SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the Registrant
[ ] Filed by a Party other than the Registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
CoreFunds, Inc.
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(Exact name of registrant as specified in its charter)
CoreFunds, Inc.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 PER EXCHANGE ACT RULE 0-11(C)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A WITH THIS PRELIMINARY
FILING
[ ] $125 per Exchange Act Rule 14a-6(i)(1). (No preliminary filing
was required.)
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (1)
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4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Dated Filed:
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(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
Dear Corefund Shareholder:
Enclosed are a proxy statement and ballot asking you to vote on a proposal to
approve a new investment advisory agreement for the Corefund Pennsylvania
Municipal Bond Fund.
This new advisory agreement is necessary because of the merger between
Corestates Financial Corp and Meridian Bancorp, Inc. This proxy statement
proposes that the combined investment advisory entity, called CoreStates
Investment Advisers, act as investment adviser with respect to the assets of
this fund.
The original solicitation for this proposal failed to reach quorum on this fund,
although the proposal was approved for all other CoreFunds. The Board of
Directors of CoreFunds, Inc. has approved this proposal, and recommends it for
your approval.
Please take a moment to review this proxy statement, and complete, sign, and
date the enclosed proxy ballot. If you have questions about this statement,
please call your investment representative, or call CoreFund Shareholder
Services at 1-800-355-CORE (2673).
Sincerely,
/s/ DAVID G. LEE
- --------------------------
David G. Lee
President
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
CoreFunds, Inc.
The document you hold in your hands contains your proxy statement and proxy
card. A proxy card is, in essence, a ballot. When you vote your proxy, it tells
us how to vote on your behalf on important issues relating to your Fund. The
proxy card may be completed by checking the appropriate box and voting for or
against the specific proposal. If you simply sign the proxy without specifying a
vote, your shares will be voted in accordance with the recommendations of the
Board of Directors.
We urge you to spend a few minutes with the proxy statement, fill out your proxy
card, and return it to us. Voting your proxy, and doing so promptly, ensures
that the Fund will not need to conduct additional mailings. When shareholders do
not return their proxies in sufficient numbers, the Fund incurs the expense of
follow-up solicitations, which may cost your Fund money.
Please take a few moments to exercise your right to vote. Thank you.
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<PAGE>
COREFUNDS, INC.
680 East Swedesford Road
Wayne, Pennsylvania 19087
Notice of Special Meeting of Shareholders
July 17, 1996
To the Shareholders of Pennsylvania Municipal Bond Fund:
Notice is hereby given that a special meeting of shareholders (the "Meeting") of
the Pennsylvania Municipal Bond Fund (the "Fund") of CoreFunds, Inc. (the
"Company"), will be held at the offices of SEI Financial Management Corporation,
680 East Swedesford Road, Wayne, Pennsylvania 19087-1658, on July 17, 1996, at
3:30 p.m., local time, for the following purpose:
1. To consider and vote upon a proposal to approve a new investment
advisory agreement between the Company, on behalf of the Fund, and
CoreStates Investment Advisers, Inc. ("CoreStates Advisers"),
resulting from a "change of control" of CoreStates Advisers in
connection with the merger of CoreStates Financial Corp ("CoreStates")
and Meridian Bancorp, Inc. ("Meridian") effective on April 12, 1996
(the "Merger").
2. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
This Proposal relates to the consideration of a new investment advisory
agreement for the Fund as a result of the change of control of CoreStates
Advisers. Pursuant to the proposed investment advisory agreement, CoreStates
Advisers will continue to act as investment adviser with respect to the assets
of the Fund.
All Shareholders are cordially invited to attend the Meeting. Regardless of
whether you plan to attend the Meeting, please complete, sign and date the
enclosed Proxy and return it promptly in the enclosed envelope so that a quorum
will be present and a maximum number of shares may be voted. If you are present
at the Meeting, you may change your vote, if desired, at that time.
This Meeting is proposed by the Company for the purpose of resoliciting
shareholder proxies. The original solicitation on February 21, 1996, for a
meeting held on March 15, 1996, failed to achieve a quorum thereby prohibiting a
vote on the new investment advisory agreement. Without a quorum and successful
vote approving the proposed investment advisory agreement for the Fund, the
Board of Directors will be required to consider other alternatives for the Fund.
Shareholders of record at the close of business on May 30, 1996, are entitled to
notice of and to vote at the meeting or any adjournment thereof.
By Order of the Board of Directors,
James W. Jennings
Secretary
June 24, 1996
PROMPT EXECUTION AND RETURN OF THE ENCLOSED PROXY
IS REQUESTED. A SELF-ADDRESSED, POSTAGE-PAID
ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
<PAGE>
COREFUNDS, INC.
680 East Swedesford Road
Wayne, Pennsylvania 19087
PROXY STATEMENT
Special Meeting of Shareholders
July 17, 1996
This proxy statement is furnished in connection with the solicitation of proxies
by the Board of Directors of CoreFunds, Inc. (the "Company") on behalf of the
Pennsylvania Municipal Bond Fund (the "Fund") for use at the Special
Meeting of Shareholders to be held at the offices of SEI Financial Management
Corporation ("SFM"), 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658,
on Wednesday, July 17, 1996, at 3:30 p.m., local time, and at any adjourned
session thereof (such meeting and any adjournment thereof are hereinafter
referred to as the "Meeting"). Shareholders of record at the close of business
on May 30, 1996, are entitled to vote at the Meeting. The table below sets forth
the number of shares outstanding for each class of shares of the Fund being
solicited by this Proxy Statement:
================================================================================
Shares Outstanding as of
Class of Shares May 30, 1996
- --------------------------------------------------------------------------------
Pennsylvania Municipal Bond Fund Class Y 874,707.6168
(formerly Series A)
- --------------------------------------------------------------------------------
Pennsylvania Municipal Bond Fund Class A 97,045.1081
(formerly Series B)
================================================================================
Each share is entitled to one vote and each fractional share is entitled to
a proportionate fractional vote on each matter as to which such shares are to be
voted at the Meeting. In addition to the solicitation of proxies by mail,
directors and officers of the Company and officers and employees of SFM, 680
East Swedesford Road, Wayne, Pennsylvania 19087, the Administrator for the Funds
(the "Administrator"), may solicit proxies in person or by telephone. Persons
holding shares as nominees will, upon request, be reimbursed for their
reasonable expenses incurred in sending soliciting materials to their
principals. The cost of solicitation will be borne by the investment adviser,
CoreStates Investment Advisers, Inc. ("CoreStates Advisers"). The Proxy Card and
this Proxy Statement are being mailed to the Shareholders on or about June 24,
1996.
Shares represented by duly executed proxies will be voted in accordance
with the instructions given. Proxies may be revoked at any time before they are
exercised by a written revocation received by the President of the Company at
680 E. Swedesford Road, Wayne, Pennsylvania 19087-1658, by properly executing a
later-dated proxy, or by attendance at the Meeting and voting in person.
INTRODUCTION
The Company is organized as a Maryland corporation and is not required to
hold annual meetings of Shareholders. This Meeting is being called in order to
permit Shareholders of the Fund to vote on and adopt a new investment advisory
agreement as a result of the termination of the existing investment advisory
agreement. The existing
-1-
<PAGE>
investment advisory agreement automatically terminated on April 12, 1996, the
date of the Merger of CoreStates and Meridian. As a result of the Merger, a
"change of control" of CoreStates Advisers is deemed to have occurred under the
Investment Company Act of 1940, as amended (the "1940 Act") thereby terminating
the existing agreement and rendering a new investment advisory agreement
necessary.
On February 21, 1996, the Company solicited the shareholders of the Fund to
approve a new investment advisory agreement, as required by the 1940 Act, in
connection with a meeting of shareholders to be held on March 15, 1996. However,
after several adjournments, the Fund failed to achieve a quorum of shareholders
required to vote on the proposed investment advisory agreement. Accordingly,
this Proxy Statement is an additional attempt by the Fund to achieve the
necessary quorum for the purpose of voting on a new investment advisory
agreement. A failure to achieve a quorum or an affirmative vote of shareholders
on this Proposal would cause the Board of Directors to consider other available
alternatives.
I. PROPOSAL 1. Approval of a New Investment Advisory Agreement for
the Fund
Background
The purpose of this Meeting is to reconsider a new advisory agreement for
the Fund resulting from the merger of Meridian into CoreStates (the "Merger").
As a result of the combination of these bank holding companies, the Company and
the Conestoga Family of Funds ("Conestoga"), the registered investment companies
of CoreStates and Meridian, respectively, reorganized to establish one surviving
registered investment company known as "CoreFunds Inc." The Merger represents a
change in ownership of the parent corporation of CoreStates Advisers and, as
such, has the effect under the 1940 Act, as amended (the "1940 Act"), of
terminating the existing investment advisory agreement between the Company, on
behalf of the Fund, and CoreStates Advisers (the "Existing Advisory Agreement").
Accordingly, shareholders are being asked to approve a new investment advisory
agreement embodying the same terms and fees with CoreStates Advisers under its
new ownership (the "New Advisory Agreement"). The Company's Board of Directors,
including a majority of the non-interested Directors (those Directors who are
not parties to the New Advisory Agreement, or interested persons of such
parties), approved the New Advisory Agreement at a meeting held on December 7,
1995, subject to approval by the shareholders of the Fund.
A quorum of shareholders of the Fund was not achieved at the first meeting
of shareholders held on March 15, 1996, and therefore, the New Advisory
Agreement could not be voted on by shareholders. Accordingly, CoreStates
Advisers is operating the Fund, on an interim basis, pursuant to the New
Advisory Agreement approved by the Board of Directors on December 7, 1995, and
having the same terms and conditions as the prior or Existing Advisory
Agreement pursuant to Rule 15a-4 under the 1940 Act. CoreStates Advisers is
permitted under this Rule to operate under an interim investment advisory
contract without shareholder approval for 120 days from the date of the Existing
Advisory Agreement's termination, which was April 12, 1996.
The Reorganization Agreement
In October 1995, CoreStates announced its intention to enter into a Merger
with Meridian. The Merger was effected on April 12, 1996 with Meridian being
merged into CoreStates. CoreStates is now the surviving corporation and
continues under the name
-2-
<PAGE>
"CoreStates Financial Corp". The Board of Directors of both CoreStates and
Meridian approved the Merger. The merged CoreStates/Meridian ranks among the
twenty-five largest bank holding companies in the United States based on assets.
In connection with the Merger, CoreFunds and Conestoga entered into an
Agreement and Plan of Reorganization (the "Reorganization") dated February 8,
1996.
The primary reason for the Reorganization was the Merger between Meridian,
the parent of Meridian Investment Company ("MIC")(investment adviser to
Conestoga) and CoreStates (the parent of CoreStates Advisers). As a result of
the Merger, the Existing Advisory Agreement between the Fund and CoreStates
Advisers, was terminated. Shareholders of the Fund are not expected to have
adverse tax consequences from the Reorganization.
The Reorganization provided that each of the following eight investment
portfolios of Conestoga ("Reorganizing Portfolios") transfer substantially all
its assets and known liabilities to the existing CoreFunds portfolios ("Existing
CoreFunds Portfolios") as identified below:
<TABLE>
<CAPTION>
========================================================================================================
Existing CoreFunds Final CoreFunds
Conestoga (Reorganizing Portfolios) Portfolios Portfolios
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Management Fund Cash Reserve Cash Reserve
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Tax-Free Fund Tax-Free Reserve Tax-Free Reserve
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U.S. Treasury Securities Fund Treasury Reserve Treasury Reserve
- --------------------------------------------------------------------------------------------------------
Equity Fund Value Equity Fund Equity Fund
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Intermediate Income Fund Intermediate Bond Fund Short-Intermediate
Bond Fund
- --------------------------------------------------------------------------------------------------------
Pennsylvania Tax-Free Bond Fund Pennsylvania Municipal Pennsylvania
Bond Fund Municipal Bond
Fund
- --------------------------------------------------------------------------------------------------------
Balanced Fund Balanced Fund Balanced Fund
- --------------------------------------------------------------------------------------------------------
International Equity Fund International Growth International
Fund Growth Fund
========================================================================================================
</TABLE>
The Reorganization also provided that each of the following three
investment portfolios of Conestoga ("Continuing Portfolios") will transfer all
its assets and known liabilities to newly-created investment portfolios of
CoreFunds ("New CoreFunds Portfolios") identified below:
===============================================================================
Conestoga (Continuing Portfolios) New CoreFunds Portfolios
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Special Equity Fund Special Equity Fund
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Bond Fund Bond Fund
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Short-Term Income Fund Short Term Income Fund
===============================================================================
-3-
<PAGE>
The Existing CoreFunds Portfolio Reorganization occurred on April 15, 1996
while the New CoreFunds Portfolio Reorganization occurred on April 22, 1996. In
exchange for the transfer of these assets and liabilities, CoreFunds
simultaneously issued shares in these eleven CoreFunds portfolios to the
corresponding Conestoga portfolios. Shareholders of each class of shares of the
Conestoga portfolios received the class of shares of the corresponding CoreFunds
portfolios based on their respective net asset values.
The Reorganization occurred shortly after the consummation of the Merger
which took place on April 12, 1996. However, because the Merger is deemed to be
a change in control of CoreFunds, the then Existing Advisory Agreement, by its
terms, automatically terminated upon the Merger.
As required by the 1940 Act, the Existing Advisory Agreement provides for
its automatic termination upon "assignment." Consummation of the Merger and
Reorganization is deemed to be an assignment (as defined in the 1940 Act) of the
Existing Advisory Agreement resulting in the termination of the Existing
Advisory Agreement in accordance with its terms. In anticipation of the
Consummation of the Merger and Reorganization, and to provide continuity in
investment advisory services, the Company's Board of Directors, including a
majority of the Board members who are not "interested persons" (as defined in
the 1940 Act) at a meeting held on December 7, 1995, approved and directed that
there be submitted to shareholders for approval the New Advisory Agreement
between the Company and CoreStates Advisers covering all the Funds. However, due
to the failure of the Fund to obtain a quorum at the March 15, 1996 Meeting, an
additional proxy solicitation and meeting for the Fund, as set forth in this
Proxy Statement, is required in order to approve the New Advisory Agreement for
the Fund.
In connection with the approval of the New Advisory Agreement, the Board
considered that the terms of the Merger and Reorganization do not
require a change in the Fund's investment objective or policies, CoreStates
Advisers investment management or operation of the Fund, or the shareholder
services or other business activities of the Fund. CoreStates and Meridian each
informed their respective Boards that the Merger would not result in any such
change, although no assurance can be given that such a change will not occur in
the future.
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 as long as two
conditions are satisfied. First, no "unfair burden" may be imposed on the
investment company as a result of the transaction relating to the change of
control, or any express or implied terms, conditions or understandings
applicable thereto. The term "unfair burden," as defined in the 1940 Act,
includes any arrangement during the two-year period after the change in control
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). No such
compensation arrangements transpired in this Reorganization.
The second condition is that, during the three-year period immediately
following consummation of the transaction, at least 75% of the investment
company's Board of
-4-
<PAGE>
Directors must not be "interested persons" of CoreStates Advisers or MIC within
the meaning of the 1940 Act.
A number of conditions precedent were required prior to the closing of the
Reorganization. Such conditions included, among other things, that all
regulatory filings, applications and notifications be duly and properly made or
obtained. All such conditions were satisfied prior to the closing. As a result
of the failure of the Fund to achieve a quorum, the Directors and the
Administrator were required to enter into an interim investment advisory
agreement for the Fund, (subject to approval by that Fund's shareholders through
this Proxy Statement) in order to continue the investment operations.
Description of the Existing Advisory Agreements and the New Advisory Agreement
CoreStates Advisers currently serves as the investment adviser to the Fund,
on an interim basis, pursuant to an investment advisory agreement dated April
12, 1996, approved by the Board of Directors on December 7, 1995, which is
identical to the Existing Advisory Agreement dated December 2, 1993. Consistent
with Rule 15a-4 under the 1940 Act, the Fund is permitted to operate under the
New Advisory Agreement approved by the Board for 120 days from the date of
termination of the then Existing Advisory Agreement (April 12, 1996), in order
to obtain approval from Fund shareholders. This Proxy Statement is intended for
the purpose of shareholders approving such New Advisory Agreement.
Compensation
Under the New and Existing Advisory Agreements, CoreStates Advisers is
entitled to a fee, which is calculated daily and paid monthly, at an annual rate
of .50% of the Fund (0% after fee waiver). The advisory fee payable to
CoreStates Advisers under the New Advisory Agreement will be the same as
the Existing Advisory Agreement.
For its fiscal year ended June 30, 1995, the aggregate investment advisory
fees paid by the Fund to Corestates Advisers totaled $0, including fee waivers
of $10,984. CoreStates Advisers may terminate this waiver of fees at any time in
its discretion. For the same period, the Fund paid SEI Financial Services
Corporation ("SFS" or "Distributor") an aggregate distribution fee of $511 for
Class A Shares and SFM, as Administrator, an aggregate administrative fee of $0,
including fee waivers of $5,491.
Duties Under the Existing Advisory Agreements and the New Advisory Agreement
The Existing Advisory Agreement and New Advisory Agreement (interim
investment advisory agreement) provide that CoreStates Advisers, in return for
its fee, will (1) provide a program of continuous investment management for the
Fund in accordance with the Fund's investment objective, policies and
limitations, (2) make investment decisions for the Fund, and (3) place orders to
purchase and sell securities for the Fund, subject to the supervision of the
Company's Directors. The Existing Advisory Agreement and New Advisory Agreement
provide that CoreStates Advisers will provide adequate office space, facilities
and personnel to perform its advisory services for the Company.
The Existing Advisory Agreement and New Advisory Agreement provide that the
Fund will pay all its expenses for services not provided by CoreStates Advisers.
These expenses include, among others: the fees and expenses of Directors of the
Fund who are not "interested persons" of CoreStates Advisers or the
Administrator; travel expenses of
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<PAGE>
officers, directors and employees of the Fund who are officers, directors or
employees of CoreStates Advisers or the Administrator related to attendance at
meetings of the Fund's Board of Directors or committees thereof; the cost of the
Fund's legally required fidelity bond; interest expenses; taxes, brokerage fees
and commissions; fees and expenses of registering and qualifying the Fund and
its shares for distribution under Federal and state securities laws; expenses of
preparing, printing and distributing prospectuses and other material to existing
shareholders; fees to the custodian and transfer agent; payments to the
Administrator for maintaining the Fund's financial books and records and
calculating its daily net asset value; auditing and legal expenses; insurance
expenses; association membership dues; and the expense of annual and semi-annual
reports to shareholders, shareholders' meetings and proxy solicitations. The
Company is also liable for such non-recurring expenses as may arise, including
litigation to which the Company or its Funds may be a party. The Company may
have an obligation to indemnify its directors and officers with respect to such
litigation.
The Existing Advisory Agreement and New Advisory Agreement both provide
that CoreStates Advisers shall not be liable for any error of judgment or
mistake of law or for losses to the Company or its shareholders, provided that
the Adviser is not protected from liability to the Company or to its
shareholders resulting from the Adviser's willful misfeasance, bad faith or
gross negligence in performance of its duties under the Advisory Agreement, or
from reckless disregard of its duties and obligations thereunder.
Except for the deemed change in the ownership of CoreStates Advisers and
different effective and termination dates, the terms of the New Advisory
Agreement are identical in all material respects to the terms of the Existing
Advisory Agreement. The New Advisory Agreement is attached to this Proxy
Statement as Exhibit A, and the description of the New Advisory Agreement set
forth in this Proxy Statement is qualified in its entirety by reference to
Exhibit A.
Duration and Termination
The Existing Advisory Agreement and New Advisory Agreement each have an
initial term of two years from their respective effective dates, and thereafter
continue for successive annual periods, provided the continuation is approved by
the Fund's Directors or by vote of a majority of its outstanding voting
securities, as well as by a majority of the Fund's Directors who are not
"interested persons" as defined in the 1940 Act. The Existing Advisory Agreement
and the New Advisory Agreement may be terminated at any time without penalty by
the Fund or the Adviser on 60 days' written notice and will automatically
terminate in the event of its assignment.
Information Regarding CoreStates Advisers
CoreStates Advisers is a registered investment adviser under the Investment
Advisers Act of 1940 (the "Advisers Act"), and currently acts as the investment
adviser to the portfolios of the Company pursuant to separate, investment
advisory agreements.
CoreStates Advisers performs most investment management and investment
advisory functions for the trust departments of CoreStates's banking
subsidiaries. In that connection, CoreStates Advisers performs certain
investment advisory, research, trading, and fund management functions. It also
provides investment management and advisory services to customers unrelated to
CoreStates. CoreStates Advisers does not currently provide investment services
to any other investment companies having an investment objective similar to the
Funds'.
-6-
<PAGE>
The principal offices of CoreStates Advisers are located at 1500 Market
Street, Philadelphia, PA 19102. CoreStates Advisers is a wholly-owned subsidiary
of CoreStates Bank, N.A. ("CoreStates Bank"), 1500 Market Street, Philadelphia,
PA 19102, which in turn is a wholly-owned subsidiary of CoreStates Financial
Corp, 1500 Market Street, Philadelphia, PA 19102. The name, address, and
principal occupation of the principal executive officers and directors of
CoreStates Advisers is set forth below.
<TABLE>
<CAPTION>
==========================================================================================================================
Name and Address Position with CoreStates Advisers Principal Occupation
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark E. Stalnecker Managing Director, Chairman and Chief Investment Officer
President
- --------------------------------------------------------------------------------------------------------------------------
Dung Vukhae Managing Director and Senior Vice Fixed Income Management
President
- --------------------------------------------------------------------------------------------------------------------------
Charles T. Meisse Managing Director and Senior Vice Director - Equity Management
President
- --------------------------------------------------------------------------------------------------------------------------
JoAnne T. Fredericks Managing Director and Senior Vice Portfolio Manager
President -- Treasurer
- --------------------------------------------------------------------------------------------------------------------------
Michael F. Melloy Vice President Fixed Income Manager
- --------------------------------------------------------------------------------------------------------------------------
Timothy R. Stives Managing Director and Senior Vice Director - Equity Management
President and Research
- --------------------------------------------------------------------------------------------------------------------------
Richard J. Lindsay Director Product Development Marketing
- --------------------------------------------------------------------------------------------------------------------------
William T. Lawrence Vice President - Secretary Portfolio Management
- --------------------------------------------------------------------------------------------------------------------------
Daniel Aboyan Director Banking
==========================================================================================================================
</TABLE>
Directors' Considerations
The Board of Directors believes that the terms of the New Advisory
Agreement are fair to, and in the best interest of the Fund, and its
Shareholders. The Board of Directors, including all of the non-interested
Directors, recommends approval by Shareholders of the New Advisory Agreement
between CoreStates Advisers and the Company, on behalf of the Fund. In making
this recommendation, the Directors carefully evaluated CoreStates Advisers,
including, but not limited to, an examination of the following factors: (1) the
fee and expense ratios of comparable mutual funds; (2) the performance of the
Fund since commencement of operations; (3) the nature and quality of the
services expected to be rendered to the Fund by CoreStates Advisers; (4) the
distinct investment objectives and policies of the Fund; (5) that the
compensation payable to CoreStates Advisers by the Funds under the proposed New
Advisory Agreement will be at the same rate as the compensation payable to the
Adviser under the Existing Advisory Agreement; (6) that the terms of the
Existing Advisory Agreements will be unchanged under the New Advisory Agreement
except for different effective and termination dates and certain other
nonmaterial changes; (7) the history, reputation, qualification and background
of CoreStates Advisers, as well as the qualifications of its personnel and
financial conditions; (8) the commitment of the parties to the Merger to pay or
reimburse the Company for the expenses of the Company incurred in connection
with the Reorganization Agreement; (10) the benefits expected to be realized as
-7-
<PAGE>
a result of CoreStates Advisers affiliation with MIC; and (11) other factors
deemed relevant.
CoreStates Advisers has advised the Board of Directors that it expects that
there will be no dilution in the scope and quality of advisory service provided
to the Fund as a result of the Reorganization. Accordingly, the Board of
Directors believes that the Fund should receive investment advisory services
under the New Advisory Agreement that are equal or superior to those they
currently receive under the Existing Advisory Agreements, at the same fee
levels.
Required Vote
Approval of the New Advisory Agreement with respect to the Fund requires
the affirmative vote of a majority of the outstanding shares of the Fund.
THE DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, RECOMMEND THAT
SHAREHOLDERS OF THE FUND VOTE "FOR" THE NEW ADVISORY AGREEMENT.
GENERAL INFORMATION ABOUT THE COMPANY AND OTHER MATTERS
Distribution
SEI Financial Services Company ("SFS"), a wholly-owned subsidiary of SEI
Corporation ("SEI"), 680 East Swedesford Road, Wayne, Pennsylvania 19087-1658,
acts as the Distributor of the shares of the Company pursuant to a Distribution
Agreement dated October 30, 1992 between the Company and SFS. SFS also acts as
the distributor of Classes A and C Shares of the Company (formerly Series B)
pursuant to a Rule 12b-1 Distribution Plan dated October 30, 1992. Alfred P.
West, Jr. serves as Chairman of the Board and Chief Executive Officer of SFS and
SEI, and Henry H. Greer serves as Director, President and Chief Operating
Officer of SFS and SEI.
Portfolio Transactions
For the Company's fiscal year ended June 30, 1995, the Company paid no
brokerage commissions to affiliated brokers.
5% Shareholders
As of May 30, 1996 the following persons were the only persons who were, to
the knowledge of the Company, beneficial owners of 5% or more of shares of the
at this Meeting.
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<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
Name and Address Percentage of
Class of Shares of Beneficial Owner Number of Shares Class of Share
--------------- ------------------- ---------------- --------------
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Pennsylvania Municipal Bond Fund Class Y
- ----------------------------------------------------------------------------------------------------------------------------
MAM & Co.
c/o Kim Kutzer
P.O. Box 15004
Reading, PA 19612 562,359.2443 63.25%
- ----------------------------------------------------------------------------------------------------------------------------
Dr. Vernon F. Alibert &
Dolores V. Alibert
1420 Conchester Highway
Boothwyn, PA 19061 177,599.3240 20.30%
- ----------------------------------------------------------------------------------------------------------------------------
Patterson & Co.
PNB Personal Trust Acctg
P.O. Box 7629
Philadelphia, PA 19101 142,809.692 16.32%
- ----------------------------------------------------------------------------------------------------------------------------
Pennsylvania Municipal Bond Fund Class A
- ----------------------------------------------------------------------------------------------------------------------------
National Financial Services Corp.
For the Benefit of our Customers
One World Financial Center
P.O. Box 3908
Church St. Station
New York, NY 10008 16,795.6280 17.30%
- ----------------------------------------------------------------------------------------------------------------------------
Salvatore J. Alesi, Sr. &
Rose P. Alesi JTTEN
284 Ellis Road
Havertown, PA 19083 15,421.4360 15.88%
- ----------------------------------------------------------------------------------------------------------------------------
Peter L. Davis &
Kathryn K. Davis JTTEN
509 Manor House Lane
Huntington Valley, PA 19006 7,832.0750 7.88%
============================================================================================================================
</TABLE>
As of May 30, 1996, the Directors and executive officers of the Company owned in
the aggregate less than 1% of the shares of the Fund.
Adjournment
In the event that sufficient votes in favor of the Proposals set forth in
the Notice of the Special Meeting are not received by the time scheduled for the
meeting, the persons named as proxies may propose one or more adjournments of
the meeting for a period or periods of not more than 60 days in the aggregate to
permit further solicitation of proxies with respect to any of such Proposal. Any
such adjournment will require the affirmative vote of a majority of the votes
cast on the question in person or by proxy at the session of the meeting to be
adjourned. The persons named as proxies will vote in favor of such adjournment
those proxies which they are entitled to vote in favor of such Proposals. They
will vote against any such adjournment those proxies required to be voted
against any such Proposals. The costs of any such additional solicitation and of
any adjourned session will be borne by the Company.
Required Vote
Approval of the Proposal requires the affirmative vote of a majority of the
outstanding shares of the Fund. As defined in the 1940 Act, "majority of the
outstanding shares" means the vote of (i) 67% or more of the Fund's outstanding
shares present at a meeting, if the holders of more than 50% of the outstanding
shares of the Fund are present
-9-
<PAGE>
or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares,
whichever is less.
Abstentions and "broker non-votes" will not be counted for or against any
Proposal to which it relates, but will be counted for purposes of determining
whether a quorum is present. Abstentions will be counted as votes present for
purposes of determining a "majority of the outstanding voting securities"
present at the Meeting, and will therefore have the effect of counting against
the Proposal to which it relates.
Shareholder Proposals
The Company does not hold annual Shareholder Meetings. Shareholders wishing
to submit proposals for inclusion in a proxy statement for a subsequent meeting
should send their written proposals to the Secretary of the Company c/o SEI
Corporation, Legal Department, 680 East Swedesford Road, Wayne, Pennsylvania
19087-1658.
Reports to Shareholders
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF THE MOST RECENT ANNUAL
REPORT TO SHAREHOLDERS OF THE COMPANY AND THE MOST RECENT SEMI-ANNUAL REPORT
SUCCEEDING SUCH ANNUAL REPORT, IF ANY, ON REQUEST. REQUESTS SHOULD BE DIRECTED
TO THE COMPANY AT 680 EAST SWEDESFORD ROAD, WAYNE, PENNSYLVANIA 19087-1658, OR
BY CALLING 1-800-355-CORE.
Other Matters
The Directors know of no other business to be brought before the meeting.
However, if any other matters properly come before the meeting, it is their
intention that proxies which do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
-----------------------
SHAREHOLDERS ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND
RETURN IT PROMPTLY.
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<PAGE>
EXHIBIT A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of April 12, 1996 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 ("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 Fund 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;
<PAGE>
(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
-2-
<PAGE>
provide supplemental research to the Investment Adviser may receive orders for
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 Fund 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 records required to be
maintained by Rule 31a-1 under the 1940 Act.
-3-
<PAGE>
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
Financial Management Corporation 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.
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
-4-
<PAGE>
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 as of the date first above written, provided that it shall have been
approved by shareholders of the respective Portfolios of the Company in
accordance with the requirements under the 1940 Act, and, unless sooner
terminated as provided herein, shall continue in effect until April 15, 1998.
Thereafter, if not terminated, this Agreement shall continue in effect for
successive periods of twelve months, each ending on [June 30] each year,
provided such continuance is specifically approved at least annually (a) by the
vote of a majority of those members of the Portfolio'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 Portfolio'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 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.
-5-
<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.
COREFUNDS, INC.
By /s/ Richard J. Shoch
----------------------------------
Title: Vice President
CORESTATES INVESTMENT ADVISERS, INC.
By /s/ Mark Stalnecker
---------------------------------
Title: President
APPENDIX A
<TABLE>
<S> <C>
======================================================================================================================
Portfolio Advisory Fee as a Percentage
of average daily net assets
- ----------------------------------------------------------------------------------------------------------------------
Growth Equity Fund .75%
- ----------------------------------------------------------------------------------------------------------------------
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%
- ----------------------------------------------------------------------------------------------------------------------
Fiduciary Reserve .50%
- ----------------------------------------------------------------------------------------------------------------------
Fiduciary Treasury Reserve .20%
- ----------------------------------------------------------------------------------------------------------------------
Fiduciary Tax-Free Reserve .20%
- ----------------------------------------------------------------------------------------------------------------------
Elite Cash Reserve .20%
- ----------------------------------------------------------------------------------------------------------------------
Elite Government Reserve .20%
- ----------------------------------------------------------------------------------------------------------------------
Elite Treasury Reserve .20%
======================================================================================================================
</TABLE>
-6-
<PAGE>
COREFUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF THE SHAREHOLDERS OF
PENNSYLVANIA MUNICIPAL BOND FUND
July 17, 1996
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF COREFUNDS, INC.
The undersigned Shareholder(s) of CoreFunds, Inc. (the "Company") hereby
appoint(s) David G. Lee, Kevin P. Robins and Michael G. Bellopede and each of
them (with full power of substitution), the proxy or proxies of the undersigned
to attend the Special Meeting of Shareholders of the Pennsylvania Municipal Bond
Fund (the "Fund") to be held on July 17, 1996, and any adjournments thereof, to
vote all of the shares that the signer would be entitled to vote if personally
present at the Special Meeting and on any other matters brought before the
Special Meeting, all as set forth in the Notice of Special Meeting of
Shareholders. Said proxies are directed to vote or refrain from voting pursuant
to the Proxy Statement as checked below upon the following matter:
1. To consider and vote upon a proposal to approve a new investment
advisory agreement between the Company, on behalf of the Fund, and
CoreStates Investment Advisers, Inc. ("CoreStates Advisers"), resulting
from a "change of control" of CoreStates Advisers in connection with
the merger of CoreStates Financial Corp ("CoreStates") and Meridian
Bancorp, Inc. ("Meridian) effective April 12, 1996 (the "Merger").
[ ] FOR [ ] AGAINST [ ] ABSTAIN
The undersigned acknowledges receipt with this proxy of a copy of the
Notice of Special Meeting of Shareholders and the Proxy Statement of the Board
of Directors.
Your signature(s) on this proxy should be exactly as your name or names
appear on this proxy. If the shares are held jointly, each holder should sign.
If signing is by attorney, executor, administrator, trustee or guardian, please
print your full title below your signature.
Dated: ________ __, 1996
- ---------------------------------------------
Signature
- ---------------------------------------------
Signature
All properly executed proxies will be voted as directed herein by the signing
Shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted in accordance with the recommendations of the Board of
Directors FOR the Proposals.
Please date, sign and return promptly.
-7-
