COREFUNDS, INC.
INTERNATIONAL GROWTH FUND
530 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
June 1, 1998
Dear Shareholder,
As a result of the Merger of CoreStates Financial Corp with and into a
wholly-owned subsidiary of First Union Corporation effective April 30, 1998, I
am writing to shareholders of International Growth Fund (the "Fund"), a series
of CoreFunds, Inc., to inform you of a Special Shareholders' meeting to be held
on July 17, 1998. Before that meeting, I would like your vote on the important
issues affecting your Fund as described in the attached Prospectus/Proxy
Statement.
The Prospectus/Proxy Statement includes four proposals. The first proposal
requests that shareholders consider and act upon an Agreement and Plan of
Reorganization whereby all of the assets of the Fund would be acquired by
Evergreen International Growth Fund in exchange for Class A, Class B or Class Y
shares of Evergreen International Growth Fund and the assumption by Evergreen
International Growth Fund of the identified liabilities of the Fund. You will
receive shares of Evergreen International Growth Fund having an aggregate net
asset value equal to the aggregate net asset value of your Fund shares. Details
about Evergreen International Growth Fund's investment objective, portfolio
management team, performance, etc. are contained in the attached
Prospectus/Proxy Statement. For federal income tax purposes, the transaction is
a non-taxable event for shareholders.
The second proposal requests shareholder consideration of an Interim Investment
Advisory Agreement between the Fund and CoreStates Investment Advisers, Inc.
("CSIA"), the Fund's current investment
adviser.
The third and fourth proposals request shareholder consideration of two Interim
Sub-Advisory Agreements between CSIA and the Fund's current sub-advisers, Martin
Currie, Inc. and Aberdeen Fund Managers, Inc.
It is anticipated that the Interim Advisory Agreement and the Interim
Sub-Advisory greements will be in effect from April 30, 1998 to the date the
reorganization is consummated (scheduled for July 27, 1998). Information
relating to the Interim Investment Advisory Agreement and the two Interim
Sub-Advisory Agreements is contained in the attached Prospectus/Proxy Statement.
The Board of Directors has approved the proposals and recommends that you vote
FOR these proposals.
-1-
<PAGE>
I realize that this Prospectus/Proxy Statement will take time to review, but
your vote is very important. Please take the time to familiarize yourself with
the proposals. If you attend the meeting, you may vote your shares in person. If
you do not expect to attend the meeting, either complete, date, sign and return
the enclosed proxy card in the enclosed postage paid envelope or vote by calling
toll-free 1-800-733-8481 24 hours a day. Instructions on how to complete the
proxy card or vote by telephone are included immediately after the Notice of
Special Meeting.
If you have any questions about the proxy, please call our proxy solicitor,
Shareholder Communications Corporation at 800-733-8481 ext. 468. You may also
FAX your completed and signed proxy card to 800-733-1885. If we do not receive
your completed proxy card or your telephone vote after several weeks, you may be
contacted by Shareholder Communications Corporation, who will remind you to vote
your shares.
Thank you for taking this matter seriously and participating in this important
process.
Sincerely,
/s/ Kevin Robins
----------------
Kevin P. Robins
Vice President
CoreFunds, Inc.
-2-
<PAGE>
COREFUNDS, INC.
INTERNATIONAL GROWTH FUND
530 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 17, 1998
Notice is hereby given that a Special Meeting (the "Meeting") of
Shareholders of International Growth Fund (the "Fund"), a series of CoreFunds,
Inc., will be held at the offices of the Evergreen Funds, 26th Floor, 200
Berkeley Street, Boston, Massachusetts 02116, on July 17, 1998 at 2:00 p.m. for
the following purposes:
1. To consider and act upon the Agreement and Plan of Reorganization
(the "Plan") dated as of April 15, 1998, providing for the acquisition of all of
the assets of the Fund by Evergreen International Growth Fund, a series of
Evergreen International Trust, ("Evergreen International") in exchange for
shares of Evergreen International and the assumption by Evergreen International
of the identified liabilities of the Fund. The Plan also provides for
distribution of these shares of Evergreen International to shareholders of the
Fund in liquidation and subsequent termination of the Fund. A vote in favor of
the Plan is a vote in favor of the liquidation and dissolution of the Fund.
2. To consider and act upon the Interim Investment Advisory Agreement
between the Fund and CoreStates Investment Advisers, Inc.
("CSIA").
3. To consider and act upon an Interim Sub-Advisory Agreement between
CSIA and Martin Currie, Inc.
4. To consider and act upon an Interim Sub-Advisory Agreement between
CSIA and Aberdeen Fund Managers, Inc.
5. To transact any other business which may properly come before the
Meeting or any adjournment or adjournments thereof.
On behalf of the Fund, the Directors of CoreFunds, Inc. have fixed the
close of business on May 29, 1998 as the record date for the determination of
shareholders of the Fund entitled to notice of and to vote at the Meeting or any
adjournment thereof.
-1-
<PAGE>
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO
NOT EXPECT TO ATTEND IN PERSON ARE URGED WITHOUT DELAY TO SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE, SO THAT
THEIR SHARES MAY BE REPRESENTED AT THE MEETING. YOUR PROMPT ATTENTION TO THE
ENCLOSED PROXY WILL HELP TO AVOID THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Directors
James W. Jennings
Secretary
June 1, 1998
-2-
<PAGE>
INSTRUCTIONS FOR EXECUTING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and may help to avoid the time and expense involved in
validating your vote if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears
in the Registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of
the party signing should conform exactly to a name shown in the
Registration on the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual
signing the proxy card should be indicated unless it is reflected in
the form of Registration. For example:
REGISTRATION VALID SIGNATURE
CORPORATE
ACCOUNTS
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. John Doe, Treasurer
c/o John Doe, Treasurer
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
TRUST ACCOUNTS
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee Jane B. Doe
u/t/d 12/28/78
CUSTODIAL OR ESTATE ACCOUNTS
(1) John B. Smith, Cust. John B. Smith
f/b/o John B. Smith, Jr. UGMA
(2) John B. Smith John B. Smith, Jr., Executor
-1-
<PAGE>
INSTRUCTIONS FOR TELEPHONE VOTING
To vote your proxy by telephone follow the four easy steps below. Or if you
prefer you may send back your signed proxy ballot in the postage paid envelope
provided.
1. Read the accompanying proxy information and ballot.
2. Identify the twelve-digit "CONTROL NO." in the middle portion of your ballot
on the left hand side. This control number is the key to casting your vote over
the telephone.
3. Dial 1-800-733-8481 ext. 468.
4. Follow the simple instructions.
F:\DCM\SALEM18\INTERGRO\497ALLDO.DOC
-2-
<PAGE>
PROSPECTUS/PROXY STATEMENT DATED June 1, 1998
Acquisition of Assets of
INTERNATIONAL GROWTH FUND
a series of
CoreFunds, Inc.
530 East Swedesford Road
Wayne, Pennsylvania 19087
By and in Exchange for Shares of
EVERGREEN INTERNATIONAL GROWTH FUND
a series of
Evergreen International Trust
200 Berkeley Street
Boston, Massachusetts 02116
This Prospectus/Proxy Statement is being furnished to shareholders of
International Growth Fund ("CoreFunds International") in connection with a
proposed Agreement and Plan of Reorganization (the "Plan") to be submitted to
shareholders of CoreFunds International for consideration at a Special Meeting
of Shareholders to be held on July 17, 1998 at 2:00 p.m. at the offices of the
Evergreen Funds, 200 Berkeley Street, 26th Floor, Boston, Massachusetts 02116,
and any adjournments thereof (the "Meeting"). The Plan provides for all of the
assets of CoreFunds International to be acquired by Evergreen International
Growth Fund ("Evergreen International") in exchange for shares of Evergreen
International and the assumption by Evergreen International of the identified
liabilities of CoreFunds International (hereinafter referred to as the
"Reorganization"). Evergreen International and CoreFunds International are
sometimes hereinafter referred to individually as the "Fund" and collectively as
the "Funds." Following the Reorganization, shares of Evergreen International
will be distributed to shareholders of CoreFunds International in liquidation of
CoreFunds International and such Fund will be terminated. Holders of Class A
shares of CoreFunds International will receive Class A shares of Evergreen
International, holders of Class B shares of CoreFunds International will receive
Class B shares of Evergreen International, and holders of Class Y shares of
CoreFunds International will receive Class Y shares of Evergreen International.
Each such class of shares of Evergreen International has substantially similar
Rule 12b-1 distribution-related fees, if any, as the shares of the respective
class of CoreFunds International held by them prior to the Reorganization. No
sales charge will be imposed in connection with Class A shares of Evergreen
International received by holders of Class A shares of CoreFunds International.
In addition, no contingent deferred sales charge ("CDSC") will be deducted at
the time of the Reorganization in connection with the Class B shares of
Evergreen International received by holders of Class B shares of CoreFunds
International. Holders of Class B shares of Evergreen International received in
the Reorganization will be subject to the schedule of CDSCs currently
-3-
<PAGE>
applicable to Class B shares of CoreFunds International and not the schedule
applicable to Class B shares of Evergreen International. As a result of the
proposed Reorganization, shareholders of CoreFunds International will receive
that number of full and fractional shares of Evergreen International having an
aggregate net asset value equal to the aggregate net asset value of such
shareholder's shares of CoreFunds International. The Reorganization is being
structured as a tax-free reorganization for federal income tax purposes.
Evergreen International is a separate series of Evergreen International
Trust, an open-end management investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The investment objective of
Evergreen International is to seek long-term growth of capital by investing
primarily in equity securities issued by well-established, quality companies
located in countries with developed markets. The investment objective of
CoreFunds International is substantially similar -- to seek long-term capital
appreciation, consistent with reasonable risk, by investing primarily in
appreciation-oriented equity securities of companies located outside the United
States. Each Fund invests substantially all of its assets in foreign securities.
Shareholders of CoreFunds International are also being asked to approve
three interim agreements: (1) the Interim Investment Advisory Agreement with
CoreStates Investment Advisers, Inc. ("CSIA"), a subsidiary of First Union
Corporation (the "Interim Advisory Agreement"), (2) an Interim Sub-Advisory
Agreement between CSIA and Martin Currie, Inc. ("Martin Currie")(the "Interim
Martin Currie Agreement"), and (3) an Interim Sub-Advisory Agreement between
CSIA and Aberdeen Fund Managers, Inc. ("Aberdeen")(the "Interim Aberdeen
Agreement"). (The Interim Martin Currie Agreement and the Interim Aberdeen
Agreement are referred to collectively as the "Interim Sub-Advisory
Agreements"). Each of these three agreements has the same terms and fees as the
previous advisory agreements. The Interim Advisory Agreement and the Interim
Sub- Advisory Agreements will be in effect for the period of time between April
30, 1998, the date on which the merger of CoreStates Financial Corp with and
into a wholly-owned subsidiary of First Union Corporation was consummated, and
the date of the Reorganization (scheduled for on or about July 27, 1998).
This Prospectus/Proxy Statement, which should be retained for future
reference, sets forth concisely the information about Evergreen International
that shareholders of CoreFunds International should know before voting on the
Reorganization. Certain relevant documents listed below, which have been filed
with the Securities and Exchange Commission ("SEC"), are incorporated in whole
or in part by reference. A Statement of Additional Information dated June 1,
1998, relating to this Prospectus/Proxy Statement and the Reorganization which
includes the financial statements of Evergreen International dated October 31,
1997 and of CoreFunds International
-4-
<PAGE>
dated June 30, 1997 and December 31, 1997, has been filed with the SEC and is
incorporated by reference in its entirety into this Prospectus/Proxy Statement.
A copy of such Statement of Additional Information is available upon request and
without charge by writing to Evergreen International at 200 Berkeley Street,
Boston, Massachusetts 02116 or by calling toll-free 1-800-343-2898.
The two Prospectuses of Evergreen International dated March 1, 1998,
and its Annual Report for the fiscal year ended October 31, 1997 are
incorporated herein by reference in their entirety, insofar as they relate to
Evergreen International only, and not to any other fund described therein. The
Prospectuses, which pertain (i) to Class A, Class B and Class C shares and (ii)
to Class Y shares, differ only insofar as they describe the separate
distribution and shareholder servicing arrangements applicable to the classes.
Shareholders of CoreFunds International will receive, with this Prospectus/Proxy
Statement, copies of the Prospectus pertaining to the class of shares of
Evergreen International that they will receive as a result of the consummation
of the Reorganization. Additional information about Evergreen International is
contained in its Statement of Additional Information of the same date which has
been filed with the SEC and which is available upon request and without charge
by writing to or calling Evergreen International at the address or telephone
number listed in the preceding paragraph.
The two Prospectuses of CoreFunds International which pertain (i) as
applicable, to Class A and Class B shares (Individual shares) and (ii) to Class
Y shares (Institutional shares) dated November 1, 1997, insofar as they relate
to CoreFunds International only, and not to any other funds described therein,
are incorporated herein in their entirety by reference. Copies of the
Prospectuses, related Statement of Additional Information dated the same date,
the Annual Report for the fiscal year ended June 30, 1997 and the Semi-Annual
Report for the six month period ended December 31, 1997, are available upon
request without charge by writing to CoreFunds International at the address
listed on the cover page of this Prospectus/Proxy Statement or by calling
toll-free 1-800-355-2673.
Included as Exhibits A, B, C, and D to this Prospectus/Proxy Statement
are a copy of the Plan and the Interim Advisory Agreement, the Interim Martin
Currie Agreement, and the Interim Aberdeen
Agreement, respectively.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The shares offered by this Prospectus/Proxy Statement are not deposits or
obligations of any bank and are not insured or otherwise
-5-
<PAGE>
protected by the U.S. government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other government agency and involve investment
risk, including possible loss of capital.
-6-
<PAGE>
TABLE OF CONTENTS
Page
COMPARISON OF FEES AND EXPENSES.........................................7
SUMMARY ..............................................................12
Proposed Plan of Reorganization .....13
Tax Consequences .....14
Investment Objectives and Policies of the Funds .....15
Comparative Performance Information for each Fund .....15
Management of the Funds .....16
Investment Advisers .....17
Administrator .....18
Portfolio Management .....18
Distribution of Shares .....18
Purchase and Redemption Procedures .....21
Exchange Privileges .....22
Dividend Policy .....22
Risks .....23
REASONS FOR THE REORGANIZATION.........................................24
Agreement and Plan of Reorganization .....28
Federal Income Tax Consequences .....30
Pro-forma Capitalization .....32
Shareholder Information .....33
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES.......................35
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS........................38
Forms of Organization .....38
Capitalization .....38
Shareholder Liability .....38
Shareholder Meetings and Voting Rights .....39
Liquidation or Dissolution .....40
Liability and Indemnification of Trustees .....40
INFORMATION REGARDING THE INTERIM ADVISORY AGREEMENT...................42
Introduction .....42
Comparison of the Interim Advisory Agreement
and the Previous Advisory Agreement .....43
Information About CoreFunds International's
Investment Adviser .....44
INFORMATION REGARDING THE INTERIM SUB-ADVISORY AGREEMENTS..............44
Introduction .....44
Comparison of the Interim Sub-Advisory Agreements
and the Previous Sub-Advisory Agreements .....46
-7-
<PAGE>
ADDITIONAL INFORMATION.................................................47
VOTING INFORMATION CONCERNING THE MEETING..............................48
FINANCIAL STATEMENTS AND EXPERTS.......................................51
LEGAL MATTERS..........................................................51
OTHER BUSINESS.........................................................51
APPENDIX A.............................................................53
APPENDIX B.............................................................54
APPENDIX C.............................................................57
EXHIBIT A.............................................................A-1
EXHIBIT B.............................................................B-1
EXHIBIT C.............................................................C-1
EXHIBIT D.............................................................D-1
EXHIBIT E.............................................................E-1
-8-
<PAGE>
COMPARISON OF FEES AND EXPENSES
The amounts for Class B shares of Evergreen International set forth in
the following tables and in the examples are based on the expenses of Evergreen
International for the fiscal year ended October 31, 1997. The amounts for Class
Y and Class A shares of Evergreen International have been estimated for the
fiscal year ending October 31, 1998. The amounts for Class Y and Class A shares
of CoreFunds International set forth in the following tables and in the examples
are based on the estimated expenses for CoreFunds International for the fiscal
year ending June 30, 1998 as set forth in the current Prospectuses of CoreFunds
International. The amounts for Class B shares of CoreFunds International are
estimated for the fiscal period ending June 30, 1998. The pro forma amounts for
Class Y, Class A and Class B shares of Evergreen International are based on what
the combined expenses would have been for Evergreen International for the fiscal
year ending October 31, 1998. All amounts are adjusted for voluntary expense
waivers.
The following tables show for Evergreen International, CoreFunds
International and Evergreen International pro forma, assuming consummation of
the Reorganization, the shareholder transaction expenses and annual fund
operating expenses associated with an investment in the Class Y, Class A and
Class B shares of each Fund.
-9-
<PAGE>
Comparison of Class Y, Class A and Class B Shares
of Evergreen International With Class Y, Class B and
Class A Shares of CoreFunds International
<TABLE>
<CAPTION>
Evergreen CoreFunds
International International
Class Y Class A Class B Class Y Class A Class B
<S> <C> <C> <C> <C> <C> <C>
------- ------- ------- ------- ------- -------
Shareholder
Transaction
Expenses
Maximum Sales None 4.75% None None 5.50% None
Load Imposed on
Purchases (as a
percentage of
offering price)
Maximum Sales None None None None None None
Load Imposed on
Reinvested
Dividends (as a
percentage of
offering price)
Contingent None None 5.00% in None None 5.00%
Deferred Sales the in the
Charge (as a first first
percentage of year year
original purchase declin- declin-
price or ing to ing to
redemption 1.00% in 1.00%
proceeds, the in the
whichever is sixth fifth
lower) year and year
0.00% and
there- 0.00%
after there-
after
Annual Fund
Operating
Expenses (as a
percentage of
average daily net
assets)
0.75% 0.75% 0.75% 0.80% 0.80% 0.80%
Management Fee
-10-
<PAGE>
12b-1 Fees(1)
None 0.25% 1.00% None 0.25% 1.00%
Other Expenses 0.65% 0.65% 0.64% 0.36% 0.36% 0.36%
----- ----- ----- ----- ----- -----
(After Waiver)
(2)
Annual Fund 1.40% 1.65% 2.39% 1.16% 1.41% 2.16%
===== ===== ===== ===== ===== =====
Operating
Expenses (3)
</TABLE>
<TABLE>
<CAPTION>
Evergreen International Pro Forma
Class Y Class A Class B
<S> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Load Imposed on None 4.75% None
Purchases (as a percentage of
offering price)
Maximum Sales Load Imposed on None None None
Reinvested Dividends (as a
percentage of offering price)
Contingent Deferred Sales Charge None None 5.00% in
(as a percentage of original the first
purchase price or redemption year
proceeds, whichever is lower) declining
to 1.00%
in the
sixth year
and 0.00%
thereafter
Annual Fund Operating Expenses (as
a percentage of average daily net
assets)
Management Fee 0.71% 0.71% 0.71%
12b-1 Fees(1) None 0.25% 1.00%
Other Expenses 0.43% 0.43% 0.43%
--------- ---------- ----------
-11-
<PAGE>
Annual Fund Operating Expenses
1.14% 1.39% 2.14%
====== ======= =======
</TABLE>
- ---------------
(1) Class A shares of Evergreen International can pay up to
0.75% of average daily net assets as a 12b-1 fee. For the
foreseeable future, the Class A 12b-1 fees will be limited
to 0.25% of average daily net assets. Long-term
shareholders may pay more than the economic equivalent
front-end sales charge permitted by the National Association
of Securities Dealers, Inc.
(2) Absent voluntary waivers by CoreFunds International's administrator,
Other Expenses would have been 0.45% of average daily net assets.
(3) Annual Fund Operating Expenses for the Class Y, Class A and
Class B shares of CoreFunds International would be 1.25% and
1.50% and 2.25%, respectively, for the fiscal year ended
June 30, 1998 absent fee and expense waivers. The
investment adviser of Evergreen International has undertaken
to limit the Fund's Annual Operating Expenses for a period
of at least two years to 1.25%, 1.50% and 2.25% for Class Y,
Class A, and Class B shares, respectively.
Examples. The following tables show for Evergreen International and
CoreFunds International, and for Evergreen International pro forma, assuming
consummation of the Reorganization, examples of the cumulative effect of
shareholder transaction expenses and annual fund operating expenses indicated
above on a $1,000 investment in each class of shares for the periods specified,
assuming (i) a 5% annual return, and (ii) redemption at the end of such period.
For Class B shares, the tables also show the effect if the shares are not
redeemed. In the case of Evergreen International pro forma, the examples do not
reflect the imposition of the 4.75% maximum sales load on purchases since
CoreFunds International shareholders who receive Class A shares of Evergreen
International in the Reorganization will not incur any sales load.
<TABLE>
<CAPTION>
Evergreen International
Three Five
One Year Years Years Ten Years
<S> <C> <C> <C> <C>
Class Y $ 14 $ 44 $ 77 $168
$ 63 $ 97 $133 $234
Class A
-12-
<PAGE>
Class B
(assuming $ 74 $105 $148 $245
redemption at the
end of the period)
Class B $ 24 $ 75 $128 $245
(assuming no
redemption at the
end of the period)
CoreFunds International
Three Five
One Year Years Years Ten Years
Class Y $ 12 $ 37 $ 64 $141
Class A $ 69 $ 97 $128 $215
Class B $ 72 $ 98 $126 $249
(assuming
redemption at the
end of the period)
Class B $ 22 $ 68 $116 $249
(assuming no
redemption at the
end of the period)
Evergreen International Pro Forma
Three Five
One Year Years Years Ten Years
Class Y $ 12 $ 37 $ 64 $141
Class A $ 14 $ 44 $ 76 $167
Class B $ 72 $ 97 $135 $210
(assuming
redemption at
the end of the
period)
-13-
<PAGE>
Class B
(assuming no $ 22 $ 67 $115 $210
redemption at
the end of the
period)
</TABLE>
The purpose of the foregoing examples is to assist CoreFunds
International shareholders in understanding the various costs and expenses that
an investor in Evergreen International as a result of the Reorganization would
bear directly and indirectly, as compared with the various direct and indirect
expenses currently borne by a shareholder in CoreFunds International. These
examples should not be considered a representation of past or future expenses or
annual return. Actual expenses may be greater or less than those shown.
SUMMARY
This summary is qualified in its entirety by reference to the
additional information contained elsewhere in this Prospectus/Proxy Statement,
the Prospectuses of Evergreen International dated March 1, 1998 and the
Prospectuses of CoreFunds International dated November 1, 1997 (which are
incorporated herein by reference), the Plan, the Interim Advisory Agreement, and
the two Interim Sub-Advisory Agreements, the forms of which are attached to this
Prospectus/Proxy Statement as Exhibits A, B, C and D, respectively.
Proposed Plan of Reorganization
The Plan provides for the transfer of all of the assets of CoreFunds
International in exchange for shares of Evergreen International and the
assumption by Evergreen International of the identified liabilities of CoreFunds
International. The identified liabilities consist only of those liabilities
reflected on the Fund's statement of assets and liabilities determined
immediately preceding the Reorganization. The Plan also calls for the
distribution of shares of Evergreen International to CoreFunds International
shareholders in liquidation of CoreFunds International as part of the
Reorganization. As a result of the Reorganization, the holders of Class A, Class
B and Class Y shares of CoreFunds International will become the owners of that
number of full and fractional Class A, Class B and Class Y shares, respectively,
of Evergreen International having an aggregate net asset value equal to the
aggregate net asset value of the shareholders' shares of CoreFunds
International, as of the close of business immediately prior to the date that
CoreFunds International's assets are
-14-
<PAGE>
exchanged for shares of Evergreen International. See "Reasons for the
Reorganization - Agreement and Plan of Reorganization."
The Directors of CoreFunds, Inc., including the Directors who are not
"interested persons," as such term is defined in the 1940 Act (the "Independent
Directors"), have concluded that the Reorganization would be in the best
interests of shareholders of CoreFunds International, and that the interests of
the shareholders of CoreFunds International will not be diluted as a result of
the transactions contemplated by the Reorganization. Accordingly, the Directors
have submitted the Plan for the approval of CoreFunds International's
shareholders.
THE BOARD OF DIRECTORS OF COREFUNDS, INC.
RECOMMENDS APPROVAL BY SHAREHOLDERS OF COREFUNDS INTERNATIONAL
OF THE PLAN EFFECTING THE REORGANIZATION.
The Trustees of Evergreen International Trust have also
approved the Plan and, accordingly, Evergreen International's
participation in the Reorganization.
Approval of the Reorganization on the part of CoreFunds International
will require the affirmative vote of a majority of CoreFunds International's
outstanding shares, with all classes voting together as a single class at a
Meeting at which a quorum of the Fund's shares is present. A majority of the
outstanding shares entitled to vote, represented in person or by proxy, is
required to constitute a quorum at the Meeting. See "Voting Information
Concerning the Meeting."
The merger of CoreStates Financial Corp ("CoreStates Financial") with
and into a wholly-owned subsidiary of First Union Corporation ("First Union")
(the "Merger") has been consummated and, as a result, by law the Merger
terminated the investment advisory agreement between CSIA and CoreFunds
International and the sub-advisory agreements between CSIA and Martin Currie and
between CSIA and Aberdeen. Prior to consummation of the Merger, CoreFunds
International received an order from the SEC which permitted the implementation,
without formal shareholder approval, of a new investment advisory agreement
between the Fund and CSIA for a period of not more than 150 days (September 27,
1998) beginning on the date of the closing of the Merger and continuing through
the date the Interim Advisory Agreement is approved by the Fund's shareholders.
Pursuant to Rule 15a-4 under the 1940 Act, Martin Currie and Aberdeen are
permitted to serve as sub-advisers to CoreFunds International for up to 120 days
from the date of the Merger without shareholder approval. The Interim Advisory
Agreement and the two Interim Sub-Advisory Agreements have the same terms and
fees as the previous investment advisory agreement between CoreFunds
International and CSIA and the previous sub-advisory agreements between CSIA and
Martin Currie and between CSIA and
-15-
<PAGE>
Aberdeen. The Reorganization is scheduled to take place on or about July 27,
1998.
Approval of the Interim Advisory Agreement and the Interim Sub-Advisory
Agreements requires the affirmative vote of (i) 67% or more of the shares of
CoreFunds International present in person or by proxy at the Meeting, if holders
of more than 50% of the shares of CoreFunds International outstanding on the
record date are present, in person or by proxy, or (ii) more than 50% of the
outstanding shares of CoreFunds International, whichever is less. See "Voting
Information Concerning the Meeting."
If the shareholders of CoreFunds International do not vote to approve
the Reorganization, the Directors will consider other possible courses of action
in the best interests of shareholders.
Tax Consequences
Prior to or at the completion of the Reorganization, CoreFunds
International will have received an opinion of Sullivan & Worcester LLP that the
Reorganization has been structured so that no gain or loss will be recognized by
the Fund or its shareholders for federal income tax purposes as a result of the
receipt of shares of Evergreen International in the Reorganization. The holding
period and aggregate tax basis of shares of Evergreen International that are
received by CoreFunds International's shareholders will be the same as the
holding period and aggregate tax basis of shares of the Fund previously held by
such shareholders, provided that shares of the Fund are held as capital assets.
In addition, the holding period and tax basis of the assets of CoreFunds
International in the hands of Evergreen International as a result of the
Reorganization will be the same as in the hands of the Fund immediately prior to
the Reorganization, and no gain or loss will be recognized by Evergreen
International upon the receipt of the assets of the Fund in exchange for shares
of Evergreen International and the assumption by Evergreen International of the
identified liabilities.
Investment Objectives and Policies of the Funds
The investment objectives and policies of Evergreen International and
CoreFunds International are similar.
The investment objective of Evergreen International is to seek
long-term growth of capital. As a secondary objective, the Fund seeks modest
income. In pursuing its investment objectives, the Fund invests primarily in
equity securities issued by established, quality companies located in countries
with developed markets. The Fund may invest a portion of its assets in equity
securities of companies located in certain emerging markets and the formerly
communist countries of Eastern Europe.
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<PAGE>
The investment objective of CoreFunds International is to seek
long-term capital appreciation, consistent with reasonable risk, by investing
primarily in appreciation-oriented equity securities of companies located
outside the United States. See "Comparison of Investment Objectives and
Policies" below.
Comparative Performance Information for each Fund
Discussions of the manner of calculation of total return are contained
in the respective Prospectuses and Statements of Additional Information of the
Funds. The following tables set forth, as applicable, the total return of the
Class B shares of Evergreen International for the one year, five year and ten
year periods ended March 31, 1998, of the Class Y and Class A shares of
CoreFunds International for the one year and five year periods ended March 31,
1998 and for all classes of both Funds for the period from inception through
March 31, 1998. The calculations of total return assume the reinvestment of all
dividends and capital gains distributions on the reinvestment date and the
deduction of all recurring expenses (including sales charges) that were charged
to shareholders' accounts.
<TABLE>
<CAPTION>
Average Annual Total Return (1)
<S> <C> <C> <C> <C> <C>
1 Year 5 Years 10 Years
Ended Ended Ended From
March March March Inception To
31, 31, 31, March 31, Inception
1998 1998 1998 1998 Date
------- ------- -------- --------- ---------
Evergreen
International
Class A shares N/A N/A N/A 13.25% 1/20/98
Class B shares 21.48% 13.91% 7.09% 10.89% 12/1/75
Class Y shares N/A N/A N/A 5.96% 3/9/98
CoreFunds
International
Class A shares 12.30% 10.50% N/A 11.94% 1/4/93
Class B shares N/A N/A N/A 29.75% 11/24/97
Class Y shares 19.25% 11.93% N/A 9.47% 2/12/90
- --------------
</TABLE>
-17-
<PAGE>
(1) Reflects waiver of advisory fees and reimbursements and/or waivers of
expenses. Without such reimbursements and/or waivers, the average
annual total returns during the periods would have been lower.
Important information about Evergreen International is also contained
in management's discussion of Evergreen International's performance, attached
hereto as Exhibit E. This information also appears in Evergreen International's
most recent Annual Report.
Management of the Funds
The overall management of Evergreen International and of CoreFunds
International is the responsibility of, and is supervised by, the Board of
Trustees of Evergreen International Trust and the Board of Directors of
CoreFunds, Inc., respectively.
Investment Advisers and Sub-Advisers
The investment adviser to Evergreen International is Keystone
Investment Management Company ("Keystone"). Keystone has provided investment
advisory and management services to investment companies and private accounts
since 1932. Keystone is an indirect wholly-owned subsidiary of First Union
National Bank ("FUNB"). FUNB is a subsidiary of First Union, the sixth largest
bank holding company in the United States based on total assets as of September
30, 1997. Keystone and its affiliates manage the Evergreen family of mutual
funds with assets of approximately $46 billion as of March 31, 1998. For further
information regarding Keystone, FUNB and First Union, see "Management of the
Funds - Investment Advisers" in the Prospectuses of Evergreen International.
Keystone manages investments and supervises the daily business affairs
of Evergreen International subject to the authority of the Trustees. Keystone is
entitled to receive from the Fund an annual fee equal to 0.75% of the first
$200,000,000 of the Fund's average daily net assets, plus 0.65% of the next
$200,000,000, plus 0.55% of the next $200,000,000, plus 0.45% of amounts over
$600,000,000.
CSIA serves as the investment adviser for CoreFunds International. As
investment adviser, CSIA has overall responsibility for portfolio management of
the Fund. For its services as investment adviser, CSIA is entitled to receive a
fee at an annual rate of 0.80% of the Fund's average daily net assets. CSIA has
engaged Martin Currie and Aberdeen as the Fund's sub-advisers. CSIA compensates
Martin Currie and Aberdeen from the advisory fee received from CoreFunds
International. See "Information Regarding the Interim Sub-Advisory Agreements."
-18-
<PAGE>
Each investment adviser may, at its discretion, reduce or waive its fee
or reimburse a Fund for certain of its other expenses in order to reduce its
expense ratios. Each investment adviser may reduce or cease these voluntary
waivers and reimbursements at any time.
Year 2000 Risks. Like other investment companies, financial and
business organizations and individuals around the world, Evergreen International
could be adversely affected if the computer systems used by the Fund's
investment adviser and the Fund's other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." The Fund's
investment adviser is taking steps to address the Year 2000 Problem with respect
to the computer systems that it uses and to obtain assurances that comparable
steps are being taken by the Fund's other major service providers. At this time,
however, there can be no assurance that these steps will be sufficient to avoid
any adverse impact on the Fund.
Administrator
SEI Fund Resources ("SEI") acts as the administrator for CoreFunds
International and provides the Fund with certain administrative personnel and
services including certain legal and accounting services. SEI is entitled to
receive a fee for such services at the annual rate of 0.25% of the Fund's
average daily net assets. SEI will continue during the term of the Interim
Advisory Agreement as CoreFunds International's administrator for the same
compensation as currently received.
Portfolio Management
Gilman C. Gunn has been Senior Vice President and Chief Investment
Officer - International at Keystone and Portfolio Manager of Evergreen
International since joining Keystone in 1991. Mr Gunn has 24 years of banking
and investment management experience.
Distribution of Shares
Evergreen Distributor, Inc. ("EDI"), an affiliate of BISYS Fund
Services, acts as underwriter of Evergreen International's shares. EDI
distributes the Fund's shares directly or through broker-dealers, banks
(including FUNB), or other financial intermediaries. Evergreen International
offers four classes of shares: Class A, Class B, Class C and Class Y. Each class
has separate distribution arrangements. (See "Distribution-Related and
Shareholder Servicing-Related Expenses" below.) No class bears the distribution
expenses relating to the shares of any other class.
-19-
<PAGE>
In the proposed Reorganization, shareholders of CoreFunds International
will receive the corresponding class of shares of Evergreen International which
they currently hold. The Class Y, Class A and Class B shares of Evergreen
International have substantially similar arrangements with respect to the
imposition of Rule 12b-1 distribution and service fees as the Class Y, Class A
and Class B shares of CoreFunds International. Because the Reorganization will
be effected at net asset value without the imposition of a sales charge,
Evergreen International shares acquired by shareholders of CoreFunds
International pursuant to the proposed Reorganization would not be subject to
any initial sales charge or CDSC as a result of the Reorganization. However,
Class B shares acquired as a result of the Reorganization would continue to be
subject to a CDSC upon subsequent redemption to the same extent as if
shareholders had continued to hold their shares of CoreFunds International. The
CDSC applicable to Class B shares of Evergreen International received in the
Reorganization will be the CDSC schedule of CoreFunds International in effect at
the time Class B shares of CoreFunds International were originally purchased.
The following is a summary description of charges and fees for the
Class Y, Class A and Class B shares of Evergreen International which will be
received by CoreFunds International shareholders in the Reorganization. More
detailed descriptions of the distribution arrangements applicable to the classes
of shares are contained in the respective Evergreen International Prospectuses
and the CoreFunds International Prospectuses and in each Fund's Statement of
Additional Information.
Class Y Shares. Class Y shares are sold at net asset value without any
initial or deferred sales charge and are not subject to distribution-related
fees. Class Y shares are only available to (i) all shareholders of record in one
or more of the Evergreen family of funds for which Evergreen Asset Management
Corp. ("Evergreen Asset") serves as investment adviser as of December 30, 1994,
(ii) certain institutional investors and (iii) investment advisory clients of
FUNB, Evergreen Asset or their affiliates. CoreFunds International shareholders
who receive Evergreen International Class Y shares in the Reorganization and who
wish to make subsequent purchases of Evergreen International shares will be able
to purchase Class Y shares.
Class A Shares. Class A shares are sold at net asset value plus an
initial sales charge and, as indicated below, are subject to
distribution-related fees. For a description of the initial sales charges
applicable to purchases of Class A shares, see "Purchase and Redemption of
Shares - How to Buy Shares" in the applicable Prospectus for Evergreen
International. No initial sales charge will be imposed on Class A shares of
Evergreen International received by CoreFunds International's shareholders in
the Reorganization.
-20-
<PAGE>
Class B Shares. Class B shares are sold without an initial sales charge
but are subject to a CDSC, which ranges from 5% to 1%, if shares are redeemed
during the first six years after the month of purchase. In addition, Class B
shares are subject to distribution-related fees and shareholder
servicing-related fees as described below. Class B shares issued in the
Reorganization will automatically convert to Class A shares after six years in
accordance with the terms of conversion applicable to Class B shares of
CoreFunds International rather than in seven years after the month of purchase
in accordance with the conversion terms applicable to Class B shares of
Evergreen International. For purposes of determining when Class B shares issued
in the Reorganization to shareholders of CoreFunds International will convert to
Class A shares, such shares will be deemed to have been purchased as of the date
Class B shares of CoreFunds International were originally purchased.
Class B shares are subject to higher distribution-related fees than the
corresponding Class A shares on which a front-end sales charge is imposed (until
they convert to Class A shares). The higher fees mean a higher expense ratio, so
Class B shares pay correspondingly lower dividends and may have a lower net
asset value than Class A shares of the Fund.
Additional information regarding the classes of shares of each Fund is
included in its respective Prospectuses and Statement of Additional Information.
Distribution-Related and Shareholder Servicing-Related Expenses.
Evergreen International has adopted a Rule 12b-1 plan with respect to its Class
A shares under which the Class may pay for distribution-related expenses at an
annual rate which may not exceed 0.75% of average daily net assets attributable
to the Class. Payments with respect to Class A shares are currently limited to
0.25% of average daily net assets attributable to the Class. This amount may be
increased to the full plan rate for the Fund by the Trustees without shareholder
approval.
CoreFunds International has adopted a Rule 12b-1 plan with respect to
its Class A shares under which the Class may pay for distribution-related
expenses at an annual rate of 0.25% of average daily net assets attributable to
the Class.
CoreFunds International has not adopted a Rule 12b-1 plan with respect
to Class Y shares.
Each of Evergreen International and CoreFunds International has also
adopted a 12b-1 plan with respect to its Class B shares under which the Class
may pay for distribution-related and shareholder servicing-related expenses at
an annual rate which may not exceed 1.00% of average daily net assets
attributable to the Class.
-21-
<PAGE>
The Class B Rule 12b-1 plans of each Fund provide that, of the total
1.00% 12b-1 fees, up to 0.25% may be for payment in respect of "shareholder
services." Consistent with the requirements of Rule 12b-1 and the applicable
rules of the National Association of Securities Dealers, Inc. ("NASD"),
following the Reorganization Evergreen International may make
distribution-related and shareholder servicing-related payments with respect to
CoreFunds International shares sold prior to the Reorganization including
payments to CoreFunds International's former underwriter.
Additional information regarding the Rule 12b-1 plans adopted by each
Fund is included in its respective Prospectuses and Statement of Additional
Information.
Purchase and Redemption Procedures
Information concerning applicable sales charges and
distribution-related fees is provided above. Investments in the Funds are not
insured. The minimum initial purchase requirement for Evergreen International is
$1,000. The minimum initial purchase requirement for Class A, Class B and Class
Y shares of CoreFunds International is $500, $500 and $1,000,000, respectively.
There is no minimum for subsequent purchases of shares of either Fund. Each Fund
provides for telephone, mail or wire redemption of shares at net asset value as
next determined after receipt of a redemption request on each day the New York
Stock Exchange ("NYSE") is open for trading. Additional information concerning
purchases and redemptions of shares, including how each Fund's net asset value
is determined, is contained in the respective Prospectuses for each Fund. Each
Fund may involuntarily redeem shareholders' accounts that have less than $1,000
($500 for CoreFunds International Class A and Class B shares) of invested funds.
All funds invested in each Fund are invested in full and fractional shares. The
Funds reserve the right to reject any purchase order.
Exchange Privileges
CoreFunds International currently permits holders of Class A and Class
B shares to exchange such shares for Class A and Class B shares of another
CoreFunds, Inc. portfolio. Exchanges of Class Y shares are generally not
permitted. Holders of shares of a class of Evergreen International generally may
exchange their shares for shares of the same class of any other Evergreen fund.
CoreFunds International shareholders will be receiving Class Y, Class A and
Class B shares of Evergreen International in the Reorganization and,
accordingly, with respect to shares of Evergreen International received by
CoreFunds International shareholders in the Reorganization, the exchange
privilege is limited to the Class Y, Class A and Class B shares, as
-22-
<PAGE>
applicable, of other Evergreen funds. Evergreen International limits exchanges
to five per calendar year and three per calendar quarter. No sales charge is
imposed on an exchange. An exchange which represents an initial investment in
another Evergreen fund must amount to at least $1,000. The current exchange
privileges, and the requirements and limitations attendant thereto, are
described in each Fund's respective Prospectuses and Statement of Additional
Information.
Dividend Policy
Evergreen International distributes its investment company taxable
income annually. CoreFunds International distributes net investment income
periodically. Each Fund distributes net realized gains at least annually.
Shareholders begin to earn dividends on the first business day after shares are
purchased unless shares were not paid for, in which case dividends are not
earned until the next business day after payment is received. Dividends and
distributions are reinvested in additional shares of the same class of the
respective Fund, or paid in cash, as a shareholder has elected. See the
respective Prospectuses of each Fund for further information concerning
dividends and distributions.
After the Reorganization, shareholders of CoreFunds International who
have elected to have their dividends and/or distributions reinvested will have
dividends and/or distributions received from Evergreen International reinvested
in shares of Evergreen International. Shareholders of CoreFunds International
who have elected to receive dividends and/or distributions in cash will receive
dividends and/or distributions from Evergreen International in cash after the
Reorganization, although they may, after the Reorganization, elect to have such
dividends and/or distributions reinvested in additional shares of Evergreen
International.
Each of Evergreen International and CoreFunds International has
qualified and intends to continue to qualify to be treated as a regulated
investment company under the Internal Revenue Code of 1986, as amended (the
"Code"). While so qualified, so long as each Fund distributes all of its net
investment company taxable income and any net realized gains to shareholders, it
is expected that a Fund will not be required to pay any federal income taxes on
the amounts so distributed. A 4% nondeductible excise tax will be imposed on
amounts not distributed if a Fund does not meet certain distribution
requirements by the end of each calendar year. Each Fund anticipates meeting
such distribution requirements.
Risks
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<PAGE>
An investment in each Fund is subject to certain risks. There is no
assurance that investment performances will be positive and that the Funds will
meet their investment objectives. For a discussion of each Fund's objectives and
policies, see "Comparison of Investment Objectives and Policies."
Both Funds may employ for hedging purposes the strategy of engaging in
options and futures transactions. The risks involved in these strategies are
described in the "Investment Practices and Restrictions-Options and Futures"
section in the Prospectuses of Evergreen International.
Both Funds invest substantially all of their assets in foreign
securities. Securities markets in foreign countries in which the Funds may
invest are generally not subject to the same degree of regulation as the U.S.
markets and may be more volatile and less liquid than the major U.S. markets.
The differences between investing in foreign and U.S. companies include: (1)
less publicly available information about foreign companies; (2) the lack of
uniform financial accounting standards and practices among countries which could
impair the validity of direct comparisons valuations measures (such as
price/earnings ratios) for securities in different countries; (3) less readily
available market quotations on foreign companies; (4) differences in government
regulation and supervision of foreign stock exchanges, brokers, listed
companies, and banks; (5) differences in legal systems which may affect the
ability to enforce contractual obligations or obtain court judgments; (6)
generally lower foreign stock market volume; (7) the likelihood that foreign
securities may be less liquid or more volatile, which may affect the Fund's
ability to purchase or sell large blocks of securities and thus obtain the best
price; (8) transaction costs, including brokerage charges and custodian charges
associated with holding foreign securities, may be higher; (9) the settlement
period for foreign securities, which are sometimes longer than those for
securities of U.S. issuers, may affect portfolio liquidity; (10) the possibility
that foreign securities held by a Fund may be traded on days that the Fund does
not value its portfolio securities, such as Saturdays and customary business
holidays, and accordingly, the Fund's net asset value may be significantly
affected on days when shareholders do not have access to the Fund; and (11)
political and social instability, expropriation, and political or financial
changes which adversely affect investment in some countries.
Evergreen International, unlike CoreFunds International, may invest in
securities of issuers in emerging markets countries and the formerly communist
countries of Eastern Europe. Investing in securities of issuers in emerging
markets countries involves exposure to economic systems that are generally less
stable than those of developed countries. Investing in companies in emerging
markets countries may involve exposure to national policies that
-24-
<PAGE>
may restrict investment by foreigners and undeveloped legal systems governing
private and foreign investments and private property. The typically small size
of the markets for securities issued by companies in emerging markets countries
and the possibility of a low or nonexistent volume of trading in those
securities may also result in a lack of liquidity and in price volatility for
those securities.
When a Fund invests in foreign securities, they usually will be
denominated in foreign currencies, and the Fund temporarily may hold funds in
foreign currencies. Thus, the value of a Fund's shares may be affected by
changes in exchange rates.
REASONS FOR THE REORGANIZATION
On November 18, 1997, First Union entered into an Agreement and Plan of
Merger with CoreStates Financial, which provided, among other things, for the
Merger of CoreStates Financial with and into a wholly-owned subsidiary of First
Union. The Merger was consummated on April 30, 1998. As a result of the Merger
it is expected that FUNB and its affiliates will succeed to the investment
advisory and administrative functions currently performed for CoreFunds
International by various units of CoreStates Financial and various unaffiliated
parties. It is also expected that CoreStates Financial and its subsidiaries will
no longer, upon completion of the Reorganization and similar reorganizations of
other portfolios of CoreFunds, Inc., provide investment advisory or
administrative services to investment companies.
Based on information received from CSIA and FUNB, at a meeting held on
February 6, 1998, all of the Directors present, including the Independent
Directors, considered and approved the Reorganization as in the best interests
of shareholders of CoreFunds International and determined that the interests of
existing shareholders of CoreFunds International will not be diluted as a result
of the transactions contemplated by the Reorganization. In addition, the
Directors approved the Interim Advisory Agreement and the two Interim
Sub-Advisory Agreements with respect to CoreFunds International.
As noted above, CoreStates Financial has merged with and into a
wholly-owned subsidiary of First Union. CoreStates Financial is the parent
company of CSIA, investment adviser to the mutual funds which comprise
CoreFunds, Inc. The Merger caused, as a matter of law, termination of the
investment advisory agreement between each series of CoreFunds, Inc. and CSIA
with respect to the Fund and the sub-advisory agreements between CSIA and Martin
Currie and between CSIA and Aberdeen. CoreFunds, Inc. has received an order from
the SEC which permits CSIA to continue to act as CoreFunds International's
investment adviser, without shareholder approval, for a period of not more
-25-
<PAGE>
than 150 days from the date the Merger was consummated (April 30, 1998) to the
date of shareholder approval of a new investment advisory agreement. Pursuant to
Rule 15a-4 promulgated by the SEC, Martin Currie and Aberdeen may serve as
sub-advisers to the Fund for 120 days (until August 28, 1998) without
shareholder approval. Accordingly, the Directors considered the recommendations
of CSIA in approving the proposed Reorganization.
In approving the Plan, the Directors reviewed various factors about the
Funds and the proposed Reorganization. There are substantial similarities
between Evergreen International and CoreFunds International. Specifically,
Evergreen International and CoreFunds International have substantially similar
investment objectives and policies and comparable risk profiles. See "Comparison
of Investment Objectives and Policies" below. At the same time, the Board of
Directors evaluated the potential economies of scale associated with larger
mutual funds and concluded that operational efficiencies may be achieved upon
the combination of CoreFunds International with Evergreen International. As of
December 31, 1997, Evergreen International's net assets were approximately $143
million and CoreFunds International's net assets were approximately $161
million.
In addition, assuming that an alternative to the Reorganization would
be to propose that CoreFunds International continue its existence and be
separately managed by FUNB or one of its affiliates, CoreFunds International
would be offered through common distribution channels with the similar Evergreen
International. CoreFunds International would also have to bear the cost of
maintaining its separate existence. CSIA and FUNB believe that the prospect of
dividing the resources of the Evergreen mutual fund organization between two
similar funds could result in each Fund being disadvantaged due to an inability
to achieve optimum size, performance levels and greater economies of scale.
Accordingly, for the reasons noted above and recognizing that there can be no
assurance that any economies of scale or other benefits will be realized, CSIA
and FUNB believe that the proposed Reorganization would be in the best interests
of each Fund and its shareholders.
The Board of Directors of CoreFunds, Inc. met and considered the
recommendation of CSIA and FUNB, and, in addition, considered among other
things, (i) the terms and conditions of the Reorganization; (ii) whether the
Reorganization would result in the dilution of shareholders' interests; (iii)
expense ratios, fees and expenses of Evergreen International and CoreFunds
International and the agreement by Evergreen International's investment adviser
to limit the Fund's annual operating expenses for a period of at least two years
to the current annual operating expenses (before waivers) of Corefunds
International; (iv) the comparative performance records of each of the Funds;
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<PAGE>
(v) compatibility of their investment objectives and policies; (vi) the
investment experience, expertise and resources of FUNB; (vii) the service and
distribution resources available to the Evergreen funds and the broad array of
investment alternatives available to shareholders of the Evergreen funds; (viii)
the personnel and financial resources of First Union and its affiliates; (ix)
the fact that FUNB will bear the expenses incurred by CoreFunds International in
connection with the Reorganization; (x) the fact that Evergreen International
will assume the identified liabilities of CoreFunds International; and (xi) the
expected federal income tax consequences of the Reorganization.
The Directors also considered the benefits to be derived by
shareholders of CoreFunds International from the sale of its assets to Evergreen
International. In this regard, the Directors considered the potential benefits
of being associated with a larger entity and the economies of scale that could
be realized by the participation in such an entity by shareholders of CoreFunds
International.
In addition, the Directors considered that there are alternatives
available to shareholders of CoreFunds International, including the ability to
redeem their shares, as well as the option to vote against the Reorganization.
Section 15(f) of the 1940 Act provides that when a change in the
control of an investment adviser occurs, the investment adviser or any of its
affiliated persons may receive any amount or benefit in connection therewith
under certain conditions. One condition is that for three years thereafter, at
least 75% of the board of directors of a surviving investment company are not
"interested persons" of the company's investment adviser or of the investment
adviser of the terminating investment company. Another condition is that no
"unfair burden" is imposed on the investment company as a result of the
understandings applicable thereto. The term "unfair burden" is considered under
the 1940 Act to include any arrangement during the two-year period after the
transaction whereby the investment adviser (or predecessor or successor
adviser), or any "interested person" of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with the
purchase or sale of securities or other property to, from or on behalf of the
investment company (other than fees for bona fide principal underwriting
services). FUNB advised CoreFunds, Inc. that it intends to comply with
conditions set forth in Section 15(f).
During their consideration of the Reorganization the
Directors met with Fund counsel regarding the legal issues
-27-
<PAGE>
involved. The Trustees of Evergreen International Trust also concluded at a
meeting on February 11, 1998 that the proposed Reorganization would be in the
best interests of shareholders of Evergreen International and that the interests
of the shareholders of Evergreen International would not be diluted as a result
of the transactions contemplated by the Reorganization.
The Directors of CoreFunds, Inc. have voted to retain their ability to
make claims under their existing Directors and Officers Errors and Omissions
Liability Insurance Policy for a period of three years following the
consummation of the Reorganization. CoreStates Financial and First Union have
agreed to take appropriate steps to insure that the cost of extending such
coverage will not be borne by CoreFunds International's shareholders.
THE DIRECTORS OF COREFUNDS, INC. RECOMMEND
THAT THE SHAREHOLDERS OF COREFUNDS INTERNATIONAL APPROVE
THE PROPOSED REORGANIZATION.
Agreement and Plan of Reorganization
The following summary is qualified in its entirety by reference to the
Plan (Exhibit A hereto).
The Plan provides that Evergreen International will acquire all of the
assets of CoreFunds International in exchange for shares of Evergreen
International and the assumption by Evergreen International of the identified
liabilities of CoreFunds International on or about July 27, 1998 or such other
date as may be agreed upon by the parties (the "Closing Date"). Prior to the
Closing Date, CoreFunds International will endeavor to discharge all of its
known liabilities and obligations. Evergreen International will not assume any
liabilities or obligations of CoreFunds International other than those reflected
in an unaudited statement of assets and liabilities of CoreFunds International
prepared as of the close of regular trading on the NYSE, currently 4:00 p.m.
Eastern time, on the business day immediately prior to the Closing Date. The
number of full and fractional shares of each class of Evergreen International to
be received by the shareholders of CoreFunds International will be determined by
multiplying the respective outstanding class of shares of CoreFunds
International by a factor which shall be computed by dividing the net asset
value per share of the respective class of shares of CoreFunds International by
the net asset value per share of the respective class of shares of Evergreen
International. Such computations will take place as of the close of regular
trading on the NYSE on the business day immediately prior to the Closing Date.
The net asset value per share of each class will be determined by dividing
assets, less liabilities, in each case attributable to the respective class, by
the total number of outstanding shares.
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<PAGE>
State Street Bank and Trust Company, the custodian for Evergreen
International, will compute the value of each Fund's respective portfolio
securities. The method of valuation employed will be consistent with the
procedures set forth in the Prospectuses and Statement of Additional Information
of Evergreen International, Rule 22c-1 under the 1940 Act, and with the
interpretations of such Rule by the SEC's Division of Investment Management.
At or prior to the Closing Date, CoreFunds International will have
declared a dividend or dividends and distribution or distributions which,
together with all previous dividends and distributions, shall have the effect of
distributing to the Fund's shareholders (in shares of the Fund, or in cash, as
the shareholder has previously elected) all of the Fund's net investment company
taxable income for the taxable period ending on the Closing Date (computed
without regard to any deduction for dividends paid) and all of its net capital
gains realized in all taxable periods ending on the Closing Date (after
reductions for any capital loss carryforward).
As soon after the Closing Date as conveniently practicable, CoreFunds
International will liquidate and distribute pro rata to shareholders of record
as of the close of business on the Closing Date the full and fractional shares
of Evergreen International received by CoreFunds International. Such liquidation
and distribution will be accomplished by the establishment of accounts in the
names of the Fund's shareholders on Evergreen International's share records of
its transfer agent. Each account will represent the respective pro rata number
of full and fractional shares of Evergreen International due to the Fund's
shareholders. All issued and outstanding shares of CoreFunds International,
including those represented by certificates, will be canceled. The shares of
Evergreen International to be issued will have no preemptive or conversion
rights. After these distributions and the winding up of its affairs, CoreFunds
International will be terminated. In connection with such termination,
CoreFunds, Inc. will file with the SEC an application for termination as a
registered investment company.
The consummation of the Reorganization is subject to the conditions set
forth in the Plan, including approval by CoreFunds International's shareholders,
accuracy of various representations and warranties and receipt of opinions of
counsel, including opinions with respect to those matters referred to in
"Federal Income Tax Consequences" below. Notwithstanding approval of CoreFunds
International's shareholders, the Plan may be terminated (a) by the mutual
agreement of CoreFunds International and Evergreen International; or (b) at or
prior to the Closing Date by either party (i) because of a breach by the other
party of any representation, warranty, or agreement contained therein to be
performed at or prior to the Closing Date if not cured
-29-
<PAGE>
within 30 days, or (ii) because a condition to the obligation of the terminating
party has not been met and it reasonably appears that it cannot be met.
The expenses of CoreFunds International in connection with the
Reorganization (including the cost of any proxy soliciting agent) will be borne
by FUNB whether or not the Reorganization is consummated. No portion of such
expenses will be borne directly or indirectly by CoreFunds International or its
shareholders.
If the Reorganization is not approved by shareholders of CoreFunds
International, the Board of Directors of CoreFunds, Inc. will consider other
possible courses of action in the best interests of shareholders.
Federal Income Tax Consequences
The Reorganization is intended to qualify for federal income tax
purposes as a tax-free reorganization under section 368(a) of the Code. As a
condition to the closing of the Reorganization, CoreFunds International will
receive an opinion of Sullivan & Worcester LLP to the effect that, on the basis
of the existing provisions of the Code, U.S. Treasury regulations issued
thereunder, current administrative rules, pronouncements and court decisions,
for federal income tax purposes, upon consummation of the Reorganization:
(1) The transfer of all of the assets of CoreFunds International solely
in exchange for shares of Evergreen International and the assumption by
Evergreen International of the identified liabilities, followed by the
distribution of Evergreen International's shares by CoreFunds International in
dissolution and liquidation of CoreFunds International, will constitute a
"reorganization" within the meaning of section 368(a)(1)(D) of the Code, and
Evergreen International and CoreFunds International will each be a "party to a
reorganization" within the meaning of section 368(b) of the Code;
(2) No gain or loss will be recognized by CoreFunds International on
the transfer of all of its assets to Evergreen International solely in exchange
for Evergreen International's shares and the assumption by Evergreen
International of the identified liabilities of CoreFunds International or upon
the distribution of Evergreen International's shares to CoreFunds
International's shareholders in exchange for their shares of CoreFunds
International;
(3) The tax basis of the assets transferred will be the same to
Evergreen International as the tax basis of such assets to CoreFunds
International immediately prior to the Reorganization, and the holding period of
such assets in the
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<PAGE>
hands of Evergreen International will include the period during
which the assets were held by CoreFunds International;
(4) No gain or loss will be recognized by Evergreen International upon
the receipt of the assets from CoreFunds International solely in exchange for
the shares of Evergreen International and the assumption by Evergreen
International of the identified liabilities of CoreFunds International;
(5) No gain or loss will be recognized by CoreFunds International's
shareholders upon the issuance of the shares of Evergreen International to them,
provided they receive solely such shares (including fractional shares) in
exchange for their shares of CoreFunds International; and
(6) The aggregate tax basis of the shares of Evergreen International,
including any fractional shares, received by each of the shareholders of
CoreFunds International pursuant to the Reorganization will be the same as the
aggregate tax basis of the shares of CoreFunds International held by such
shareholder immediately prior to the Reorganization, and the holding period of
the shares of Evergreen International, including fractional shares, received by
each such shareholder will include the period during which the shares of
CoreFunds International exchanged therefor were held by such shareholder
(provided that the shares of CoreFunds International were held as a capital
asset on the date of the Reorganization).
Opinions of counsel are not binding upon the Internal Revenue Service
or the courts. If the Reorganization is consummated but does not qualify as a
tax-free reorganization under the Code, a shareholder of CoreFunds International
would recognize a taxable gain or loss equal to the difference between his or
her tax basis in his or her Fund shares and the fair market value of Evergreen
International shares he or she received. Shareholders of CoreFunds International
should consult their tax advisers regarding the effect, if any, of the proposed
Reorganization in light of their individual circumstances. It is not anticipated
that the securities of the combined portfolio will be sold in significant
amounts in order to comply with the policies and investment practices of
Evergreen International. Since the foregoing discussion relates only to the
federal income tax consequences of the Reorganization, shareholders of CoreFunds
International should also consult their tax advisers as to the state and local
tax consequences, if any, of the Reorganization.
Capital loss carryforwards of CoreFunds International will be available
to Evergreen International to offset capital gains recognized after the
Reorganization, subject to limitations imposed by the Code. These limitations
provide generally that the amount of loss carryforward which may be used in any
year following the closing is an amount equal to the value of all of
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<PAGE>
the outstanding stock of CoreFunds International immediately prior to the
Reorganization, multiplied by a long-term tax-exempt bond rate determined
monthly by the Internal Revenue Service. The rate for February, 1998 was 5.23%.
A capital loss carryforward may generally be used without any limit to offset
gains recognized on sale of assets transferred by CoreFunds International to
Evergreen International pursuant to the Reorganization, to the extent of the
excess of the value of any such asset on the Closing Date over its tax basis.
Pro-forma Capitalization
The following table sets forth the capitalizations of Evergreen
International and CoreFunds International as of December 31, 1997, and the
capitalization of Evergreen International on a pro forma basis as of that date,
giving effect to the proposed acquisition of assets at net asset value and the
conversion of 14,299,191 Evergreen International Class B shares to Class A
shares. The pro forma data reflects an exchange ratio of approximately 1.92464,
1.92464, and 1.92464 Class Y, Class A shares and Class B shares respectively, of
Evergreen International issued for each Class Y, Class A and Class B share,
respectively, of CoreFunds International.
Capitalization of CoreFunds International,
Evergreen International and Evergreen
International (Pro Forma)
<TABLE>
<CAPTION>
CoreFunds Evergreen Evergreen International
International International (After Reorganization)
<S> <C> <C> <C>
------------- ------------- ----------
Net Assets
Class A........................ $2,323,888 N/A $101,050,671
Class B........................ $ 13,990 $143,394,020 $ 44,681,227
Class C........................ N/A N/A N/A
Class Y........................ $158,407,654 N/A $158,407,654
------------ ----------- ------------
Total Net Assets $160,745,532 $143,394,020 $304,139,552
Net Asset Value Per
Share
Class A........................ $13.28 N/A $6.90
Class B........................ $13.28 $6.90 $6.90
Class C........................ N/A N/A N/A
Class Y........................ $13.28 N/A $6.90
Shares Outstanding
Class A........................ 175,016 N/A 14,636,034
Class B........................ 1,054 20,768,615 6,471,452
Class C........................ N/A N/A N/A
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<PAGE>
CoreFunds Evergreen Evergreen International
International International (After Reorganization)
------------- ------------- ----------
Class Y........................ 11,925,445 N/A 22,952,161
----------- --------- ----------
All Classes.................... 12,101,515 20,768,615 44,059,647
</TABLE>
The table set forth above should not be relied upon to reflect the
number of shares to be received in the Reorganization; the actual number of
shares to be received will depend upon the net asset value and number of shares
outstanding of each Fund at the time of the Reorganization.
Shareholder Information
As of May 29, 1998 (the "Record Date"), the following number of each
Class of shares of beneficial interest of CoreFunds International was
outstanding:
Class of Shares
- ---------------
Class Y................................................. 11,685,543
Class A................................................. 171,412
Class B................................................. 2,956
----------
All Classes............................................. 11,859,911
As of March 31, 1998, the officers and Directors of CoreFunds, Inc.
beneficially owned as a group less than 1% of the outstanding shares of
CoreFunds International. To CoreFunds, Inc.'s knowledge, the following persons
owned beneficially or of record more than 5% of CoreFunds International's total
outstanding shares as of March 31, 1998:
<TABLE>
<CAPTION>
Percentage
of Shares Percentage of
of Class Shares of
Before Class After
No. of Reorgani- Reorgani-
Name and Address Class Shares zation zation
- ---------------- ----- ------ --------- ---------
Patterson & Co. Y 11,417,735 97.22% 95.25%
<S> <C> <C> <C> <C>
PNB Personal
Trust Accounting
P.O. Box 7829
Philadelphia, PA
19101-7829
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<PAGE>
Percentage
of Shares Percentage of
of Class Shares of
Before Class After
No. of Reorgani- Reorgani-
Name and Address Class Shares zation zation
- ---------------- ----- ------ --------- ---------
National A 57,338 32.67% 0.79%
Financial
Services Corp.
For Exclusive Use
of Our Customers
200 Liberty
Street, 4th Floor
1 World Financial
Center
New York, NY
10281-1003
Mark E. A 16,040 9.14% 0.22%
Stalnecker &
Susan M.
Stalnecker
9 Briarcrest Dr.
Wallingford, PA
19085-6710
CoreStates Bank, B 206 6.95% 0.01%
NA Cust. for the
IRA of John D.
Leibenguth
3178 Bellview Rd.
Schnecksville, PA
18078-2858
CoreStates Bank, B 367 12.42% 0.01%
NA Cust. for the
IRA of
Christopher A.
Amalfitano
2518 Grendon Dr.
Wilmington, DE
19808-4057
CoreStates Bank, B 180 6.08% 0.01%
NA Cust. for the
Rollover IRA of
Robert Gravely
762 Church Ln.
Yeanon, PA
19050-3536
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<PAGE>
CoreStates Bank, B 1,210 40.93% 0.04%
NA Cust. for the
Rollover IRA of
Kathleen D.
Carberry
421 Sunset Ave.
Maple Shade, NJ
08052-2816
CoreStates Bank, B 363 12.29% 0.01%
NA Cust. for the
IRA of Robert G.
Hedly, Sr.
3007 Greens Way
Cir.
Collegeville, PA
19426-3184
Luis A. Rodriguez B 251 8.50% 0.01%
3833 N. 5th St.
2nd Floor
Philadelphia, PA
19140-3337
</TABLE>
COMPARISON OF INVESTMENT OBJECTIVES AND POLICIES
The following discussion is based upon and qualified in its entirety by
the descriptions of the respective investment objectives, policies and
restrictions set forth in the respective Prospectuses and Statement of
Additional Information of the Funds. The investment objective, policies and
restrictions of Evergreen International can be found in the Prospectuses of
Evergreen International under the caption "Description of the Funds - Investment
Objectives and Policies." Evergreen International's Prospectuses also offer
additional funds advised by FUNB or its affiliates. These additional funds are
not involved in the Reorganization, their investment objectives and policies are
not discussed in this Prospectus/Proxy Statement, and their shares are not
offered hereby. The investment objective, policies and restrictions of CoreFunds
International can be found in the respective Prospectuses of the Fund under the
caption "Information on the Funds." Unlike the investment objective of CoreFunds
International, which is fundamental, the investment objective of Evergreen
International is non- fundamental and can be changed by the Board of Trustees
without shareholder approval.
The investment objective of Evergreen International is to seek long-term
growth of capital. As a secondary objective, the Fund seeks modest income. In
pursuing its investment objectives, the Fund invests primarily in equity
securities issued by
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<PAGE>
established, quality companies located in countries with developed markets. The
Fund may invest a portion of its assets in equity securities of companies
located in certain emerging markets and the formerly communist countries of
Eastern Europe. Countries with emerging markets are generally those where the
per capita income is in the low to middle ranges, as determined by the World
Bank.
Under normal circumstances, Evergreen International invests at least
65% of its total assets in the securities of companies in at least three
different countries (other than the United States). For this purpose, a company
is deemed to be located in a particular country if (1) it is organized under the
laws of that country; (2) its principal securities trading market is in that
country; (3) it derives at least 50% of its revenues or profits from goods
produced or sold, investments made, or services performed in that country; or
(4) it has at least 50% of its assets located in that country. Excluding
repurchase agreements, the Fund currently follows a policy of investing solely
in securities of non-U.S. issuers.
While Evergreen International focuses on equity securities, it may
invest a portion of its assets in debt securities issued by public or private
issuers with any rating or that are unrated; provided, however, that the Fund
may only invest up to 10% of its total assets in high yield/high risk bonds,
which are debt securities rated below investment grade; i.e., BB or lower by
Standard & Poor's Ratings Group ("S&P") or Ba or lower by Moody's Investors
Service ("Moody's"). Securities rated below investment grade are considered
predominantly speculative with respect to the ability of the issuer to meet
principal and interest payments. For additional information concerning the risks
of investments in high yield bonds, see "Special Risk Considerations-Risk
Characteristics of High Yield Bonds" in the Prospectuses of Evergreen
International.
Evergreen International may also invest in payment-in-kind securities
issued by public or private issuers, as well as preferred stocks, convertible
securities, and rights and warrants to purchase common stocks, when the Fund's
investment adviser determines that such investment is consistent with the Fund's
investment objectives.
The investment objective of CoreFunds International is to seek
long-term capital appreciation, consistent with reasonable risk, by investing
primarily in appreciation-oriented equity
securities of companies located outside the United States. Under normal market
conditions, CoreFunds International will invest at least 65% of its total assets
in the equity securities of companies located in at least three different
countries. Companies are located in a country if they are headquartered or doing
business primarily in that country.
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<PAGE>
CoreFunds International invests in appreciation-oriented equity
securities of companies located outside the United States, including Australia,
Canada, France, Hong Kong, Japan, Mexico, Singapore, Sweden, Switzerland,
Germany, Netherlands and the United Kingdom. "Appreciation-oriented" securities
are equity securities of companies that the Fund's adviser and sub-advisers
believe have the greatest potential for long-term growth.
The characteristics of each investment policy and the associated risks
are described in each Fund's respective Prospectuses and Statement of Additional
Information. The Funds have other investment policies and restrictions which are
also set forth in the Prospectuses and Statement of Additional Information of
each Fund.
COMPARATIVE INFORMATION ON SHAREHOLDERS' RIGHTS
Forms of Organization
Evergreen International Trust and CoreFunds, Inc. are open-end
management investment companies registered with the SEC under the 1940 Act,
which continuously offer shares to the public. Evergreen International Trust is
organized as a Delaware business trust and is governed by its Declaration of
Trust, By-Laws and a Board of Trustees. CoreFunds, Inc. is organized as a
Maryland corporation and is governed by its Articles of Incorporation, ByLaws
and a Board of Directors. Each entity is also governed by applicable Delaware,
Maryland and federal law. Evergreen International is a series of Evergreen
International Trust and CoreFunds International is a series of CoreFunds, Inc.
Capitalization
The beneficial interests in Evergreen International are represented by
an unlimited number of transferable shares of beneficial interest, $.001 par
value per share. CoreFunds, Inc.'s authorized shares consist of 30 billion
shares of common stock, par value $.001 per share, of which 25 million are
classified as Class Y shares, 25 million are classified as Class A shares, and
25 million are classified as Class B shares of CoreFunds International.
Evergreen International Trust's Declaration of Trust and CoreFunds, Inc.'s
Articles of Incorporation permit the Trustees or Directors, respectively, to
allocate shares into an unlimited number of series, and classes thereof, with
rights determined by the Trustees or Directors, respectively, all without
shareholder approval. Fractional shares may be issued by either Fund. Each
Fund's shares represent equal proportionate interests in the assets belonging to
the Funds. Shareholders of each Fund are entitled to receive dividends and other
amounts as determined by the Trustees or Directors. Shareholders of each Fund
vote separately, by class, as to matters, such as approval of or amendments to
Rule 12b-1
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<PAGE>
distribution plans, that affect only their particular class and by Fund as to
matters, such as approval of or amendments to investment advisory agreements or
proposed reorganizations, that affect only their particular Fund.
Shareholder Liability
Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation of personal liability extended to stockholders
of Delaware corporations. No similar statutory or other authority limiting
business trust shareholder liability exists in any other state. As a result, to
the extent that Evergreen International Trust or a shareholder is subject to the
jurisdiction of courts in those states, it is possible that a court may not
apply Delaware law, and may thereby subject shareholders of Evergreen
International Trust to liability. To guard against this risk, the Declaration of
Trust of Evergreen International Trust (a) provides that any written obligation
of the Trust may contain a statement that such obligation may only be enforced
against the assets of the Trust or the particular series in question and the
obligation is not binding upon the shareholders of the Trust; however, the
omission of such a disclaimer will not operate to create personal liability for
any shareholder; and (b) provides for indemnification out of Trust property of
any shareholder held personally liable for the obligations of the Trust.
Accordingly, the risk of a shareholder of Evergreen International Trust
incurring financial loss beyond that shareholder's investment because of
shareholder liability is limited to circumstances in which: (i) the court
refuses to apply Delaware law; (ii) no contractual limitation of liability was
in effect; and (iii) the Trust itself is unable to meet its obligations. In
light of Delaware law, the nature of the Trust's business, and the nature of its
assets, the risk of personal liability to a shareholder of Evergreen
International Trust is remote.
Under Maryland law, shareholders of CoreFunds International have no
personal liability as such for the acts or obligations of the Fund or CoreFunds,
Inc., as the case may be.
Shareholder Meetings and Voting Rights
Neither Evergreen International Trust on behalf of Evergreen
International nor CoreFunds, Inc. on behalf of CoreFunds International is
required to hold annual meetings of shareholders. However, a meeting of
shareholders for the purpose of voting upon the question of removal of a Trustee
or Director must be called when requested in writing by the holders of at least
10% of the outstanding shares of Evergreen International Trust or CoreFunds,
Inc. In addition, each is required to call a meeting of shareholders for the
purpose of electing Trustees or Directors if, at any time, less than a majority
of the Trustees
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<PAGE>
or Directors then holding office were elected by shareholders. Neither Evergreen
International Trust nor CoreFunds, Inc. currently intends to hold regular
shareholder meetings and neither entity permits cumulative voting. Except when a
larger quorum is required by applicable law, with respect to Evergreen
International, twenty-five percent (25%) of the outstanding shares entitled to
vote, and with respect to CoreFunds International, a majority of the outstanding
shares entitled to vote constitutes a quorum for consideration of such matter.
For Evergreen International, a majority of the votes cast and entitled to vote,
and for CoreFunds International, a majority of the outstanding shares, is
sufficient to act on a matter (unless otherwise specifically required by the
applicable governing documents or other law, including the 1940 Act).
Under the Declaration of Trust of Evergreen International Trust, each
share of Evergreen International will be entitled to one vote for each dollar of
net asset value applicable to each share. Under the voting provisions governing
CoreFunds International, each share is entitled to one vote. Over time, the net
asset values of the mutual funds which are each a series of CoreFunds, Inc. have
changed in relation to one another and are expected to continue to do so in the
future. Because of the divergence in net asset values, a given dollar investment
in a fund with a lower net asset value will purchase more shares, and under
CoreFunds International's voting provisions, have more votes, than the same
investment in a fund with a higher net asset value. Under the Declaration of
Trust of Evergreen International Trust, voting power is related to the dollar
value of the shareholders' investment rather than to the number of shares held.
Liquidation or Dissolution
In the event of the liquidation of Evergreen International or CoreFunds
International, the shareholders are entitled to receive, when and as declared by
the Trustees or Directors, respectively, the excess of the assets belonging to
such Fund or attributable to the class over the liabilities belonging to the
Fund or attributable to the class. In either case, the assets so distributable
to shareholders of the Fund will be distributed among the shareholders in
proportion to the number of shares of a class of the Fund held by them and
recorded on the books of the Fund.
Liability and Indemnification of Trustees
The By-Laws of CoreFunds, Inc. provide that a present or former
Director or officer is entitled to indemnification to the full extent
permissible under the laws of the State of Maryland and the 1940 Act against
liabilities and expenses with respect to claims related to his or her position
with CoreFunds, Inc.,
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<PAGE>
provided that no indemnification shall be provided to a Director or officer
against any liability to CoreFunds, Inc. or any shareholder by reasons of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.
Under the Declaration of Trust of Evergreen International Trust, a
Trustee is liable to the Trust and its shareholders only for such Trustee's own
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of the office of Trustee or the discharge of such
Trustee's functions. As provided in the Declaration of Trust, each Trustee of
the Trust is entitled to be indemnified against all liabilities against him or
her, including the costs of litigation, unless it is determined that the Trustee
(i) did not act in good faith in the reasonable belief that such Trustee's
action was in or not opposed to the best interests of the Trust; (ii) had acted
with willful misfeasance, bad faith, gross negligence or reckless disregard of
such Trustee's duties; and (iii) in a criminal proceeding, had reasonable cause
to believe that such Trustee's conduct was unlawful (collectively, "disabling
conduct"). A determination that the Trustee did not engage in disabling conduct
and is, therefore, entitled to indemnification may be based upon the outcome of
a court action or administrative proceeding or by (a) a vote of a majority of
those Trustees who are neither "interested persons" within the meaning of the
1940 Act nor parties to the proceeding or (b) an independent legal counsel in a
written opinion. The Trust may also advance money for such litigation expenses
provided that the Trustee undertakes to repay the Trust if his or her conduct is
later determined to preclude indemnification and certain other conditions are
met.
The foregoing is only a summary of certain characteristics of the
operations of the Declaration of Trust of Evergreen International Trust,
Articles of Incorporation of CoreFunds, Inc., By-Laws, Delaware and Maryland law
and is not a complete description of those documents or law. Shareholders should
refer to the provisions of such Declaration of Trust, Articles of Incorporation,
By-Laws, and Delaware and Maryland law directly for more complete information.
-40-
<PAGE>
INFORMATION REGARDING THE INTERIM ADVISORY AGREEMENT
Introduction
In view of the Merger discussed above, and the factors discussed below,
the Board of Directors of CoreFunds, Inc. recommends that shareholders of
CoreFunds International approve the Interim Advisory Agreement. The Merger
became effective on April 30, 1998. Pursuant to an order received from the SEC
all fees payable under the Interim Advisory Agreement will be placed in escrow
and paid to CSIA if shareholders approve the contract within 150 days of its
effective date. The Interim Advisory Agreement will remain in effect until the
earlier of the Closing Date for the Reorganization or two years from its
effective date. The terms of the Interim Advisory Agreement are essentially the
same as the Previous Advisory Agreement (as defined below). The only difference
between the Previous Advisory Agreement and the Interim Advisory Agreement, if
approved by shareholders, is the length of time each Agreement is in effect. A
description of the Interim Advisory Agreement pursuant to which CSIA continues
as investment adviser to CoreFunds International, as well as the services to be
provided by CSIA pursuant thereto, is set forth below under "Advisory Services."
The description of the Interim Advisory Agreement in this Prospectus/Proxy
Statement is qualified in its entirety by reference to the Interim Advisory
Agreement, attached hereto as Exhibit B.
CSIA, a Pennsylvania corporation, is an indirect wholly-owned
subsidiary of First Union. CSIA's address is 1500 Market Street, Philadelphia,
Pennsylvania 19102. CSIA has served as investment adviser pursuant to an
Investment Advisory Agreement dated April 12, 1996. As used herein, the
Investment Advisory Agreement for CoreFunds International is referred to as the
"Previous Advisory Agreement." At a meeting of the Board of Directors of
CoreFunds, Inc. held on February 6, 1998, the Directors, including a majority of
the Independent Directors, approved the Interim Advisory Agreement for CoreFunds
International.
The Directors have authorized CoreFunds, Inc., on behalf of CoreFunds
International, to enter into the Interim Advisory Agreement with CSIA. Such
Agreement became effective on April 30, 1998. If the Interim Advisory Agreement
for CoreFunds International is not approved by shareholders, the Directors will
consider appropriate actions to be taken with respect to CoreFunds
International's investment advisory arrangements at that time. The Previous
Advisory Agreement was last approved by the Directors, including a majority of
the Independent Directors, on June 5, 1997.
-41-
<PAGE>
Comparison of the Interim Advisory Agreement and the Previous
Advisory Agreement
Advisory Services. The management and advisory services to be provided
by CSIA under the Interim Advisory Agreement are identical to those currently
provided by CSIA under the Previous Advisory Agreement. Under the Previous
Advisory Agreement and Interim Advisory Agreement, CSIA manages the investment
portfolio of CoreFunds International, makes decisions about and places orders
for all purchases and sales of the Fund's securities, and maintains certain
records relating to these purchases and sales.
Fees. The investment advisory fees for CoreFunds International under the
Previous Advisory Agreement and the Interim Advisory Agreement are identical.
See "Summary - Investment Advisers."
Payment of Expenses and Transaction Charges. Under the Previous
Advisory Agreement, CSIA was required to pay all expenses incurred by it in
connection with its activities under the Agreement other than the cost of
securities (including brokerage commissions, if any) purchased for the Fund and
the cost of obtaining market quotations of portfolio securities held by the
Fund.
The Interim Advisory Agreement contains an identical provision.
Limitation of Liability. The Previous Advisory Agreement provided that
CSIA was not liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of the Agreement, except
a loss resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of CSIA in the performance of its duties
or from reckless disregard by it of its obligations and duties under the
Agreement.
The Interim Advisory Agreement contains an identical provision.
Termination; Assignment. The Interim Advisory Agreement provides that
it may be terminated without penalty by vote of a majority of the outstanding
voting securities of CoreFunds International (as defined in the 1940 Act) or by
a vote of a majority of CoreFunds, Inc.'s entire Board of Directors on 60 days'
written notice to CSIA or by CSIA on 60 days' written notice to CoreFunds, Inc.
Also, the Interim Advisory Agreement will automatically terminate in the event
of its assignment (as defined in the 1940 Act).
-42-
<PAGE>
The Previous Advisory Agreement contained identical provisions as to
termination and assignment.
Information About CoreFunds International's Investment Adviser
CSIA, a registered investment adviser, manages, in addition to the
Fund, other funds of CoreFunds, Inc. The name and address of each executive
officer and director of CoreStates is set forth in Appendix A to this
Prospectus/Proxy Statement.
During the fiscal years ended June 30, 1997, 1996 and 1995, CSIA
received from CoreFunds International management fees of $1,131,220, $964,647,
and $861,592, respectively, and voluntarily waived fees of $0, $20,021 and
$57,439, respectively. CSIA is not currently waiving a portion of its management
fee. See "Comparison of Fees and Expenses." CoreStates Bank, N.A. acts as
custodian for CoreFunds International and during the fiscal year ended June 30,
1997, received $216,408 in custodian fees.
The Board of Directors considered the Interim Advisory Agreement as
part of its overall approval of the Plan. The Board of Directors considered,
among other things, the factors set forth above in "Reasons for the
Reorganization." The Board of Directors also considered the fact that there were
no material differences between the terms of the Interim Advisory Agreement and
the terms of the Previous Advisory Agreement.
THE DIRECTORS OF COREFUNDS, INC. RECOMMEND
THAT THE SHAREHOLDERS OF COREFUNDS INTERNATIONAL
APPROVE THE INTERIM ADVISORY AGREEMENT.
INFORMATION REGARDING THE INTERIM SUB-ADVISORY AGREEMENTS
Introduction
In view of the Merger discussed above, and the factors discussed below,
the Board of Directors of CoreFunds, Inc. recommends that shareholders of
CoreFunds International approve the Interim Sub-Advisory Agreements. The Interim
Sub-Advisory Agreements became effective on April 30, 1998. Pursuant to Rule
15a-4 under the 1940 Act, Martin Currie and Aberdeen may serve as sub-advisers
to CoreFunds International under the Interim Sub- Advisory Agreements for up to
120 days after their effectiveness, so long as the Interim Sub-Advisory
Agreements have been approved by the Directors of CoreFunds, Inc., including a
majority of the Independent Directors. This approval has been obtained. The two
Interim Sub-Advisory Agreements are also being submitted to shareholders of
CoreFunds International for their approval. The Interim Sub-Advisory Agreements
will remain in effect until the earlier of the Closing Date of the
Reorganization or two years from their effective date. The terms of the Interim
Sub-Advisory Agreements are essentially the same as the Previous Sub-Advisory
-43-
<PAGE>
Agreements (as defined below), except for the length of time the Agreements are
in effect. The description of the Interim Sub- Advisory Agreements in this
Prospectus/Proxy Statement is qualified in its entirety by reference to the two
Interim Sub- Advisory Agreements, attached hereto as Exhibits C and D.
CSIA has general oversight responsibility for the investment advisory
services provided to CoreFunds International by Martin Currie and Aberdeen. CSIA
also is responsible for managing the allocation of CoreFunds International's
assets between Martin Currie and Aberdeen.
Martin Currie, Saltire Court, 20 Castle Terrace, Edinburgh EH 2ES,
Scotland, has served as sub-adviser to CoreFunds International pursuant to a
Sub-Advisory Agreement dated April 12, 1996 (the "Previous Martin Currie
Agreement"), and Aberdeen, Nations Bank Tower, 22nd Floor, Fort Lauderdale,
Florida 33394, has served as sub-adviser to CoreFunds pursuant to a Sub-Advisory
Agreement dated December 15, 1997 (the "Previous Aberdeen Agreement"; the
"Previous Martin Currie Agreement" and the "Previous Aberdeen Agreement" are
referred to collectively as the "Previous Sub-Advisory Agreements"). The
Previous Martin Currie Agreement was last approved by the Directors, including a
majority of the Independent Directors, on June 5, 1997 and was approved by
shareholders on April 12, 1996. The Previous Aberdeen Agreement was approved by
the Directors, including a majority of the Independent Directors, on September
4, 1997 and by shareholders on December 15, 1997.
Martin Currie, a New York corporation, is a wholly-owned subsidiary of
Martin Currie, Ltd., which is owned principally by its full-time working
executives. Founded in 1881, Martin Currie, Ltd. is one of Scotland's largest
independent investment management groups. Martin Currie was established by
Martin Currie, Ltd. to provide foreign investment advisory services to U.S.
clients.
Aberdeen, a Delaware corporation, is wholly owned by Aberdeen Asset
Management PLC, a publicly-held corporation based in the United Kingdom. An
indirect subsidiary of First Union owns approximately 10.3% of Aberdeen Asset
Management PLC. Aberdeen Asset Management PLC has assets under management of
approximately $18.1 billion. It formed Aberdeen in 1995 to provide foreign
investment advisory services in the United States.
Comparison of the Interim Sub-Advisory Agreements and the
Previous Sub-Advisory Agreements
Sub-Advisory Services. The management and advisory services to be provided
by Martin Currie and Aberdeen are identical to those currently provided by them
under the Previous Sub-Advisory
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Agreements. Under the Previous Sub-Advisory Agreements, Martin Currie and
Aberdeen were each responsible for providing a continuous investment program for
that portion of CoreFunds International's assets allocated to it by CSIA.
Fees. The investment sub-advisory fees under the Previous Sub-Advisory
Agreements and the Interim Sub-Advisory Agreements are identical. As
compensation for services under the Previous Sub-Advisory Agreements, Martin
Currie was paid by CSIA a monthly fee equal to 0.50% of the portion of CoreFunds
International's daily net assets allocated to Martin Currie, and Aberdeen was
paid by CSIA a monthly fee equal to 0.375% of the portion of CoreFunds
International's daily net assets allocated to Aberdeen. For the fiscal years
ended June 30, 1997, 1996, and 1995, Martin Currie received $362,901, $509,474,
and $493,328, respectively, and Aberdeen received $79,385, $15,115, and $0,
respectively, in advisory fees.
Limitation of Liability. The Previous Sub-Advisory Agreements provided
that neither Martin Currie nor Aberdeen was liable to CoreFunds International,
except that each would be liable for a loss resulting from a breach of fiduciary
duty with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith, or gross negligence by it. The
Interim Sub-Advisory Agreements contain identical provisions.
Termination; Assignment. The Interim Sub-Advisory Agreements each
provide that it may be terminated on 60 days' written notice without penalty by
CoreFunds, Inc.'s Board of Directors, by a vote of a majority of CoreFunds,
Inc.'s outstanding securities, CSIA, or the respective sub-adviser. The
Agreements also terminate in the event of their assignment. The Previous
Sub-Advisory Agreements contained identical provisions as to termination and
assignment.
The Directors considered the Interim Sub-Advisory Agreements as part of
its overall approval of the Plan. The Directors considered, among other things,
the factors set forth above in "Reasons for the Reorganization." The Directors
also considered the fact that there were no material differences between the
terms of the Interim Sub-Advisory Agreements and the terms of the Previous
Sub-Advisory Agreements.
THE DIRECTORS OF COREFUNDS, INC. RECOMMEND
THAT THE SHAREHOLDERS OF COREFUNDS INTERNATIONAL
APPROVE THE INTERIM SUB-ADVISORY AGREEMENTS
WITH MARTIN CURRIE AND ABERDEEN.
ADDITIONAL INFORMATION
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Evergreen International. Information concerning the operation and
management of Evergreen International is incorporated herein by reference from
the Prospectuses dated March 1, 1998, copies of which are enclosed, and
Statement of Additional Information of the same date. A copy of such Statement
of Additional Information is available upon request and without charge by
writing to Evergreen International at the address listed on the cover page of
this Prospectus/Proxy Statement or by calling toll-free 1-800-343-2898.
CoreFunds International . Information about the Fund is included in its
current Prospectuses dated November 1, 1997 and in the Statement of Additional
Information of the same date, that have been filed with the SEC, all of which
are incorporated herein by reference. Copies of the Prospectuses and Statement
of Additional Information are available upon request and without charge by
writing to CoreFunds International at the address listed on the cover page of
this Prospectus/Proxy Statement or by calling toll-free 1-800-355-2673.
Evergreen International and CoreFunds International are each subject to
the informational requirements of the Securities Exchange Act of 1934 and the
1940 Act, and in accordance therewith file reports and other information
including proxy material, and charter documents with the SEC. These items can be
inspected and copies obtained at the Public Reference Facilities maintained by
the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
Regional Offices located at Northwest Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661- 2511 and Seven World Trade Center, Suite 1300, New
York, New York 10048.
The SEC maintains a Web site (http://www.sec.gov) that contains each
Fund's Statement of Additional Information and other material incorporated by
reference herein together with other information regarding Evergreen
International and CoreFunds International.
VOTING INFORMATION CONCERNING THE MEETING
This Prospectus/Proxy Statement is furnished in connection with a
solicitation of proxies by the Directors of CoreFunds, Inc. to be used at the
Special Meeting of Shareholders to be held at 2:00 p.m., July 17, 1998, at the
offices of the Evergreen Funds, 200 Berkeley Street, 26th Floor, Boston,
Massachusetts 02116, and at any adjournments thereof. This Prospectus/Proxy
Statement, along with a Notice of the Meeting and a proxy card, is first being
mailed to shareholders of CoreFunds International on or about June 1, 1998. Only
shareholders of record as of the close of business on the Record Date will be
entitled to notice of, and to vote at, the Meeting or any adjournment thereof.
The holders of a majority of the outstanding shares at the close of
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business on the Record Date present in person or represented by proxy will
constitute a quorum for the Meeting. If the enclosed form of proxy is properly
executed and returned in time to be voted at the Meeting, the proxies named
therein will vote the shares represented by the proxy in accordance with the
instructions marked thereon. Unmarked proxies will be voted FOR the proposed
Reorganization, FOR the Interim Advisory Agreement, FOR each of the Interim
Sub-Advisory Agreements and FOR any other matters deemed appropriate. Proxies
that reflect abstentions and "broker non-votes" (i.e., shares held by brokers or
nominees as to which (i) instructions have not been received from the beneficial
owners or the persons entitled to vote or (ii) the broker or nominee does not
have discretionary voting power on a particular matter) will be counted as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum, but will have the effect of being counted as votes against
the Plan, the Interim Advisory Agreement and each of the Interim Sub-Advisory
Agreements which must be approved by a percentage of the shares present at the
Meeting or a majority of the outstanding voting securities. A proxy may be
revoked at any time on or before the Meeting by written notice to the Secretary
of CoreFunds, Inc. at the address set forth on the cover of this
Prospectus/Proxy Statement. Unless revoked, all valid proxies will be voted in
accordance with the specifications thereon or, in the absence of such
specifications, FOR approval of the Plan and the Reorganization contemplated
thereby, FOR approval of the Interim Advisory Agreement and FOR approval of each
of the Interim Sub-Advisory Agreements.
Approval of the Plan will require the affirmative vote of a majority of
the outstanding shares, with all classes voting together as a single class at
the Meeting at which a quorum of the Fund's shares is present. Approval of each
of the Interim Advisory Agreement and the Interim Sub-Advisory Agreements will
require the affirmative vote of (i) 67% or more of the outstanding voting
securities present at the Meeting if holders of more than 50% of the outstanding
voting securities are present, in person or by proxy, at the Meeting, or (ii)
more than 50% of the outstanding voting securities, whichever is less, with all
classes voting together as one class. Each full share outstanding is entitled to
one vote and each fractional share outstanding is entitled to a proportionate
share of one vote.
Proxy solicitations will be made primarily by mail, but proxy
solicitations may also be made by telephone, telegraph or personal solicitations
conducted by officers and employees of FUNB or CSIA, their affiliates or other
representatives of CoreFunds International (who will not be paid for their
soliciting activities). Shareholder Communications Corporation ("SCC") and its
agents have been engaged by CoreFunds International to assist in soliciting
proxies, and may call shareholders to ask if they would be willing to authorize
SCC to
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execute a proxy on their behalf authorizing the voting of their shares in
accordance with the instructions given over the telephone by the shareholders.
In addition, shareholders may call SCC at 1-800-733-8481 extension 468 between
the hours of 9:00 a.m. and 11:00 p.m. Eastern time in order to initiate the
processing of their votes by telephone. SCC will utilize a telephone vote
solicitation procedure designed to authenticate the shareholder's identity by
asking the shareholder to provide his or her social security number (in the case
of an individual) or taxpayer identification number (in the case of an entity).
The shareholder's telephone instructions will be implemented in a proxy executed
by SCC and a confirmation will be sent to the shareholder to ensure that the
vote has been authorized in accordance with the shareholder's instructions.
Although a shareholder's vote may be solicited and cast in this manner, each
shareholder will receive a copy of this Prospectus/Proxy Statement and may vote
by mail using the enclosed proxy card. CoreFunds International believes that
this telephonic voting system complies with applicable law and has reviewed an
opinion of counsel to that effect.
If you wish to participate in the Meeting, you may submit the proxy
card included with this Prospectus/Proxy Statement, vote by telephone, vote by
fax or attend in person. Any proxy given by you is revocable.
In the event that sufficient votes to approve the Reorganization are
not received by July 17, 1998, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies. In
determining whether to adjourn the Meeting, the following factors may be
considered: the percentage of votes actually cast, the percentage of negative
votes actually cast, the nature of any further solicitation and the information
to be provided to shareholders with respect to the reasons for the solicitation.
Any such adjournment will require an affirmative vote by the holders of a
majority of the shares present in person or by proxy and entitled to vote at the
Meeting. The persons named as proxies will vote upon such adjournment after
consideration of all circumstances which may bear upon a decision to adjourn the
Meeting.
A shareholder who objects to the proposed Reorganization will not be
entitled under either Maryland law or the Articles of Incorporation of
CoreFunds, Inc. to demand payment for, or an appraisal of, his or her shares.
However, shareholders should be aware that the Reorganization as proposed is not
expected to result in recognition of gain or loss to shareholders for federal
income tax purposes and that, if the Reorganization is consummated, shareholders
will be free to redeem the shares of Evergreen International which they receive
in the transaction at their then-current net asset value. Shares of CoreFunds
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International may be redeemed at any time prior to the consummation of the
Reorganization. Shareholders of CoreFunds International may wish to consult
their tax advisers as to any differing consequences of redeeming Fund shares
prior to the Reorganization or exchanging such shares in the Reorganization.
CoreFunds International does not hold annual shareholder meetings. If
the Reorganization is not approved, shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for a subsequent shareholder
meeting should send their written proposals to the Secretary of CoreFunds, Inc.
at the address set forth on the cover of this Prospectus/Proxy Statement such
that they will be received by the Fund in a reasonable period of time prior to
any such meeting.
The votes of the shareholders of Evergreen International are not being
solicited by this Prospectus/Proxy Statement and are not required to carry out
the Reorganization.
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES.
Please advise CoreFunds International whether other persons are beneficial
owners of shares for which proxies are being solicited and, if so, the number of
copies of this Prospectus/Proxy Statement needed to supply copies to the
beneficial owners of the respective shares.
FINANCIAL STATEMENTS AND EXPERTS
The Annual Report of Evergreen International as of October 31, 1997,
and the financial statements and financial highlights for the periods indicated
therein, have been incorporated by reference herein and in the Registration
Statement in reliance upon the report of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The financial statements and financial highlights of CoreFunds
International incorporated in this Prospectus/Proxy Statement by reference from
the Annual Report of CoreFunds, Inc. for the year ended June 30, 1997 have been
audited by Ernst & Young LLP, independent auditors, as stated in their report,
which is incorporated herein by reference and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
Certain legal matters concerning the issuance of shares of Evergreen
International will be passed upon by Sullivan & Worcester LLP, Washington, D.C.
OTHER BUSINESS
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The Directors of CoreFunds, Inc. do not intend to present any other
business at the Meeting. If, however, any other matters are properly brought
before the Meeting, the persons named in the accompanying form of proxy will
vote thereon in accordance with their judgment.
THE DIRECTORS OF COREFUNDS, INC. RECOMMEND APPROVAL OF THE PLAN, THE
INTERIM ADVISORY AGREEMENT AND EACH OF THE INTERIM SUB- ADVISORY AGREEMENTS, AND
ANY UNMARKED PROXIES WITHOUT INSTRUCTIONS TO THE CONTRARY WILL BE VOTED IN FAVOR
OF APPROVAL OF THE PLAN AND THE INTERIM ADVISORY AGREEMENT AND EACH OF THE
INTERIM SUB-ADVISORY AGREEMENTS.
June 1, 1998
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<PAGE>
APPENDIX A
The names and addresses of the principal executive officers
and directors of CoreStates Investment Advisers, Inc. are as
follows:
OFFICERS:
Name Address
- ---- -------
David C. Francis, Chief First Union National Bank
Investment Officer 201 South College Street
Charlotte, North Carolina 28288-
1195
L. Robert Cheshire, Vice First Union National Bank
President 201 South College Street
Charlotte, North Carolina 28288-
1195
John E. Gray, Vice First Union National Bank
President 201 South College Street
Charlotte, North Carolina 28288-
1195
Dillon S. Harris, Jr., Vice First Union National Bank
President 201 South College Street
Charlotte, North Carolina 28288-
1195
J. Kellie Allen, Vice First Union National Bank
President 201 South College Street
Charlotte, North Carolina 28288-1195
DIRECTORS:
Name Address
- ---- -------
Donald A. McMullen First Union National Bank
201 South College Street
Charlotte, North Carolina 28288-
1195
William M. Ennis First Union National Bank
201 South College Street
Charlotte, North Carolina 28288-
1195
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Name Address
- ---- -------
William D. Munn First Union National Bank
201 South College Street
Charlotte, North Carolina 28288-1195
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APPENDIX B
The names and addresses of the principal executive officers
and directors of Martin Currie, Inc. are as follows:
OFFICERS:
Name Address
- ---- -------
Michael J. Gibson, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
James K.R. Falconer, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Patrick J. Scott-Plummer, Chief Saltire Court
Executive Officer 20 Castle Terrace
Edinburgh EH1 2ES
Charles J.P. Dawney, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
James M.A. Fairweather, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Allan D. MacLeod, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Michael W. Thomas, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
James G. Wilson, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Anthony P. Hanlon, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Timothy J.D. Hall, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
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Name Address
- ---- -------
Susan Gillingham, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Colin Winchester, Chief Financial Saltire Court
Officer 20 Castle Terrace
Edinburgh EH1 2ES
Julian M.C. Livingston, Group Legal Saltire Court
Director 20 Castle Terrace
Edinburgh EH1 2ES
Steven N. Johnson, Vice President Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Martin R. Brown, Director of Saltire Court
Operations 20 Castle Terrace
Edinburgh EH1 2ES
DIRECTORS:
Name Address
- ---- --------
Michael J. Gibson Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
James K.R. Falconer Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Patrick J. Scott-Plummer Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Charles J.P. Dawney Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
James M.A. Fairweather Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Allan D. MacLeod Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
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<PAGE>
Name Address
- ---- --------
Michael W. Thomas Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
James G. Wilson Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Anthony P. Hanlon Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Timothy J.D. Hall Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
Susan Gillingham Saltire Court
20 Castle Terrace
Edinburgh EH1 2ES
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APPENDIX C
The names and addresses of the principal executive officers
and directors of Aberdeen Fund Managers, Inc. are as follows:
Name Address
- ----- -------
Beverley Hendry, Chief Nations Bank Tower
Executive Officer, Director 22nd Floor
Ft. Lauderdale, FL 33394
Martin J. Gilbert, President, Nations Bank Tower
Director 22nd Floor
Ft. Lauderdale, FL 33394
James L. Pope, Assistant Nations Bank Tower
Treasurer, Director 22nd Floor
Ft. Lauderdale, FL 33394
Gawaine Lewis, Secretary, Nations Bank Tower
Director 22nd Floor
Ft. Lauderdale, FL 33394
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<PAGE>
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 15th day of April, 1998, by and between Evergreen International Trust, a
Delaware business trust, with its principal place of business at 200 Berkeley
Street, Boston, Massachusetts 02116 (the "Trust"), with respect to its Evergreen
International Growth Fund series (the "Acquiring Fund"), and CoreFunds, Inc., a
Maryland corporation, with its principal place of business at 530 East
Swedesford Road, Wayne, Pennsylvania 19087 ("CoreFunds"), with respect to its
International Growth Fund series (the "Selling Fund").
This Agreement is intended to be, and is adopted as, a plan of
reorganization and liquidation within the meaning of Section 368(a)(1)(D) of the
United States Internal Revenue Code of 1986, as amended (the "Code"). The
reorganization (the "Reorganization") will consist of (i) the transfer of all of
the assets of the Selling Fund in exchange solely for Class A, Class B, and
Class Y shares of beneficial interest, $.001 par value per share, of the
Acquiring Fund (the "Acquiring Fund Shares"); (ii) the assumption by the
Acquiring Fund of the identified liabilities of the Selling Fund; and (iii) the
distribution, after the Closing Date hereinafter referred to, of the Acquiring
Fund Shares to the shareholders of the Selling Fund in liquidation of the
Selling Fund as provided herein, all upon the terms and conditions hereinafter
set forth in this Agreement.
WHEREAS, the Selling Fund and the Acquiring Fund are each a separate
investment series of an open-end, registered investment company of the
management type and the Selling Fund owns securities that generally are assets
of the character in which the Acquiring Fund is permitted to invest;
WHEREAS, both Funds are authorized to issue their shares of beneficial
interest or shares of common stock, as the case may be;
WHEREAS, the Trustees of the Trust have determined that the exchange of
all of the assets of the Selling Fund for Acquiring Fund Shares and the
assumption of the identified liabilities of the Selling Fund by the Acquiring
Fund on the terms and conditions hereinafter set forth are in the best interests
of the Acquiring Fund's shareholders;
WHEREAS, based on information furnished by CoreStates Investment
Advisers, Inc. and First Union National Bank, the Directors of CoreFunds have
determined that the Selling Fund should exchange all of its assets and the
identified liabilities for Acquiring Fund Shares and that the interests of the
existing
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shareholders of the Selling Fund will not be diluted as a result of the
transactions contemplated herein;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUND IN EXCHANGE FOR
THE ACQUIRING FUND SHARES AND ASSUMPTION OF SELLING FUND
LIABILITIES AND LIQUIDATION OF THE SELLING FUND
1.1 THE EXCHANGE. Subject to the terms and conditions herein set forth
and on the basis of the representations and warranties contained herein, the
Selling Fund agrees to transfer all of the Selling Fund's assets as set forth in
paragraph 1.2 to the Acquiring Fund. The Acquiring Fund agrees in exchange
therefor (i) to deliver to the Selling Fund the number of Acquiring Fund Shares,
including fractional Acquiring Fund Shares, determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of each such class of the Selling Fund by the net
asset value per share of the corresponding class of Acquiring Fund Shares
computed in the manner and as of the time and date set forth in paragraph 2.2;
and (ii) to assume the identified liabilities of the Selling Fund, as set forth
in paragraph 1.3. Such transactions shall take place at the closing provided for
in paragraph 3.1 (the "Closing Date").
1.2 ASSETS TO BE ACQUIRED. The assets of the Selling Fund to be
acquired by the Acquiring Fund shall consist of all property, including, without
limitation, all cash, securities, commodities, interests in futures and
dividends or interest receivables, that is owned by the Selling Fund and any
deferred or prepaid expenses shown as an asset on the books of the Selling Fund
on the Closing Date.
The Selling Fund has provided the Acquiring Fund with its most recent
audited financial statements, which contain a list of all of Selling Fund's
assets as of the date thereof. The Selling Fund hereby represents that as of the
date of the execution of this Agreement there have been no changes in its
financial position as reflected in said financial statements other than those
occurring in the ordinary course of its business in connection with the purchase
and sale of securities and the payment of its normal operating expenses.
The Acquiring Fund will, within a reasonable time prior to the Closing
Date, furnish the Selling Fund with a list of the securities, if any, on the
Selling Fund's list referred to in the second sentence of this paragraph that do
not conform to the
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Acquiring Fund's investment objectives, policies, and restrictions. The Selling
Fund will, within a reasonable period of time prior to the Closing Date, furnish
the Acquiring Fund with a list of its portfolio securities and other
investments. In the event that the Selling Fund holds any investments that the
Acquiring Fund may not hold, the Selling Fund, if requested by the Acquiring
Fund, will dispose of such securities prior to the Closing Date. In addition, if
it is determined that the Selling Fund and the Acquiring Fund portfolios, when
aggregated, would contain investments exceeding certain percentage limitations
imposed upon the Acquiring Fund with respect to such investments, the Selling
Fund if requested by the Acquiring Fund will dispose of a sufficient amount of
such investments as may be necessary to avoid violating such limitations as of
the Closing Date. Notwithstanding the foregoing, nothing herein will require the
Selling Fund to dispose of any investments or securities if, in the reasonable
judgment of the Selling Fund, such disposition would adversely affect the
tax-free nature of the Reorganization or would violate the Selling Fund's
fiduciary duty to its shareholders.
1.3 LIABILITIES TO BE ASSUMED. The Selling Fund will endeavor to
discharge all of its known liabilities and obligations prior to the Closing
Date. The Acquiring Fund shall assume only those liabilities, expenses, costs,
charges and reserves reflected on a Statement of Assets and Liabilities of the
Selling Fund prepared on behalf of the Selling Fund, as of the Valuation Date
(as defined in paragraph 2.1), in accordance with generally accepted accounting
principles consistently applied from the prior audited period. The Acquiring
Fund shall assume only those liabilities of the Selling Fund reflected in such
Statement of Assets and Liabilities and shall not assume any other liabilities,
whether absolute or contingent, known or unknown, accrued or unaccrued, all of
which shall remain the obligation of the Selling Fund.
In addition, upon completion of the Reorganization, for purposes of
calculating the maximum amount of sales charges (including asset based sales
charges) permitted to be imposed by the Acquiring Fund under the National
Association of Securities Dealers, Inc. Conduct Rule 2830 ("Aggregate NASD
Cap"), the Acquiring Fund will add to its Aggregate NASD Cap immediately prior
to the Reorganization the Aggregate NASD Cap of the Selling Fund immediately
prior to the Reorganization, in each case calculated in accordance with such
Rule 2830.
1.4 LIQUIDATION AND DISTRIBUTION. On or as soon after the Closing Date
as is conveniently practicable (the "Liquidation Date"), (a) the Selling Fund
will liquidate and distribute pro rata to the Selling Fund's shareholders of
record, determined as of the close of business on the Valuation Date (the
"Selling Fund Shareholders"), the Acquiring Fund Shares received
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by the Selling Fund pursuant to paragraph 1.1; and (b) the Selling Fund will
thereupon proceed to dissolve as set forth in paragraph 1.8 below. Such
liquidation and distribution will be accomplished by the transfer of the
Acquiring Fund Shares then credited to the account of the Selling Fund on the
books of the Acquiring Fund to open accounts on the share records of the
Acquiring Fund in the names of the Selling Fund Shareholders and representing
the respective pro rata number of the Acquiring Fund Shares due such
shareholders. All issued and outstanding shares of the Selling Fund will
simultaneously be canceled on the books of the Selling Fund. The Acquiring Fund
shall not issue certificates representing the Acquiring Fund Shares in
connection with such exchange.
1.5 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of the Acquiring Fund's transfer agent. Shares of the
Acquiring Fund will be issued in the manner described in the combined Prospectus
and Proxy Statement on Form N-14 to be distributed to shareholders of the
Selling Fund as described in paragraph 5.7.
1.6 TRANSFER TAXES. Any transfer taxes payable upon issuance of the
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.7 REPORTING RESPONSIBILITY. Any reporting responsibility of the
Selling Fund is and shall remain the responsibility of the Selling Fund up to
and including the Closing Date and such later date on which the Selling Fund is
terminated.
1.8 TERMINATION. The Selling Fund shall be terminated promptly
following the Closing Date and the making of all distributions pursuant to
paragraph 1.4.
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of the Selling Fund's assets to be
acquired by the Acquiring Fund hereunder shall be the value of such assets
computed as of the close of business on the New York Stock Exchange on the
business day next preceding the Closing Date (such time and date being
hereinafter called the "Valuation Date"), using the valuation procedures set
forth in the Trust's Declaration of Trust and the Acquiring Fund's then current
prospectuses and statement of additional information or such other valuation
procedures as shall be mutually agreed upon by the parties.
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2.2 VALUATION OF SHARES. The net asset value per share of the Acquiring
Fund Shares shall be the net asset value per share computed as of the close of
business on the New York Stock Exchange on the Valuation Date, using the
valuation procedures set forth in the Trust's Declaration of Trust and the
Acquiring Fund's then current prospectuses and statement of additional
information.
2.3 SHARES TO BE ISSUED. The number of the Acquiring Fund Shares of
each class to be issued (including fractional shares, if any) in exchange for
the Selling Fund's assets shall be determined by multiplying the shares
outstanding of each class of the Selling Fund by the ratio computed by dividing
the net asset value per share of the Selling Fund attributable to each of its
classes by the net asset value per share of the respective classes of the
Acquiring Fund determined in accordance with paragraph 2.2. Holders of Class A,
Class B, and Class Y shares of the Selling Fund will receive Class A, Class B,
and Class Y shares, respectively, of the Acquiring Fund.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
State Street Bank and Trust Company in accordance with its regular practice in
pricing the shares and assets of the Acquiring Fund.
ARTICLE III
CLOSING AND CLOSING DATE
3.1 CLOSING DATE. The Closing (the "Closing") shall take place on or
about July 27, 1998 or such other date as the parties may agree to in writing
(the "Closing Date"). All acts taking place at the Closing shall be deemed to
take place simultaneously immediately prior to the opening of business on the
Closing Date unless otherwise provided. The Closing shall be held as of 9:00
a.m. at the offices of the Evergreen Funds, 200 Berkeley Street, Boston, MA
02116, or at such other time and/or place as the parties may agree.
3.2 CUSTODIAN'S CERTIFICATE. CoreStates Bank, N.A., as custodian for
the Selling Fund (the "Custodian"), shall deliver at the Closing a certificate
of an authorized officer stating that (a) the Selling Fund's portfolio
securities, cash, and any other assets shall have been delivered in proper form
to the Acquiring Fund on the Closing Date; and (b) all necessary taxes including
all applicable federal and state stock transfer stamps, if any, shall have been
paid, or provision for payment shall have been made, in conjunction with the
delivery of portfolio securities by the Selling Fund.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that on
the Valuation Date (a) the New York Stock Exchange or another
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primary trading market for portfolio securities of the Acquiring Fund or the
Selling Fund shall be closed to trading or trading thereon shall be restricted;
or (b) trading or the reporting of trading on said Exchange or elsewhere shall
be disrupted so that accurate appraisal of the value of the net assets of the
Acquiring Fund or the Selling Fund is impracticable, the Valuation Date shall be
postponed until the first business day after the day when trading shall have
been fully resumed and reporting shall have been restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Evergreen Service Company, as
transfer agent for the Selling Fund as of the Closing Date, shall deliver at the
Closing a certificate of an authorized officer stating that its records contain
the names and addresses of the Selling Fund Shareholders and the number and
percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing. The Acquiring Fund shall issue and deliver or
cause Evergreen Service Company, its transfer agent, to issue and deliver a
confirmation evidencing the Acquiring Fund Shares to be credited on the Closing
Date to the Secretary of CoreFunds or provide evidence satisfactory to the
Selling Fund that such Acquiring Fund Shares have been credited to the Selling
Fund's account on the books of the Acquiring Fund. At the Closing, each party
shall deliver to the other such bills of sale, checks, assignments, share
certificates, if any, receipts and other documents as such other party or its
counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUND. The Selling Fund represents
and warrants to the Acquiring Fund as follows:
(a) The Selling Fund is a separate investment series of a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Maryland.
(b) The Selling Fund is a separate investment series of a
Maryland corporation that is registered as an investment company classified as a
management company of the open-end type, and its registration with the
Securities and Exchange Commission (the "Commission") as an investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), is in
full force and effect.
(c) The current prospectuses and statement of additional
information of the Selling Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act and the rules and regulations of the Commission
thereunder
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and do not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(d) The Selling Fund is not, and the execution, delivery, and
performance of this Agreement (subject to shareholder approval) will not result,
in violation of any provision of CoreFunds' Articles of Incorporation or By-Laws
or of any material agreement, indenture, instrument, contract, lease, or other
undertaking to which the Selling Fund is a party or by which it is bound.
(e) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it prior to the Closing Date, except for liabilities, if any, to be
discharged or reflected in the Statement of Assets and Liabilities as provided
in paragraph 1.3 hereof.
(f) Except as otherwise disclosed in writing to and accepted
by the Acquiring Fund, no litigation, administrative proceeding, or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Selling Fund or any of its properties
or assets, which, if adversely determined, would materially and adversely affect
its financial condition, the conduct of its business, or the ability of the
Selling Fund to carry out the transactions contemplated by this Agreement. The
Selling Fund knows of no facts that might form the basis for the institution of
such proceedings and is not a party to or subject to the provisions of any
order, decree, or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the transactions
herein contemplated.
(g) The financial statements of the Selling Fund at December
31, 1997 are in accordance with generally accepted accounting principles
consistently applied, and such statements (copies of which have been furnished
to the Acquiring Fund) fairly reflect the financial condition of the Selling
Fund as of such date, and there are no known contingent liabilities of the
Selling Fund as of such date not disclosed therein.
(h) Since December 31, 1997 there has not been any material
adverse change in the Selling Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Selling Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Acquiring Fund. For the purposes
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of this subparagraph (h), a decline in the net asset value of the Selling Fund
shall not constitute a material adverse change.
(i) At the Closing Date, all federal and other tax returns and
reports of the Selling Fund required by law to have been filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid, or provision shall have been made for the
payment thereof. To the best of the Selling Fund's knowledge, no such return is
currently under audit, and no assessment has been asserted with respect to such
returns.
(j) For each fiscal year of its operation, the Selling Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.
(k) All issued and outstanding shares of the Selling Fund are,
and at the Closing Date will be, duly and validly issued and outstanding, fully
paid and non-assessable by the Selling Fund. All of the issued and outstanding
shares of the Selling Fund will, at the time of the Closing Date, be held by the
persons and in the amounts set forth in the records of the transfer agent as
provided in paragraph 3.4. The Selling Fund does not have outstanding any
options, warrants, or other rights to subscribe for or purchase any of the
Selling Fund shares, nor is there outstanding any security convertible into any
of the Selling Fund shares.
(l) At the Closing Date, the Selling Fund will have good and
marketable title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2 and full right, power, and authority to sell,
assign, transfer, and deliver such assets hereunder, and, upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act, other than as
disclosed to the Acquiring Fund and accepted by the Acquiring Fund.
(m) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Selling
Fund and, subject to approval by the Selling Fund Shareholders, this Agreement
constitutes a valid and binding obligation of the Selling Fund, enforceable in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors'
rights and to general equity principles.
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(n) The information to be furnished by the Selling Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations thereunder applicable thereto.
(o) The Prospectus and Proxy Statement of the Selling Fund to
be included in the Registration Statement (as defined in paragraph 5.7)(other
than information therein that relates to the Acquiring Fund) will, on the
effective date of the Registration Statement and on the Closing Date, not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which such statements were made, not
misleading.
4.2 REPRESENTATIONS OF THE ACQUIRING FUND. The Acquiring
Fund represents and warrants to the Selling Fund as follows:
(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust that is registered as an investment company classified
as a management company of the open-end type, and its registration with the
Commission as an investment company under the 1940 Act is in full force and
effect.
(c) The current prospectuses and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations of the Commission thereunder and do not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Acquiring Fund is not, and the execution, delivery and
performance of this Agreement will not result, in violation of the Trust's
Declaration of Trust or By-Laws or of any material agreement, indenture,
instrument, contract, lease, or other undertaking to which the Acquiring Fund is
a party or by which it is bound.
(e) Except as otherwise disclosed in writing to the
Selling Fund and accepted by the Selling Fund, no litigation,
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administrative proceeding or investigation of or before any court or
governmental body is presently pending or to its knowledge threatened against
the Acquiring Fund or any of its properties or assets, which, if adversely
determined, would materially and adversely affect its financial condition and
the conduct of its business or the ability of the Acquiring Fund to carry out
the transactions contemplated by this Agreement. The Acquiring Fund knows of no
facts that might form the basis for the institution of such proceedings and is
not a party to or subject to the provisions of any order, decree, or judgment of
any court or governmental body that materially and adversely affects its
business or its ability to consummate the transactions contemplated herein.
(f) The financial statements of the Acquiring Fund at October
31, 1997 are in accordance with generally accepted accounting principles
consistently applied, and such statements (copies of which have been furnished
to the Selling Fund) fairly reflect the financial condition of the Acquiring
Fund as of such date, and there are no known contingent liabilities of the
Acquiring Fund as of such date not disclosed therein.
(g) Since October 31, 1997 there has not been any material
adverse change in the Acquiring Fund's financial condition, assets, liabilities,
or business other than changes occurring in the ordinary course of business, or
any incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred, except as otherwise disclosed to
and accepted by the Selling Fund. For the purposes of this subparagraph (g), a
decline in the net asset value of the Acquiring Fund shall not constitute a
material adverse change.
(h) At the Closing Date, all federal and other tax returns and
reports of the Acquiring Fund required by law then to be filed by such dates
shall have been filed, and all federal and other taxes shown due on said returns
and reports shall have been paid or provision shall have been made for the
payment thereof. To the best of the Acquiring Fund's knowledge, no such return
is currently under audit, and no assessment has been asserted with respect to
such returns.
(i) For each fiscal year of its operation, the Acquiring Fund
has met the requirements of Subchapter M of the Code for qualification and
treatment as a regulated investment company and has distributed in each such
year all net investment income and realized capital gains.
(j) All issued and outstanding Acquiring Fund Shares are, and
at the Closing Date will be, duly and validly issued and outstanding, fully paid
and non-assessable. The Acquiring Fund does not have outstanding any options,
warrants, or other rights to subscribe for or purchase any Acquiring Fund
Shares, nor is
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there outstanding any security convertible into any Acquiring Fund Shares.
(k) The execution, delivery, and performance of this Agreement
have been duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and binding obligation of the
Acquiring Fund enforceable in accordance with its terms, subject as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights and to general equity
principles.
(l) The Acquiring Fund Shares to be issued and delivered to
the Selling Fund, for the account of the Selling Fund Shareholders, pursuant to
the terms of this Agreement will, at the Closing Date, have been duly authorized
and, when so issued and delivered, will be duly and validly issued Acquiring
Fund Shares, and will be fully paid and non-assessable.
(m) The information to be furnished by the Acquiring Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials, and other documents that may be necessary in connection with
the transactions contemplated hereby shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto.
(n) The Prospectus and Proxy Statement (as defined in
paragraph 5.7) to be included in the Registration Statement (only insofar as it
relates to the Acquiring Fund) will, on the effective date of the Registration
Statement and on the Closing Date, not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which such statements were made, not misleading.
(o) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act,
and such of the state Blue Sky or securities laws as it may deem appropriate in
order to continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. The Acquiring Fund and the Selling
Fund each will operate its business in the ordinary course between the date
hereof and the Closing Date, it being
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understood that such ordinary course of business will include customary
dividends and distributions.
5.2 APPROVAL OF SHAREHOLDERS. CoreFunds will call a meeting of the
Selling Fund Shareholders to consider and act upon this Agreement and to take
all other action necessary to obtain approval of the transactions contemplated
herein.
5.3 INVESTMENT REPRESENTATION. The Selling Fund covenants that the
Acquiring Fund Shares to be issued hereunder are not being acquired for the
purpose of making any distribution thereof other than in accordance with the
terms of this Agreement.
5.4 ADDITIONAL INFORMATION. The Selling Fund will assist the Acquiring
Fund in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Selling Fund shares.
5.5 FURTHER ACTION. Subject to the provisions of this Agreement, the
Acquiring Fund and the Selling Fund will each take, or cause to be taken, all
action, and do or cause to be done, all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the Closing Date.
5.6 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within sixty days after the Closing Date, the Selling Fund shall
furnish the Acquiring Fund, in such form as is reasonably satisfactory to the
Acquiring Fund, a statement of the earnings and profits of the Selling Fund for
federal income tax purposes that will be carried over by the Acquiring Fund as a
result of Section 381 of the Code, and which will be reviewed by KPMG Peat
Marwick LLP and certified by CoreFunds' President and Treasurer.
5.7 PREPARATION OF FORM N-14 REGISTRATION STATEMENT. The Selling Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the proxy statement, referred to
in paragraph 4.1(o) (the "Prospectus and Proxy Statement"), all to be included
in a Registration Statement on Form N-14 of the Acquiring Fund (the
"Registration Statement"), in compliance with the 1933 Act, the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and the 1940 Act in
connection with the meeting of the Selling Fund Shareholders to consider
approval of this Agreement and the transactions contemplated herein.
5.8 CAPITAL LOSS CARRYFORWARDS. As promptly as practicable, but in any case
within sixty days after the Closing Date, the Acquiring Fund and the Selling
Fund shall cause KPMG
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Peat Marwick LLP to issue a letter addressed to the Acquiring Fund and the
Selling Fund, in form and substance satisfactory to the Funds, setting forth the
federal income tax implications relating to capital loss carryforwards (if any)
of the Selling Fund and the related impact, if any, of the proposed transfer of
all of the assets of the Selling Fund to the Acquiring Fund and the ultimate
dissolution of the Selling Fund, upon the shareholders of the Selling Fund.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1 All representations, covenants, and warranties of the Acquiring
Fund contained in this Agreement shall be true and correct as of the date hereof
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date, and the Acquiring Fund shall have delivered to the Selling
Fund a certificate executed in its name by the Trust's President or Vice
President and its Treasurer or Assistant Treasurer, in form and substance
reasonably satisfactory to the Selling Fund and dated as of the Closing Date, to
such effect and as to such other matters as the Selling Fund shall reasonably
request.
6.2 The Selling Fund shall have received on the Closing Date an opinion
from Sullivan & Worcester LLP, counsel to the Acquiring Fund, dated as of the
Closing Date, in a form reasonably satisfactory to the Selling Fund, covering
the following points:
(a) The Acquiring Fund is a separate investment series of a
Delaware business trust duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the power to own all of its
properties and assets and to carry on its business as presently conducted.
(b) The Acquiring Fund is a separate investment series of a
Delaware business trust registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed, and
delivered by the Acquiring Fund and, assuming due authorization, execution and
delivery of this Agreement by the
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Selling Fund, is a valid and binding obligation of the Acquiring Fund
enforceable against the Acquiring Fund in accordance with its terms, subject as
to enforcement, to bankruptcy, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights generally and to general equity
principles.
(d) Assuming that a consideration therefor not less than the
net asset value thereof has been paid, the Acquiring Fund Shares to be issued
and delivered to the Selling Fund on behalf of the Selling Fund Shareholders as
provided by this Agreement are duly authorized and upon such delivery will be
legally issued and outstanding and fully paid and non-assessable, and no
shareholder of the Acquiring Fund has any preemptive rights in respect thereof.
(e) The Registration Statement, to such counsel's knowledge,
has been declared effective by the Commission and no stop order under the 1933
Act pertaining thereto has been issued, and to the knowledge of such counsel, no
consent, approval, authorization or order of any court or governmental authority
of the United States or the State of Delaware is required for consummation by
the Acquiring Fund of the transactions contemplated herein, except such as have
been obtained under the 1933 Act, the 1934 Act and the 1940 Act, and as may be
required under state securities laws.
(f) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of the Trust's Declaration of Trust or By-Laws or any provision of any
material agreement, indenture, instrument, contract, lease or other undertaking
(in each case known to such counsel) to which the Acquiring Fund is a party or
by which it or any of its properties may be bound or to the knowledge of such
counsel, result in the acceleration of any obligation or the imposition of any
penalty, under any agreement, judgment, or decree to which the Acquiring Fund is
a party or by which it is bound.
(g) Only insofar as they relate to the Acquiring Fund, the
descriptions in the Prospectus and Proxy Statement of statutes, legal and
governmental proceedings and material contracts, if any, are accurate and fairly
present the information required to be shown.
(h) Such counsel does not know of any legal or governmental
proceedings, only insofar as they relate to the Acquiring Fund, existing on or
before the effective date of the Registration Statement or the Closing Date
required to be described in the Registration Statement or to be filed as
exhibits to the Registration Statement which are not described or filed as
required.
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(i) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Acquiring Fund or
any of its properties or assets and the Acquiring Fund is not a party to or
subject to the provisions of any order, decree or judgment of any court or
governmental body, which materially and adversely affects its business, other
than as previously disclosed in the Registration Statement.
Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Acquiring Fund at
which the contents of the Prospectus and Proxy Statement and related matters
were discussed and, although they are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Prospectus and Proxy Statement (except to the extent indicated
in paragraph (g) of their above opinion), on the basis of the foregoing (relying
as to materiality to a large extent upon the opinions of the Trust's officers
and other representatives of the Acquiring Fund), no facts have come to their
attention that lead them to believe that the Prospectus and Proxy Statement as
of its date, as of the date of the Selling Fund Shareholders' meeting, and as of
the Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein regarding the Acquiring Fund
or necessary, in the light of the circumstances under which they were made, to
make the statements therein regarding the Acquiring Fund not misleading. Such
opinion may state that such counsel does not express any opinion or belief as to
the financial statements or any financial or statistical data, or as to the
information relating to the Selling Fund, contained in the Prospectus and Proxy
Statement or the Registration Statement, and that such opinion is solely for the
benefit of CoreFunds and the Selling Fund. Such opinion shall contain such other
assumptions and limitations as shall be in the opinion of Sullivan & Worcester
LLP appropriate to render the opinions expressed therein.
In this paragraph 6.2, references to the Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
6.3 The merger between First Union Corporation and CoreStates Financial
Corp shall be completed prior to the Closing Date.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
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The obligations of the Acquiring Fund to complete the transactions
provided for herein shall be subject, at its election, to the performance by the
Selling Fund of all the obligations to be performed by it hereunder on or before
the Closing Date and, in addition thereto, the following conditions:
7.1 All representations, covenants, and warranties of the Selling Fund
contained in this Agreement shall be true and correct as of the date hereof and
as of the Closing Date with the same force and effect as if made on and as of
the Closing Date, and the Selling Fund shall have delivered to the Acquiring
Fund on the Closing Date a certificate executed in its name by CoreFunds'
President or Vice President and the Treasurer or Assistant Treasurer, in form
and substance satisfactory to the Acquiring Fund and dated as of the Closing
Date, to such effect and as to such other matters as the Acquiring Fund shall
reasonably request.
7.2 The Selling Fund shall have delivered to the Acquiring Fund a
statement of the Selling Fund's assets and liabilities, together with a list of
the Selling Fund's portfolio securities showing the tax costs of such securities
by lot and the holding periods of such securities, as of the Closing Date,
certified by the Treasurer of CoreFunds.
7.3 The Acquiring Fund shall have received on the Closing Date an
opinion of Morgan, Lewis & Bockius LLP, counsel to the Selling Fund, in a form
satisfactory to the Acquiring Fund covering the following points:
(a) The Selling Fund is a separate investment series of a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland and has the power to own all of its properties and
assets and to carry on its business as presently conducted.
(b) The Selling Fund is a separate investment series of a
Maryland corporation registered as an investment company under the 1940 Act,
and, to such counsel's knowledge, such registration with the Commission as an
investment company under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed and
delivered by the Selling Fund and, assuming due authorization, execution, and
delivery of this Agreement by the Acquiring Fund, is a valid and binding
obligation of the Selling Fund enforceable against the Selling Fund in
accordance with its terms, subject as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
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(d) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental authority of the United
States or the State of Maryland is required for consummation by the Selling Fund
of the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act, and as may be required under state
securities laws.
(e) The execution and delivery of this Agreement did not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of CoreFunds' Articles of Incorporation or By-laws, or any provision
of any material agreement, indenture, instrument, contract, lease or other
undertaking (in each case known to such counsel) to which the Selling Fund is a
party or by which it or any of its properties may be bound or, to the knowledge
of such counsel, result in the acceleration of any obligation or the imposition
of any penalty, under any agreement, judgment, or decree to which the Selling
Fund is a party or by which it is bound.
(f) Only insofar as they relate to the Selling Fund, the
descriptions in the Prospectus and Proxy Statement of statutes, legal and
government proceedings and material contracts, if any, are accurate and fairly
present the information required to be shown.
(g) Such counsel does not know of any legal or governmental
proceedings, insofar as they relate to the Selling Fund existing on or before
the date of mailing of the Prospectus and Proxy Statement and the Closing Date,
required to be described in the Prospectus and Proxy Statement or to be filed as
an exhibit to the Registration Statement which are not described or filed as
required.
(h) To the knowledge of such counsel, no litigation or
administrative proceeding or investigation of or before any court or
governmental body is presently pending or threatened as to the Selling Fund or
any of its respective properties or assets and the Selling Fund is neither a
party to nor subject to the provisions of any order, decree or judgment of any
court or governmental body, which materially and adversely affects its business
other than as previously disclosed in the Prospectus and Proxy Statement.
(i) Assuming that a consideration therefor of not less than
the net asset value thereof has been paid, and assuming that such shares were
issued in accordance with the terms of the Selling Fund's registration
statement, or any amendment thereto, in effect at the time of such issuance, all
issued and outstanding shares of the Selling Fund are legally issued and fully
paid and non-assessable.
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Such counsel shall also state that they have participated in
conferences with officers and other representatives of the Selling Fund at which
the contents of the Prospectus and Proxy Statement and related matters were
discussed and, although they are not passing upon and do not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Prospectus and Proxy Statement (except to the extent indicated
in paragraph (f) of their above opinion), on the basis of the foregoing (relying
as to materiality to a large extent upon the opinions of CoreFunds' officers and
other representatives of the Selling Fund), no facts have come to their
attention that lead them to believe that the Prospectus and Proxy Statement as
of its date, as of the date of the Selling Fund Shareholders' meeting, and as of
the Closing Date, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein regarding the Selling Fund
or necessary, in the light of the circumstances under which they were made, to
make the statements therein regarding the Selling Fund not misleading. Such
opinion may state that they do not express any opinion or belief as to the
financial statements or any financial or statistical data, or as to the
information relating to the Acquiring Fund, contained in the Prospectus and
Proxy Statement or Registration Statement, and that such opinion is solely for
the benefit of the Trust and the Acquiring Fund.
Such opinion shall contain such other assumptions and limitations as
shall be in the opinion of Morgan, Lewis & Bockius LLP appropriate to render the
opinions expressed therein, and shall indicate, with respect to matters of
Maryland law, that as Morgan, Lewis & Bockius LLP are not admitted to the bar of
Maryland, such opinions are based either upon the review of published statutes,
cases and rules and regulations of the State of Maryland or upon an opinion of
Maryland counsel.
In this paragraph 7.3, references to the Prospectus and Proxy Statement
include and relate to only the text of such Prospectus and Proxy Statement and
not to any exhibits or attachments thereto or to any documents incorporated by
reference therein.
7.4 The merger between First Union Corporation and CoreStates Financial
Corp shall be completed prior to the Closing Date.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING
FUND AND THE SELLING FUND
If any of the conditions set forth below do not exist on or before the
Closing Date with respect to the Selling Fund or the Acquiring Fund, the other
party to this Agreement shall, at its
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option, not be required to consummate the transactions contemplated by this
Agreement:
8.1 This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Selling Fund in accordance with the provisions of CoreFunds' Articles of
Incorporation and By-Laws and certified copies of the resolutions evidencing
such approval shall have been delivered to the Acquiring Fund. Notwithstanding
anything herein to the contrary, neither the Acquiring Fund nor the Selling Fund
may waive the conditions set forth in this paragraph 8.1.
8.2 On the Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, nor instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act and no action, suit or
other proceeding shall be threatened or pending before any court or governmental
agency in which it is sought to restrain or prohibit, or obtain damages or other
relief in connection with, this Agreement or the transactions contemplated
herein.
8.3 All required consents of other parties and all other consents,
orders, and permits of federal, state and local regulatory authorities
(including those of the Commission and of state Blue Sky securities authorities,
including any necessary "no-action" positions of and exemptive orders from such
federal and state authorities) to permit consummation of the transactions
contemplated hereby shall have been obtained, except where failure to obtain any
such consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of the Acquiring Fund or the Selling Fund,
provided that either party hereto may for itself waive any of such conditions.
8.4 The Registration Statement shall have become effective under the
1933 Act, and no stop orders suspending the effectiveness thereof shall have
been issued and, to the best knowledge of the parties hereto, no investigation
or proceeding for that purpose shall have been instituted or be pending,
threatened or contemplated under the 1933 Act.
8.5 The Selling Fund shall have declared a dividend or dividends which,
together with all previous such dividends, shall have the effect of distributing
to the Selling Fund Shareholders all of the Selling Fund's net investment
company taxable income for all taxable periods ending on or prior to the Closing
Date (computed without regard to any deduction for dividends paid) and all of
its net capital gains realized in all taxable periods ending on or prior to the
Closing Date (after reduction for any capital loss carryforward).
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8.6 The parties shall have received a favorable opinion of Sullivan &
Worcester LLP addressed to the Acquiring Fund and the Selling Fund substantially
to the effect that for federal income tax purposes:
(a) The transfer of all of the Selling Fund assets in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
identified liabilities of the Selling Fund followed by the distribution of the
Acquiring Fund Shares to the Selling Fund in dissolution and liquidation of the
Selling Fund will constitute a "reorganization" within the meaning of Section
368(a)(1)(D) of the Code and the Acquiring Fund and the Selling Fund will each
be a "party to a reorganization" within the meaning of Section 368(b) of the
Code.
(b) No gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange for the
Acquiring Fund Shares and the assumption by the Acquiring Fund of the identified
liabilities of the Selling Fund.
(c) No gain or loss will be recognized by the Selling Fund
upon the transfer of the Selling Fund assets to the Acquiring Fund in exchange
for the Acquiring Fund Shares and the assumption by the Acquiring Fund of the
identified liabilities of the Selling Fund or upon the distribution (whether
actual or constructive) of the Acquiring Fund Shares to Selling Fund
Shareholders in exchange for their shares of the Selling Fund.
(d) No gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for the Acquiring
Fund Shares in liquidation of the Selling Fund.
(e) The aggregate tax basis for the Acquiring Fund Shares
received by each Selling Fund Shareholder pursuant to the Reorganization will be
the same as the aggregate tax basis of the Selling Fund shares held by such
shareholder immediately prior to the Reorganization, and the holding period of
the Acquiring Fund Shares to be received by each Selling Fund Shareholder will
include the period during which the Selling Fund shares exchanged therefor were
held by such shareholder (provided the Selling Fund shares were held as capital
assets on the date of the Reorganization).
(f) The tax basis of the Selling Fund assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately prior to the Reorganization, and the holding period of the
assets of the Selling Fund in the hands of the Acquiring Fund will include the
period during which those assets were held by the Selling Fund.
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Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Selling Fund may waive the conditions set forth in this paragraph
8.6.
8.7 The Acquiring Fund shall have received from KPMG Peat Marwick LLP a
letter addressed to the Acquiring Fund, in form and substance satisfactory to
the Acquiring Fund, to the effect that:
(a) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards) consisting of a reading
of any unaudited pro forma financial statements included in the Registration
Statement and Prospectus and Proxy Statement, and inquiries of appropriate
officials of CoreFunds responsible for financial and accounting matters, nothing
came to their attention that caused them to believe that such unaudited pro
forma financial statements do not comply as to form in all material respects
with the applicable accounting requirement of the 1933 Act and the published
rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the Capitalization Table
appearing in the Registration Statement and Prospectus and Proxy Statement has
been obtained from and is consistent with the accounting records of the Selling
Fund; and
(c) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the pro forma financial
statements that are included in the Registration Statement and Prospectus and
Proxy Statement were prepared based on the valuation of the Selling Fund's
assets in accordance with the Trust's Declaration of Trust and the Acquiring
Fund's then current prospectuses and statement of additional information
pursuant to procedures customarily utilized by the Acquiring Fund in valuing its
own assets;
(d) on the basis of limited procedures agreed upon by the
Acquiring Fund and described in such letter (but not an examination in
accordance with generally accepted auditing standards), the data utilized in the
calculations of the projected expense ratios appearing in the Registration
Statement and Prospectus and Proxy Statement agree with underlying accounting
records of the Selling Fund or with written estimates by Selling Fund's
management and were found to be mathematically correct.
In addition, the Acquiring Fund shall have received from KPMG Peat
Marwick LLP a letter addressed to the Acquiring Fund
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dated on the Closing Date, in form and substance satisfactory to the Acquiring
Fund, to the effect that on the basis of limited procedures agreed upon by the
Acquiring Fund (but not an examination in accordance with generally accepted
auditing standards), the calculation of net asset value per share of the Selling
Fund as of the Valuation Date was determined in accordance with generally
accepted accounting practices and the portfolio valuation practices of the
Acquiring Fund.
8.8 The Selling Fund shall have received from KPMG Peat Marwick LLP a
letter addressed to the Selling Fund, in form and substance satisfactory to the
Selling Fund, to the effect that:
(a) they are independent certified public accountants with
respect to the Acquiring Fund within the meaning of the 1933 Act and the
applicable published rules and regulations thereunder;
(b) on the basis of limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards) consisting of a reading of any
unaudited pro forma financial statements included in the Registration Statement
and Prospectus and Proxy Statement, and inquiries of appropriate officials of
the Trust responsible for financial and accounting matters, nothing came to
their attention that caused them to believe that such unaudited pro forma
financial statements do not comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the published rules and
regulations thereunder;
(c) on the basis of limited procedures agreed upon by the
Selling Fund and described in such letter (but not an examination in accordance
with generally accepted auditing standards), the Capitalization Table appearing
in the Registration Statement and Prospectus and Proxy Statement has been
obtained from and is consistent with the accounting records of the Acquiring
Fund; and
(d) on the basis of limited procedures agreed upon by the
Selling Fund (but not an examination in accordance with generally accepted
auditing standards), the data utilized in the calculations of the projected
expense ratio appearing in the Registration Statement and Prospectus and Proxy
Statement agree with written estimates by each Fund's management and were found
to be mathematically correct.
ARTICLE IX
EXPENSES
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9.1 Except as otherwise provided for herein, all expenses of the
transactions contemplated by this Agreement incurred by the Selling Fund and the
Acquiring Fund will be borne by First Union National Bank ("FUNB"). Such
expenses include, without limitation, (a) expenses incurred in connection with
the entering into and the carrying out of the provisions of this Agreement; (b)
expenses associated with the preparation and filing of the Registration
Statement under the 1933 Act covering the Acquiring Fund Shares to be issued
pursuant to the provisions of this Agreement; (c) registration or qualification
fees and expenses of preparing and filing such forms as are necessary under
applicable state securities laws to qualify the Acquiring Fund Shares to be
issued in connection herewith in each state in which the Selling Fund
Shareholders are resident as of the date of the mailing of the Prospectus and
Proxy Statement to such shareholders; (d) postage; (e) printing; (f) accounting
fees; (g) legal fees; and (h) solicitation costs of the transaction.
Notwithstanding the foregoing, the Acquiring Fund shall pay its own federal and
state registration fees. In the event that the merger of First Union Corporation
and CoreStates Financial Corp is not completed, this Agreement shall terminate.
In such event, all expenses of the transactions contemplated by this Agreement
incurred by the Acquiring Fund will be borne by FUNB and all expenses of the
transactions contemplated by this Agreement incurred by the Selling Fund will be
borne by CoreStates Investment Advisers, Inc.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Fund and the Selling Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
10.2 The representations, warranties, and covenants contained in this
Agreement or in any document delivered pursuant hereto or in connection herewith
shall not survive the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Fund and the Selling Fund. In addition, either the Acquiring Fund or
the Selling Fund may at its option terminate this Agreement at or prior to the
Closing Date because:
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(a) of a breach by the other of any representation, warranty,
or agreement contained herein to be performed at or prior to the Closing Date,
if not cured within 30 days; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party has not been met and it reasonably appears
that it will not or cannot be met.
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either the
Acquiring Fund, the Selling Fund, the Trust, CoreFunds, the respective Trustees,
Directors or officers, to the other party or its Trustees, Directors or
officers, but each shall bear the expenses incurred by it incidental to the
preparation and carrying out of this Agreement as provided in paragraph 9.1.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the authorized officers of
the Selling Fund and the Acquiring Fund; provided, however, that following the
meeting of the Selling Fund Shareholders called by the Selling Fund pursuant to
paragraph 5.2 of this Agreement, no such amendment may have the effect of
changing the provisions for determining the number of the Acquiring Fund Shares
to be issued to the Selling Fund Shareholders under this Agreement to the
detriment of such shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without giving effect to the conflicts
of laws provisions thereof; provided, however, that the due authorization,
execution and delivery of this Agreement, in the case of the Selling Fund, shall
be governed and construed in accordance with the laws of the State of Maryland,
without giving effect to the conflicts of laws provisions thereof.
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13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm, or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of the Acquiring Fund
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents, or employees of the Trust personally, but shall bind only the
trust property of the Acquiring Fund, as provided in the Declaration of Trust of
the Trust. The execution and delivery of this Agreement have been authorized by
the Trustees of the Trust on behalf of the Acquiring Fund and signed by
authorized officers of the Trust, acting as such, and neither such authorization
by such Trustees nor such execution and delivery by such officers shall be
deemed to have been made by any of them individually or to impose any liability
on any of them personally, but shall bind only the trust property of the
Acquiring Fund as provided in the Declaration of Trust of the Trust.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
EVERGREEN INTERNATIONAL
TRUST ON BEHALF OF EVERGREEN
INTERNATIONAL GROWTH FUND
By:
Name:
Title:
COREFUNDS, INC.
ON BEHALF OF INTERNATIONAL
GROWTH FUND
By:
Name:
Title:
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EXHIBIT B
INTERIM INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 30, 1998 between COREFUNDS, INC., a Maryland
corporation (hereinafter the "Company"), and CORESTATES INVESTMENT ADVISERS,
INC., a Pennsylvania corporation (hereinafter the "Investment Adviser").
WHEREAS, the Company is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Company is authorized to issue shares of Common Stock in
separate classes representing shares in separate portfolios of securities and
other assets; and
WHEREAS, the Company desires to retain the Investment Adviser to
furnish investment advisory services to the Company and its portfolios, and the
Investment Adviser is willing to so furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment Adviser to
act as investment adviser to the portfolios of the Company for the period
and on the terms set forth in this Agreement. The Investment Adviser
accepts such appointment and agrees to furnish the services herein set
forth for the compensation herein provided.
2. Delivery of Documents. The Company has furnished the Investment
Adviser with copies properly certified or authenticated of each of the
following:
a. the Company's Articles of Incorporation, as filed with the
Secretary of State of Maryland on September 11, 1984, and all amendments
thereto (such Articles, as presently in effect and as they shall from time
to time be amended or supplemented, are herein called the "Articles of
Incorporation");
b. the Company's By-Laws and amendments thereto (such By- Laws, as
presently in effect and as they shall from time to time be amended, are
herein called the "By-Laws");
c. resolutions of the Company's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
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d. the Company's Notification of Registration on Form N-8A under the
1940 Act as filed with the Securities and Exchange Commission on September
11, 1984 and all amendments thereto;
e. the Company's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 2- 93214) and
under the 1940 Act as filed with the Securities and Exchange Commission and
all amendments thereto; and
f. the Company's most recent Prospectuses and Statement of Additional
Information (such Prospectuses and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectuses").
The Company will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Company's Board of
Directors, the Investment Adviser will provide a continuous investment program
for each portfolio of the Company, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by the existing portfolios and such other portfolios (hereinafter
collectively, the "Portfolios") offered by the Company and identified by the
Company as appropriate. The Investment Adviser will determine from time to time
what securities and other investments will be purchased, retained, or sold by
the Company. The Investment Adviser will provide the services under this
Agreement in accordance with the Company's investment objective, policies, and
restrictions as stated in the Prospectuses and resolutions of the Company's
Board of Directors.
The Investment Adviser further agrees that it:
a. will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with any regulations of the Comptroller of
the Currency pertaining to the investment advisory activities of national banks;
b. will not make loans to any person to purchase or carry
the Company's shares or make loans to the Company;
c. will place orders pursuant to its investment determinations for the
Company on behalf of its Portfolios either directly with the issuer or with any
broker or dealer. In placing orders with brokers and dealers the primary
consideration of the Investment Adviser will be the prompt execution of orders
in an effective manner at the most favorable price. Subject to this
consideration, brokers or dealers who provide supplemental research to the
Investment Adviser may receive orders for
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transactions with the Company. In no instance will portfolio securities be
purchased from or sold to CoreStates Financial Corp or any affiliated person of
either the Company or CoreStates Financial Corp;
d. will maintain all books and records with respect to the Company's
portfolio securities transactions and will furnish the Company's Board of
Directors such periodic and special reports as the Board may request;
e. will treat confidentially and as proprietary information of the
Company all records and other information relative to the Company and prior,
present, or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Company, which approval shall not be unreasonably withheld and may not be
withheld where the Investment Adviser may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company;
f. will provide to the Company and the Company's other service
providers, at such intervals as may be reasonably requested by the Company,
information relating to (i) the performance of services by the Investment
Adviser hereunder, and (ii) market quotations of portfolio securities held by
the Company on behalf of its Portfolios;
g. will direct and use its best efforts to cause the broker or dealer
involved in any portfolio transaction with the Company to send a written
confirmation of such transaction to the Company's Custodian and Transfer Agent;
and
h. will not purchase shares of the Company for itself or for accounts
with respect to which it is exercising sole investment discretion in connection
with such transactions.
4. Services Not Exclusive. The investment management services furnished
by the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any of such records upon the Company's
request. The Investment Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the
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records required to be maintained by Rule 31a-1 under the 1940 Act.
6. Expenses. During the term of this Agreement, the Investment Adviser
will pay all expenses incurred by it in connection with its activities under
this Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Company and the cost of obtaining market
quotations of portfolio securities held by the Company.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date of this Agreement, the
Company will pay the Investment Adviser and the Investment Adviser will accept
as full compensation for services rendered to the Portfolios therefor, the fees
detailed in Appendix A attached to this Agreement; provided, however, that if
the total expenses borne by any Portfolio of the Company in any fiscal year of
the Company exceeds any expense limitations imposed by applicable state
securities laws or regulations, the Investment Adviser will reimburse the
Portfolio for a portion of such excess equal to the amount of such excess times
the ratio of the fees otherwise payable to the Investment Adviser hereunder to
the aggregate fees otherwise payable to the Investment Adviser hereunder and SEI
Fund Resources pursuant to an Administration Agreement between it and the
Company. The Investment Adviser's obligation to reimburse the Company on behalf
of its Portfolios hereunder is limited in any fiscal year of the Company to the
amount of the Investment Adviser's fee hereunder for such fiscal year; provided,
however, that notwithstanding the foregoing, the Investment Adviser shall
reimburse the Company for such excess regardless of the fees paid to it to the
extent that the securities laws or regulations of any state having jurisdiction
over the Company so require. Any such expense reimbursements will be estimated
daily and reconciled and paid on a monthly basis.
8. Use of Investment Adviser's Name and Logo. The Company agrees that
it shall furnish to the Investment Adviser, prior to any use or distribution
thereof, copies of all prospectuses, statements of additional information, proxy
statements, reports to shareholders, sales literature, advertisements, and other
material prepared for distribution to shareholders of the Portfolios of the
Company or to the public, which in any way refer to or describe the Investment
Adviser or which include any trade names, trademarks, or logos of the Investment
Adviser or any affiliate of the Investment Adviser. The Company further agrees
that it shall not use or distribute any such material if the Investment Adviser
reasonably objects in writing to such use or distribution within ten business
days after the date such material is furnished to the Investment Adviser. The
provisions of this section shall survive the termination of this Agreement.
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9. Limitation of Liability. The Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Company in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith, or gross negligence on the part of the Investment Adviser in the
performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
10. Duration and Termination. This Agreement will become effective for
each Portfolio as of the date first above written. Subject to the provisions for
termination as provided herein, this Agreement shall remain in effect for each
Portfolio until the earlier of the Closing Date defined in the Agreement and
Plan of Reorganization dated as of April 15, 1998 with respect to each Portfolio
or for two years from the date first above written and from year to year
thereafter, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Company's Board of
Directors who are not parties to this Agreement or interested persons of any
party to this Agreement, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Company's Board of Directors or by vote
of a majority of the Portfolio's outstanding voting securities. Notwithstanding
the foregoing, this Agreement may be terminated at any time on sixty days
written notice, without the payment of any penalty, by the Company (by vote of
the Board of Directors or by vote of a majority of the Portfolio's outstanding
voting securities) or by the Investment Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
11. Name Protection After Termination. In the event this Agreement is
terminated by either party or upon written notice from the Investment Adviser at
any time, the Company hereby agrees that it will eliminate from its corporate
name any references to the name "CoreFunds." The Company shall have the
nonexclusive use of the name "CoreFunds" in whole or in part so long as this
Agreement is effective or until such notice is given.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
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effective until approved by vote of a majority of the Portfolio's outstanding
voting securities.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
COREFUNDS, INC.
By ____________________________
CORESTATES INVESTMENT ADVISERS, INC.
By ____________________________
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APPENDIX A
Portfolio Advisory Fee as a
Percentage of average
daily net assets
Growth Equity Fund .75%
Core Equity Fund .74%
Special Equity Fund 1.50%
Equity Index Fund .40%
International Growth Fund .80%
Balanced Fund .70%
Short-Intermediate Bond Fund .50%
Bond Fund .74%
Short Term Income Fund .74%
Government Income Fund .50%
Intermediate Municipal Bond Fund .50%
Pennsylvania Municipal Bond Fund .50%
New Jersey Municipal Bond Fund .50%
Global Bond Fund .60%
Cash Reserve .40%
Treasury Reserve .40%
Tax-Free Reserve .40%
Elite Cash Reserve .20%
Elite Government Reserve .20%
Elite Treasury Reserve .20%
Elite Tax-Free Reserve .20%
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EXHIBIT C
INTERIM SUB-INVESTMENT ADVISORY AGREEMENT
INTERNATIONAL GROWTH FUND
AGREEMENT made as of April 30, 1998 between CORESTATES
INVESTMENT ADVISERS, INC., a Pennsylvania corporation (hereinafter the
"Investment Adviser"), and MARTIN CURRIE, INC., a New York corporation
(hereinafter the "Sub-Adviser").
WHEREAS, CoreFunds, Inc., a Maryland corporation (the "Fund")
is registered as an open-end, diversified, management investment company under
the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of Common
Stock in separate series representing shares in a separate portfolio of
securities and other assets; and
WHEREAS, the Investment Adviser is a party to an Investment
Advisory Agreement, dated as of April 30, 1998 with the Fund, pursuant to which
the Investment Adviser provides investment advisory services to the Fund and
certain of its portfolios; and
WHEREAS, the Investment Adviser wishes to have the Sub-
Adviser act as a sub-investment adviser for a portion of the assets of the
Fund's International Growth Portfolio and as such to provide the Investment
Adviser with investment advisory services, including investment management,
investment research and investment recommendations, and the Sub-Adviser is
willing to provide such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Adviser hereby appoints the Sub-Adviser to
act as a sub- investment adviser to the Fund for the period and on the terms set
forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to
furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund or the Investment Adviser has furnished
the Sub-Adviser with copies properly certified or authenticated of each of the
following:
a. the Fund's Articles of Incorporation, as filed with the Secretary
of State of Maryland on September 11, 1984, and all amendments thereto
(such Articles, as presently in effect and as they shall from time to time
be amended or supplemented, are herein called the "Articles of
Incorporation");
C-91
<PAGE>
b. the Fund's By-Laws and amendments thereto (such By-Laws, as
presently in affect and as they shall from time to time be amended, are
herein called the "By-Laws");
c. resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
d. the Fund's Notification of Registration on Form N- 8A under the
1940 Act as filed with the Securities and Exchange Commission on September
11, 1984 and all amendments thereto;
e. the Fund's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended ("1933 Act") (File No. 2-93214) and under the
1940 Act as filed with the Securities and Exchange Commission and all
amendments thereto;
and
f. the Fund's most recent Prospectus and Statement of Additional
Information (such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus").
The Fund or the Investment Adviser will furnish the
Sub-Adviser from time to time with copies of all amendments of or supplements to
the foregoing.
3. Management. Subject to the supervision of the Fund's Board
of Directors and the Investment Adviser, the Sub-Adviser will provide a
continuous investment program for a portion of the assets of the International
Growth Portfolio of the Fund, as determined by the Investment Adviser, including
investment research and management with respect to that portion of securities
and investments and cash equivalents managed by the Sub-Adviser for the
International Growth Portfolio of the Fund and such other portfolios
(hereinafter collectively, the "Portfolios") offered by the Fund and identified
by the Fund as appropriate to use a sub-investment adviser. The Sub-Adviser will
determine from time to time what securities and other investments will be
purchased, retained, or sold by the Fund. The Sub-Adviser will provide the
services under this Agreement in accordance with the Fund's investment
objective, policies, and restrictions as stated in the Prospectus and
resolutions of the Fund's Board of Directors. The Sub-Adviser acknowledges and
agrees that the Fund shall have no responsibility to pay the Sub- Adviser, and
that any compensation to be paid to the Sub-Adviser shall be paid by the
Investment Adviser pursuant to Section 7 of this Agreement.
The Sub-Adviser further agrees that it:
C-92
<PAGE>
a. will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with any regulations of the
Comptroller of the Currency pertaining to the investment advisory activities of
national banks;
b. will not make loans to any person to purchase or
carry the Fund shares or make loans to the Fund;
c. will place orders pursuant to its investment determinations
for the Fund either directly with the issuer or with any broker or dealer. In
placing orders with brokers and dealers the primary consideration of the
Sub-Adviser will be the prompt execution of orders in an effective manner at the
most favorable price. Subject to this consideration, brokers or dealers who
provide supplemental research to the Sub-Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to SEI Investments Distribution Co., CoreStates Financial
Corp, or any affiliated person of either the Fund, SEI Investments Distribution
Co., or CoreStates Financial Corp;
d. will maintain all books and records with respect to the
Fund's portfolio securities transactions and will furnish the Fund's Board of
Directors such periodic and special reports as the Board may request;
e. will treat confidentially and as proprietary information of
the Fund all records and other information relative to the Fund and prior,
present, or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Fund, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund;
f. will provide to the Fund and the Fund's other service
providers, at such intervals as may be reasonably requested by the Fund,
information relating to (i) the performance of services by the Sub-Adviser
hereunder, and (ii) market quotations of portfolio securities held by the Fund;
g. will direct and use its best efforts to cause the broker or
dealer involved in any portfolio transaction with the Fund to send a written
confirmation of such transaction to the Fund's Custodian and Transfer Agent; and
h. will not purchase shares of the Fund for itself or for
accounts with respect to which it is exercising sole investment discretion in
connection with such transactions.
C-93
<PAGE>
4. Services Not Exclusive. The investment management services furnished by
the Sub-Adviser hereunder are not to be deemed exclusive, and the Sub-Adviser
shall be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Fund and the cost of obtaining market quotations of
portfolio securities held by the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date of this Agreement, the
Investment Adviser will pay the Sub-Adviser and the Sub-Adviser will accept as
full compensation therefor a fee, computed daily and paid monthly, at an annual
rate of .50% of the portion of the Portfolio's average daily net assets
allocated to such Sub-Adviser. The Sub-Adviser may from time to time and at its
discretion voluntarily waive all or a portion of its sub-advisory fees in order
to assist the Fund in maintaining a competitive expense ratio.
8. Limitation of Liability. The Sub- Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
C-94
<PAGE>
9. Duration and Termination. This Agreement will become effective as of the
date first above written. Subject to the provisions for termination as provided
herein, this Agreement shall remain in effect until the earlier of the Closing
Date defined in the Agreement and Plan of Reorganization dated as of April 15,
1998 with respect to the International Growth Portfolio of the Fund or for two
years from the date first above written and from year to year thereafter,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Fund's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities. Notwithstanding the foregoing, this Agreement may
be terminated at anytime on sixty days' written notice, without the payment of
any penalty, by the Fund (by vote of the Fund's Board of Directors or by vote of
a majority of the Fund's outstanding voting securities), by the Investment
Advisor or by the Sub-Adviser. This Agreement will immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning of such terms in the 1940 Act.)
10. Amendment of This Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the Fund's outstanding voting
securities.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
C-95
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
CORESTATES INVESTMENT ADVISERS, INC.
By:
Name:
Title:
MARTIN CURRIE, INC.
By:
Name:
Title:
C-96
<PAGE>
EXHIBIT D
INTERIM SUB-INVESTMENT ADVISORY AGREEMENT
COREFUNDS INTERNATIONAL GROWTH FUND
AGREEMENT made as of April 30, 1998 between CORESTATES
INVESTMENT ADVISERS, INC., a Pennsylvania corporation (hereinafter the
"Investment Adviser"), and ABERDEEN FUND MANAGERS, INC., a Delaware corporation
(hereinafter the "Sub- Adviser").
WHEREAS, CoreFunds, Inc., a Maryland corporation (the "Fund")
is registered as an open-end, diversified, management investment company under
the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Fund is authorized to issue shares of Common
Stock in separate series representing shares in a separate portfolio of
securities and other assets; and
WHEREAS, the Investment Adviser is a party to an Investment
Advisory Agreement, dated as of April 30, 1998 with the Fund, pursuant to which
the Investment Adviser provides investment advisory services to the Fund and
certain of its portfolios; and
WHEREAS, the Investment Adviser wishes to have the Sub-
Adviser act as a sub-investment adviser for a portion of the assets of the
Fund's International Growth Portfolio and as such to provide the Investment
Adviser with investment advisory services, including investment management,
investment research and investment recommendations, and the Sub-Adviser is
willing to provide such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Investment Adviser hereby appoints the Sub-Adviser
to act as a sub-investment adviser to the Fund for the period and on the terms
set forth in this Agreement. The Sub-Adviser accepts such appointment and agrees
to furnish the services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund or the Investment Adviser has
furnished the Sub-Adviser with copies properly certified or authenticated of
each of the following:
a. the Fund's Articles of Incorporation, as filed with the
Secretary of State of Maryland on September 11, 1984, and all amendments thereto
(such Articles, as presently in effect and as they shall from time to time be
amended or supplemented, are herein called the "Articles of Incorporation");
D-97
<PAGE>
b. the Fund's By-Laws and amendments thereto (such By-Laws,
as presently in affect and as they shall from time to time be amended, are
herein called the "By-Laws");
c. resolutions of the Fund's Board of Directors
authorizing the appointment of the Investment Adviser and
approving this Agreement;
d. the Fund's Notification of Registration on Form N- 8A
under the 1940 Act as filed with the Securities and Exchange Commission on
September 11, 1984 and all amendments thereto;
e. the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended ("1933 Act") (File No. 2-93214) and under the
1940 Act as filed with the Securities and Exchange Commission and all amendments
thereto; and
f. the Fund's most recent Prospectus and Statement of
Additional Information (such Prospectus and Statement of Additional Information,
as presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus").
The Fund or the Investment Adviser will furnish the
Sub-Adviser from time to time with copies of all amendments of or supplements to
the foregoing.
3. Management. Subject to the supervision of the Fund's Board of
Directors and the Investment Adviser, the Sub-Adviser will provide a continuous
investment program for a portion of the assets of the International Growth
Portfolio of the Fund, as determined by the Investment Adviser, including
investment research and management with respect to that portion of securities
and investments and cash equivalents managed by the Sub-Adviser for the
International Growth Portfolio of the Fund and such other portfolios
(hereinafter collectively, the "Portfolios") offered by the Fund and identified
by the Fund as appropriate to use a sub-investment adviser. The Sub-Adviser will
determine from time to time what securities and other investments will be
purchased, retained, or sold by the Fund. The Sub-Adviser will provide the
services under this Agreement in accordance with the Fund's investment
objective, policies, and restrictions as stated in the Prospectus and
resolutions of the Fund's Board of Directors. The Sub-Adviser acknowledges and
agrees that the Fund shall have no responsibility to pay the Sub- Adviser, and
that any compensation to be paid to the Sub-Adviser shall be paid by the
Investment Adviser pursuant to Section 7 of this Agreement.
The Sub-Adviser further agrees that it:
a. will conform with all applicable Rules and Regulations of
the Securities and Exchange Commission and will in addition conduct its
activities under this Agreement in accordance with any regulations of the
Comptroller of the Currency pertaining to the investment advisory activities of
national banks;
D-98
<PAGE>
b. will not make loans to any person to purchase or
carry the Fund shares or make loans to the Fund;
c. will place orders pursuant to its investment
determinations for the Fund either directly with the issuer or with any broker
or dealer. In placing orders with brokers and dealers the primary consideration
of the Sub-Adviser will be the prompt execution of orders in an effective manner
at the most favorable price. Subject to this consideration, brokers or dealers
who provide supplemental research to the Sub-Adviser may receive orders for
transactions with the Fund. In no instance will portfolio securities be
purchased from or sold to SEI Investments Distribution Co., CoreStates Financial
Corp, or any affiliated person of either the Fund, SEI Investments Distribution
Co., or CoreStates Financial Corp;
d. will maintain all books and records with respect to the
Fund's portfolio securities transactions and will furnish the Fund's Board of
Directors such periodic and special reports as the Board may request;
e. will treat confidentially and as proprietary information
of the Fund all records and other information relative to the Fund and prior,
present, or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and approval in writing by
the Fund, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Fund;
f. will provide to the Fund and the Fund's other service
providers, at such intervals as may be reasonably requested by the Fund,
information relating to (i) the performance of services by the Sub-Adviser
hereunder, and (ii) market quotations of portfolio securities held by the Fund;
g. will direct and use its best efforts to cause the broker
or dealer involved in any portfolio transaction with the Fund to send a written
confirmation of such transaction to the Fund's Custodian and Transfer Agent; and
h. will not purchase shares of the Fund for itself or for
accounts with respect to which it is exercising sole investment discretion in
connection with such transactions.
4. Services Not Exclusive. The investment management services
furnished by the Sub-Adviser hereunder are not to be deemed exclusive, and the
Sub-Adviser shall be free to furnish similar services to others so long as its
services under this Agreement are not impaired thereby.
D-99
<PAGE>
5. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which
it maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses. During the term of this Agreement, the Sub- Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Fund and the cost of obtaining market quotations of
portfolio securities held by the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date of this Agreement, the
Investment Adviser will pay the Sub- Adviser and the Sub-Adviser will accept as
full compensation therefor a fee, computed daily and paid monthly, at an annual
rate of .375% of the portion of the Portfolio's average daily net assets
allocated to such Sub-Adviser. The Sub-Adviser may from time to time and at its
discretion voluntarily waive all or a portion of its sub-advisory fees in order
to assist the Fund in maintaining a competitive expense ratio.
8. Limitation of Liability. The Sub-Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
9. Duration and Termination. This Agreement will become effective as
of the date first above written. Subject to the provisions for termination as
provided herein, this Agreement shall remain in effect until the earlier of the
Closing Date defined in the Agreement and Plan of Reorganization dated as of
April 15, 1998 with respect to the International Growth Portfolio of the Fund or
for two years from the date first above written and from year to year
thereafter, provided such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Fund's Board of Directors
who are not parties to this Agreement or interested persons of any party to this
Agreement, cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the Fund's Board of Directors or by vote of a majority of
the Fund's outstanding voting securities. Notwithstanding the foregoing, this
Agreement may be terminated at anytime on sixty days' written notice, without
the payment of any penalty, by the Fund (by vote of the Fund's Board of
Directors or by vote of a majority of the Fund's outstanding voting securities),
by the
D-100
<PAGE>
Investment Advisor or by the Sub-Adviser. This Agreement will immediately
terminate in the event of its assignment. (As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested persons" and
"assignment" shall have the same meaning of such terms in the 1940 Act.)
10. Amendment of This Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the Fund's outstanding voting
securities.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day and
year first above written.
CORESTATES INVESTMENT ADVISERS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-------------------------------------
ABERDEEN FUND MANAGERS, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-------------------------------------
D-101
<PAGE>
EXHIBIT E
A DISCUSSION WITH YOUR FUND MANAGER
[PICTURE OF GILMAN GUNN APPEARS HERE]
Q. GILMAN, HOW WOULD YOU DESCRIBE THE PERFORMANCE OF THE FUND DURING THE PAST
YEAR?
A. I think the Fund has performed quite well. For the 12 months that ended on
October 31, 1997, Keystone International Fund had a total return of 15.69%,
outperforming its benchmark, the Morgan Stanley Capital International EAFE
Index, which had a return of 4.63%. The EAFE Index measures performance of
stocks in Europe, Australia and the Far East.
Q. WHAT CONTRIBUTED TO THIS STRONG, RELATIVE PERFORMANCE?
A. There were several factors. First, during a period of strength by the U.S.
dollar, we hedged part of our foreign currency exposure. This strategy has been
successful in adding to the performance of the Fund. Second, we had a heavy
emphasis on Europe throughout the year. At the end of the fiscal year, the
Fund's weighting in Europe was approximately 60% of net assets. In general the
European markets have increased by 15% to 40% during the 12 month period in
local terms, although these local returns were mitigated by the fall of the
currencies against the U.S. dollar. Third, we have kept our exposure in Japan
and the Far East very moderate. Our emphasis on emerging markets, in general,
has been very light, less than 10%, throughout the year. Earlier in the year, we
did have larger weightings in Latin America, and this did help the performance
of the Fund.
Q. WHY HAS EUROPE BEEN SUCH A RELATIVELY STRONG PERFORMER?
A. Europe has presented good investment opportunities for several reasons.
First, the weaker European currencies have helped European exporters become more
competitive against U.S. companies. Second, lower interest rates have been good
for European companies. Third, many European companies have started
restructuring and cost-cutting programs, and these restructurings have added to
the bottom line, even in a period of flat economic growth. Fourth, there has
been a major portfolio shift in Europe, as people have moved out of cash and
bonds and into equities, and this shift has helped the European equity markets.
Q. JAPAN IS THE WORLD'S SECOND LARGEST MARKET, AND YET THE FUND'S WEIGHTING IN
JAPAN HAS BEEN REDUCED FROM ABOUT 20% OF ASSETS TO LESS THAN 7%. WHY IS THAT?
A. Japan continues to be very disappointing. In general, we have wanted to keep
our exposure light. We have invested in some major Japanese exporters, and the
weak yen and strong dollar have helped these investments. One major holding that
has been a very strong performer is Sony Corp. We also have invested in some
Japanese pharmaceutical companies and property and casualty companies.
There are some good things happening in Japan. Interest rates are very low,
and the financial system is slowly improving. But the overall market has been
hurt throughout the year by the lack of domestic growth, and more recently by
the fallout from the Asian problems.
10
<PAGE>
KEYSTONE INTERNATIONAL FUND INC.
We expect we will be keeping our exposure to the Japanese market fairly light.
We are very lightly weighted, and have been lightly weighted, in Southeast
Asia and Asia. We think Asia will continue to be a volatile area. There are
longer-term structural problems that need to be addressed.
Q. WHAT INDUSTRIES HAVE YOU BEEN EMPHASIZING?
A. We have tended to be conservative. Several of the industries we have
emphasized have been fairly defensive in nature. These include pharmaceuticals,
<PAGE>
healthcare, food and beverages, and energy. We have been underweighted in
technology and Japanese banks.
Q. WHAT ARE SOME OF THE COMPANIES THAT HAVE CONTRIBUTED TO THE PERFORMANCE?
A. Some of our best investments have been global companies with strong
franchises. Many of them also have been restructuring to increase their
efficiency and competitiveness.
Philips Electronics NV, a Dutch company that is the Fund's third largest
holding, is a good example of a company that is benefitting from restructuring,
cutting costs and getting out of its non-core businesses. This is also a company
that has a very large market share in its primary businesses. It is dominant in
Europe.
Other companies that have helped the fund include the largest holding, Nestle
SA, which is prominent globally; British Petroleum Co. Plc, which has been
restructuring; Societe Nationale Elf Aquitaine of France, another large oil
company that is benefitting from restructuring; and Novartis AG, our largest
pharmaceutical company.
One very strong performer has been Holderbank Financiere Glarus AG, a Swiss
company. This corporation owns cement companies all over the world, particularly
in emerging markets, and is very well run. The cement industry is becoming more
consolidated, with fewer players, and a few are becoming dominant; therefore,
pricing is becoming easier for them.
All these companies have been top ten holdings, so their performance has
helped the Fund.
Q. GILMAN, THE UNITED STATES STOCK MARKET HAS OUTPERFORMED FOREIGN MARKETS FOR
THE PAST SEVERAL YEARS. WHY DOES IT STILL MAKE SENSE TO INVEST INTERNATIONALLY,
ESPECIALLY IN LIGHT OF THE VOLATILITY OF FOREIGN MARKETS?
A. Volatility is not limited to outside the United States. There are many people
who think the U.S. market is highly valued after significantly outperforming the
rest of the world markets over the past several years. U.S. corporations have
significantly benefitted during the past few years from cost-cuttings and
restructurings. This trend just started over the last two years in Europe and is
only just beginning in Japan. As a result, looking ahead, there will be more
investment opportunities from restructuring outside the United States than
inside. In addition, the strength of the U.S. dollar will make it more difficult
for U.S. exporters to compete in the international markets, while foreign
exporters should have an easier time. Finally, outside the United states there
are many opportunities that did not exist within the United States. One example
is privatization.
It is true that markets outside the United States can be more volatile. We
have tried to be cognizant of the risks as we've invested, and this awareness
has helped the fund achieve competitive performance with below-average risk.
Q. GILMAN, WHAT IS YOUR OUTLOOK?
A. We see opportunities, particularly in Europe where economies are growing,
interest rates are low, and corporations are restructuring to increase their
efficiency and competitiveness. We have about half the Fund's assets in Europe,
and we expect this emphasis to continue. We are less optimistic about the
near-term opportunities in Japan and Asia, and we expect to keep our weightings
modest in those regions, concentrating on selective opportunities, such as
Japanese exporters
11
<PAGE>
that have been helped by the strength of the U.S. dollar. We also expect to keep
a fairly modest weighting in the emerging markets, less than 10%, although we
will be available to take advantage of selective opportunities.
We have been very mindful of the recent volatility in the emerging markets,
and we expect to have light weightings there. Our relatively large cash
<PAGE>
weighting, at about 22% at the end of the fiscal year, as well as active
currency management should help reduce the risk of the Fund. We believe there
are some very attractive opportunities in international investing, and it makes
more sense than ever to have part of one's portfolio diversified
internationally.
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
as of October 31, 1997 as a percentage of net assets
<S> <C>
Nestle SA (Switzerland) 2.7%
- - -----------------------------------------------------------------------------
Novartis AG (Switzerland) 2.6%
- - -----------------------------------------------------------------------------
Philips Electronics NV (Netherlands) 2.4%
- - -----------------------------------------------------------------------------
British Petroleum Co. Plc (U.K.) 2.3%
- - -----------------------------------------------------------------------------
Karstadt AG (Germany) 2.1%
- - -----------------------------------------------------------------------------
Societe Nationale Elf Aquitaine (France) 2.1%
- - -----------------------------------------------------------------------------
Holderbank Financiere Glarus AG (Switzerland) 2.0%
- - -----------------------------------------------------------------------------
B.A.T. Industries Plc (U.K.) 1.9%
- - -----------------------------------------------------------------------------
Sony Corp. (Japan) 1.8%
- - -----------------------------------------------------------------------------
Telecom Italia SpA (Italy) 1.7%
- - -----------------------------------------------------------------------------
</TABLE>
<PAGE>
KEYSTONE INTERNATIONAL FUND INC.
GROWTH OF AN INVESTMENT
[CHART APPEARS HERE] [CHART APPEARS HERE]
<TABLE>
<CAPTION>
HISTORICAL PERFORMANCE as of October 31, 1997
- - ----------------------------------------------------------------------
<S> <C>
Cumulative Total Return
1 year w/o sales charge 15.69%
1 year w/sales charge* 12.69%
5 years 72.94%
10 years 87.31%
Average Annual Total Return
1 year w/o sales charge 15.69%
1 year w/sales charge* 12.69%
5 years 11.58%
10 years 6.48%
</TABLE>
* Adjusted for maximum contingent deferred sales charge of 3.0% for those
investors who sold fund shares after one calendar year.
<PAGE>
International investing involves increased risk and volatility.
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STATEMENT OF ADDITIONAL INFORMATION
Acquisition of the Assets of
INTERNATIONAL GROWTH FUND
a Series of
COREFUNDS, INC.
530 East Swedesford Road
Wayne, Pennsylvania 19087
(800) 355-2673
By and In Exchange For Shares of
EVERGREEN INTERNATIONAL GROWTH FUND
a Series of
EVERGREEN INTERNATIONAL TRUST
200 Berkeley Street
Boston, Massachusetts 02116
(800) 343-2898
This Statement of Additional Information, relating specifically to the
proposed transfer of the assets and liabilities of International Growth Fund
("CoreFunds International"), a series of CoreFunds, Inc., to Evergreen
International Growth Fund ("Evergreen International"), a series of Evergreen
International Trust, in exchange for Class A shares (to be issued to holders of
Class A shares of CoreFunds International), Class B shares (to be issued to
holders of Class B shares of CoreFunds International), and Class Y shares (to be
issued to holders of Class Y shares of CoreFunds International) of beneficial
interest, $.001 par value per share, of Evergreen International, consists of
this cover page and the following described documents, each of which is attached
hereto and incorporated by reference herein:
(1) The Statement of Additional Information of Evergreen
International dated March 1, 1998;
(2) The Statement of Additional Information of CoreFunds
International dated November 1, 1997;
(3) Annual Report of CoreFunds International for the year ended
June 30, 1997;
(4) Semi-Annual Report of CoreFunds International for the six
month period ended December 31, 1997;
(5) Annual Report of Evergreen International for the year ended
October 31, 1997; and
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(6) Pro-Forma combining Financial Statements (unaudited) for the
fiscal year ended October 31, 1997.
This Statement of Additional Information, which is not a prospectus,
supplements, and should be read in conjunction with, the Prospectus/Proxy
Statement of Evergreen International and CoreFunds International dated June 1,
1998. A copy of the Prospectus/Proxy Statement may be obtained without charge by
calling or writing to Evergreen International or CoreFunds International at the
telephone numbers or addresses set forth above.
The date of this Statement of Additional Information is June 1, 1998.
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