<PAGE>
As filed with the Securities and Exchange Commission on September 25, 1998.
File No. 33-44293
File No. 811-6488
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 X
Pre-Effective Amendment
Post-Effective Amendment No. 7 X
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 X
AMENDMENT NO. 9 X
CUFUND
(Exact name of registrant as specified in charter)
c/o CT Corporation
2 Oliver Street
Boston, Massachusetts 02109
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (800) 342-5734
Mark E. Nagle
c/o SEI Investments Company
Oaks, PA 19456
(Name and Address of Agent for Service)
Copies to:
Richard W. Grant, Esquire Francis C. Lee
Morgan, Lewis & Bockius LLP Southwest Corporate Federal Credit Union
2000 One Logan Square 7920 Belt Line Road, Suite 1100
Philadelphia, PA 19103 Dallas, TX 75240
IT IS PROPOSED THAT THIS FILING BECOME EFFECTIVE (CHECK APPROPRIATE BOX)
X IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (B)
ON [DATE] PURSUANT TO PARAGRAPH (B)
60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A) (1)
75 DAYS AFTER FILING PURSUANT TO PARAGRAPH (A) (2)
ON [DATE] PURSUANT TO PARAGRAPH (A) OF RULE 485
================================================================================
<PAGE>
CUFUND
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
N-1A Item No. Location
- --------------- --------
<S> <C> <C>
PART A - Short-Term Maturity Portfolio and Adjustable Rate Portfolio
- ------
Item 1. Cover page.......................... Cover Page
Item 2. Synopsis............................ Annual Operating Expenses; Summary
Item 3. Condensed Financial Information..... Financial Highlights
Item 4. General Description of Registrant... Summary; The Trust;
Investment Objective; Investment
Policies; Portfolio Management
Policies; Investment Risks
Item 5. Management of the Fund.............. The Adviser; The
Administrator; The Shareholder
Servicing Agent; Trustees and
Officers of the Trust
Item 5A. Management's Discussion of Fund
Performance........................ *
Item 6. Capital Stock and Other Securities.. General Information--
Voting Rights; Shareholder
Inquiries; Dividends; Federal
Taxes; State Taxes
Item 7. Purchase of Securities Being Offered Purchase and Redemption of
Shares
Item 8. Redemption or Repurchase............ Purchase and Redemption of
Shares
Item 9. Pending Legal Proceedings........... Not Applicable
PART B - Short-Term Maturity Portfolio and Adjustable Rate Portfolio
- ------
Item 10. Cover Page.......................... Not Applicable
Item 11. Table of Contents................... Table of Contents
Item 12. General Information and History..... Not Applicable
Item 13. Investment Objectives and Policies.. Description of Permitted
Investments; General
Information--
Investment Limitations; Non-
Fundamental Policies
Item 14. Management of the Fund.............. The Adviser; Trustees and
Officers of the Trust; The
Administrator; The Shareholder
Servicing Agent
Item 15. Control Persons and Principal Holders
of Securities...................... General Information--
5% Shareholders; Trustees
and Officers of the Trust
Item 16. Investment Advisory and Other
Services........................... The Adviser; The
Administrator; The Shareholder
Servicing Agent; The Distributor
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
N-1A Item No. Location
- --------------- --------
<S> <C> <C>
Item 17. Brokerage Allocation and Other
Practices........................... General Information--
Portfolio Transactions
Item 18. Capital Stock and Other Securities.. General Information--
Description of Shares;
Dividends; Shareholder Liability;
Limitation of Trustees' Liability;
Voting Rights
Item 19. Purchase, Redemption, and Pricing of
Securities Being Offered........... Purchase and Redemption of
Shares; Description of Net Asset
Value
Item 20. Tax Status.......................... Federal Taxes; State Taxes
Item 21. Underwriters........................ The Distributor
Item 22. Calculation of Performance Data..... Performance; Computation of
Yield; Calculation of Total
Return
Item 23. Financial Statements................ Financial Information
</TABLE>
PART C -- Information required to be included in Part C is set forth under the
- -------
appropriate Item, so numbered, in Part C of this Registration Statement.
__________________
* Information required by Item 5A is contained in the 1998 Annual Report to
Shareholders.
<PAGE>
(CUFUND LOGO)
SHORT-TERM MATURITY PORTFOLIO
ADJUSTABLE RATE PORTFOLIO
PROSPECTUS
AND
STATEMENT OF ADDITIONAL INFORMATION
9/30/98
CUF-F-008-04
<PAGE>
CUFUND
Investment Adviser:
SOUTHWEST CORPORATE FEDERAL CREDIT UNION
CUFUND (the "Trust") is a no-load mutual fund seeking to provide a convenient
and economical means of investing in one or more professionally managed
portfolios of securities. This Prospectus relates to the shares of the
following fixed income portfolios (the "Portfolios"):
. SHORT-TERM MATURITY PORTFOLIO
. ADJUSTABLE RATE PORTFOLIO
The Trust's shares are offered exclusively to federally and state chartered
credit unions ("Shareholders").
This combined Prospectus and Statement of Additional Information sets forth
concisely the information about the Trust that a prospective investor should
know before investing. Investors are advised to read this combined Prospectus
and Statement of Additional Information and retain it for future reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS COMBINED PROSPECTUS AND STATEMENT OF
ADDITIONAL INFORMATION. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS INVESTMENT WILL NOT REPRESENT SHARES OR DEPOSITS OF AND WILL NOT BE
INSURED BY THE NATIONAL CREDIT UNION SHARE INSURANCE FUND OR ANY OTHER
GOVERNMENT AGENCY. ONLY CREDIT UNIONS MAY INVEST IN CUFUND.
ALL INVESTMENTS OF CUFUND ARE PERMITTED BY THE FEDERAL CREDIT UNION ACT AND
NATIONAL CREDIT UNION ADMINISTRATION RULES AND REGULATIONS FOR NATURAL PERSON
CREDIT UNIONS. THE MERITS OF THESE SECURITIES HAVE NOT BEEN PASSED UPON BY THE
NATIONAL CREDIT UNION ADMINISTRATION NOR HAS THE NATIONAL CREDIT UNION
ADMINISTRATION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS COMBINED
PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION.
NO AGENT OR OTHER OFFICIAL OF SOUTHWEST CORPORATE FEDERAL CREDIT UNION OR ANY
OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS COMBINED PROSPECTUS AND
STATEMENT OF ADDITIONAL INFORMATION AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS SHOULD NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY CUFUND.
THIS COMBINED PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION DOES NOT
CONSTITUTE AN OFFERING BY CUFUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
SEPTEMBER 30, 1998
<PAGE>
2
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Summary..................................................................... 3
Annual Operating Expenses................................................... 4
Financial Highlights........................................................ 5
The Trust................................................................... 6
The Short-Term Maturity Portfolio........................................... 6
The Adjustable Rate Portfolio............................................... 7
Portfolio Management Policies............................................... 7
The Adviser................................................................. 8
The Administrator........................................................... 9
The Shareholder Servicing Agent............................................. 9
The Distributor............................................................. 9
Trustees and Officers of the Trust.......................................... 9
Purchase and Redemption of Shares........................................... 11
</TABLE>
<TABLE>
<S> <C>
Dividends................................................................... 12
Determination of Net Asset Value............................................ 12
Performance................................................................. 12
Computation of Yield........................................................ 13
Calculation of Total Return................................................. 13
Federal Taxes............................................................... 13
State Taxes................................................................. 14
General Information......................................................... 14
Description of Permitted Investments And Risk Factors....................... 19
Experts..................................................................... 23
Financial Statements........................................................ 23
Appendix.................................................................... 24
</TABLE>
<PAGE>
SUMMARY
CUFUND (THE "TRUST") IS A NO-LOAD, DIVERSIFIED, OPEN-END MANAGEMENT
INVESTMENT COMPANY THAT PROVIDES A CONVENIENT WAY FOR FEDERALLY AND STATE
CHARTERED CREDIT UNIONS TO INVEST IN PROFESSIONALLY MANAGED PORTFOLIOS OF
SECURITIES. THE FOLLOWING PROVIDES BASIC INFORMATION ABOUT THE TRUST'S SHORT-
TERM MATURITY AND ADJUSTABLE RATE PORTFOLIOS (EACH, A "PORTFOLIO").
WHAT ARE THE INVESTMENT OBJECTIVES? The Short-Term Maturity Portfolio seeks a
high level of income consistent with safety of capital. The Adjustable Rate
Portfolio seeks higher levels of current income while reducing principal
volatility. There is no assurance that either Portfolio will meet its
investment objective. See "Investment Objective" for each Portfolio.
WHAT ARE THE PERMITTED INVESTMENTS? Each Portfolio's assets will be invested
exclusively in obligations that constitute authorized investments for federal
credit unions. When market conditions are favorable, the Short-Term Maturity
Portfolio will be predominantly invested in mortgage-backed securities. The
Adjustable Rate Portfolio will invest at least 65% of its assets in adjustable
rate securities. See "Investment Objective" and "Investment Policies" for each
Portfolio.
WHAT ARE THE RISKS INVOLVED WITH AN INVESTMENT IN THE PORTFOLIOS? Each
Portfolio's investments are subject to market and interest rate fluctuations
which may affect the value of the Portfolio's shares. In addition, the
mortgage-backed securities in which the Portfolios may invest are subject to
the risk of prepayment during periods of declining interest rates. Prepayment
of mortgages which underlie securities purchased at a premium often results in
capital losses, while prepayment of mortgages purchased at a discount often
results in capital gains. Because of these unpredictable prepayment
characteristics, it is often not possible to predict accurately the average
life or realized yield of a particular issue. See "Investment Policies" for
each Portfolio and the "Description of Permitted Investments and Risk Factors."
WHO IS THE ADVISER? Southwest Corporate Federal Credit Union (the "Adviser")
serves as the investment adviser of the Trust and is entitled to a fee, which
is calculated daily and paid monthly, at an annual rate of .32% of the average
daily net assets of each Portfolio. The Adviser has voluntarily agreed to waive
its fee and reimburse the Trust for other expenses to the extent necessary to
limit the total operating expenses of each Portfolio to .39% of its average
daily net assets. The Adviser reserves the right, in its sole discretion, to
terminate this voluntary waiver at any time. See "The Adviser."
WHO IS THE ADMINISTRATOR? SEI Investments Mutual Funds Services (the
"Administrator") serves as the administrator for the Trust. See "The
Administrator."
WHO IS THE SHAREHOLDER SERVICING AGENT? SEI Investments Mutual Funds Services
serves as the transfer agent, dividend disbursing agent and shareholder
servicing agent for the Trust under an administration agreement. See "The
Shareholder Servicing Agent."
WHO IS THE DISTRIBUTOR? SEI Investments Distribution Co. (the "Distributor")
serves as the exclusive distributor of the Trust's shares. No compensation is
paid to the Distributor for distribution services. See "The Distributor."
HOW ARE THE SHARES PURCHASED AND REDEEMED? Purchases and redemptions may be
made through the Distributor on any day on which both the New York Stock
Exchange and the Federal Reserve wire system are open for business (a "Business
Day"). A Purchase Order will be effective as of the day received by the
Distributor if the Distributor receives the order prior to 4:00 p.m., Eastern
time and First Union National Bank (the "Custodian") receives federal funds
before 12:00 p.m., Eastern time on the next Business Day. Redemption Orders
must be placed prior to 4:00 p.m., Eastern time on any Business Day for the
order to be accepted that day. See "Purchase and Redemption of Shares."
HOW ARE DIVIDENDS PAID? Substantially all of the net investment income
(exclusive of capital gains) of each Portfolio is declared daily and
distributed in the form of monthly dividends to Shareholders. Any capital gains
are distributed at least annually. Distributions are paid in additional shares
unless the Shareholder elects to take the payment in cash. See "Dividends."
3
<PAGE>
ANNUAL OPERATING EXPENSES
(As a percentage of average net assets)
<TABLE>
<CAPTION>
SHORT-
TERM ADJUSTABLE
MATURITY RATE
PORTFOLIO PORTFOLIO
- --------------------------------------------------------------------------------
<S> <C> <C>
Advisory Fees (after fee waivers)(1)(2) .12% .12%
Other Expenses (2)(3)...................................... .27% .27%
- --------------------------------------------------------------------------------
Total Operating Expenses (1)(2)............................ .39% .39%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) The Adviser has agreed to voluntarily waive its fee and reimburse expenses
in an amount that operates to limit Total Operating Expenses of each
Portfolio to not more than .39% of its average daily net assets. The
Adviser reserves the right, in its sole discretion, to terminate this
voluntary waiver at any time. Absent the waiver of advisory fees, Advisory
Fees and Total Operating Expenses, as a percentage of average net assets,
would have been .32% and .59%, respectively, for both the Short-Term
Maturity Portfolio and the Adjustable Rate Portfolio. Additional
information may be found under "The Adviser" and "The Administrator."
(2) The Advisory Fees, Other Expenses and Total Operating Expenses set forth
above have been restated from historical figures to reflect an estimate of
current expenses.
(3) Administration fees are calculated at an annual rate which is the greater
of: (i) $214,000 or (ii) .09% of the average daily net assets of the Trust
up to $750 million, and .0725% of the average daily net assets of the
Trust exceeding $750 million. See "The Administrator."
EXAMPLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 YR. 3 YRS. 5 YRS. 10 YRS.
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment in a Portfolio assuming a 5%
annual return and redemption at the end of each
time period........................................ $ 4 $13 $22 $49
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
The example is based upon the total operating expenses of each Portfolio as
set forth in the "Annual Operating Expenses" table above. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The purpose of the expense
table and example is to assist the investor in understanding the various costs
and expenses that may be directly or indirectly borne by investors in each
Portfolio. Additional information may be found under "The Adviser," "The
Administrator" and "The Distributor."
4
<PAGE>
FINANCIAL HIGHLIGHTS
The following financial highlights for a share outstanding throughout each
period ended May 31 have been audited by Arthur Andersen LLP, independent
public accountants, whose report thereon was unqualified. This information
should be read in conjunction with the financial statements and notes thereto
which are incorporated by reference into this combined Prospectus and
Statement of Additional Information. Further information about the performance
of the Portfolios, including management's discussion of each Portfolio's
performance, is contained in the Trust's annual report to Shareholders, which
may be obtained upon request without charge by contacting the Administrator.
<TABLE>
<CAPTION>
RATIO
OF NET
INVEST-
RATIO OF RATIO OF MENT
EXPENSES EXPENSES INCOME
TO TO TO
TOTAL AVERAGE AVERAGE AVERAGE
NET NET GAINS FROM DIVIDENDS NET NET NET NET NET
ASSET NET ON INVEST- FROM NET CAPITAL ASSET ASSETS ASSETS, ASSETS, ASSETS,
VALUE, INVEST- INVEST- MENT INVEST- GAIN TOTAL VALUE, END OF NET OF EXCLUDING NET OF
BEGINNING MENT MENT OPERA- MENT DISTRI- DISTRI- END OF TOTAL PERIOD FEE FEE FEE
OF PERIOD INCOME SECURITIES TIONS INCOME BUTIONS BUTIONS PERIOD RETURN (000) WAIVERS WAIVERS WAIVERS
- ---------------------------------------------------------------------------------------------------------------------------
ADJUSTABLE RATE PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 $ 10.01 0.56 (0.01) 0.55 (0.56) -- (0.56) $ 10.00 5.63% $125,398 0.39% 0.59% 5.58%
1997 9.96 0.57 0.05 0.62 (0.57) -- (0.57) 10.01 6.36 148,960 0.39 0.56 5.66
1996 9.94 0.59 0.02 0.61 (0.59) -- (0.59) 9.96 6.29 153,760 0.39 0.53 5.92
1995 9.96 0.53 (0.02) 0.51 (0.53) -- (0.53) 9.94 5.25 162,147 0.38 0.51 5.34
1994 10.02 0.37 (0.06) 0.31 (0.37) -- (0.37) 9.96 3.19 183,486 0.38 0.51 3.70
1993(1) 10.00 0.38 0.02 0.40 (0.38) -- (0.38) 10.02 4.22 172,593 0.39 0.55 3.94
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET
INVEST-
MENT
INCOME TO
AVERAGE
NET PORT-
ASSETS, FOLIO
EXCLUDING TURN-
FEE OVER
WAIVERS RATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1998 5.38% 31%
1997 5.49 17
1996 5.78 23
1995 5.21 4
1994 3.57 67
1993(1) 3.78 71
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO
OF NET
INVEST-
RATIO OF RATIO OF MENT
EXPENSES EXPENSES INCOME
TO TO TO
TOTAL AVERAGE AVERAGE AVERAGE
NET NET GAINS FROM DIVIDENDS NET NET NET NET NET
ASSET NET ON INVEST- FROM NET CAPITAL ASSET ASSETS ASSETS, ASSETS, ASSETS,
VALUE, INVEST- INVEST- MENT INVEST- GAIN TOTAL VALUE, END OF NET OF EXCLUDING NET OF
BEGINNING MENT MENT OPERA- MENT DISTRI- DISTRI- END OF TOTAL PERIOD FEE FEE FEE
OF PERIOD INCOME SECURITIES TIONS INCOME BUTIONS BUTIONS PERIOD RETURN (000) WAIVERS WAIVERS WAIVERS
- ---------------------------------------------------------------------------------------------------------------------------
SHORT-TERM MATURITY PORTFOLIO
- ---------------------------------------------------------------------------------------------------------------------------
1998 $ 9.80 0.53 0.06 0.59 (0.53) -- (0.53) $ 9.86 6.17% $ 29,545 0.39% 0.59% 5.37%
1997 9.76 0.52 0.04 0.56 (0.52) -- (0.52) 9.80 5.90 29,668 0.39 0.58 5.33
1996 9.73 0.52 0.03 0.55 (0.52) -- (0.52) 9.76 5.73 30,633 0.38 0.61 5.27
1995 9.59 0.50 0.14 0.64 (0.50) -- (0.50) 9.73 6.92 35,050 0.38 0.51 5.24
1994 10.00 0.41 (0.38) 0.03 (0.41) (0.03) (0.44) 9.59 0.23 41,737 0.38 0.55 4.23
1993(1) 10.00 0.44 0.01 0.45 (0.45) -- (0.45) 10.00 4.77 20,288 0.39 0.64 4.69
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATIO OF
NET
INVEST-
MENT
INCOME TO
AVERAGE
NET PORT-
ASSETS, FOLIO
EXCLUDING TURN-
FEE OVER
WAIVERS RATE
- ---------------------------------------------------------------------------------------------------------------------------
1998 5.17% 76%
1997 5.14 63
1996 5.04 42
1995 5.11 53
1994 4.06 148
1993(1) 4.44 188
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1)Each Portfolio commenced operations on June 15, 1992. Ratios and total
returns for this period have been annualized.
Amounts designated as "--" are either $0 or have been rounded to $0.
5
<PAGE>
THE TRUST
CUFUND (the "Trust") is a diversified, open-end management investment company,
which was organized as a Massachusetts business trust on November 22, 1991. The
Trust offers units of beneficial interest ("shares") in two portfolios
("Portfolios"), the Short-Term Maturity Portfolio and the Adjustable Rate
Portfolio. Each share of each Portfolio represents an undivided, proportionate
interest in that Portfolio. Shares of the Trust are sold without a sales
charge.
The Trust is offered solely to federally and state chartered credit unions.
Shares of the Trust are designed to qualify as eligible investments for
federally chartered credit unions pursuant to Sections 107(7), 107(8) and
107(15) of the Federal Credit Union Act ("FCUA") and Part 703 of the National
Credit Union Administration ("NCUA") Rules and Regulations ("NCUA Rules"). The
Trust intends to continually monitor changes in the applicable laws, rules and
regulations governing eligible investments, including new investments, for
federally chartered credit unions and to take such action as may be necessary
to assure that the Trust's investments, and, therefore, shares of the Trust,
continue to qualify as eligible Investments under the FCUA.
Sections 107(7), 107(8) and 107(15) of the FCUA set forth those securities,
deposits and other obligations in which federally chartered credit unions may
invest. The Trust's investments consist exclusively of assets designed to
qualify as eligible investments if owned directly by a federally chartered
credit union. Shares of the Trust may or may not qualify as eligible
investments for particular state chartered credit unions. Accordingly, the
Trust encourages, but does not require, each state chartered credit union to
consult qualified legal counsel concerning whether the Trust's shares are
permissible investments for that credit union. While the Adviser will attempt
to assure that the Trust follows the investment policies set forth herein, the
Trust cannot be responsible for compliance by participating state chartered
credit unions with limitations on permissible investments to which they may be
subject.
The Trust is designed as a convenient and economic vehicle for federally and
state chartered credit unions seeking to obtain the yields available on short-
term and adjustable rate investments authorized under the FCUA. The Trust
offers credit unions an alternative to direct investments in eligible
investments, with the intended financial advantage of quantity purchases. For
example, a higher yield may be available when eligible investments are bought
in substantial amounts. Investment in the Trust will relieve the credit unions
of many of the investment and administrative problems usually associated with
the direct purchase and investment management of these eligible investments,
such as scheduling maturities and reinvestments, safekeeping of securities,
surveying the market for the best price at which to buy and sell, and separate
principal and interest record keeping.
THE SHORT-TERM MATURITY PORTFOLIO
INVESTMENT OBJECTIVE
The Short-Term Maturity Portfolio seeks a high level of income consistent with
safety of capital. There is no assurance that the Portfolio's investment
objective will be met.
INVESTMENT POLICIES
The Short-Term Maturity Portfolio's assets will be invested exclusively in
obligations that are authorized investments for federal credit unions under the
FCUA, consisting of: obligations issued or fully guaranteed as to principal and
interest by the United States Government and its agencies or instrumentalities;
certificates of deposit, bankers' acceptances and time deposits issued or
guaranteed by United States banks with total assets exceeding $1 billion,
including comparable U.S. dollar denominated obligations of foreign branches of
such banks; mortgage-backed securities; share certificates issued by corporate
credit unions that operate in compliance with Part 704 of the NCUA Rules and
are examined by the NCUA; repurchase agreements and reverse repurchase
agreements involving securities that constitute permissible investments for the
Portfolio; and federal funds. When market conditions are favorable, the
Portfolio will be predominantly invested in mortgage-backed securities. See
"Portfolio Management Policies." For additional information regarding permitted
investments of the Portfolio, see "Description of Permitted Investments and
Risk Factors."
Under normal circumstances, the Short-Term Maturity Portfolio will maintain an
average weighted maturity of three years or less. The measure of maturity will
be the expected life of securities held by the Portfolio. See "Description of
Permitted Investments and Risk Factors."
6
<PAGE>
THE ADJUSTABLE RATE PORTFOLIO
INVESTMENT OBJECTIVE
The Adjustable Rate Portfolio seeks higher levels of current income while
reducing principal volatility. There is no assurance that the Portfolio's
investment objective will be met.
INVESTMENT POLICIES
The Adjustable Rate Portfolio's assets will be invested exclusively in
obligations authorized under the FCUA (see "The Short-Term Maturity Portfolio,
Investment Policies"). The Adjustable Rate Portfolio will, under normal
circumstances, invest at least 65% of its assets in adjustable rate mortgage
securities ("ARMs") or other adjustable rate securities that have interest
rates which reset at periodic intervals. ARMs are pass-through certificates
representing interests in a pool of adjustable rate mortgages. These adjustable
rate mortgages and other adjustable rate securities have interest rates that
reset at periodic intervals of one year or less based upon a specified index
and thus may experience less price volatility due to changes in market interest
rates than other debt securities. However, these securities will still
experience some price fluctuations since the interest rate adjustments may be
subject to caps and may not correlate completely to market interest rates. For
a description of the Portfolio's permitted investments, see "Description of
Permitted Investments and Risk Factors."
Under normal circumstances, the Adjustable Rate Portfolio expects to maintain
an average weighted maturity of less than 5 years. The measure of maturity will
be the expected life of securities held by the Portfolio. See "Description of
Permitted Investments and Risk Factors."
PORTFOLIO MANAGEMENT POLICIES
The Adviser will seek to enhance the yield of each Portfolio by taking
advantage of yield disparities or other factors that occur in the government
securities and money markets. The Trust may dispose of any portfolio security
prior to its maturity if such disposition and reinvestment of the proceeds are
expected to enhance yield consistent with the Adviser's judgment as to a
desirable portfolio maturity structure or if such disposition is believed to be
advisable due to other circumstances or considerations.
Mortgage-backed securities purchased by a Portfolio will be issued or
guaranteed as to payment of principal and interest by the U.S. Government, its
agencies or instrumentalities or, if backed by private issuers, rated in one of
the two highest rating categories by a nationally recognized statistical rating
organization (an "NRSRO"). The principal Governmental issuers or guarantors of
mortgage-backed securities are the Government National Mortgage Association
("GNMA"), Fannie Mae, and Federal Home Loan Mortgage Corporation ("FHLMC").
Obligations of GNMA are backed by the full faith and credit of the U.S.
Government while obligations of Fannie Mae and FHLMC are supported by the
respective agency only. Guarantees of each Portfolio's securities by the U.S.
Government, its agencies or instrumentalities guarantee only the payment of
principal and interest on the guaranteed securities, and do not guarantee the
securities' yield or value or the yield or value of the Portfolio's shares.
Each Portfolio may purchase mortgage-backed securities that are backed or
collateralized by fixed, adjustable or floating rate mortgages.
Under normal circumstances, the Adjustable Rate Portfolio will invest at least
25% of its total assets in privately issued mortgage-backed securities
(securities that are not issued or guaranteed by the U.S. Government, its
agencies or instrumentalities), including securities nominally issued by a
governmental entity (such as the Resolution Trust Corporation) that is not
responsible for the payment of principal and interest on such securities. While
such securities are not obligations of a governmental entity and thus may bear
a greater risk of nonpayment, the timely payment of principal and interest
normally is supported, at least partially, by various forms of insurance or
guarantees. There can be no assurance, however, that such credit enhancements
will support full payment of the principal and interest on such obligations. As
stated above, each Portfolio intends to invest in privately issued, mortgage-
backed securities only if they are rated in one of the two highest rating
categories.
For temporary defensive purposes when the Adviser determines that market
conditions warrant, each Portfolio may invest up to 100% of its assets in the
money market instruments described above and in the "Description of Permitted
Investments and Risk Factors," and may hold a portion of its assets in cash.
While each Portfolio expects to invest primarily in mortgage-backed securities,
the Adviser may decide to reduce either Portfolio's holdings at a time when it
believes mortgage-
7
<PAGE>
backed securities are trading at a high premium, experiencing high levels of
prepayments, trading at historically narrow effective margins, or are otherwise
less attractive investments with a risk of capital depreciation.
For the fiscal years ended May 31, 1998 and May 31, 1997, the portfolio
turnover rates for the Short-Term Maturity Portfolio were 76% and 63%,
respectively, and for the Adjustable Rate Portfolio were 31% and 17%,
respectively.
The Portfolios will not purchase any obligation of any bank or savings and loan
association that does not qualify as a "Section 107(8) institution" under the
FCUA and regulations thereunder.
Fluctuations in the price of securities held by a Portfolio will cause
fluctuations in the net asset value of that Portfolio's shares.
Some of the permitted investments for the Portfolios may not be permitted
investments for particular state chartered credit unions. See "The Trust."
THE ADVISER
The Trust and Southwest Corporate Federal Credit Union (the "Adviser") have
entered into an investment advisory agreement (the "Advisory Agreement"). Under
the Advisory Agreement, the Adviser makes the investment decisions for each
Portfolio and continuously reviews, supervises and administers each Portfolio's
investment programs, subject to the supervision of, and policies established
by, the Trustees of the Trust. Each Portfolio may also execute brokerage or
other agency transactions through an affiliate of the Adviser for which the
affiliate receives compensation.
The Adviser is a federally chartered corporate credit union located at 7920
Belt Line Road, Suite 1100, Dallas, TX 75240. As of May 31, 1998, the Adviser
had total assets of approximately $3.6 billion, ranking it as the third largest
corporate credit union in the United States. Founded in 1975, the Adviser
provides credit unions with investment products and services; payment systems
services; correspondent financial services; financial management information;
and credit services. The Adviser registered as an investment adviser in 1989
and, as of May 31, 1998, had credit union funds under advisement in its
Investment Advisory Service of approximately $1.6 billion.
Bruce M. Fox, Chief Investment Officer, joined the Adviser in 1990. Mr. Fox has
served as portfolio manager of the Short-Term Maturity Portfolio since August
1994 and the Adjustable Rate Portfolio since September 1996. He is responsible
for management of Southwest Corporate Federal Credit Union's funds management
area.
Maurice A. Kerins III, Senior Investment Adviser, joined the Adviser in October
1996. Mr. Kerins manages the daily cash positions of the Short-Term Maturity
and Adjustable Rate Portfolios and, in conjunction with Mr. Fox, determines the
overall strategy of the Portfolios. Mr. Kerins has managed the Short-Term
Maturity Portfolio since March 1998 and the Adjustable Rate Portfolio since
October 1996. He also advises 25 portfolios of member credit unions under the
Network Investment Advisory Service. He has worked in the fixed income markets
since 1983.
The Adviser is entitled to a fee, which is calculated daily and paid monthly,
at an annual rate of .32% of the average daily net assets of each Portfolio.
The Adviser has voluntarily agreed to waive all or a portion of its fees and
reimburse expenses in order to limit the total operating expenses of each
Portfolio to not more than .39% of each Portfolio's average daily net assets.
The Adviser reserves the right, in its sole discretion, to terminate this
voluntary fee waiver at any time.
The Advisory Agreement provides that the Adviser shall not be protected against
any liability to the Trust or its Shareholders by reason of willful
misfeasance, bad faith or gross negligence on its part in the performance of
its duties or from reckless disregard of its obligations or duties under the
Advisory Agreement.
The continuance of the Advisory Agreement, must be specifically approved at
least annually (i) by the vote of the Trustees, and (ii) by the vote of a
majority of the Trustees who are not parties to the Advisory Agreement or
"interested persons" of any party thereto, cast in person at a meeting called
for the purpose of voting on such approval. The Advisory Agreement will
terminate automatically in the event of its assignment, and is terminable at
any time without penalty by the Trustees of the Trust or, with respect to each
Portfolio, by a majority of the outstanding shares of that Portfolio, on not
less than 30 days' nor more than 60 days' written notice to the Adviser, or by
the Adviser on 90 days' written notice to the Trust.
8
<PAGE>
THE ADMINISTRATOR
SEI Investments Mutual Funds Services (the "Administrator") and the Trust are
parties to an administration agreement (the "Administration Agreement"). Under
the terms of the Administration Agreement, the Administrator provides the Trust
with overall administrative services (other than investment advisory services)
including all necessary office space, equipment, personnel and facilities.
The Trust pays the Administrator a fee, which is calculated at an annual rate
which is the greater of: (i) $214,000, or (ii) .09% of the average daily net
assets of the Trust up to $750 million, and .0725% of the average daily net
assets of the Trust exceeding $750 million.
The Administration Agreement provides that the Administrator shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which the Administration Agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Administrator in the performance of its duties or
from reckless disregard by it of its duties and obligations under the
Administration Agreement.
The Administration Agreement shall continue in effect for successive periods of
one year subject to review by the Trustees of the Trust.
The Administrator, a Delaware business trust, has its principal business
offices at Oaks, PA 19456. SEI Investments Management Corporation ("SIMC"), a
wholly-owned subsidiary of SEI Investments Company ("SEI Investments"), is the
owner of all beneficial interest in the Administrator. SEI Investments and its
subsidiaries and affiliates, including the Administrator, are leading providers
of funds evaluation services, trust accounting systems, and brokerage and
information services to financial institutions, institutional investors and
money managers. The Administrator and its affiliates also serve as
administrator or sub-administrator to the following other mutual funds: The
Achievement Funds Trust, The Advisors' Inner Circle Fund, The Arbor Fund, ARK
Funds, Armada Funds, Bishop Street Funds, Boston 1784 Funds(R), CrestFunds,
Inc., The Expedition Funds, First American Funds, Inc., First American
Investment Funds, Inc., First American Strategy Funds, Inc., HighMark Funds,
Monitor Funds, Morgan Grenfell Investment Trust, The Nevis Fund, Inc., Oak
Associates Funds, PBHG Advisor Funds, Inc., The PBHG Funds, Inc., PBHG
Insurance Series Fund, Inc., The Pillar Funds, Santa Barbara Group of Mutual
Funds, Inc., SEI Asset Allocation Trust, SEI Daily Income Trust, SEI Index
Funds, SEI Institutional Investments Trust, SEI Institutional Managed Trust,
SEI International Trust, SEI Liquid Asset Trust, SEI Tax Exempt Trust, STI
Classic Funds, STI Classic Variable Trust, TIP Funds and TIP Institutional
Funds.
THE SHAREHOLDER SERVICING AGENT
SEI Investments Mutual Funds Services acts as the transfer agent, dividend
disbursing agent and shareholder servicing agent for the Trust. Compensation
for these services is paid under the Administration Agreement. See "The
Administrator."
THE DISTRIBUTOR
SEI Investments Distribution Co. (the "Distributor"), a registered broker-
dealer that is a wholly-owned subsidiary of SEI Investments, and the Trust are
parties to a distribution agreement (the "Distribution Agreement"). Each
Portfolio may also execute brokerage or other agency transactions through the
Distributor for which the Distributor receives compensation.
The Distribution Agreement appoints the Distributor as the exclusive
distributor of the Trust's shares and provides that the Trust's shares be sold
without a minimum sales quota. The Distribution Agreement is renewable annually
and may be terminated at any time by the Distributor, Trustees who are not
"interested persons" of the Trust as that term is defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), and who have no direct or
indirect financial interest in the operation of a Distribution Plan or in any
agreements related thereto ("Qualified Trustees") or by a majority vote of the
outstanding securities of the Trust upon not more than 60 days' written notice
by either party.
No compensation is paid to the Distributor for distribution services.
TRUSTEES AND OFFICERS OF THE TRUST
The management and affairs of the Trust are supervised by the Trustees under
the laws governing business trusts in the Commonwealth of
9
<PAGE>
Massachusetts. The Trustees have approved contracts under which, as described
above, certain companies provide essential services to the Trust. The Trustees
and executive officers of the Trust, their respective dates of birth and
principal occupations for the last five years are set forth below. Unless
otherwise indicated, the address of each Trustee and executive officer is SEI
Investments, Oaks, Pennsylvania, 19456.
JAMES L. BRYAN (7/13/38)--Trustee--777 E. Campbell Road, Suite 731, Richardson,
Texas 75081. President of Texans Credit Union, Richardson, Texas (1974-
present).
GARY L. JANACEK (3/30/51)--Trustee--2401 S. 31st Street, Temple, Texas 76508.
President of Scott and White Employees Credit Union, Temple, Texas (1977-
present).
ARNO J. EASTERLY* (3/25/35)--Trustee--2701 Village Lane, Bossier City,
Louisiana 71112. President of Barksdale Federal Credit Union, Barksdale AFB,
Louisiana (1984-present).
DR. MARTHA ROMAYNE SEGER (2/17/21)--Trustee--4810 E. Scarlett Street, Tucson,
Arizona 85711. John M. Olin Distinguished Fellow in the Eller Center for the
Study of the Private Market Economy at The University of Arizona, Tucson (1991-
present).
MARK E. NAGLE (10/20/59)--President and Chief Executive Officer--Vice President
of Fund Accounting and Administration and Vice President of the Administrator
since 1996. Vice President of the Distributor since December 1997. Vice
President, Fund Accounting, BISYS Fund Services (1995-1996). Senior Vice
President and Site Manager, Fidelity Investments (1981-1995).
MICHAEL BEATTIE (3/13/65)--Controller and Chief Financial Officer--Associate
Director, Funds Accounting since July 1997. Manager, Funds Accounting (1993-
1997).
RICHARD W. GRANT (10/25/45)--Secretary--2000 One Logan Square, Philadelphia,
Pennsylvania 19103. Partner of Morgan, Lewis & Bockius LLP (law firm) since
1989, counsel to the Trust, the Administrator, and the Distributor.
- --------
* Mr. Easterly is a Trustee who may be deemed to be an "interested" person of
the Trust as the term is defined in the 1940 Act.
FRANCIS C. LEE (12/3/48)--Vice President, Assistant Secretary--President and
CEO of Southwest Corporate Federal Credit Union since 1995. Senior Vice
President of Operations, Western Corporate Federal Credit Union (1981-1995).
KEVIN P. ROBINS (4/5/61)--Vice President, Assistant Secretary--Senior Vice
President, General Counsel and Secretary of SEI, Senior Vice President, General
Counsel and Secretary of the Administrator and the Distributor since 1994. Vice
President and Assistant Secretary of SEI Investments, the Administrator and the
Distributor (1992-1994).
SANDRA K. ORLOW (10/18/53)--Vice President, Assistant Secretary--Vice President
and Assistant Secretary of the Administrator and the Distributor since 1988.
TODD CIPPERMAN (2/14/66)--Vice President, Assistant Secretary--Vice President
and Assistant Secretary of SEI, the Administrator and the Distributor since
1995. Associate, Dewey Ballantine (law firm) (1994-1995). Associate, Winston &
Strawn (law firm) (1991-1994).
JOSEPH M. O'DONNELL (11/13/54)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and the Distributor
since 1998. Vice President and General Counsel, FPS Services, Inc. (1993-1997).
LYDIA A. GAVALIS (6/5/64)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and the Distributor
since 1998. Assistant General Counsel and Director of Arbitration, Philadelphia
Stock Exchange (1989-1998).
LYNDA J. STRIEGEL (10/30/48)--Vice President and Assistant Secretary--Vice
President and Assistant Secretary of the Administrator and the Distributor
since 1998. Senior Asset Management Counsel, Barnett Banks, Inc. (1997-1998).
Partner, Groom and Nordberg, Chartered (1996-1997). Associate General Counsel,
Riggs Bank, N.A. (1991-1995).
KATHY HEILIG (12/21/58)--Vice President and Assistant Secretary--Treasurer of
SEI Investments since 1997; Assistant Controller of SEI Investments since 1995;
Vice President of SEI Investments since 1991; Director of Taxes of SEI
Investments (1987-1991).
10
<PAGE>
The Trustees and officers of the Trust own less than 1% of the outstanding
shares of the Trust. The Trust pays the fees for Trustees. Compensation of
officers of the Trust is paid by the Administrator.
The following table shows Trustee compensation for the fiscal year ended May
31, 1998.
<TABLE>
<CAPTION>
AGGREGATE
COMPENSATION PENSION OR
FROM RETIREMENT
REGISTRANT BENEFITS ESTIMATED
FOR THE ACCRUED AS ANNUAL TOTAL COMPENSATION FROM
FISCAL YEAR PART OF BENEFITS REGISTRANT AND FUND COMPLEX
ENDED MAY FUND UPON PAID TO TRUSTEES FOR THE
NAME OF PERSON 31, 1998 EXPENSES RETIREMENT FISCAL YEAR ENDED MAY 31, 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dr. M. R. Seger......... $24,000 N/A N/A $24,000 for service on 1 board
- ------------------------------------------------------------------------------------------
J. L. Bryan............. $ 4,000 N/A N/A $ 4,000 for service on 1 board
- ------------------------------------------------------------------------------------------
A. J. Easterly.......... $ 4,000 N/A N/A $ 4,000 for service on 1 board
- ------------------------------------------------------------------------------------------
G. L. Janacek........... $ 4,000 N/A N/A $ 4,000 for service on 1 board
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
PURCHASE AND REDEMPTION OF SHARES
Purchase and redemption of shares of either Portfolio may be made on any day on
which both the New York Stock Exchange (the "NYSE") and the Federal reserve
wire system are open for business (a "Business Day") by placing orders with the
Distributor.
The minimum initial investment in either Portfolio of the Trust is $100,000.
There is no minimum for subsequent investments.
A purchase order will be effective as of the day received by the Distributor if
the Distributor receives the order before 4:00 p.m., Eastern time, and the
Custodian receives federal funds before 12:00 p.m., Eastern time on the next
Business Day.
The purchase price of shares of a Portfolio is the net asset value next
determined after a purchase order is received by the Trust. The net asset value
per share of a Portfolio is determined by dividing the total market value of a
Portfolio's investments and other assets, less any liabilities, by the total
outstanding shares of the Portfolio. Net asset value per share is determined as
of the regularly-scheduled close of normal trading on the NYSE (normally, 4:00
p.m., Eastern time) on each Business Day. See "Determination of Net Asset
Value." Purchases will be made in full and fractional shares of a Portfolio
calculated to three decimal places.
Shares may be offered only to residents of those states in which such shares
are eligible for purchase.
Shareholders who desire to redeem shares of either Portfolio must place their
redemption orders prior to 4:00 p.m., Eastern time on any Business Day for the
order to be accepted on that Business Day. The redemption price of the shares
is the net asset value of the Portfolio next determined after receipt by the
Distributor of the redemption order. Payment on redemption will be made as
promptly as possible and, in any event, within seven days after the redemption
order is received, as required by the 1940 Act. It is currently the Trust's
policy to pay for redemptions in cash.
The Trust reserves the right to suspend the right of redemption and/or to
postpone the date of payment upon redemption for any period on which trading on
the NYSE is restricted, or during the existence of an emergency (as determined
by the Securities and Exchange Commission (the "SEC") by rule or regulation) as
a result of which disposal or valuation of the Portfolio's securities is not
reasonably practicable, or for such other periods as the SEC has by order
permitted. The Trust also reserves the right to suspend sales of shares of a
Portfolio for any period during which the NYSE, the Adviser, the Administrator
and/or the Custodian are not open for business for any reason. The New York
Stock Exchange will not open in observance of the following holidays: New
Year's Day; Martin Luther King, Jr., Day; Presidents' Day; Good Friday;
Memorial Day; Independence Day; Labor Day; Thanksgiving; and Christmas. In
addition, the Federal Reserve observes the following holidays: Columbus Day and
Veterans' Day.
Purchase and redemption orders may be placed by telephone. The Trust, its
transfer agent or sub-agent will not be responsible for any loss, liability,
cost or expense for acting upon wire instructions or upon telephone
instructions that it reasonably believes to be genuine. The Trust, its transfer
11
<PAGE>
agent and sub-agent may each employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, including requiring a form
of personal identification prior to acting upon instructions received by
telephone and recording telephone instructions. The Trust, the Trust's transfer
agent or sub-agent may be liable for losses resulting from fraudulent or
unauthorized instructions if it does not employ these procedures. If market
conditions are extraordinarily active, or other extraordinary circumstances
exist, Shareholders who experience difficulties placing redemption orders by
telephone may wish to consider placing their redemption orders by other means.
DIVIDENDS
Substantially all of the net investment income (not including capital gains) of
each Portfolio is distributed in the form of monthly dividends to Shareholders.
Net investment income consists of accrued interest and any general income of
the Trust allocated to a Portfolio, less the estimated expenses of such
Portfolio and the general expenses of the Trust allocated to such Portfolio
during a particular period. Dividends are declared daily, just prior to a
determination of net asset value. If a purchase order is placed on the
preceding Business Day, shares begin earning dividends on the Business Day
federal funds payment is received by the Custodian. If a purchase order and
federal funds are received the same Business Day, shares begin earning
dividends on the next Business Day. Currently, capital gains of a Portfolio, if
any, will be distributed at least annually.
Shareholders automatically receive all income dividends and capital gain
distributions in additional shares at the net asset value next determined
unless the Shareholder has elected at the time of initial investment to take
such payments in cash. Shareholders may change their election by providing
written notice to the Administrator at least 15 days prior to the change.
Dividends and distributions of each Portfolio are paid on a per share basis.
DETERMINATION OF NET ASSET VALUE
As described previously, the net asset value per share of each Portfolio is
calculated by adding the value of securities and other assets, subtracting
liabilities and dividing by the number of outstanding shares.
Pursuant to policies established by the Board of Trustees of the Trust, the
Administrator values the securities of each Portfolio based upon valuations
provided by brokers or an independent pricing service. The pricing service
relies primarily on prices of actual market transactions as well as trader
quotations. However, the service may also use a matrix system to determine
valuations of fixed income securities, which system considers such factors as
security prices, yields, maturities, call features, ratings and developments
relating to specific securities in arriving at valuations. The procedures of
the pricing service and its valuations are reviewed by the officers of the
Trust under the general supervision of the Board of Trustees. Securities and
other assets for which market prices are either (i) not readily available or
not obtained, or (ii) deemed by the Adviser to be materially inaccurate, are
valued at fair value as determined in good faith under procedures established
by the Board of Trustees.
PERFORMANCE
From time to time, each Portfolio may advertise its yield and total return.
These figures will be based on historical earnings and are not intended to
indicate future performance. The 30-day yield of a Portfolio refers to the
annualized income generated by an investment in the Portfolio over a specified
30-day period. The 30-day yield is calculated by assuming that the income
generated by the investment during that period is generated over one year and
is shown as a percentage of the investment. See "Computation of Yield."
The total return of a Portfolio refers to the average compounded rate of return
to a hypothetical investment, for designated time periods (including, but not
limited to, the period from which the Portfolio commenced operations through
the specified date), assuming that the entire investment is redeemed at the end
of each period and assuming the reinvestment of all dividend and capital gain
distributions. See "Calculation of Total Return."
Each Portfolio's performance may from time to time be compared to other mutual
funds tracked by mutual fund rating services, to broad groups of comparable
mutual funds or to unmanaged indices which may assume reinvestment of dividends
but generally do not reflect deductions for administrative and management
costs. Indices that may be used include: for the Short-Term Maturity Portfolio,
Lipper Short Term U.S. Government Index
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<PAGE>
and 1 year Constant Maturity Treasury Adjustable Rate ("CMT"); and for the
Adjustable Rate Portfolio, Lipper Adjustable Rate Mortgage Index, 1 month
London Interbank Offered Rate ("LIBOR"), 1 year CMT, Effective Fed Funds Rate
and 30-day Donoghue Index.
COMPUTATION OF YIELD
The 30-day yield for a Portfolio is calculated by assuming that the income
generated by the Portfolio's investment during that 30-day period is generated
each period over one year and is shown as a percentage of the investment. In
particular, yield will be calculated according to the following formula: Yield
= 2[((a-b)/(cd)+1)/6/-1] where a = dividends and interest earned during the
period; b = expenses accrued for the period (net of reimbursement); c = the
average daily number of shares outstanding during the period that were entitled
to receive dividends; and d = the maximum offering price per share on the last
day of the period.
For the 30-day period ended May 31, 1998, the yield for each Portfolio was:
Short-Term Maturity Portfolio, 5.32% and Adjustable Rate Portfolio, 5.41%.
CALCULATION OF TOTAL RETURN
Total return will be calculated according to the following formula: P(1 + T)n =
ERV, where P = a hypothetical initial payment of $1,000; T = average annual
total return; n = number of years; and ERV = ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the designated time period
as of the end of such period. For the fiscal year ended May 31, 1998, the total
return for each Portfolio was: Short-Term Maturity Portfolio, 6.17% and
Adjustable Rate Portfolio, 5.63%. For the period from June 15, 1992
(commencement of operations) through May 31, 1998, the average annual total
return for each Portfolio was: Short-Term Maturity Portfolio, 4.93% and
Adjustable Rate Portfolio, 5.16%.
FEDERAL TAXES
The following discussion of certain federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended (the "Code") and the regulations
issued thereunder as in effect on the date of this combined Prospectus and
Statement of Additional Information. New legislation, as well as administrative
changes or court decisions, may significantly change the conclusions expressed
herein, and may have a retroactive effect with respect to the transactions
contemplated herein.
No attempt has been made to present a detailed explanation of the federal,
state or local income tax treatment of the Portfolios or their Shareholders.
Credit unions generally are exempt from federal income taxation on income,
dividends and capital gains realized as a result of purchasing, holding or
redeeming shares of the Trust. Shareholders are, however, urged (but not
required) to consult their tax advisors regarding specific questions as to
federal, state and local income taxes including, without limitation, issues
relating to unrelated business income taxes.
Tax Status of the Portfolios:
Each Portfolio is treated as a separate entity for federal income tax purposes
and is not combined with the Trust's other Portfolio. Each Portfolio intends to
qualify for the special tax treatment afforded regulated investment companies
("RICs") under the Code, so that it will be relieved of federal income tax on
that part of its net investment income and net capital gains (the excess of
long-term capital gain over short-term capital loss) which is distributed to
Shareholders.
Tax Status of Distributions:
Each Portfolio will distribute all of its net investment income (including, for
this purpose, net short-term capital gain) to Shareholders. Dividends from net
investment income will be taxable to Shareholders as ordinary income whether
received in cash or in additional shares. Any net capital gain will be
distributed annually and will be taxed to Shareholders as long-term capital
gain, regardless of how long the Shareholder has held shares. Each Portfolio
will make annual reports to Shareholders of the federal income tax status of
all distributions.
In order to qualify for treatment as a RIC under the Code, each Portfolio must
distribute annually to its Shareholders at least the sum of 90% of its net
investment income excludable from gross income plus 90% of its investment
company taxable income (generally, net investment income plus net short-term
capital gain) and also must meet several additional requirements. Among these
requirements are the following: (i) at least 90% of the Portfolio's gross
income each taxable year must be derived from dividends, interest, payments
with respect to securities loans, and gains from the sale or other disposition
of stock or securities, or certain other income; (ii) at the close of each
quarter of the Portfolio's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, United
13
<PAGE>
States Government securities, securities of other RICs and other securities,
with such other securities limited, in respect to any one issuer, to an amount
that does not exceed 5% of the value of the Portfolio's assets and that does
not represent more than 10% of the outstanding voting securities of such
issuer; and (iii) at the close of each quarter of the Portfolio's taxable year,
not more than 25% of the value of its assets may be invested in securities
(other than United States Government securities or the securities of other
RICs) of any one issuer or two or more issuers which the Portfolio controls and
which are engaged in the same, similar or related trades or businesses. The
Adviser may reimburse the Trust for certain costs incurred. If for any taxable
year a Portfolio does not qualify for the special tax treatment afforded RICs,
all of its taxable income will be subject to federal income tax at corporate
rates without any deduction for distributions to its Shareholders.
Notwithstanding the distribution requirement described above, which only
requires a Portfolio to distribute at least 90% of its annual investment
company taxable income and does not require any minimum distribution of net
capital gain (the excess of net long-term capital gain over net short-term
capital loss), a Portfolio will be subject to a nondeductible 4% federal excise
tax to the extent it fails to distribute by the end of any calendar year 98% of
its ordinary income for that year and 98% of its capital gain net income (the
excess of short and long-term capital gains over short and long-term capital
losses) for the one-year period ending on October 31 of that year, plus certain
other amounts.
Each Portfolio intends to make sufficient distributions prior to the end of
each calendar year to avoid liability for federal excise tax.
Dividends declared by a Portfolio in October, November or December of any year
and payable to Shareholders of record on a date in that month will be deemed to
have been paid by the Portfolio and received by the Shareholder on December 31
of that year, if paid by the Portfolio at any time during the immediately
succeeding January.
Sale, exchange or redemption of Portfolio shares is a taxable event to the
Shareholder.
STATE TAXES
Income received on direct U.S. obligations is exempt from tax at the state
level when received directly and may be exempt, depending on the state, when
received by a Shareholder from a Portfolio provided certain conditions are
satisfied. Interest received on repurchase agreements may not be exempt from
state taxation. Each Portfolio will inform Shareholders annually of the
percentage of income and distributions derived from direct U.S. obligations.
Shareholders should consult their tax advisors to determine whether any portion
of the income dividends received from a Portfolio is considered tax exempt in
their particular states.
Each Portfolio is not liable for any income or franchise tax in Massachusetts
if it qualifies as a RIC for federal income tax purposes. See "Federal Taxes."
GENERAL INFORMATION
THE TRUST
The Declaration of Trust under which the Trust was organized permits the Trust
to offer separate portfolios of shares. All consideration received by the Trust
for shares of any portfolio and all assets of such portfolio belong only to
that portfolio and would be subject only to liabilities related thereto.
Each Portfolio pays its expenses, including fees of its service providers,
audit and legal expenses, expenses of preparing prospectuses, proxy
solicitation material and reports to shareholders, costs of custodial services,
registering the shares under federal securities laws, and making notice filings
under state securities laws, pricing, insurance expenses, litigation and other
extraordinary expenses, brokerage costs, interest charges, taxes and
organization expenses.
For the Short-Term Maturity Portfolio, for the fiscal years ended May 31, 1998,
May 31, 1997 and May 31, 1996 (i) the fees paid to the Administrator and
Shareholder Servicing Agent by the Portfolio, were $39,341, $35,873 and
$38,327, respectively, and (ii) the fees paid to the Adviser were $94,844,
$96,481 and $108,870, respectively, of which $58,416, $57,725 and $78,682 were
waived, respectively. For the Adjustable Rate Portfolio, for the fiscal years
ended May 31, 1998, May 31, 1997 and May 31, 1996, (i) the fees paid to the
Administrator and Shareholder Servicing Agent by the Portfolio, were $174,659,
$178,127 and $175,673, respectively, and (ii) the fees paid to the Adviser were
$417,610, $477,404 and $505,410, respectively, of which $258,218, $159,760 and
$221,873 were waived, respectively.
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<PAGE>
DESCRIPTION OF SHARES
The Declaration of Trust authorizes the issuance of an unlimited number of
shares of a Portfolio, each of which represents an equal proportionate interest
in that Portfolio with each other share of the Portfolio. Shares are entitled
upon liquidation to a pro rata share in the net assets of the respective
Portfolio. Shareholders have no preemptive rights. The Declaration of Trust
provides that the Board of Trustees of the Trust may create additional series
of shares. All consideration received by the Trust for shares of any additional
series and all assets in which such consideration is invested would belong to
that series and would be subject to the liabilities related thereto. Share
certificates representing shares will not be issued.
SHAREHOLDER LIABILITY
The Trust is an entity of the type commonly known as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust could, under
certain circumstances, be held personally liable as partners for the
obligations of the trust. Even if, however, the Trust were held to be a
partnership, the possibility of the Shareholders incurring financial loss for
that reason appears remote because (i) the Trust's Declaration of Trust
contains an express disclaimer of Shareholder liability for obligations of the
Trust and requires that notice of such disclaimer be given in each agreement,
obligation or instrument entered into or executed by or on behalf of the Trust
or the Trustees, and (ii) the Declaration of Trust provides for indemnification
out of the Trust property for any Shareholder held personally liable for the
obligations of the Trust.
LIMITATION OF TRUSTEES' LIABILITY
The Declaration of Trust provides that a Trustee shall be liable for his or her
own willful defaults and shall not be liable for any neglect or wrongdoing of
any officer, agent, employee, investment adviser, administrator, principal
underwriter or custodian. The Declaration of Trust also provides that the Trust
will indemnify its Trustees and officers against liabilities and expenses
incurred in connection with actual or threatened litigation in which they may
be involved because of their offices with the Trust, unless it is determined in
the manner provided in the Declaration of Trust that they have not acted in
good faith in the reasonable belief that their actions were in the best
interests of the Trust. However, nothing in the Declaration of Trust shall
protect or indemnify a Trustee against any liability for his or her willful
misfeasance, bad faith, gross negligence or reckless disregard of his or her
duties.
YEAR 2000 ISSUE
The Trust depends on the smooth functioning of computer systems in almost every
aspect of its business. Like other mutual funds, businesses and individuals
around the world, the Trust could be adversely affected if the computer systems
used by its service providers do not properly process dates on and after
January 1, 2000 and distinguish between the year 2000 and the year 1900. The
Trust is in the process of asking its service providers whether they expect to
have their computer systems adjusted for the year 2000 transition, and is
seeking assurances from each service provider that it is devoting significant
resources to prevent, and it expects its system to accommodate the year 2000
without, material adverse consequences to the Trust. The Trust and its
shareholders may experience losses if these assurances prove to be incorrect or
as a result of year 2000 computer difficulties experienced by issuers of
portfolio securities or third parties, such as custodians, banks, broker-
dealers or others with which the Trust does business.
INVESTMENT LIMITATIONS
The investment objective and the following investment limitations are
"fundamental policies" of each Portfolio. Fundamental policies cannot be
changed with respect to a Portfolio without the consent of the holders of a
majority of the Portfolio's outstanding shares. The term "majority of the
Portfolio's outstanding shares" means the vote of (i) 67% or more of the
Portfolio's shares present at a meeting, if more than 50% of the outstanding
shares of the Portfolio are present or represented by proxy, or (ii) more than
50% of the Portfolio's outstanding shares, whichever is less.
Each Portfolio may not:
1. Purchase securities of any issuer (except securities issued or guaranteed as
to principal and interest by the U.S. Government, its agencies or
instrumentalities and repurchase agreements involving, such securities) if as a
result of such purchase more than 5% of the total assets of the Portfolio would
be invested in the securities of such issuer. This restriction applies to 75%
of the Portfolio's total assets.
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2. Purchase any securities which would cause more than 25% of the total assets
of the Portfolio to be invested in the securities of one or more issuers
conducting their principal business activities in the same industry; provided
that this limitation does not apply to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, or repurchase agreements
involving such securities; and further provided that the Adjustable Rate
Portfolio will invest at least 25% of the value of its total assets in
mortgage-backed securities which are not issued or guaranteed by the U.S.
Government as described in this Prospectus, except when investing for temporary
defensive purposes.
3. Borrow money except for temporary or emergency purposes and then only in an
amount not exceeding one-third of the value of its total assets, except that
each Portfolio may enter into reverse repurchase agreements. Any borrowing will
be done from a credit union, corporate credit union or bank (any borrowing over
5% will be from a bank) and, to the extent that such borrowing exceeds 5% of
the value of the Portfolio's assets, asset coverage of at least 300% is
required. In the event that such asset coverage shall at any time fall below
300%, the Portfolio shall, within three days thereafter or such longer period
as the SEC may prescribe by rules and regulations, reduce the amount of its
borrowings to such an extent that the asset coverage of such borrowings shall
be at least 300%. 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 in
excess of 5% of a Portfolio's total assets will be repaid before the Portfolio
makes additional investments and any interest paid on such borrowings will
reduce income.
4. Make loans, except that (a) a Portfolio may purchase or hold debt
instruments in accordance with its investment objective and policies; and (b) a
Portfolio may enter into repurchase agreements.
5. Pledge, mortgage or hypothecate assets, except to secure temporary
borrowings permitted by paragraph (3) above in aggregate amounts not to exceed
10% of total assets taken at current value at the time of the incurrence of
such loan.
6. Purchase or sell real estate, real estate limited partnership interests,
futures contracts, commodities or commodities contracts, provided that this
limitation shall not prohibit the purchase of securities of issuers that may
invest in such obligations and debt securities secured by real estate or
interests therein.
7. Make short sales of securities, maintain a short position or purchase
securities on margin, except that the Trust may obtain short-term credits as
necessary for the clearance of security transactions.
8. Act as an underwriter of securities of other issuers except as it may be
deemed an underwriter in selling a Portfolio security.
9. Purchase securities of other investment companies except for money market
funds, CMOs and REMICs (defined below) and then only as permitted by the 1940
Act and the rules and regulations thereunder. Under these rules and
regulations, the Portfolios are prohibited from acquiring the securities of
other investment companies if, as a result of such acquisition, the Portfolios
own more than 3% of the total voting stock of the company; securities issued by
any one investment company represent more than 5% of the total assets of either
Portfolio; or securities (other than treasury stock) issued by all investment
companies represent more than 10% of the total assets of either Portfolio.
Investment companies typically incur fees that are separate from those fees
incurred directly by the Portfolio. A Portfolio's purchase of such investment
company securities results in the layering of expenses, such that Shareholders
would indirectly bear a proportionate share of the operating expenses of such
investment companies, including advisory fees.
It is the position of the SEC's Staff that certain nongovernmental issuers of
collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conduits ("REMICs") constitute investment companies pursuant to the
1940 Act and that investments in instruments issued by such entities are
subject to the limitations set forth above unless the issuers of such
instruments have received orders from the SEC exempting such instruments from
the definition of investment company.
10. Issue senior securities (as defined in the 1940 Act) except in connection
with permitted borrowings as described above or as permitted by rule,
regulations or order of the SEC.
11. Purchase or retain securities of an issuer if, to the knowledge of the
Trust, an officer, Trustee, partner or director of the Trust or any investment
adviser of the Trust owns beneficially more than of
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1% of the shares or securities of such issuer and all such officers, Trustees,
partners and directors owning more than of 1% of such shares or securities
together own more than 5% of such shares or securities.
12. Invest in interests in oil, gas or other mineral exploration or development
programs or oil, gas or mineral leases.
13. Purchase securities of any company which has (with predecessors) a record
of less than three years' continuing operations, except (i) obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities, or
(ii) municipal securities which are rated by at least two NRSROs, if, as a
result, more than 5% of the total assets (taken at fair market value) of the
Portfolio would be invested in such securities.
In addition,
14. CUFUND is not insured or insurable by the National Credit Union Share
Insurance Fund.
15. CUFUND is not supervised or examined by NCUA and is not subject to NCUA
oversight. It is the responsibility of each credit union investing in CUFUND to
evaluate the appropriateness of the investment and the suitable level of
concentration risk on their balance sheets.
16. Except for the initial shareholder, CUFUND investors are restricted to only
credit unions. CUFUND will refuse all offers of investment arising from other
non-credit union parties.
17. Each Portfolio of CUFUND will only invest in investments and engage in
transactions permitted for natural person federal credit unions under Sections
107(7), 107(8) and 107(15) of the FCUA and Part 703 of the NCUA Rules and
Regulations.
18. Any amendments, modifications or changes to these fundamental policies must
be approved by the NCUA before becoming effective.
NON-FUNDAMENTAL POLICIES
Non-fundamental policies can be changed without Shareholder approval.
Each Portfolio may not:
1. Invest in warrants.
2. Invest in illiquid securities in an amount exceeding, in the aggregate, 15%
of the Portfolio's net assets. An illiquid security is a security which cannot
be disposed of promptly (within seven days) and in the usual course of business
at a price that approximates its carrying value by the Portfolio, and includes
repurchase agreements maturing in excess of seven days, time deposits with a
withdrawal penalty, non-negotiable instruments and instruments for which no
market exists.
3. Write or purchase puts, calls, options or combinations thereof.
4. Acquire more than 10% of the voting securities of any one issuer.
5. Invest in companies for the purpose of exercising control.
Credit unions that seek an independent certified accountant's opinion on their
financial statements in accordance with generally accepted accounting
principles ("GAAP") are required to account for investments in mutual funds
such as CUFUND at fair value each month. Credit unions that do not seek an
independent certified accountant's opinion in accordance with GAAP are required
to account for investments in mutual funds by the lower of cost or market each
month. This disclosure is intended to comply with the substance of an NCUA
requirement that the Adviser disclose the proper accounting treatment for
Shareholders investing in the Trust.
The foregoing percentages concerning the investment limitations and non-
fundamental policies of the Portfolios will apply at the time of the purchase
of a security and shall not be considered violated unless an excess occurs or
exists immediately after and as a result of a purchase of such security.
VOTING RIGHTS
Each share of a Portfolio held entitles the Shareholder of record to one vote
on all matters voted on by the Shareholders of such Portfolio. Each Portfolio
will vote separately on matters relating solely to that Portfolio. As a
Massachusetts business trust, the Trust is not required to hold annual meetings
of Shareholders but approval will be sought for certain changes in the
operation of the Trust and for the election of Trustees under certain
circumstances. In addition, a Trustee may be removed by a majority vote of the
remaining Trustees or by a majority vote of Shareholders at a special meeting
called upon written request of Shareholders owning at least 10% of the
outstanding shares of the Trust. In the event that such a meeting is requested,
the Trust will provide appropriate assistance and information to the
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Shareholders requesting the meeting. Voting by proxy is permitted.
REPORTING
The Trust will send to its shareholders annual and semi-annual reports; the
financial statements appearing in annual reports are audited by independent
public accountants. The Trust furnishes proxy statements and other reports to
Shareholders of record.
SHAREHOLDER INQUIRIES
Shareholder inquiries should be directed to the Adviser, 7920 Belt Line Road,
Suite 1100, Dallas, TX 75240.
PORTFOLIO TRANSACTIONS
The Adviser selects brokers or dealers to execute transactions for the purchase
or sale of portfolio securities on the basis of its judgment of their
professional capability to provide the service. The primary consideration is to
have brokers or dealers execute transactions at best price and execution. Best
price and execution refers to many factors, including the price paid or
received for a security, the transaction cost, the promptness and reliability
of execution, the confidentiality and placement accorded the order and other
factors affecting the overall benefit obtained by the account on the
transaction. The determination of what are reasonably competitive rates is
based upon the professional knowledge of the Adviser as to rates paid and
charged for similar transactions throughout the securities industry. In some
instances, the Trust may pay a minimal transaction cost when the transaction
presents no difficulty. Trades are generally made on a net basis where the
Trust either buys securities directly from the dealer or sells them to the
dealer. In these instances, there is no direct commission charged but there is
a spread (the difference between the buy and sell price) which is the
equivalent of a commission.
The money market securities in which the Portfolios invest are traded primarily
in the over-the-counter market. Longer term debt securities are usually traded
over-the-counter, but may be traded on an exchange. Where possible, the Adviser
will deal directly with the dealers who make a market in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. Such dealers usually are acting as principal for their own
account. On occasion, securities may be purchased directly from the issuer.
Money market securities are generally traded on a net basis and do not normally
involve either brokerage commissions or transfer taxes. The cost of executing
portfolio securities transactions of the Trust will primarily consist of dealer
spreads.
The Adviser may place a combined order for two or more accounts or Portfolios
engaged in the purchase or sale of the same security if, in its judgment, joint
execution is in the best interest of each participant and will result in best
price and execution. Transactions involving commingled orders are allocated in
a manner deemed equitable to each account or Portfolio. It is believed that the
ability of the accounts to participate in volume transactions will generally be
beneficial to the accounts and Portfolios. Although it is recognized that, in
some cases, the joint execution of orders could adversely affect the price or
volume of the security that a particular account or trust may obtain, it is the
opinion of the Adviser and the Board of Trustees that the advantages of
combined orders outweigh the possible disadvantages.
Consistent with the Conduct Rules of the National Association of Securities
Dealers, Inc., and subject to seeking best price and execution, the Adviser may
place orders with broker/dealers which have agreed to defray certain Trust
expenses such as custodian fees.
It is expected that the Adviser may execute brokerage or other agency
transactions through the Distributor, a registered broker-dealer, or an
affiliate of the Adviser in conformity with the 1940 Act, the Securities
Exchange Act of 1934, as amended, and rules promulgated by the SEC. Under these
provisions, the Distributor or an affiliate of the Adviser is permitted to
receive and retain compensation for effecting portfolio transactions for the
Trust on an exchange if a written contract is in effect between the Distributor
or an affiliate of the Adviser and the Trust expressly permitting the
Distributor or an affiliate of the Adviser to receive and retain such
compensation. These rules further require that commissions paid to the
Distributor or an affiliate of the Adviser by the Trust for exchange
transactions not exceed "usual and customary" brokerage commissions. The rules
define "usual and customary" commissions to include amounts which are
"reasonable and fair compared to the
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commission, fee or other remuneration received or to be received by other
brokers in connection with comparable transactions involving similar securities
being purchased or sold on a securities exchange during a comparable period of
time." In addition, the Trust may direct business to one or more designated
broker/dealers in connection with such broker/dealer's provision of services to
the Trust or payment of certain Trust expenses (e.g., custody, pricing and
professional fees). The Trustees, including those who are not "interested
persons" of the Trust, have adopted procedures for evaluating the
reasonableness of compensation paid to the Distributor or an affiliate of the
Adviser and will review these procedures periodically.
The Trust is required to identify any securities of its "regular broker or
dealers" (as such term is defined in the Investment Company Act) which the
Trust has acquired during its most recent fiscal year. As of May 31, 1998, the
Short-Term Maturity Portfolio held debt securities issued by Prudential
Securities in the amount of $296,000.
5% SHAREHOLDERS
As of September 8, 1998, the following persons were the only persons who were
record owners (or to the knowledge of the Trust, beneficial owners) of 5% or
more of the shares of the Portfolios. The Trust believes that most of the
shares referred to below were owned by the indicated entities both of record
and beneficially.
ADJUSTABLE RATE PORTFOLIO
Southwest Corporate Federal Credit Union
Attn: Accounting Department
7920 Belt Line Road, Suite 1100
Dallas, TX 75240, 89.79%
Texans Credit Union
Attn: Karan Daughtery, Controller
777 East Campbell Road
Richardson, TX 75081-6793, 5.42%
SHORT-TERM MATURITY PORTFOLIO
Southwest Corporate Federal Credit Union
Attn: Accounting Department
7920 Belt Line Road, Suite 1100
Dallas, TX 75240, 80.49%
Carter Federal Credit Union
c/o Sherrel Matlock
P.O. Box 814
Springhill, LA 71075, 6.30%
Dyess Federal Credit Union
Attn: Wilson R. Little
P.O. Box 631
Abilene, TX 79604, 9.98%
As of September 8, 1998, Southwest Corporate Federal Credit Union, 7920 Belt
Line Road, Suite 1100, Dallas, TX 75240, which is the Adviser, owned of record
89.79% and 80.49% of the outstanding voting securities of the Adjustable Rate
Portfolio and the Short-Term Maturity Portfolio, respectively. Southwest
Corporate Federal Credit Union has voting or investment power with respect to
such voting securities. Consequently, under the 1940 Act, Southwest Corporate
Federal Credit Union may be deemed to be a controlling person of the Adjustable
Rate Portfolio and Short-Term Maturity Portfolio. To the best of the knowledge
of the Trust, Southwest Corporate Federal Credit Union's ownership of such
voting securities is for investment only, not for purposes of control, but may
materially affect the voting rights of other Shareholders.
COUNSEL AND INDEPENDENT ACCOUNTANTS
Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania serves as counsel to
the Trust. Arthur Andersen LLP, Philadelphia, Pennsylvania, serves as the
independent public accountants of the Trust.
CUSTODIAN
First Union National Bank (the "Custodian"), Broad and Chestnut Streets, P.O.
Box 7618, Philadelphia, Pennsylvania 19101, acts as custodian of the Trust. The
Custodian holds cash, securities and other assets of the Trust as required by
the 1940 Act.
DESCRIPTION OF PERMITTED INVESTMENTS AND RISK FACTORS
The following is a description of the permitted investments for the Portfolios:
BANKERS' ACCEPTANCES--Bankers' acceptances are bills of exchange or time drafts
drawn on and accepted by a commercial bank. Bankers' acceptances are used by
corporations to finance the shipment and storage of goods. Maturities are
generally six months or less.
CERTIFICATES OF DEPOSIT; SHARE CERTIFICATES--Certificates of deposit are
interest bearing instruments with a specific maturity. They are issued by banks
and savings and loan associations in exchange for the deposit of funds and
normally can be traded in the secondary market prior to maturity. Each
Portfolio may also
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purchase share certificates issued by certain credit unions which cannot be
traded in a secondary market. Such share certificates are considered to be
illiquid securities and neither Portfolio may invest more than 15% of its net
assets in illiquid securities. See "General Information,Non-Fundamental
Policies."
FEDERAL FUNDS--Federal funds are funds held by a regional Federal Reserve Bank
for the account of a bank that is a member of such Federal Reserve Bank. A loan
of federal funds is an unsecured loan at a negotiated interest rate for a
negotiated time period, generally overnight. Unsecured loans of federal funds
may be made to U.S. banks and other Section 107(8) institutions, provided that:
1) the accounts of such banks are federally insured; 2) the interest received
is at the market rate for federal funds transactions; and 3) the transaction
has a specified maturity or the Portfolio is able to require repayment at any
time. Federal funds investments maturing in more than seven days are considered
to be illiquid; a Portfolio will not invest more than 15% of its net assets in
illiquid securities. See "General Information, Non-Fundamental Policies."
Loans of federal funds are not federally insured. In the event the borrower of
federal funds enters into a bankruptcy or other insolvency proceedings, the
lending Portfolio could experience delays and incur expenses in recovering
cash. Further, the possibility exists that, in such an instance, the borrowing
institution may not be able to repay the borrowed funds. A Portfolio will limit
federal funds lending to those banks and other Section 107(8) institutions
whose creditworthiness has been reviewed and found satisfactory by the Adviser.
MORTGAGE-BACKED SECURITIES--Mortgage-backed securities are instruments that
entitle the holder to a share of all interest and principal payments from
mortgages underlying the security. The mortgages backing these securities
include conventional fixed rate mortgages, graduated payment mortgages, and
adjustable rate mortgages. During periods of declining interest rates,
prepayment of mortgages, underlying mortgage-backed securities can be expected
to accelerate. Prepayment of mortgages which underlie securities purchased at a
premium often results in capital losses, while prepayment of mortgages
purchased at a discount often results in capital gains. Because of these
unpredictable prepayment characteristics, it is often not possible to predict
accurately the average life or realized yield of a particular issue.
Government Pass-Through Securities: These are securities that are issued
or guaranteed by a U.S. Government agency representing an interest in a
pool of mortgage loans. The primary issuers or guarantors of these
mortgage-backed securities are GNMA, Fannie Mae and FHLMC. Fannie Mae and
FHLMC obligations are not backed by the full faith and credit of the U.S.
Government as GNMA certificates are, but Fannie Mae and FHLMC securities
are supported by the instrumentalities' right to borrow from the U.S.
Treasury. GNMA, Fannie Mae and FHLMC each guarantees timely distributions
of interest to certificate holders. GNMA and Fannie Mae also each
guarantees timely distributions of scheduled principal. FHLMC in the past
guaranteed only the ultimate collection of principal of the underlying
mortgage loan; however, FHLMC now issues mortgage-backed securities (FHLMC
Gold PCS) which also guarantee timely payment of monthly principal
reductions. Government and private guarantees do not extend to the
securities' value, which is likely to vary inversely with fluctuations in
interest rates.
Private Pass-Through Securities: These are mortgage-backed securities
issued by a non-governmental entity, such as a trust. These securities
include collateralized mortgage obligations ("CMOs") and real estate
mortgage investment conduits ("REMICs") that are rated in one of the top
two rating categories. While they are generally structured with one or more
types of credit enhancement, private pass-through securities typically lack
a guarantee by an entity having the credit status of a governmental agency
or instrumentality.
CMOs: CMOs are debt obligations or multi-class pass-through certificates
issued by agencies or instrumentalities of the U.S. Government or by
private originators or investors in mortgage loans. In a CMO, series of
bonds or certificates are usually issued in multiple classes. Principal and
interest paid on the underlying mortgage assets may be allocated among the
several classes of a series of a CMO in a variety of ways. Each class of a
CMO, often referred to as a "tranche," is issued with a specific fixed or
floating coupon rate and has a stated maturity or final distribution date.
Principal payments on the underlying mortgage assets may cause
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CMOs to be retired substantially earlier than their stated maturities or
final distribution dates, resulting in a loss of all or part of any premium
paid. One or more classes of CMOs may have coupon rates that reset
periodically based on an index, such as the London Interbank Offered Rate
("LIBOR"). The Trust may purchase fixed, adjustable or "floating" rate
CMOs: (i) that are collateralized by fixed rate or adjustable rate
mortgages that are guaranteed as to payment of principal and interest by an
agency or instrumentality of the U.S. Government: (ii) that are directly
guaranteed as to payment of principal and interest by the issuer, which
guarantee is collateralized by U.S. Government securities; (iii) that are
collateralized by privately issued fixed rate or adjustable rate mortgages
adhering to sufficient credit enhancements to achieve the highest rating by
an NRSRO; (iv) whose price is estimated to change not more than 17 percent,
due to an immediate and sustained parallel shift in the yield curve of plus
or minus 300 basis points; (v) whose expected average life is not greater
than 10 years; whose average life would not extend by more than 4 years,
assuming an immediate and sustained parallel shift in the yield curve of
plus 300 basis points; and (vi) whose average life would not shorten by
more than 6 years, assuming an immediate and sustained parallel shift in
the yield curve of minus 300 basis points.
REMICs: A REMIC is a CMO that qualifies for special tax treatment under
the Code and invests in certain mortgages principally secured by interests
in real property. Investors may purchase beneficial interests in REMICs,
which are known as "regular" interests, or "residual" interests. The
Portfolios will not invest in residual REMICs. Guaranteed REMIC pass-
through certificates ("REMIC Certificates") issued by Fannie Mae, FHLMC or
GNMA represent beneficial ownership interests in a REMIC trust consisting
principally of mortgage loans or Fannie Mae, FHLMC or GNMA-guaranteed
mortgage pass-through certificates. For FHLMC REMIC Certificates, FHLMC
guarantees the timely payment of interest, and also guarantees the payment
of principal as payments are required to be made on the underlying mortgage
participation certificates. Fannie Mae REMIC Certificates are issued and
guaranteed as to timely distribution of principal and interest by Fannie
Mae. GNMA REMIC certificates are supported by the full faith and credit of
the U.S. Treasury.
Parallel Pay Securities, PAC Bonds: Parallel pay CMOs and REMICs are
structured to provide payments of principal on each payment date to more
than one class. These simultaneous payments are taken into account in
calculating the stated maturity date or final distribution date of each
class, which must be retired by its stated maturity date or final
distribution date, but may be retired earlier. Planned Amortization Class
CMOs ("PAC Bonds") generally require payments of a specified amount of
principal on each payment date. PAC Bonds are always parallel pay CMOs with
the required principal payment on such securities having the highest
priority after interest has been paid to all classes.
Estimated Average Life: Due to the possibility of prepayments of the
underlying mortgage instruments, mortgage-backed securities generally do
not have a known maturity. In the absence of a known maturity, market
participants generally refer to an estimated average life. An average life
estimate is a function of an assumption regarding anticipated prepayment
patterns, based upon current interest rates, current conditions in the
relevant housing markets and other factors. The assumption is necessarily
subjective, and thus different market participants can produce different
average life estimates with regard to the same security. There can be no
assurance that estimated average life will be a security's actual average
life. The Adviser performs median prepayment estimates in accordance with
Section 703 of the revised NCUA Rules.
REPURCHASE AGREEMENTS--Repurchase agreements are agreements by which a
Portfolio obtains a security and simultaneously commits to return the security
to the seller at an agreed upon price on an agreed upon date within a number of
days from the date of purchase. The Custodian will hold the security as
collateral for the repurchase agreement. A Portfolio bears a risk of loss in
the event the other party defaults on its obligations and the Portfolio is
delayed or prevented from exercising its right to dispose of the collateral or
if the Portfolio realizes a loss on the sale of the collateral. A Portfolio
will enter into repurchase agreements only with financial institutions deemed
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to present minimal risk of bankruptcy during the term of the agreement based on
established guidelines. Repurchase agreements are considered loans under the
1940 Act, although they are not considered to be loans under Section 107 of the
FCUA, which generally limits federal credit unions to making loans only to
members.
REVERSE REPURCHASE AGREEMENTS--Reverse repurchase agreements are agreements by
which a Portfolio sells securities to financial institutions and simultaneously
agrees to repurchase those securities at a mutually agreed-upon date and price.
At the time a Portfolio enters into a reverse repurchase agreement, the
Portfolio will place liquid assets having a value equal to the repurchase price
in a segregated custodial account and monitor this account to ensure equivalent
value is maintained. Reverse repurchase agreements involve the risk that the
market value of securities sold by the Portfolio may decline below the price at
which the Portfolio is obligated to repurchase the securities. Reverse
repurchase agreements are considered to be borrowings by a Portfolio under the
1940 Act, and would also be considered to be borrowings under Section 107 of
the FCUA.
TIME DEPOSITS--Time deposits are nonnegotiable receipts issued by a bank in
exchange for a deposit of funds. Like certificates of deposit, they earn a
specified rate of interest over a definite period of time; however, they cannot
be traded in the secondary market. Time deposits with a withdrawal penalty or
that mature in more than seven days are considered to be illiquid securities.
UNITED STATES GOVERNMENT AGENCIES--Obligations issued or guaranteed by agencies
of the U.S. Government, including, among others, the Federal Farm Credit Bank,
the Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the U.S. Government,
including, among others, FHLMC, the Federal Land Banks and the U.S. Postal
Service. Some of these securities are supported by the full faith and credit of
the U.S. Treasury, others are supported by the right of the issuer to borrow
from the Treasury, while still others are supported only by the credit of the
instrumentality. Guarantees of principal by agencies or instrumentalities of
the U.S. Government may be a guarantee of payment at the maturity of the
obligation so that in the event of a default prior to maturity there might not
be a market and thus no means of realizing on the obligation prior to maturity.
Guarantees as to the timely payment of principal and interest do not extend to
the value or yield of these securities nor to the value of a Portfolio's
shares.
UNITED STATES TREASURY OBLIGATIONS--U.S. Treasury obligations consist of bills,
notes and bonds issued by the U.S. Treasury and separately traded interest and
principal component parts of such obligations that are transferable through the
federal book-entry system known as Separately Traded Registered Interest and
Principal Securities ("STRIPS").
VARIABLE AND FLOATING RATE INSTRUMENTS--Certain obligations purchased by each
Portfolio may carry variable or floating rates of interest, and may involve a
conditional or unconditional demand feature. Such instruments bear interest at
rates which are not fixed, but which vary with changes in specified market
rates or indices such as the Federal Reserve Composite Index. The interest
rates on these securities may be reset daily, weekly, quarterly or some other
reset period, and may have a floor or ceiling on interest rate changes. There
is a risk that the current interest rate on such obligations may not accurately
reflect existing market interest rates. A demand instrument with a demand
notice exceeding seven days may be considered illiquid if there is no secondary
market for such security.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES--The Portfolios may individually
purchase or sell portfolio securities in when-issued or delayed delivery
transactions. When-issued or delayed delivery basis transactions involve the
purchase of an instrument with payment and delivery taking place in the future.
Delivery of and payment for these securities may occur a month or more after
the date of the purchase commitment. Each Portfolio will maintain with the
Custodian a separate account with liquid assets in an amount at least equal to
these commitments. The interest rate realized on these securities is fixed as
of the purchase date and no interest accrues to the Portfolio before
settlement. These securities are subject to market fluctuation due to changes
in market interest rates and it is possible that the market value at the time
of settlement could be higher or lower than the purchase price if the general
level of interest rates has changed. Although a Portfolio generally purchases
securities on a when-issued or forward commitment basis with the intention of
actually acquiring securities for its portfolio, a Portfolio may dispose of a
when-
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issued security or forward commitment prior to settlement if it deems
appropriate.
EXPERTS
The Financial Statements incorporated by reference herein have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated by reference herein in
reliance upon the authority of said firm as experts in giving said report.
FINANCIAL STATEMENTS
The Trust's Financial Statements and the Notes thereto and the Report of the
Independent Public Accountants dated June 26, 1998 for the fiscal year ended
May 31, 1998, relating to the financial statements and financial highlights of
the Trust are incorporated herein by reference.
23
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
DUFF & PHELPS
AAA Highest credit quality. The risk factors are negligible, being only
slightly more than for risk-free U.S. Treasury debt.
AA High credit quality. Protection factors are strong. Risk is modest but may
vary slightly from time to time because of economic conditions.
FITCH RATINGS
AAA Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable
events.
AA Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA'. Because bonds rated in
the "AAA' and "AA' categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+'.
IBCA RATING DEFINITIONS
AAA Obligations for which there is the lowest expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial,
such that adverse changes in business, economic or financial conditions are
unlikely to increase investment risk substantially.
AA Obligations for which there is a very low expectation of investment risk.
Capacity for timely repayment of principal and interest is substantial.
Adverse changes in business, economic or financial conditions may increase
investment risk, albeit not very significantly.
MOODY'S RATING DEFINITIONS
AAA Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.
AA Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long-term risk appear somewhat larger than
the Aaa securities.
STANDARD & POOR'S RATINGS GROUP DEFINITIONS
AAA Debt rated "AAA' has the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.
AA Debt rated "AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated debt only in small degree.
THOMSON BANKWATCH
AAA The highest category; indicates that the ability to repay principal and
interest on a timely basis is very high.
AA The second-highest category; indicates a superior ability to repay
principal and interest on a timely basis, with limited incremental risk
compared to issues rated in the highest category.
24
<PAGE>
INVESTMENT ADVISER
Southwest Corporate Federal Credit Union
7920 Belt Line Road
Suite 1100
Dallas, TX 75240
ADMINISTRATOR
SEI Investments Mutual Funds Services
One Freedom Valley Drive
Oaks, PA 19456
DISTRIBUTOR
SEI Investments Distribution Co.
One Freedom Valley Drive
Oaks, PA 19456
LEGAL COUNSEL
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP
1601 Market Street
Philadelphia, PA 19103-2499
<PAGE>
PART C: OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits:
(a) Part A - Financial Highlights
(b) Part B
(i) The following audited financial statements for the Short-Term Maturity
and Adjustable Rate Portfolios (the "Portfolios") for the fiscal year ended
May 31, 1998, including the report of Arthur Andersen LLP dated June 26,
1998, are incorporated by reference to the combined Prospectus and
Statement of Additional Information from Form N-30D filed on July 27, 1998
with Accession Number 0000935069-98-000117.
Statement of Net Assets
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
(c) Exhibits
(1) Agreement and Declaration of Trust (originally filed as
Exhibit No. 1 to Registrant's Registration Statement on
December 2, 1991).*
(2) By-Laws (originally filed as Exhibit No. 2 to Registrant's
Registration Statement on April 23, 1992).*
(3) Not Applicable.
(4) Not Applicable.
(5) Investment Advisory Agreement between Registrant and Southwest
Corporate Federal Credit Union dated May 1, 1992.*
(6) Distribution Agreement between Registrant and SEI Financial
Services Company dated May 1, 1992.*
(7) Not Applicable.
(8) Custodian Agreement between Registrant and CoreStates Bank
N.A. dated May 1, 1992.*
(9) Not Applicable.
(10) Opinion and Consent of Counsel (originally filed as Exhibit
No. 10 to Registrant's Registration Statement on May 29,
1992).*
(11) Consent of Independent Public Accountants is filed herewith.
(12) Not Applicable.
(13)(1) Administration Agreement between Registrant and SEI Financial
Management Corporation dated April 30, 1996.*
(13)(2) Assignment and Assumption Agreement between SEI Financial
Management Corporation and SEI Financial Resources dated May
31, 1996.*
(13)(3) Consent of Assignment and Assumption between Registrant and
SEI Financial Management Corporation dated April 8, 1997.**
(14) Not Applicable.
(15) Not Applicable.
(16) Performance Quotation Computation (originally filed as Exhibit
No. 16 to Registrant's Registration Statement on September 28,
1995).*
(17) Financial Data Schedules are filed herewith.
(18) Not Applicable.
(24) Powers of Attorney for James L. Bryan, Gary L. Janacek, Arno
J. Easterly and Martha Romayne Seger.**
C-1
<PAGE>
________________________________
* Incorporated by reference to Post-Effective Amendment No. 5, as filed on
September 27, 1996.
**Incorporated by reference to Post-Effective Amendment No. 6, as filed on
September 26, 1997.
ITEM 25. Persons Controlled by or Under Common Control with Registrant
See the combined Prospectus and Statement of Additional Information
regarding the Trust's control relationships. The Administrator is a subsidiary
of SEI Investments Company ("SEI Investments") which also controls the
Distributor of the Registrant (SEI Investments Distribution Co.) and other
corporations engaged in providing various financial and record keeping services,
primarily to bank trust departments, pension plan sponsors and investment
managers.
ITEM 26. Number of Holders of Securities:
As of August 19, 1998:
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
-------------- --------------
<S> <C>
Units of beneficial interest, without par value--
Short-Term Maturity Portfolio.................. 8
Adjustable Rate Portfolio...................... 10
</TABLE>
ITEM 27. Indemnification:
Article VIII of the Agreement and Declaration of Trust (originally filed as
Exhibit No. 1 to Registrant's Registration Statement on December 2, 1991) is
incorporated herein by reference. Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended (the "Act"), may be
permitted to trustees, directors, officers and controlling persons of the
Registrant by the Registrant pursuant to the Registrant's Agreement and
Declaration of Trust or otherwise, the Registrant is aware that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and, therefore, is unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by trustees, officers or
controlling persons of the Registrant in connection with the successful defense
of any act, suit or proceeding) is asserted by such trustees, officers or
controlling persons in connection with the shares being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
ITEM 28. Business and Other Connections of Investment Adviser:
Other business, profession, vocation or employment of a substantial nature
in which the Adviser and each director or officer of the Adviser is or has been,
at any time during the last two fiscal years, engaged for his own account or in
the capacity or director, officer, employee, partner or trustee are as follows:
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Position Name of Connection with
with Adviser Other Company Other Company
----------------- ------------- --------------
<S> <C> <C>
Francis C. Lee, President None None
Arno J. Easterly, Director Barksdale Federal Credit Union, President
Barksdale AFB, LA
Patricia A. Mott, Secretary Arlington Federal Credit Union, Arlington, TX President
Joe G. Thornton, Director The Teachers Federal Credit Union, Texarkana, TX President
W.E. Ferrett, Director Texaco P.A.W. Employees Federal Credit Union, President
Port Arthur, TX
Brent Taylor Weokie Credit Union Vice President/Chief
Oklahoma City, OK Financial Officer
Jimmy O. Junkin, Director Randolph-Brooks Federal Credit Union Chief Financial Officer
Universal City, TX
Sarah S. Mosley, Director Telcoe Federal Credit Union, Little Rock, AR President
David R. Seely, Chairman Kirtland Federal Credit Union, President
Albuquerque, NM
Gerald W. Gurney, Director Texans Credit Union, Dallas, TX Sr. Exec.Vice President/Chief
Operating Officer
Jo Anne Beck, Senior Vice President None None
John P. Cassidy, Chief Financial Officer None None
Bruce M. Fox, Chief Investment Officer None None
Bob L. Rehm, Senior Vice President None None
Brent W. Smith, Senior Vice President None None
Rebecca L. Averett, Vice President None None
Lou Ann Haslett, Vice President Oklahoma Corporate Federal Credit Union President
Vahid G. Parvazi, Vice President None None
</TABLE>
ITEM 29. Principal Underwriters:
(a) Furnish the name of each investment company (other than the Registrant)
for which each principal underwriter currently distributing securities
of the Registrant also acts as a principal underwriter, depositor or
investment adviser.
Registrant's distributor, SEI Investments Distribution Co. ("the
Distributor"), acts as distributor for:
SEI Daily Income Trust July 15, 1982
SEI Liquid Asset Trust November 29, 1982
SEI Tax Exempt Trust December 3, 1982
SEI Index Funds July 10, 1985
SEI Institutional Managed Trust January 22, 1987
SEI International Trust August 30, 1988
The Advisors' Inner Circle Fund November 14, 1991
The Pillar Funds February 28, 1992
STI Classic Funds May 29, 1992
First American Funds, Inc. November 1, 1992
First American Investment Funds, Inc. November 1, 1992
The Arbor Fund January 28, 1993
Boston 1784 Funds/(R)/ June 1, 1993
The PBHG Funds, Inc. July 16, 1993
Morgan Grenfell Investment Trust January 3, 1994
C-3
<PAGE>
The Achievement Funds Trust December 27, 1994
Bishop Street Funds January 27, 1995
CrestFunds, Inc. March 1, 1995
STI Classic Variable Trust August 18, 1995
ARK Funds November 1, 1995
Monitor Funds January 11, 1996
FMB Funds, Inc. March 1, 1996
SEI Asset Allocation Trust April 1, 1996
TIP Funds April 28, 1996
SEI Institutional Investments Trust June 14, 1996
First American Strategy Funds, Inc. October 1, 1996
HighMark Funds February 15, 1997
Armada Funds March 8, 1997
PBHG Insurance Series Fund, Inc. April 1, 1997
The Expedition Funds June 9, 1997
TIP Institutional Funds January 1, 1998
Oak Associates Funds February 27, 1998
The Nevis Fund, Inc. June 29, 1998
The Parkstone Group of Funds September 14, 1998
SEI Investments provides numerous financial services to investment
managers, pension plan sponsors, and bank trust departments. These services
include portfolio evaluation, performance measurement and consulting
services ("Funds Evaluation") and automated execution, clearing and
settlement of securities transactions ("MarketLink").
(b) Furnish the information required by the following table with respect
to each director, officer or partner of each principal underwriter
named in the answer to Item 21 of Part B. Unless otherwise noted, the
business address of each director or officer is SEI Investments, Oaks,
PA 19456.
<TABLE>
<CAPTION>
Position and Office Positions and Offices
Name with Underwriter with Registrant
- ---- --------------- ---------------
<S> <C> <C>
Alfred P. West, Jr. Director, Chairman of the Board of Directors --
Henry H. Greer Director --
Carmen V. Romeo Director --
Mark J. Held President & Chief Operating Officer --
Gilbert L. Beebower Executive Vice President --
Richard B. Lieb Executive Vice President --
Dennis J. McGonigle Executive Vice President --
Robert M. Silvestri Chief Financial Officer & Treasurer --
Leo J. Dolan, Jr. Senior Vice President --
Carl A. Guarino Senior Vice President --
Larry Hutchison Senior Vice President --
Jack May Senior Vice President --
Hartland J. McKeown Senior Vice President --
Barbara J. Moore Senior Vice President --
Kevin P. Robins Senior Vice President & General Counsel Vice President &
Assistant Secretary
Patrick K. Walsh Senior Vice President --
Robert Aller Vice President --
Gordon W. Carpenter Vice President --
Todd Cipperman Vice President & Assistant Secretary Vice President &
</TABLE>
C-4
<PAGE>
<TABLE>
<S> <C> <C>
Assistant Secretary
S. Courtney E. Collier Vice President & Assistant Secretary --
Robert Crudup Vice President & Managing Director --
Barbara Doyne Vice President --
Jeff Drennen Vice President --
Vic Galef Vice President & Managing Director --
Lydia A. Gavalis Vice President & Assistant Secretary Vice President &
Assistant Secretary
Greg Gettinger Vice President & Assistant Secretary --
Kathy Heilig Vice President Vice President &
Assistant Secretary
Jeff Jacobs Vice President --
Samuel King Vice President --
Kim Kirk Vice President & Managing Director --
John Krzeminski Vice President & Managing Director --
Carolyn McLaurin Vice President & Managing Director --
W. Kelso Morrill Vice President --
Mark Nagle Vice President President
Joanne Nelson Vice President --
Joseph M. O'Donnell Vice President & Assistant Secretary Vice President &
Assistant Secretary
Sandra K. Orlow Vice President & Secretary Vice President &
Assistant Secretary
Cynthia M. Parrish Vice President & Assistant Secretary --
Kim Rainey Vice President --
Rob Redican Vice President --
Maria Rinehart Vice President --
Mark Samuels Vice President & Managing Director --
Kathryn L. Stanton Vice President & Assistant Secretary --
Lynda J. Striegel Vice President & Assistant Secretary Vice President &
Assistant Secretary
Lori L. White Vice President & Assistant Secretary --
Wayne M. Withrow Vice President & Managing Director --
</TABLE>
ITEM 30. Location of Accounts and Records:
Books or other documents required to be maintained by Section 31(a) of the
Investment company Act of 1940, as amended (the "1940 Act"), and the rules
promulgated thereunder, are maintained as follows:
(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3);
(6); (8); (12); and 31a-1(d), the required books and records are maintained
at the offices of Registrant's Custodian:
First Union National Bank
Broad and Chestnut Streets
P.O. Box 7618
Philadelphia, Pennsylvania 19101
(b)/(c) With respect to Rules 31a-1(a); 31a-1(b)(1), (4); (2)(C) and
(D); (4); (5); (6); (8); (9); (10); (11); and 31a-1(f), the required books
and records are maintained at the offices of Registrant's Administrator:
SEI Investments Mutual Funds Services
C-5
<PAGE>
Oaks, PA 19456
(d) With respect to Rules 31a-(b)(5); (6), (9) and (10) and 31a-1(f),
the required books and records are maintained at the offices of
Registrant's Adviser:
Southwest Corporate Federal Credit Union
7920 Belt Line Road, Suite 1100
Dallas, TX 75240
ITEM 31. Management Services: None.
ITEM 32. Undertakings.
Registrant hereby undertakes that whenever Shareholders meeting the
requirements of Section 16(c) of the 1940 Act inform the Board of Trustees of
their desire to communicate with Shareholders of the Trust, the Trustees will
inform such Shareholders as to the approximate number of Shareholders of record
and the approximate costs of mailing or afford said Shareholders access to a
list of Shareholders.
Registrant hereby undertakes to call a meeting of Shareholders for the
purpose of voting upon the question of removal of a Trustee(s) when requested in
writing to do so by the holders of at least 10% of Registrant's outstanding
shares and in connection with such meetings to comply with the provisions of
Section 16(c) of the 1940 Act relating to shareholder communications.
Registrant hereby undertakes to furnish, upon request and without charge,
to each person to whom a prospectus is delivered, a copy of the Registrant's
latest annual report to Shareholders.
C-6
<PAGE>
NOTICE
A copy of the Agreement and Declaration of Trust of CUFUND is on file with
the Secretary of State of the Commonwealth of Massachusetts and notice is hereby
given that this Registration Statement has been executed on behalf of the Trust
by an officer of the Trust as an officer and by its Trustees as trustees and not
individually and the obligations of or arising out of this Registration
Statement are not binding upon any of the Trustees, officers, or Shareholders
individually but are binding only upon the assets and property of the Trust.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, as amended, the Registrant certifies that it meets all of
the requirements for the effectiveness of this Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-
Effective Amendment No. 7 to the Registration Statement No. 33-44293 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Wayne, Commonwealth of Pennsylvania on the 24th day of September, 1998.
CUFUND
By: /s/Mark E. Nagle
---------------------
Mark E. Nagle
President
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacity on the dates indicated.
* Trustee September 24, 1998
- ---------------------------
James L. Bryan
* Trustee September 24, 1998
- --------------------------
Gary L. Janacek
* Trustee September 24, 1998
- --------------------------
Arno J. Easterly
* Trustee September 24, 1998
- --------------------------
Dr. Martha Romayne Seger
/s/Mark E. Nagle President September 24, 1998
- --------------------------
Mark E. Nagle
/s/Michael Beattie Controller & September 24, 1998
- -------------------------- Chief Financial Officer
Michael Beattie
*By: /s/Mark E. Nagle
------------------------
Mark E. Nagle
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
- -------
<S> <C>
EX-99.B1 (1) Agreement and Declaration of Trust (originally filed as
Exhibit No. 1 to Registrant's Registration Statement on
December 2, 1991).*
EX-99.B2 (2) By-Laws (originally filed as Exhibit No. 2 to Registrant's
Registration Statement on April 23, 1992).*
(3) Not Applicable.
(4) Not Applicable.
EX-99.B5 (5) Investment Advisory Agreement between Registrant and Southwest
Corporate Federal Credit Union dated May 1, 1992.*
EX-99.B6 (6) Distribution Agreement between Registrant and SEI Financial
Services Company dated May 1, 1992.*
(7) Not Applicable.
EX-99.B8 (8) Custodian Agreement between Registrant and CoreStates Bank
N.A. dated May 1, 1992.*
(9) Not Applicable.
EX-99.B10 (10) Opinion and Consent of Counsel (originally filed as Exhibit
No. 10 to Registrant's Registration Statement on May 29,
1992).*
EX-99.B11 (11) Consent of Independent Public Accountants is filed herewith.
(12) Not Applicable.
EX-99.B13.1 (13) Administration Agreement between Registrant and SEI Financial
Management Corporation dated April 30, 1996.*
EX-99.B13.2 (13) Assignment and Assumption Agreement between SEI Financial
Management Corporation and SEI Fund Resources dated May 31,
1996.*
EX-99.B13.3 (13) Consent of Assignment and Assumption between Registrant and
SEI Financial Management Corporation dated April 8, 1997.**
(14) Not Applicable.
(15) Not Applicable.
EX-99.B16 (16) Performance Quotation Computation (originally filed as Exhibit
No. 16 to Registrant's Registration Statement on September 28,
1995).*
(18) Not Applicable.
EX-99.B24 (24) Powers of Attorney for James L. Bryan, Gary L. Janacek, Arno
J. Easterly, Martha Romayne Seger.**
EX-99.B27 (27) Financial Data Schedules are filed herewith.
</TABLE>
___________________________________
* Incorporated by reference to Post-Effective Amendment No. 5, as filed on
September 27, 1996.
** Incorporated by reference to Post-Effective Amendment No. 6, as filed on
September 26, 1997.
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated June 26,
1998, on the May 31, 1998 financial statements of CUFUND, included in the
previously filed Form N-30D dated July 27, 1998, and to all references to
our Firm included in Post-Effective Amendment No. 7 to the Registration
Statement File No. 33-44293.
/s/ARTHUR ANDERSEN LLP
Philadelphia, PA
September 24, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000881636
<NAME> CUFUND
<SERIES>
<NUMBER> 010
<NAME> ADJUSTABLE RATE PORTFOLIO
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 124645
<INVESTMENTS-AT-VALUE> 125095
<RECEIVABLES> 965
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 126060
<PAYABLE-FOR-SECURITIES> 662
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 662
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 125672
<SHARES-COMMON-STOCK> 12539
<SHARES-COMMON-PRIOR> 14882
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 50
<ACCUMULATED-NET-GAINS> (674)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 450
<NET-ASSETS> 125398
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7786
<OTHER-INCOME> 0
<EXPENSES-NET> (504)
<NET-INVESTMENT-INCOME> 7282
<REALIZED-GAINS-CURRENT> (16)
<APPREC-INCREASE-CURRENT> (64)
<NET-CHANGE-FROM-OPS> 7202
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (7295)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 90
<NUMBER-OF-SHARES-REDEEMED> (2488)
<SHARES-REINVESTED> 56
<NET-CHANGE-IN-ASSETS> (2342)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 37
<OVERDIST-NET-GAINS-PRIOR> 658
<GROSS-ADVISORY-FEES> 418
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 762
<AVERAGE-NET-ASSETS> 130484
<PER-SHARE-NAV-BEGIN> 10.01
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> (.01)
<PER-SHARE-DIVIDEND> (.56)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.00
<EXPENSE-RATIO> .39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000881636
<NAME> CUFUND
<SERIES>
<NUMBER> 020
<NAME> SHORT-TERM MATURITY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-START> JUN-01-1997
<PERIOD-END> MAY-31-1998
<INVESTMENTS-AT-COST> 29260
<INVESTMENTS-AT-VALUE> 29274
<RECEIVABLES> 335
<ASSETS-OTHER> 88
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 29697
<PAYABLE-FOR-SECURITIES> 152
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 152
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 30358
<SHARES-COMMON-STOCK> 2997
<SHARES-COMMON-PRIOR> 3027
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 7
<ACCUMULATED-NET-GAINS> (820)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 14
<NET-ASSETS> 29545
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1705
<OTHER-INCOME> 0
<EXPENSES-NET> (115)
<NET-INVESTMENT-INCOME> 1590
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 179
<NET-CHANGE-FROM-OPS> 1769
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1596)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> (42)
<SHARES-REINVESTED> 12
<NET-CHANGE-IN-ASSETS> (30)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 1
<OVERDIST-NET-GAINS-PRIOR> (820)
<GROSS-ADVISORY-FEES> 95
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 173
<AVERAGE-NET-ASSETS> 29639
<PER-SHARE-NAV-BEGIN> 9.80
<PER-SHARE-NII> .53
<PER-SHARE-GAIN-APPREC> .06
<PER-SHARE-DIVIDEND> (.53)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.86
<EXPENSE-RATIO> .39
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
