------------------------- SCHEDULE A TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI INDEX FUNDS AND SEI INVESTMENTS MANAGEMENT CORPORATION DATED NOVEMBER 18, 1998 AS AMENDED ____, 2004 Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual rate as follows: S&P 500 Index Fund .03% Bond Index Fund .07%
EXHIBIT C - ADVISORY AGREEMENT BETWEEN SIMC AND SDIT INVESTMENT ADVISORY AGREEMENT SEI DAILY INCOME TRUST AGREEMENT made this 17th day of March, 2003, by and between SEI Daily Income Trust, a Massachusetts business trust (the "Trust"), and SEI Investments 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, each having its own investment policies; and WHEREAS, the Trust desires to retain the Adviser to render investment management services with respect to its portfolios, as listed on attached Schedule A, (each a "Fund" and, collectively, the "Funds"), 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 U.S. Securities and Exchange Commission (the "SEC"), or by rule or regulation, a majority of the outstanding voting securities of any affected Fund(s)) and thereafter supervise the investment activities of one or more sub-advisers deemed necessary to carry out the investment program of any Funds of the Trust, and to continuously review, supervise and (where appropriate) administer the investment program of the Funds, to determine in its discretion (where appropriate) the securities to be purchased or sold, to provide the Trust's administrator (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 Fund 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. 2. DELIVERY OF DOCUMENTS. The Trust has furnished the 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 Fund(s). 3. OTHER COVENANTS. The Adviser agrees that it: (a) will comply with all applicable rules and regulations of the SEC 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 Funds 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 Fund the best overall terms available. In assessing the best overall terms available for any transaction, 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 Fund 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 Funds 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 Fund. In addition, the Adviser if authorized to allocate purchase and sale orders for 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 Fund's securities be purchased from or sold to the Adviser, any sub-adviser engaged with respect to that Fund, 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 SEC and the 1940 Act. 4. COMPENSATION OF THE ADVISER. For the services to be rendered by the Adviser as provided in 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 a Fund. 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 Fund 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 Fund 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 Fund. 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-1 under the 1940 Act. 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 and Federal 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 Funds 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 Fund; provided, however, that if the shareholders of any Fund 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 Fund 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 Fund 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 SEC. 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. 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 Investments Management Corporation 1 Freedom Valley Drive Oaks, PA 19456 Attn: Legal Department To the Trust at: SEI Daily Income Trust c/o SEI Investments 1 Freedom Valley Drive Oaks, PA 19456 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 Fund of the Trust shall be liable for the obligations of any other Fund of the Trust. Without limiting the generality of the foregoing, the Adviser shall look only to the assets of a particular Fund for payment of fees for services rendered to that Fund. Where the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is altered by a rule, regulation or order of the SEC, whether of special or general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first written above. SEI Daily Income Trust SEI Investments Management Corporation By: /s/ Timothy D. Barto By: /s/ Todd Cipperman -------------------------------- ------------------------------- Attest: /s/ Jackie Bardyn Attest: /s/ Jackie Bardyn ---------------------------- --------------------------- AMENDED AND RESTATED SCHEDULE A TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI DAILY INCOME TRUST AND SEI INVESTMENTS MANAGEMENT CORPORATION AS OF MARCH 17, 2003, AS AMENDED _______, 2004 Money Market Fund Prime Obligation Fund Government Fund Government II Fund Treasury Fund Treasury II Fund Federal Securities Fund Short-Duration Government Fund Intermediate-Duration Government Fund GNMA Fund Corporate Daily Income Fund Treasury Securities Daily Income Fund AMENDED AND RESTATED SCHEDULE B TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI DAILY INCOME TRUST AND SEI INVESTMENTS MANAGEMENT CORPORATION AS OF MARCH 17, 2003, AS AMENDED __________, 2004 Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual rate as follows: 0.075% on the first $500 million of assets and 0.02% on the assets in excess of $500 million. The fee will be calculated based on the combined assets of the following Funds managed by the Adviser: Money Market Fund Prime Obligation Fund Government Fund Government II Fund Treasury Fund Treasury II Fund Federal Securities Fund 0.10% up to $500 million; 0.075% between $500 million and $1 billion; and 0.05% over $1 billion. The fee will be calculated based on the combined assets of the following Funds managed by the Adviser: Short-Duration Government Fund Intermediate-Duration Government Fund GNMA Fund 0.10% up to $500 million; 0.075% between $500 million and $1 billion; and 0.05% over $1 billion. The fee will be calculated based on the combined assets of the following Funds managed by the Adviser: Corporate Daily Income Fund Treasury Securities Daily Income Fund AGREED AND ACCEPTED: SEI Daily Income Trust SEI Investments Management Corporation By: /s/ By: /s/ -------------------------------- ------------------------------- Attest: /s/ Attest: /s/ ---------------------------- --------------------------- EXHIBIT D - ADVISORY AGREEMENT BETWEEN SIMC AND STET INVESTMENT ADVISORY AGREEMENT SEI TAX EXEMPT TRUST AGREEMENT made this 16th day of April, 1996, by and between SEI Tax Exempt 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 Intermediate-Term Municipal Portfolio 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. 2. DELIVERY OF DOCUMENTS. The Trust has furnished the 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 transaction, 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 if authorized to allocate purchase and sale orders for 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. 4. COMPENSATION OF THE ADVISER. For the services to be rendered by the Adviser as provided in 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-1 under the 1940 Act. 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 interests 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 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. 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, statue, 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 Tax Exempt Trust SEI Financial Management Corporation By: /s/ Kevin Robins By: /s/ Todd Cipperman -------------------------------- ------------------------------- Attest: /s/ Jennifer Klass Attest: /s/ Kevin Robins ---------------------------- --------------------------- SCHEDULE A TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI TAX EXEMPT TRUST AND SEI FINANCIAL MANAGEMENT CORPORATION Pursuant to Article 4, the Trust shall pay the Adviser compensation at an annual rate as follows: Intermediate-Term Municipal Portfolio .33%
SCHEDULE B TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI TAX EXEMPT TRUST AND SEI INVESTMENTS MANAGEMENT CORPORATION This Schedule B forms a supplement to the Investment Advisory Agreement (the "Agreement") dated April 16, 1996 between SEI Tax Exempt Trust (the "Trust") and SEI Investments Management Corporation, f/k/a SEI Financial Management Corporation (the "Adviser"). RECITALS WHEREAS, the Trust and the Adviser entered into the Agreement, which sets forth the rights and obligations of the parties pertaining to the management of separate portfolios of the Trust managed by the Adviser; WHEREAS, the Trust offers an investment portfolio: Pennsylvania Municipal Bond Fund (the "Fund"), and has approved of the Adviser's management of the Fund as a "manager of managers," in accordance with the Agreement; and WHEREAS, at the shareholder meeting held on August 29, 2000, the shareholders of the Fund approved the Agreement with respect to the Adviser's management of the Fund. AGREEMENTS Now, therefore, the parties agree as follows: The Trust hereby appoints the Adviser to act as investment adviser to the Fund as provided in Section 1 of the Agreement. In making the Agreement applicable with respect to the Fund, the Agreement is being entered into severally and not jointly, as it pertains to the respective funds of the Trust, and the Trust and the Adviser intend that the numbered provisions contained in the Agreement be understood as applying separately to the Fund as if contained in, and forming, a separate agreement. The compensation of the Adviser, determined as set forth in Article 4 of the Agreement with respect to the Fund, will be 0.35%. The date of this Schedule B is August 29, 2000, which shall be deemed the date upon which the Agreement has been executed with respect to the Fund. 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 is binding only upon the assets and property of the Trust. This Schedule B may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The parties listed below have executed this Schedule B as of the 29th day of August, 2000. IN WITNESS WHEREOF, the parties hereto have caused this Schedule to be executed as of August 29, 2000. SEI Tax Exempt Trust SEI Investments Management Corporation By: /s/ Timothy D. Barto By: /s/ Todd Cipperman -------------------------------- ------------------------------- Attest: /s/ Jackie Bardyn Attest: /s/ Jackie Bardyn ---------------------------- --------------------------- SCHEDULE C TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI TAX EXEMPT TRUST AND SEI INVESTMENTS MANAGEMENT CORPORATION This Schedule C forms a supplement to the Investment Advisory Agreement (the "Agreement") dated April 16, 1996 between SEI Tax Exempt Trust (the "Trust") and SEI Investments Management Corporation, f/k/a SEI Financial Management Corporation (the "Adviser"). RECITALS WHEREAS, the Trust and the Adviser entered into the Agreement, which sets forth the rights and obligations of the parties pertaining to the management of separate portfolios of the Trust managed by the Adviser; and WHEREAS, the Trust has created an additional portfolio: Massachusetts Tax Free Money Market Fund (the "Fund"), and has approved of the Adviser's management of the Fund as a "manager of managers," in accordance with the Agreement. AGREEMENTS Now, therefore, the parties agree as follows: The Trust hereby appoints the Adviser to act as investment adviser to the Fund as provided in Section 1 of the Agreement. In making the Agreement applicable with respect to the Fund, the Agreement is being entered into severally and not jointly, as it pertains to the respective funds of the Trust, and the Trust and the Adviser intend that the numbered provisions contained in the Agreement be understood as applying separately to the Fund as if contained in, and forming, a separate agreement. The compensation of the Adviser, determined as set forth in Article 4 of the Agreement with respect to the Fund, will be 0.05% on the first $500,000, 000, 0.04% on the next $500,000,000 and 0.03% thereafter. For the purposes of this fee schedule, the Advisor's fees will be calculated based upon the net assets of the Fund, provided, however, payment to the Adviser shall not exceed payment due from the Adviser to the Sub-Adviser in accordance with the terms of the Sub-Advisory agreement for the Fund. The date of this Schedule C is December 29, 2000, which shall be deemed the date upon which the Agreement has been executed with respect to the Fund. 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 is binding only upon the assets and property of the Trust. This Schedule C may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The parties listed below have executed this Schedule B as of the 29th day of December, 2000. IN WITNESS WHEREOF, the parties hereto have caused this Schedule to be executed as of December 29, 2000. SEI Tax Exempt Trust SEI Investments Management Corporation By: /s/ Timothy D. Barto By: /s/ Todd Cipperman -------------------------------- ------------------------------- Attest: /s/ Jackie Bardyn Attest: /s/ Jackie Bardyn ---------------------------- --------------------------- SCHEDULE D TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI TAX EXEMPT TRUST AND SEI INVESTMENTS MANAGEMENT CORPORATION This Schedule D forms a supplement to the Investment Advisory Agreement (the "Agreement") dated April 16, 1996 between SEI Tax Exempt Trust (the "Trust") and SEI Investments Management Corporation, f/k/a SEI Financial Management Corporation (the "Adviser"). RECITALS WHEREAS, the Trust and the Adviser entered into the Agreement, which sets forth the rights and obligations of the parties pertaining to the management of separate portfolios of the Trust managed by the Adviser; and WHEREAS, the Trust has created an additional portfolio: Short Duration Municipal Fund (the "Fund"), and has approved of the Adviser's management of the Fund as a "manager of managers," in accordance with the Agreement. AGREEMENTS Now, therefore, the parties agree as follows: The Trust hereby appoints the Adviser to act as investment adviser to the Fund as provided in Section 1 of the Agreement. In making the Agreement applicable with respect to the Fund, the Agreement is being entered into severally and not jointly, as it pertains to the respective funds of the Trust, and the Trust and the Adviser intend that the numbered provisions contained in the Agreement be understood as applying separately to the Fund as if contained in, and forming, a separate agreement. The compensation of the Adviser, determined as set forth in Article 4 of the Agreement with respect to the Fund, will be 0.33%. For the purposes of this fee schedule, the Advisor's fees will be calculated based upon the net assets of the Fund, provided, however, payment to the Adviser shall not exceed payment due from the Adviser to the Sub-Adviser in accordance with the terms of the Sub-Advisory agreement for the Fund. The date of this Schedule D is September 17, 2003 which shall be deemed the date upon which the Agreement has been executed with respect to the Fund. 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 is binding only upon the assets and property of the Trust. This Schedule D may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The parties listed below have executed this Schedule D as of the 17th day of September, 2003. IN WITNESS WHEREOF, the parties hereto have caused this Schedule to be executed as of September 17, 2003. SEI Tax Exempt Trust SEI Investments Management Corporation By: /s/ Timothy D. Barto By: /s/ Lydia A. Gavalis -------------------------------- ------------------------------- Attest: /s/ Cassandra Johnson Attest: /s/ Cassandra Johnson ---------------------------- --------------------------- SCHEDULE E TO THE INVESTMENT ADVISORY AGREEMENT BETWEEN SEI TAX EXEMPT TRUST AND SEI INVESTMENTS MANAGEMENT CORPORATION This Schedule E forms a supplement to the Investment Advisory Agreement (the "Agreement") dated April 16, 1996 between SEI Tax Exempt Trust (the "Trust") and SEI Investments Management Corporation, f/k/a SEI Financial Management Corporation (the "Adviser"). RECITALS WHEREAS, the Trust and the Adviser entered into the Agreement, which sets forth the rights and obligations of the parties pertaining to the management of separate portfolios of the Trust managed by the Adviser; and WHEREAS, the Trust approved the Adviser's management of the California Tax Exempt Fund, Tax Free Fund, Institutional Tax Free Fund, and Pennsylvania Tax Free Fund (collectively, the "Funds") as a "manager of managers," in accordance with the Agreement. AGREEMENTS Now, therefore, the parties agree as follows: The Trust hereby appoints the Adviser to act as investment adviser to the Funds as provided in Section 1 of the Agreement. In making the Agreement applicable with respect to the Funds, the Agreement is being entered into severally and not jointly, as it pertains to the respective funds of the Trust, and the Trust and the Adviser intend that the numbered provisions contained in the Agreement be understood as applying separately to the Funds as if contained in, and forming, a separate agreement. The compensation of the Adviser, determined as set forth in Article 4 of the Agreement with respect to the Funds, will be as follows:
NET ASSET VALUE ANNUAL FEE --------------- ---------- Up to $500,000,000 0.05% Next $500,000,000 0.04% Over $1,000,000,000 0.03%
The fees for the Tax Free, Institutional Tax Free, Pennsylvania Tax Free and California Tax Exempt Funds shall be calculated by aggregating the assets of the four portfolios, applying the above fee schedule and then allocating the fee to each of those portfolios based upon their relative net assets. For the purposes of this fee schedule, the Advisor's fees will be calculated based upon the net assets of the Funds, provided, however, payment to the Adviser shall not exceed payment due from the Adviser to the Sub-Adviser in accordance with the terms of the Sub-Advisory agreement for the Funds. The date of this Schedule E is ____, 2004 which shall be deemed the date upon which the Agreement has been executed with respect to the Fund. 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 is binding only upon the assets and property of the Trust. This Schedule D may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. The parties listed below have executed this Schedule E as of the ___th day of _____, 2004. IN WITNESS WHEREOF, the parties hereto have caused this Schedule to be executed as of ____________, 2004. SEI Tax Exempt Trust SEI Investments Management Corporation By: By: -------------------------------- ------------------------------- Attest: Attest: ---------------------------- --------------------------- EXHIBIT E - INVESTMENT POLICIES CHART
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- DIVERSIFICATION POLICY SIMT Large Cap Growth, SIMT Large With respect to 75% of its No Fund may purchase With respect to 75% of its Cap Value, SIMT Tax-Managed Large assets, no Fund may: (i) securities of an issuer if assets, no Fund may: (i) Cap, SIMT Mid-Cap, SIMT Small Cap purchase the securities of it would cause the Fund to purchase the securities of Growth, SIMT Small Cap Value, SIMT any issuer (except fail to satisfy the any issuer (except Tax-Managed Small Cap, SIMT Core securities issued or diversification requirement securities issued or Fixed Income, SIMT High Yield Bond, guaranteed by the U.S. for a diversified management guaranteed by the U.S. SIT International Equity, SIT Government, its agencies or company under the 1940 Act, Government, its agencies or Emerging Markets Equity, STET Short instrumentalities) if, as a the rules or regulations instrumentalities) if, as a Duration Municipal, STET result, more than 5% of its thereunder or any exemption result, more than 5% of its Intermediate-Term Municipal, STET total assets would be therefrom, as such statute, total assets would be Pennsylvania Municipal, SDIT invested in the securities rules or regulations may be invested in the securities Corporate Daily Income, SDIT of such issuer; or (ii) amended or interpreted from of such issuer; or (ii) Short-Duration Government, SDIT acquire more than 10% of the time to time. acquire more than 10% of Intermediate-Duration Government, outstanding voting the outstanding voting SDIT GNMA, INDEX S&P 500 Index, securities of any one issuer. securities of any one INDEX Bond Index issuer. SDIT Government II, STET Tax Free, No Fund may purchase No Fund may purchase No Fund may purchase STET Institutional Tax Free, STET securities of any issuer securities of an issuer if securities of any issuer California Tax Exempt, STET (except securities issued or it would cause the Fund to (except securities issued Pennsylvania Tax Free guaranteed by the U.S. fail to satisfy the or guaranteed by the U.S. Government, its agencies or diversification requirement Government, its agencies or instrumentalities), if as a for a diversified management instrumentalities), if as a result, more than 25% of its company under the 1940 Act, result, more than 25% of total assets would be the rules or regulations its total assets would be invested in the securities thereunder or any exemption invested in the securities of such issuer. therefrom, as such statute, of such issuer. rules or regulations may be No Fund may acquire more amended or interpreted from No Fund may acquire more than 10% of the voting time to time. than 10% of the voting securities of any one issuer. securities of any one issuer. CONCENTRATION POLICY SIMT Large Cap Growth, SIMT Large No Fund may purchase any No Fund may concentrate No Fund may purchase any Cap Value, SIMT Tax-Managed Large securities which would cause investments in a particular securities which would Cap, SIMT Mid-Cap, SIMT Small Cap more than 25% of the total industry or group of cause 25% or more of the Growth, SIMT Small Cap Value, SIMT assets of the Fund to be industries, as concentration total assets of the Fund to Tax-Managed Small Cap, SIMT Core invested in the securities is defined under the 1940 be invested in the Fixed Income, SIMT High Yield Bond, of one or more issuers Act, the rules and securities of one or more SIT conducting their principal regulations thereunder or issuers conducting their business activities in any exemption principal business activities in
E-1
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- International Equity, SIT Emerging the same industry, provided therefrom, as such statute, the same industry, provided Markets Equity, SIT Emerging Markets that this limitation does rules or regulations may be that this limitation does Debt, SIT International Fixed not apply to investments in amended or interpreted from not apply to investments in Income, STET Tax Free, STET obligations issued or time to time. obligations issued or Institutional Tax Free, STET guaranteed by the U.S. guaranteed by the U.S. California Tax Exempt, STET Government, its agencies or Government, its agencies or Intermediate-Term Municipal, STET instrumentalities. instrumentalities. Pennsylvania Municipal Bond, STET Pennsylvania Tax Free, STET Short Duration Municipal, INDEX S&P 500 Index, INDEX Bond Index, STET California Municipal Bond, STET Massachusetts Municipal Bond, STET New Jersey Municipal Bond, STET New York Municipal Bond SDIT Corporate Daily Income, SDIT No Fund may purchase any No Fund may concentrate No Fund may purchase any Short-Duration Government, SDIT securities which would cause investments in a particular securities which would Intermediate-Duration Government, 25% or more of the total industry or group of cause 25% or more of the SDIT GNMA, SDIT Government II assets of the Fund to be industries, as concentration total assets of the Fund to invested in the securities is defined under the 1940 be invested in the of one or more issuers Act, the rules and securities of one or more conducting their principal regulations thereunder or issuers conducting their business activities in the any exemption therefrom, as principal business same industry, provided that such statute, rules or activities in the same this limitation does not regulations may be amended industry, provided that apply to investments in (a) or interpreted from time to this limitation does not domestic banks and (b) time. apply to investments in (a) obligations issued or domestic banks and (b) guaranteed by the U.S. obligations issued or Government or its agencies guaranteed by the U.S. and instrumentalities. Government or its agencies and instrumentalities. STET Tax Free, STET Institutional No Fund may invest more than No Fund may concentrate No Fund may invest more Tax Free, STET 25% of its total assets in investments in a particular than 25% of its total issuers industry assets in issuers within
E-2
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Intermediate-Term Municipal, STET within the same state or or group of industries, as the same state or similar Pennsylvania Municipal Bond similar type projects concentration is defined type projects (except in (except in specified under the 1940 Act, the specified categories). For categories). For the STET rules and regulations the STET Pennsylvania Pennsylvania Municipal Bond thereunder or any exemption Municipal Bond Fund, Fund, this limitation does therefrom, as such statute, this limitation does not apply to the extent rules or regulations may be not apply to the extent stated in its investment amended or interpreted from stated in its investment objective and policies. time to time. objective and policies. STET Massachusetts Tax Free Money No Fund may purchase any No Fund may concentrate No Fund may purchase any Market securities which would cause investments in a particular securities which would more than 25% of the total industry or group of cause 25% or more of the assets of the Fund, based on industries, as concentration total assets of the Fund, current value at the time of is defined under the 1940 based on current value at such purchase, to be Act, the rules and the time of such purchase, invested in the securities regulations thereunder or to be invested in the of one or more issuers any exemption therefrom, as securities of one or more conducting their principal such statute, rules or issuers conducting their business activities in the regulations may be amended principal business same industry, provided that or interpreted from time to activities in the same this limitation does not time. industry, provided that apply to investments in (a) this limitation does not obligations issued or apply to investments in (a) guaranteed by the U.S. obligations issued or Government or its agencies guaranteed by the U.S. and instrumentalities, or Government or its agencies (b) obligations of state or and instrumentalities, or municipal governments and (b) obligations of state or their political subdivisions. municipal governments and their political subdivisions. BORROWING POLICY AND POLICY REGARDING ISSUANCE OF SENIOR SECURITIES SIMT Large Cap Growth, SIMT Large No Fund may borrow money in No Fund may borrow money or No Fund may borrow money in Cap Value, SIMT Tax-Managed Large an amount exceeding 33 1/3% issue senior securities (as an amount exceeding 33 1/3% Cap, SIMT Mid-Cap, SIMT Small Cap of the value of its total defined under the 1940 of the value of its total Growth, SIMT Small Cap Value, SIMT assets, provided that, for Act), except to the extent assets, provided that, for Tax- purposes of this limitation, permitted under the 1940 purposes of this limitation,
E-3
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Managed Small Cap, SIMT Core investment strategies which Act, the rules and investment strategies which Fixed Income, SIMT High Yield Bond, either obligate a Fund to regulations thereunder or either obligate a Fund to SIT International Equity, SIT purchase securities or any exemption therefrom, as purchase securities or Emerging Markets Equity, SIT require a Fund to segregate such statute, rules or require a Fund to segregate Emerging Markets Debt, STET Short assets are not considered to regulations may be amended assets are not considered to Duration Municipal, STET California be borrowings. To the extent or interpreted from time to be borrowings. To the extent Municipal Bond, STET Massachusetts that its borrowings exceed time. that its borrowings exceed Municipal Bond, STET New Jersey 5% of its assets: (i) all 5% of its assets: (i) all Municipal Bond, STET New York borrowings will be repaid borrowings will be repaid Municipal Bond before a Fund makes before a Fund makes additional investments and additional investments and any interest paid on such any interest paid on such borrowings will reduce borrowings will reduce income; and (ii) asset income; and (ii) asset coverage of at least 300% is coverage of at least 300% is required. required. No Fund may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. All SAAT Funds Each Fund may borrow money No Fund may borrow money or Each Fund may borrow money in an amount up to 33 1/3% issue senior securities (as in an amount up to 33 1/3% of the value of its total defined under the 1940 of the value of its total assets, provided that, for Act), except to the extent assets, provided that, for purposes of this limitation, permitted under the 1940 purposes of this limitation, investment strategies which Act, the rules and investment strategies which either obligate a Fund to regulations thereunder or either obligate a Fund to purchase securities or any exemption therefrom, as purchase securities or require a Fund to segregate such statute, rules or require a Fund to segregate assets are not considered to regulations may be amended assets are not considered to be borrowings. Except where or interpreted from time to be borrowings. Except where a Fund has borrowed money time. a Fund has borrowed money for temporary purposes in for temporary purposes in amounts not exceeding 5% of amounts not exceeding 5% of its assets, asset coverage its assets, asset coverage of 300% is required for all of 300% is required for all borrowings. borrowings. No Fund may issue senior securities
E-4
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. SIMT Real Estate Fund No Fund may borrow money in No Fund may borrow money or No Fund may borrow money in an amount exceeding 33 1/3% issue senior securities (as an amount exceeding 33 1/3% of the value of its total defined under the 1940 of the value of its total assets, provided that, for Act), except to the extent assets, provided that, for purposes of this limitation, permitted under the 1940 purposes of this limitation, investment strategies that Act, the rules and investment strategies that either obligate the Fund to regulations thereunder or either obligate the Fund to purchase securities or any exemption therefrom, as purchase securities or require the Fund to such statute, rules or require the Fund to segregate assets are not regulations may be amended segregate assets are not considered to be borrowing. or interpreted from time to considered to be borrowing. Asset coverage of at least time. Asset coverage of at least 300% is required for all 300% is required for all borrowing, except where the borrowing, except where the Fund has borrowed money for Fund has borrowed money for temporary purposes in an temporary purposes in an amount not exceeding 5% of amount not exceeding 5% of its total assets. its total assets. No Fund may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. SDIT Corporate Daily Income, SDIT No Fund may borrow money No Fund may borrow money or No Fund may borrow money Short-Duration Government, SDIT except for temporary or issue senior securities (as except for temporary or Intermediate-Duration Government, emergency purposes and then defined under the 1940 emergency purposes and then SDIT GNMA, SDIT Government II, INDEX only in an amount not Act), except to the extent only in an amount not S&P 500 Index, INDEX Bond Index, SIT exceeding 10% of the value permitted under the 1940 exceeding 10% of the value International Fixed Income of the total assets of that Act, the rules and of the total assets of that Fund. This borrowing regulations thereunder or Fund. This borrowing provision is included solely any exemption therefrom, as provision is included solely to facilitate the orderly such statute, rules or to facilitate the orderly sale of portfolio securities regulations may be amended sale of portfolio securities to accommodate or interpreted from time to to accommodate time.
E-5
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- substantial redemption substantial redemption requests if they should requests if they should occur and is not for occur and is not for investment purposes. All investment purposes. All borrowings will be repaid borrowings will be repaid before the Fund makes before the Fund makes additional investments and additional investments and any interest paid on such any interest paid on such borrowings will reduce the borrowings will reduce the income of that Fund. income of that Fund. No Fund may issue senior securities (as defined in the 1940 Act) except in connection with permitted borrowings as described in the prospectuses and its statement of additional information or as permitted by rule, regulation or order of the SEC. STET Tax Free, STET Institutional No Fund may borrow money No Fund may borrow money or No Fund may borrow money Tax Free, STET California Tax except for temporary or issue senior securities (as except for temporary or Exempt, STET Intermediate-Term emergency purposes and then defined under the 1940 emergency purposes and then Municipal, STET Pennsylvania only in an amount not Act), except to the extent only in an amount not Municipal Bond, STET Pennsylvania exceeding 10% of the value permitted under the 1940 exceeding 10% of the value Tax Free of total assets. The Act, the rules and of total assets. The California Tax Exempt Fund regulations thereunder or California Tax Exempt Fund has a fundamental policy any exemption therefrom, as has a fundamental policy that, to the extent such such statute, rules or that, to the extent such borrowing exceeds 5% of the regulations may be amended borrowing exceeds 5% of the value of the Fund's total or interpreted from time to value of the Fund's total assets, borrowing will be time. assets, borrowing will be done from a bank and in done from a bank and in accordance with the accordance with the requirements of the 1940 requirements of the 1940 Act. This borrowing Act. This borrowing provision is included solely provision is included solely to facilitate the orderly to facilitate the orderly sale of portfolio securities sale of portfolio securities to accommodate heavy to accommodate heavy redemption requests if they redemption requests if they should occur and is should occur and is not for
E-6
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- not for investment purposes. investment purposes. All All borrowings of the Funds, borrowings of the Funds, in in excess of 5% of their excess of 5% of its total total assets, will be repaid assets, will be repaid before making additional before making additional investments and any interest investments and any interest paid on such borrowings will paid on such borrowings will reduce income. reduce income. No Fund may issue senior securities (as defined in the 1940 Act) except as permitted by rule, regulation or order of the SEC. STET Massachusetts Tax Free Money No Fund may borrow, except No Fund may borrow money or No Fund may borrow, except Market that the Fund may (a) borrow issue senior securities (as that the Fund may (a) borrow from banks for temporary or defined under the 1940 from banks for temporary or emergency purposes, Act), except to the extent emergency purposes, including the meeting of permitted under the 1940 including the meeting of redemption requests which Act, the rules and redemption requests which might otherwise require the regulations thereunder or might otherwise require the untimely disposition of any exemption therefrom, as untimely disposition of securities, and (b) to the such statute, rules or securities, and (b) to the extent consistent with the regulations may be amended extent consistent with the Fund's investment objective or interpreted from time to Fund's investment objective and policies, enter into time. and policies, enter into reverse repurchase reverse repurchase agreements, forward roll agreements, forward roll transactions and similar transactions and similar investment techniques and investment techniques and strategies. To the extent it strategies. To the extent it engages in transactions engages in transactions described in (a) and (b), described in (a) and (b), the Fund will be limited so the Fund will be limited so that no more than 33 1/3% of that no more than 33 1/3% of its total assets (including its total assets (including the amount borrowed), less the amount borrowed), less liabilities (not including liabilities (not including the amount borrowed) valued the amount borrowed) valued at the time the borrowing is at the time the borrowing is made, is derived from such made, is derived from such transactions. transactions.
E-7
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- No Fund may issue senior securities (as defined in the 1940 Act) except in connection with permitted borrowings as described in its statement of additional information or as permitted by the 1940 Act, and any rule, regulation or order of the SEC thereunder. LENDING POLICY SIMT Large Cap Growth, SIMT Large No Fund may make loans if, No Fund may make loans, No Fund may make loans if, Cap Value, SIMT Tax-Managed Large as a result, more than 33 except to the extent as a result, more than 33 Cap, SIMT Mid-Cap, SIMT Small Cap 1/3% of its total assets permitted under the 1940 1/3% of its total assets Growth, SIMT Small Cap Value, SIMT would be lent to other Act, the rules and would be lent to other Tax-Managed Small Cap, SIMT Core parties, except that each regulations thereunder or parties, except that each Fixed Income, SIMT High Yield Bond, Fund may: (i) purchase or any exemption therefrom, as Fund may: (i) purchase or SIMT Real Estate, SIT International hold debt instruments in such statute, rules or hold debt instruments in Equity, SIT Emerging Markets Equity, accordance with its regulations may be amended accordance with its SIT Emerging Markets Debt, STET investment objective and or interpreted from time to investment objective and Short Duration Municipal, STET policies; (ii) enter into time. policies; (ii) enter into California Municipal Bond, STET repurchase agreements; and repurchase agreements; and Massachusetts Municipal Bond, STET (iii) lend its securities. (iii) lend its securities. New Jersey Municipal Bond, STET New York Municipal Bond, STET Massachusetts Tax Free Money Market All SAAT Funds No Fund may make loans if, No Fund may make loans, No Fund may make loans if, as a result, more than 33 except to the extent as a result, more than 33 1/3% of its total assets permitted under the 1940 1/3% of its total assets would be loaned to other Act, the rules and would be loaned to other parties. regulations thereunder or parties. any exemption therefrom, as such statute, rules or regulations may be amended or interpreted from time to time. SDIT Corporate Daily Income, SDIT No Fund may make loans, No Fund may make loans, No Fund may make loans, Short- except except to except
E-8
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Duration Government, SDIT that each Fund may the extent permitted that each Fund may Intermediate-Duration Government, purchase or hold debt under the 1940 Act, purchase or hold debt SDIT GNMA, SDIT Government II, STET instruments in accordance the rules and regulations instruments in accordance Tax Free, STET Institutional Tax with its investment thereunder or any with its investment Free, STET California Tax Exempt, objective and policies and exemption therefrom, as objective and policies and STET Intermediate-Term Municipal, may enter into repurchase such statute, rules or may enter into repurchase STET Pennsylvania Municipal Bond, agreements, provided that regulations may be amended agreements, provided that STET Pennsylvania Tax Free repurchase agreements or interpreted from time to repurchase agreements maturing in more than seven time. maturing in more than seven days, restricted securities days, restricted securities and other illiquid and other illiquid securities are not to securities are not to exceed, in the aggregate, exceed, in the aggregate, 10% of the Fund's net assets 10% of the Fund's net (15% for STET assets (15% for STET Intermediate-Term Municipal Intermediate-Term Municipal Fund). Fund). INDEX S&P 500 Index, INDEX Bond No Fund may make loans, No Fund may make loans, No Fund may make loans, Index, SIT International Fixed Income except that each Fund: (i) except to the extent except that each Fund: (i) may enter into repurchase permitted under the 1940 may enter into repurchase agreements, provided that Act, the rules and agreements, provided that repurchase agreements and regulations thereunder or repurchase agreements and time deposits maturing in any exemption therefrom, as time deposits maturing in more than seven days, and such statute, rules or more than seven days, and other illiquid securities, regulations may be amended other illiquid securities, including securities which or interpreted from time to including securities which are not readily marketable time. are not readily marketable or are restricted, are not or are restricted, are not to exceed, in the aggregate, to exceed, in the 10% of the Fund's total aggregate, 10% of the assets; (ii) may engage in Fund's total assets; (ii) securities lending as may engage in securities described in its statement lending as described in its of additional information; statement of additional and (iii) may purchase or information; and (iii) may hold debt instruments in purchase or hold debt accordance with its instruments in accordance investment objective and with its investment policies. objective and policies. PLEDGING/MORTGAGING POLICY SDIT Corporate Daily Income, SDIT No Fund may pledge, mortgage None. No Fund may pledge, Short-Duration Government, SDIT or hypothecate assets except mortgage or hypothecate Intermediate-Duration Government, to secure temporary assets except to secure SDIT GNMA, SDIT borrowings permitted by temporary borrowings permitted by
E-9
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Government II, INDEX S&P 500 a Fund's borrowing a Fund's borrowing Index, INDEX Bond Index, SIT policy/statement of policy/statement of International Fixed Income, STET Tax additional information in additional information Free, STET Institutional Tax Free, aggregate amounts not to in aggregate amounts not to STET California Tax Exempt, STET exceed 10% of the net assets exceed 10% of the net Intermediate-Term Municipal, STET of such Fund taken at fair assets of such Fund taken Pennsylvania Municipal Bond, STET market value at the time of at fair market value at the Pennsylvania Tax Free the incurrence of such loan, time of the incurrence of and as to the INDEX S&P 500 such loan, and as to the Index, in connection with INDEX S&P 500 Index, in stock index futures trading connection with stock index as provided in its statement futures trading as provided of additional information. in its statement of additional information. INDEX S&P 500 Index, INDEX Bond Index No Fund may pledge, mortgage None. No Fund may pledge, or hypothecate assets except mortgage or hypothecate to secure temporary assets except to secure borrowings as described in temporary borrowings as its statement of additional described in its statement information in aggregate of additional information amounts not to exceed 10% of in aggregate amounts not to the net assets of the Fund exceed 10% of the net taken at current value at assets of the Fund taken at the time of the incurrence current value at the time of such loan and, as to the of the incurrence of such INDEX S&P 500 Index Fund, in loan and, as to the INDEX S&P connection with stock index 500 Index Fund, in connection futures trading as provided with stock index futures in its statement of trading as provided in its additional information. statement of additional information. SHORT SALES SDIT Corporate Daily Income, SDIT No Fund may make short sales None. No Fund may make short Short-Duration Government, SDIT of securities, maintain a sales of securities, Intermediate-Duration Government, short position or purchase maintain a short position SDIT GNMA, SDIT Government II, INDEX securities on margin, except or purchase securities on S&P 500 Index, INDEX Bond Index, SIT that the Funds may obtain margin, except that the International Fixed Income, STET Tax short-term credits as Funds may obtain short-term Free, STET Institutional Tax Free, necessary for the clearance credits as necessary for STET California Tax Exempt, STET of security transactions. the clearance of security Intermediate-Term transactions.
E-10
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Municipal, STET Pennsylvania Municipal Bond, STET Pennsylvania Tax Free REAL ESTATE/COMMODITIES SIMT Large Cap Growth, SIMT Large No Fund may purchase or sell No Fund may purchase or No Fund may purchase or sell Cap Value, SIMT Tax-Managed Large real estate, physical sell commodities or real real estate, physical Cap, SIMT Mid-Cap, SIMT Small Cap commodities, or commodities estate, except to the commodities, or commodities Growth, SIMT Small Cap Value, SIMT contracts, except that each extent permitted under the contracts, except that each Tax-Managed Small Cap, SIMT Core Fund may purchase: (i) 1940 Act, the rules and Fund may purchase: (i) Fixed Income, SIMT High Yield Bond, marketable securities issued regulations thereunder or marketable securities issued SIMT Real Estate, SIT International by companies which own or any exemption therefrom, as by companies which own or Equity, SIT Emerging Markets Equity, invest in real estate such statute, rules or invest in real estate SIT Emerging Markets Debt, STET (including real estate regulations may be amended (including real estate Short Duration Municipal, STET investment trusts), or interpreted from time to investment trusts), California Municipal Bond, STET commodities, or commodities time. commodities, or commodities Massachusetts Municipal Bond, STET contracts; and (ii) contracts; and (ii) New Jersey Municipal Bond, STET commodities contracts commodities contracts New York Municipal Bond, INDEX S&P relating to financial relating to financial 500 Index, INDEX Bond Fund instruments, such as instruments, such as financial futures contracts financial futures contracts and options on such and options on such contracts. contracts. All SAAT Funds No Fund may purchase or sell No Fund may purchase or No Fund may purchase or sell real estate, physical sell commodities or real real estate, physical commodities, or commodities estate, except to the commodities, or commodities contracts, except that each extent permitted under the contracts, except that each Fund may purchase 1940 Act, the rules and Fund may purchase commodities contracts regulations thereunder or commodities contracts relating to financial any exemption therefrom, as relating to financial instruments, such as such statute, rules or instruments, such as financial futures or index regulations may be amended financial futures or index contracts and options on or interpreted from time to contracts and options on such contracts. time. such contracts. SDIT Corporate Daily Income, SDIT No Fund may purchase or sell No Fund may purchase or No Fund may purchase or sell Government II, SIT International real estate, real estate sell commodities or real real estate, real estate Fixed Income Fund limited partnership estate, except to the limited partnership interests, commodities or extent permitted under the interests, commodities or commodities contracts 1940 Act, the rules and commodities contracts including futures contracts. regulations thereunder or including futures contracts. However, subject to its any exemption therefrom, as However, subject to its permitted investments, each such statute, rules or permitted investments, each Fund may purchase regulations may be amended Fund may purchase obligations obligations or
E-11
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- issued by companies which interpreted from time to issued by companies which invest in real estate, time. invest in real estate, commodities or commodities commodities or commodities contracts. contracts. STET Tax Free, STET Institutional No Fund may purchase or sell No Fund may purchase or No Fund may purchase or sell Tax Free, STET California Tax real estate, real estate sell commodities or real real estate, real estate Exempt, STET Intermediate-Term limited partnership estate, except to the limited partnership Municipal, STET Pennsylvania interests, commodities or extent permitted under the interests, commodities or Municipal Bond, STET Pennsylvania commodities contracts 1940 Act, the rules and commodities contracts Tax Free including futures contracts. regulations thereunder or including futures contracts. However, subject to its any exemption therefrom, as However, subject to its permitted investments, any such statute, rules or permitted investments, any Fund may invest in municipal regulations may be amended Fund may invest in municipal securities or other or interpreted from time to securities or other obligations secured by real time. obligations secured by real estate or other interests estate or other interests therein. therein. SDIT Short-Duration Government, SDIT No Fund may purchase or sell No Fund may purchase or No Fund may purchase or sell Intermediate-Duration Government, real estate, real estate sell commodities or real real estate, real estate SDIT GNMA limited partnership estate, except to the limited partnership interests, commodities or extent permitted under the interests, commodities or commodities contracts 1940 Act, the rules and commodities contracts (excluding futures regulations thereunder or (excluding futures contracts). However, subject any exemption therefrom, as contracts). However, subject to its permitted such statute, rules or to its permitted investments, each Fund may regulations may be amended investments, each Fund may purchase obligations issued or interpreted from time to purchase obligations issued by companies which invest in time. by companies which invest in real estate, commodities or real estate, commodities or commodities contracts. commodities contracts. STET Massachusetts Tax Free Money No Fund may purchase or sell No Fund may purchase or No Fund may purchase or sell Market real estate, real estate sell commodities or real real estate, real estate limited partnership estate, except to the limited partnership interests, commodities or extent permitted under the interests, commodities or commodities contracts 1940 Act, the rules and commodities contracts including futures contracts. regulations thereunder or including futures contracts. However, subject to its any exemption therefrom, as However, subject to its permitted investments, the such statute, rules or permitted investments, the Fund may: (a) invest in regulations may be amended Fund may: (a) invest in securities of issuers or interpreted from time to securities of issuers engaged in the real estate time. engaged in the real estate business or the business of business or the business of investing investing
E-12
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- in real estate (including in real estate (including interests in limited interests in limited partnerships owning or partnerships owning or otherwise engaging in the otherwise engaging in the real estate business or the real estate business or the business of investing in business of investing in real estate) and securities real estate) and securities which are secured by real which are secured by real estate or interests therein; estate or interests therein; (b) hold or sell real estate (b) hold or sell real estate received in connection with received in connection with securities it holds or held; securities it holds or held; or (c) trade in futures or (c) trade in futures contracts and options on contracts and options on futures contracts (including futures contracts (including options on currencies) to options on currencies) to the extent consistent with the extent consistent with the Fund's investment the Fund's investment objective and policies. objective and policies. UNDERWRITING OF SECURITIES All SAAT Funds, SIMT Large Cap No Fund may act as an No Fund may underwrite None. Growth, SIMT Large Cap Value, SIMT underwriter of securities of securities issued by other Tax-Managed Large Cap, SIMT Mid-Cap, other issuers except as it persons, except to the SIMT Small Cap Growth, SIMT Small may be deemed an underwriter extent permitted under the Cap Value, SIMT Tax-Managed Small in selling a portfolio 1940 Act, the rules and Cap, SIMT Core Fixed Income, SIMT security. regulations thereunder or High Yield Bond, SIMT Real Estate, any exemption therefrom, as SIT International Equity, SIT such statute, rules or Emerging Markets Equity, SIT regulations may be amended Emerging Markets Debt, SIT or interpreted from time to International Fixed Income, STET time. Short Duration Municipal, SDIT Corporate Daily Income, SDIT Short-Duration Government, SDIT Intermediate-Duration Government, SDIT GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX Bond Index, STET Tax Free, STET Institutional Tax Free, STET California Tax Exempt, STET Intermediate-Term Municipal, STET
E-13
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Pennsylvania Municipal Bond, STET Pennsylvania Tax Free, STET California Municipal Bond, STET Massachusetts Municipal Bond, STET New Jersey Municipal Bond, STET New York Municipal Bond, STET Massachusetts Tax Free Money Market INVESTMENT IN OIL/GAS All SAAT Funds, SIMT Large Cap No Fund may invest in None. No Fund may invest in Growth, SIMT Large Cap Value, SIMT interests in oil, gas, or interests in oil, gas, or Tax-Managed Large Cap, SIMT Mid-Cap, other mineral exploration or other mineral exploration SIMT Small Cap Growth, SIMT Small development programs and or development programs and Cap Value, SIMT Core Fixed Income, oil, gas or mineral leases. oil, gas or mineral leases. SIMT High Yield Bond, SIT International Equity, SIT Emerging Markets Equity, SIT Emerging Markets Debt, SIT International Fixed Income, STET California Municipal Bond, STET Massachusetts Municipal Bond, STET New Jersey Municipal Bond, STET New York Municipal Bond SDIT Corporate Daily Income, SDIT No Fund may invest in None. No Fund may invest in Short-Duration Government, SDIT interests in oil, gas or interests in oil, gas or Intermediate-Duration Government, other mineral exploration or other mineral exploration SDIT GNMA, SDIT Government II, INDEX development programs. or development programs. S&P 500 Index, INDEX Bond Index, STET Tax Free, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond, STET Pennsylvania Tax Free STET Institutional Tax Free, STET No Fund may invest in None. No Fund may invest in California Tax Exempt interests in oil, gas or interests in oil, gas or mineral leases. mineral leases. INVESTMENT COMPANIES
E-14
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- All SAAT Funds The SAAT Funds concentrate None. None. their interests in investment company interests. SDIT Corporate Daily Income, SDIT No Fund may purchase None. No Fund may purchase Short-Duration Government, SDIT securities of other securities of other Intermediate-Duration Government, investment companies; investment companies; SDIT GNMA provided that all Funds may provided that all Funds may purchase such securities as purchase such securities as permitted by the 1940 Act permitted by the 1940 Act and the rules and and the rules and regulations thereunder but, regulations thereunder but, in any event, such Funds may in any event, such Funds not purchase securities of may not purchase securities other open-end investment of other open-end companies. investment companies. INDEX S&P 500 Index, INDEX Bond No Fund may purchase None. No Fund may purchase Index, SIT International Fixed securities of other securities of other Income, STET Intermediate-Term investment companies except investment companies except Municipal, STET Pennsylvania as permitted by the 1940 Act as permitted by the 1940 Municipal Bond, Pennsylvania Tax Free and the rules and Act and the rules and regulations thereunder and regulations thereunder and may only purchase securities may only purchase of money market funds. securities of money market funds. STET Tax Free, STET Institutional No Fund may purchase None. No Fund may purchase Tax Free, STET California Tax Exempt securities of other securities of other investment companies as investment companies as permitted by the 1940 Act permitted by the 1940 Act and the rules and and the rules and regulations thereunder. regulations thereunder. OWNERSHIP OF SECURITIES SDIT Corporate Daily Income, SDIT No Fund may purchase or None. None. Short-Duration Government, SDIT retain securities of an Intermediate-Duration Government, issuer if, to the knowledge SDIT GNMA, SDIT Government II, INDEX of the Trust, an officer, S&P 500 Index, INDEX Bond Index, SIT trustee, partner or director International Fixed Income, STET Tax of the Trust or any Free, STET Institutional Tax Free, investment adviser of the STET California Tax Exempt, STET Trust owns beneficially more Intermediate-Term Municipal, STET than 1/2 of 1% of the shares Pennsylvania Municipal or securities of such issuer and all such officers, trustees, partners and
E-15
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Bond, STET Pennsylvania Tax Free directors owning more than 1/2 of 1% of such shares or securities together own more than 5% of such shares or securities. UNSEASONED ISSUERS SDIT Corporate Daily Income, SDIT No Fund may purchase None. None. Short-Duration Government, SDIT securities of any company Intermediate-Duration Government, which has (with SDIT GNMA, SDIT Government II, SIT predecessors) a record of International Fixed Income, STET Tax less than three years Free, STET Institutional Tax Free, continuing operations, STET California Tax Exempt, STET except: (i) obligations Intermediate-Term Municipal, STET issued or guaranteed by the Pennsylvania Municipal Bond, STET U.S. Government, its Pennsylvania Tax Free agencies or instrumentalities; or (ii) municipal securities which are rated by at least two nationally recognized municipal bond rating services if, as a result, more than 5% of the total assets (taken at fair market value and current value for the STET Funds) would be invested in such securities. INDEX S&P 500 Index, INDEX Bond Index No Fund may purchase None. None. 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. INVESTMENT IN OPTIONS SDIT Corporate Daily Income, SDIT No Fund may purchase None. No Fund may purchase Short-Duration Government, SDIT warrants, puts, calls, warrants, puts, calls, Intermediate- straddles, spreads or straddles, spreads or
E-16
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- Duration Government, SDIT GNMA, combinations thereof, combinations thereof, SDIT Government II, INDEX S&P 500 except that the except that the Index, INDEX Bond Index Intermediate-Duration Intermediate-Duration Government and GNMA Funds Government and GNMA Funds may invest in options on may invest in options on futures contracts. futures contracts. STET Tax Free, STET Institutional No Fund may purchase None. No Fund may purchase Tax Free, STET California Tax warrants, puts, calls, warrants, puts, calls, Exempt, STET Intermediate-Term straddles, spreads or straddles, spreads or Municipal, STET Pennsylvania combinations thereof, except combinations thereof, Municipal Bond, STET Pennsylvania as permitted by their except as permitted by Tax Free statement of additional their statement of information. additional information. RESTRICTED/ILLIQUID SECURITIES SDIT Corporate Daily Income, SDIT No Fund may purchase None. No Fund may invest more Short-Duration Government, SDIT restricted securities than 10% of its net assets Intermediate-Duration Government, (securities which must be in illiquid securities. SDIT GNMA, SDIT Government II, INDEX registered under the S&P 500 Index, INDEX Bond Index, SIT Securities Act of 1933 International Fixed Income before they may be offered or sold to the public) or other illiquid securities except as described in the prospectuses and statement of additional information. POLICY REGARDING CONTROL OF ISSUER SDIT Corporate Daily Income, SDIT No Fund may invest in None. No Fund may invest in Short-Duration Government, SDIT companies for the purpose of companies for the purpose Intermediate-Duration Government, exercising control. of exercising control. SDIT GNMA, SDIT Government II, INDEX S&P 500 Index, INDEX Bond Index, SIT International Fixed Income, STET Tax Free, STET Institutional Tax Free, STET California Tax Exempt, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond, STET Pennsylvania Tax Free OTHER POLICIES
E-17
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- SIMT Large Cap Value, SIMT Large Cap The Funds' investment None. None. Growth, SIMT Tax-Managed Large Cap, limitations in their SIMT Small Cap Value, SIMT Small Cap respective prospectuses are Growth, SIMT Tax-Managed Small Cap, fundamental. SIMT Mid-Cap, SIMT Core Fixed Income, SIMT High Yield Bond, STET Tax Free, STET Institutional Tax Free, STET California Tax Exempt, STET Intermediate-Term Municipal, STET Pennsylvania Municipal Bond, STET Pennsylvania Tax Free STET Intermediate-Term Municipal, Each Fund must abide by its None. No Fund or each Fund must STET Pennsylvania Municipal Bond maturity restrictions and abide by its maturity invest solely in the restrictions and invest permitted investments in its solely in the permitted statement of additional investments in its information and prospectuses. statement of additional information and prospectuses. SLAT Prime Obligation The Fund may only purchase None. None. securities with a remaining maturity of 365 days or less. (The Fund will be managed in accordance with Rule 2a-7 under the 1940 Act, which currently restricts a money market fund from acquiring any instrument with a remaining maturity of greater than 397 calendar days). STET California Municipal Bond The Fund must be fully At least 80% of its net None. invested in obligations assets is invested in which produce interest that obligations which produce is exempt from both Federal interest that is exempt from and California state income both Federal and California taxes. state income taxes. STET Massachusetts Municipal Bond The Fund must be fully At least 80% of its net None. invested in obligations assets is invested in which produce interest obligations which
E-18
CURRENT FUNDAMENTAL PROPOSED NEW PROPOSED NEW NON- FUNDS POLICY FUNDAMENTAL POLICY FUNDAMENTAL POLICY ------------------------------------- ----------------------------- ----------------------------- ----------------------------- that is exempt from both produce interest that is Federal and Massachusetts exempt from both Federal and state income taxes. Massachusetts state income taxes. STET New Jersey Municipal Bond The Fund must be fully At least 80% of its net None. invested in obligations assets is invested in which produce interest that obligations which produce is exempt from both Federal interest that is exempt from and New Jersey state income both Federal and New Jersey taxes. state income taxes. STET New York Municipal Bond The Fund must be fully At least 80% of its net None. invested in obligations assets is invested in which produce interest that obligations which produce is exempt from both Federal interest that is exempt from and New York state and city both Federal and New York income taxes. state and city income taxes. STET Pennsylvania Municipal Bond Fund The Fund must be fully At least 80% of its net None. invested in obligations assets is invested in which produce interest that obligations which produce is exempt from both Federal interest that is exempt from and Pennsylvania state both Federal and income taxes. Pennsylvania state income taxes. SDIT GNMA The Fund may not invest less None. The Fund has adopted a than 65% of its assets in policy to invest at least GNMA securities. 80% of its assets in the type of securities that it is required to by Rule 35d-1.
E-19 PROXY TABULATOR P.O. BOX 9132 HINGHAM, MA 02043-9132 TO VOTE BY TELEPHONE 1) Read the Proxy Statement and have the Proxy card on reverse at hand. 2) Call 1-800-690-6903. 3) Follow the recorded instructions. TO VOTE BY INTERNET 1) Read the Proxy Statement and have the Proxy card below at hand. 2) Go to www.proxyweb.com 3) Follow the on-line instructions. TO VOTE BY MAIL 1) Read the Proxy Statement. 2) Check the appropriate boxes on the reverse side. 3) Sign, date and return the Proxy card in the envelope provided. IF YOU VOTE BY TELEPHONE OR INTERNET, PLEASE DO NOT RETURN YOUR PROXY CARD. [SHAREHOLDER ADDRESS] SHARES XXX CONTROL NUMBER XXX ACCOUNT NUMBER XXX 999 999 999 999 99 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS FUND NAME PRINTS HERE TO BE HELD ON OCTOBER 27, 2004 Notice is hereby given that a special meeting of shareholders (the "Meeting") of SEI Liquid Asset Trust, SEI Tax Exempt Trust, SEI Daily Income Trust, SEI Index Funds, SEI Institutional Managed Trust, SEI Institutional International Trust and SEI Asset Allocation Trust (collectively, the "Trusts") and each of their portfolios (the "Funds") will be held at the offices of SEI Investments Management Corporation ("SIMC"), One Freedom Valley Drive, Oaks, Pennsylvania 19456, on October 27, 2004, at [MEETING TIME] (Eastern time). The purpose of the Meeting is to consider the Proposals set forth on reverse and to transact such other business as may be properly brought before the Meeting or any adjournments(s) thereof. The specifics of these Proposals, which are more fully described in the attached Proxy Statement, are shown on the reverse side of the card. Date:_________________________, 2004 ----------------------------------- | | | | ----------------------------------- Signature(s) (SIGN IN THE BOX) Please date and sign exactly as the name or names appear on this card. When signing as attorney, trustee, executor, administrator, custodian, guardian or corporate officer, please give full title. If shares are held jointly, each shareholder should sign. Please fill out box(es) as shown using black or blue ink or number 2 pencil. PLEASE DO NOT USE FINE POINT PENS. THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS A VOTE "FOR" THE PROPOSALS. Proposal 1. To elect Trustees for all Funds FOR WITHHOLD nominees authority listed (except as to vote for marked to the all nominees contrary at left) (01) Rosemarie B. Greco (02) Nina Lesavoy (03) James M. Williams -------------------------------------------------------------------------------------------------------------------------- To withhold authority to vote for one or more of the nominees, write the number(s) of the nominee(s) above.
TO IMPLEMENT THE "MANAGER OF MANAGERS" STRUCTURE WITH SIMC SERVING AS EACH FUND'S "MANAGER OF MANAGERS," SHAREHOLDERS MUST APPROVE PROPOSALS 2 AND 3. NEITHER PROPOSAL WILL BE IMPLEMENTED WITH RESPECT TO A FUND, IF SHAREHOLDERS OF THAT FUND DO NOT APPROVE BOTH PROPOSALS. FOR AGAINST ABSTAIN PROPOSAL 2. To approve a "manager of managers" structure for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust. PROPOSAL 3. To approve SIMC as investment advisor for: the Bond Index Fund of SEI Index Funds; the Short-Duration Government, Intermediate-Duration Government, GNMA, and Corporate Daily Income Funds of SEI Daily Income Trust; and the California Tax Exempt, Tax Free, Institutional Tax Free, and Pennsylvania Tax Free Funds of SEI Tax Exempt Trust; and to approve an investment advisory agreement with SIMC and these Funds. PROPOSAL 4 IS SEPARATED INTO SEPARATE ITEMS. YOU MAY VOTE FOR PROPOSAL 4 AS A GROUP OR BY EACH ITEM. IF YOU VOTE ON PROPOSAL 4 AS A GROUP, A FUND WILL RECORD YOUR VOTES AS HAVING BEEN CAST "FOR" OR "AGAINST" EACH APPLICABLE ITEM WITHIN PROPOSAL 4 IN ACCORDANCE WITH YOUR VOTE. ALTERNATIVELY, YOU MAY VOTE SEPARATELY "FOR" OR "AGAINST" EACH ITEM OF PROPOSAL 4. IF THIS PROXY CARD INCLUDES A VOTE ON PROPOSAL 4 AS A GROUP AND SEPARATE VOTES ON SPECIFIC ITEMS, YOUR VOTE ON THE ENTIRE PROPOSAL AS A GROUP WILL CONTROL AND WILL BE RECORDED AS YOUR INTENDED VOTE. PROPOSAL 4. To approve eliminating, amending or reclassifying certain fundamental policies and restrictions. STOP HERE IF YOU VOTED ON PROPOSAL 4 AS A GROUP. IF YOU HAVE NOT VOTED ON PROPOSAL 4 AS A GROUP AND WOULD LIKE TO VOTE ON EACH ITEM SEPARATELY, PLEASE CHECK THE APPROPRIATE BOXES BELOW. 4(a) Fundamental Policy Regarding Diversification 4(b) Fundamental Policy Regarding Concentration 4(c) Fundamental Policy Regarding Borrowing and Senior Securities 4(d) Fundamental Policy Regarding Lending 4(e) Fundamental Policy Regarding Pledging and Mortgaging of Fund Assets 4(f) Fundamental Policy Regarding Control of Issuer 4(g) Fundamental Policy Regarding Purchase of Real Estate and Commodities 4(h) Fundamental Policy Regarding Short Sales 4(i) Fundamental Policy Regarding Underwriting of Securities 4(j) Fundamental Policy Regarding Investment in Securities of Other Investment Companies 4(k) Fundamental Policy Regarding Investing in Issuers when Securities are Owned by Officers and Trustees 4(l) Fundamental Policy Regarding "Unseasoned Issuers" 4(m) Fundamental Policy Regarding Investments in Options 4(n) Fundamental Policy Regarding Oil and Gas 4(o) Fundamental Policy Regarding Investments in Illiquid and Restricted Securities 4(p) Fundamental Policy making all Investment Limitations in Prospectus Fundamental 4(q) Fundamental Policy Requiring that at Least 65% of the Fund's Assets be Invested in Particular Types of Securities 4(r) Fundamental Policy Requiring the Municipal Funds to be Fully Invested in Obligations which Produce Interest that is Exempt from Both Federal and State Income Taxes 4(s) Fundamental Policy that the Funds Must Abide by their Maturity Restrictions and Invest Solely in Investments Permitted by their Prospectus and Statement of Additional Information 4(t) Fundamental Policy that the Fund may only Purchase Securities with a Remaining Maturity of 365 Days or Less
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.