SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COREFUNDS, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
[INSERT NAME OF FILER WHEN APPLICABLE]
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<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(s). Each
proxy card may be completed by checking the appropriate box voting for or
against the specific proposals relating to your Fund(s). If you simply sign the
proxy without specifying a vote, your shares will be voted in accordance with
the 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 Funds will not need to conduct additional mailings. When
shareholders do not return their proxies in sufficient numbers, the Fund(s) will
incur the expense of follow-up solicitations, which may cost your Fund(s) money.
Please take a few moments to exercise your right to vote. Thank you.
<PAGE>
COREFUNDS, INC.
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
MARCH 15, 1996
To the Shareholders of CoreFunds, Inc.
Notice is hereby given that a special meeting of shareholders (the
'Meeting') of Cash Reserve, Treasury Reserve, Tax-Free Reserve, Value Equity
Fund, International Growth Fund, Equity Index Fund, Growth Equity Fund, Short
Intermediate Bond Fund ( formerly Intermediate Bond Fund), Balanced Fund,
Government Income Fund, Intermediate Municipal Bond Fund, Global Bond Fund,
Pennsylvania Municipal Bond Fund, New Jersey Municipal Bond Fund, Fiduciary
Reserve, Fiduciary Treasury Reserve, Fiduciary Tax-Free Reserve, Elite Cash
Reserve, Elite Government Reserve, and Elite Treasury Reserve (each a 'Fund',
and collectively the 'Funds') 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 March 15, 1996, at 3:30 p.m., local
time, for the following purposes:
1. To consider and act upon a proposal to elect a Board of Directors
(voted on by the shareholders of the Company as a whole).
2. To consider and vote upon a proposal to approve a new advisory
agreement between the Company, on behalf of each Fund, and
CoreStates Investment Advisers, Inc. ('CoreStates Advisers'),
pursuant to which CoreStates Advisers will act as investment
adviser with respect to the assets of the Funds, effective upon the
merger of CoreStates Corp. ('CoreStates') and Meridian Bancorp,
Inc. ('Meridian') (the 'Merger') (voted on by shareholders of each
Fund).
3. To consider and vote upon a proposal to approve the selection of
Martin Currie, Inc. ('Martin Currie') or its successor as a
Sub-Adviser for a portion of the assets of the International Growth
Fund (voted on by the shareholders of the International Growth
Fund).
4. To consider and vote upon a proposal to approve the selection of
Aberdeen Trust ('Aberdeen') or its successor as a Sub-Adviser for a
portion of the assets of the International Growth Fund (voted on by
shareholders of the International Growth Fund).
5. To consider and vote upon a proposal to approve the selection of
Alpha Global Fixed Income Managers, Inc. ('Alpha Global') or its
successor as the Sub-Adviser to the Global Bond Fund (voted on by
shareholders of the Global Bond Fund).
6. To consider and vote upon a proposal to change the Global Bond Fund
from a 'diversified' investment company to a 'non-diversified'
investment company (voted on by shareholders of the Global Bond
Fund).
7. To consider and vote upon a proposal to change the fundamental
policy of the Short Intermediate Bond Fund so that the Fund
maintains an average weighted maturity of two to five years instead
of the existing weighted maturity of three to ten years
(voted on by shareholders of the Short Intermediate Bond Fund).
<PAGE>
8. To consider and vote upon an amended investment advisory agreement
between CoreStates Advisers and each of the Fiduciary Treasury
Reserve and Fiduciary Tax-Free Reserve ('Fiduciary Funds') which
would increase (absent any fee waivers) the contractual advisory
fee paid to CoreStates Advisers (voted on by shareholders of each
of the Fiduciary Treasury Reserve and Treasury Tax-Free Reserve).
9. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Proposal 1 relates to the election of Directors, including two new
Directors to the Company's Board of Directors. Proposals 2, 3 and 5 relate to
the consideration of new investment advisory and sub-advisory agreements for the
Funds as a result of the change of control of CoreStates Advisers. Proposal 4
relates to a multiple manager structure approved by the International Growth
Fund's Board of Directors and approval of the selection of Aberdeen Trust as an
additional sub-adviser for the Fund. Proposal 6 relates to a change in
'diversification' for the Global Bond Fund while Proposal 7 relates to a change
in fundamental policy concerning the average weighted maturity of the Fund.
Proposal 8 relates to a change of the Fiduciary Treasury Reserve and Fiduciary
Tax-Free Reserve portfolios to increase the contractual advisory fee paid to
CoreStates Advisers (although it is intended to be waived) in conformity with
the existing Fiduciary Tax-Free Reserve portfolio.
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.
Shareholders of record at the close of business on January 15, 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
February 21, 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
MARCH 15, 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 Funds (each a 'Fund,' and, together, the 'Funds') 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 Thursday, March 15, 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 January 15, 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 Company
being solicited by this Proxy Statement:
<TABLE>
<CAPTION>
SHARES OUTSTANDING AS
OF
CLASS OF SHARES JANUARY 15, 1996
- --------------- ----------------------
<S> <C>
Cash Reserve Class Y (formerly Series A).................................................. 572,441,959.040
Cash Reserve Class C (formerly Series B).................................................. 18,187,047.080
Treasury Reserve Class Y (formerly Series A).............................................. 534,750,006.190
Treasury Reserve Class C (formerly Series B).............................................. 21,382,197.520
Tax-Free Reserve Class Y (formerly Series A).............................................. 64,147,900.340
Tax-Free Reserve Class C (formerly Series B).............................................. 2,242,466.500
Growth Equity Fund Class Y (formerly Series A)............................................ 8,412,490.228
Growth Equity Fund Class A (formerly Series B)............................................ 186,027.810
Equity Index Fund Class Y (formerly Series A)............................................. 5,343,048.295
Equity Fund Class Y (formerly Value Equity Fund Series A)................................. 2,439,515.252
Equity Fund Class A (formerly Value Equity Fund Series B)................................. 210,914.750
International Growth Fund Class Y (formerly Series A)..................................... 8,798,957.811
International Growth Fund Class A (formerly Series B)..................................... 154,896.060
Balanced Fund Class Y (formerly Series A)................................................. 5,694,735.940
Balanced Fund Class A (formerly Series B)................................................. 219,542.493
Short Intermediate Bond Fund Class Y (formerly Intermediate Bond Fund Series A)........... 5,571,511.985
Short Intermediate Bond Fund Class A (formerly Intermediate Bond Fund Series B)........... 205,306.866
Government Income Fund Class Y (formerly Series A)........................................ 1,353,496.605
Government Income Fund Class A (formerly Series B)........................................ 134,927.209
Intermediate Municipal Bond Fund Class Y (formerly Series A).............................. 23,328.866
Intermediate Municipal Bond Fund Class A (formerly Series B).............................. 102,151.837
Global Bond Fund Class Y (formerly Series A).............................................. 3,427,578.787
Global Bond Fund Class A (formerly Series B).............................................. 17,788.613
Pennsylvania Municipal Bond Fund Class Y (formerly Series A).............................. 270,626.090
Pennsylvania Municipal Bond Fund Class A (formerly Series B).............................. 20,482.652
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
SHARES OUTSTANDING AS
OF
CLASS OF SHARES JANUARY 15, 1996
- --------------- ----------------------
<S> <C>
New Jersey Municipal Bond Fund Class Y (formerly Series A)................................ 149,035.093
New Jersey Municipal Bond Fund Class A (formerly Series B)................................ 11,505.382
Fiduciary Reserve Class Y (formerly Series A)............................................. 364,869,652.210
Fiduciary Treasury Reserve Class Y (formerly Series A).................................... 19,961,752.170
Fiduciary Tax-Free Reserve Class Y (formerly Series A).................................... 76,665,013.640
Elite Cash Reserve Class Y (formerly Series A)............................................
Elite Treasury Reserve Class Y (formerly Series A)........................................
Elite Government Reserve Class Y (formerly Series A)......................................
</TABLE>
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 CoreStates Financial Corp
('CoreStates') and Meridian Bancorp, Inc. ('Meridian'). The Proxy Card and this
Proxy Statement are being mailed to the Shareholders on or about February 21,
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 primarily in
order to permit Shareholders to vote on a new investment adviser and adopt a new
investment advisory agreement upon the termination of the existing agreements as
a result of the merger of CoreStates and Meridian. In addition, Shareholders
will also be asked to approve the selection of new Directors and an existing
Director never previously approved by Shareholders. Shareholders of the
International Growth Fund will vote on the selection of a new sub-adviser and a
new sub-advisory agreement for the Fund in a multiple manager structure, in
addition to approvals resulting from the change of control of the Adviser as
voted above.
Shareholders of the Global Bond Fund will be asked to approve a change in
fundamental policy from being a 'diversified' fund to a 'non-diversified' fund,
while Shareholders of the Short Intermediate Bond Fund (formerly Intermediate
Bond Fund) will be asked to approve a fundamental change in the average weighted
maturity of the Fund. Shareholders of the Fiduciary Reserve and Fiduciary
Treasury Reserve will be asked to approve an increase in the contractual
advisory fee paid to CoreStates Advisers in conformity with the Fiduciary
Tax-Free Reserve structure.
This Proxy Statement solicits votes on proposals affecting more than one
Fund as set forth below. Shareholders are requested to vote only on those
proposals affecting the Funds of which they are Shareholders.
2
<PAGE>
<TABLE>
<CAPTION>
PROPOSAL FUND
- -------- ----
<S> <C> <C>
1. To consider and act upon a proposal to elect a Board of Directors All Funds As A Whole
2. To consider and vote upon proposal to approve a new advisory agreement between Each Fund
the Company, on behalf of each Fund and CoreStates Advisers, pursuant to which
CoreStates Advisers will act as investment adviser with respect to the assets of
the Funds, effective upon the merger of CoreStates and Meridian.
3. To consider and vote upon a proposal to approve the selection of Martin Currie or International Growth Fund
its successor as a Sub-Adviser for a portion of the assets of the International
Growth Fund.
4. To consider and vote upon a proposal to approve the selection of Aberdeen Trust International Growth Fund
or its successor as a Sub-Adviser for a portion of the assets of the
International Growth Fund.
5. To consider and approve the new Sub-Advisory Agreement between Alpha Global or Global Bond Fund
its successor and CoreStates Advisers on behalf of the Global Bond Fund.
6. To consider and vote upon a proposal to change the Global Bond Fund from a Global Bond Fund
'diversified' investment company to a 'non-diversified' investment company.
7. To consider and vote upon a proposal to change the fundamental policy of the Short Intermediate Bond Fund
Short Intermediate Bond Fund (formerly Intermediate Bond Fund) so that the Fund
maintains an average weighted maturity of two to five years instead of the
existing average weighted average maturity of three to ten years.
8. To consider and vote upon an amended investment advisory agreement between Fiduciary Treasury Reserve
CoreStates Advisers and each of the Fiduciary Treasury Reserve and Fiduciary and Fiduciary Tax-Free
Tax-Free Reserve (the 'Fiduciary Funds') which would increase (absent any fee Reserve
waivers) the contractual advisory fee paid to CoreStates Advisers.
</TABLE>
<TABLE>
<S> <C> <C>
I. PROPOSAL 1. TO CONSIDER AND ACT UPON A PROPOSAL TO ELECT A BOARD OF DIRECTORS (VOTED ON BY THE
(ALL FUNDS) SHAREHOLDERS OF THE COMPANY AS A WHOLE)
</TABLE>
At the Meeting, it is proposed that five Directors be elected to hold
office until their successors are duly elected and qualified. The persons named
in the accompanying Proxy intend, in the absence of contrary instructions, to
vote all proxies on behalf of the shareholders for the election of Erin
Anderson, Emil J. Mikity, George H. Strong, Thomas J. Taylor and Cheryl H. Wade.
Messrs. Anderson, Mikity and Strong are currently members of the Board of
Directors. Messrs. Mikity and Strong were last elected by Shareholders at a
special meeting held on April 1, 1992. Ms. Anderson is currently a member of the
Board of Directors elected by the Board on December 16, 1992. Shareholders,
however, never elected Ms. Anderson to the Board. Mr. Taylor and Ms. Wade have
not previously served on the Board and have not previously been elected by the
Board or Shareholders.
The proposal to elect the Board of Directors is being presented for
shareholder approval pursuant to requirements under the 1940 Act. In compliance
with the 1940 Act, shareholder meetings must be held within sixty days to elect
Directors whenever fewer than a majority of the Directors holding office have
been elected by
3
<PAGE>
the shareholders or, if necessary in the case of filling vacancies, to assure
that at least two-thirds of the Directors holding office after such vacancies
are filled have been elected by the shareholders. Because the addition of Mr.
Taylor and Ms. Wade raise the number of Directors to five, of which only two
have been elected by shareholders of the Company, a shareholder meeting must be
held to elect Mr. Taylor and Ms. Wade in order for the Board of Directors to
comply with the two-thirds requirement.
Because the Company does not hold regular annual shareholder meetings, each
nominee, if elected, will hold office until his or her successor is elected and
qualified. Under Maryland General Corporation Law, a corporation registered
under the 1940 Act is not required to hold an annual meeting in any year in
which the election of Directors is not required to be acted upon under such Act.
The Fund has availed itself of this provision and will achieve cost savings by
eliminating printing costs, mailing charges and other expenses involved in
routine annual meetings.
Even with the elimination of routine annual meetings, the Board of
Directors may call special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act, or required or permitted by the
Articles of Incorporation and By-Laws of the Company. As described above,
shareholder meetings will be held to elect Directors under certain circumstances
in compliance with the 1940 Act. Shareholder meetings may also be held by the
Company in order to approve investment policy changes, a new investment advisory
agreement or other matters requiring shareholder action under the 1940 Act.
A meeting may also be called by those shareholders holding at least 10% of
the Shares entitled to vote at the meeting for the purpose of voting upon the
removal of Directors, in which case shareholders may receive assistance in
communicating with other shareholders as if the provisions contained in Section
16(c) of the 1940 Act applied. In addition, Maryland General Corporation Law
provides for the calling of a special meeting by the written request of
shareholders holding at least 25% of the Shares entitled to vote at the meeting.
Each of the nominees has consented to being named in this Proxy Statement
and to serving as a Director, if elected. The Company knows of no reason why any
nominee would be unable or unwilling to serve if elected. Should any of the
nominees become unable or unwilling to accept nomination or election, the
persons named in the proxy will exercise their voting power to vote for such
person or persons as the management of the Company may recommend. Directors will
be elected by a majority of all votes cast at the Meeting provided that a
majority of shareholders entitled to vote is present in person or by Proxy at
the Meeting. If you give no voting instructions, your Shares will be voted for
all nominees named herein.
INFORMATION REGARDING NOMINEES
The following information is provided for each nominee. It includes his or
her name, position with the Company, length of directorship (if applicable),
age, principal occupations or employment during the past five years,
directorships with other companies which file reports periodically with the
Securities and Exchange Commission, number of shares of the Funds beneficially
owned and percentage of shares of the Funds beneficially owned.
4
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
BUSINESS EXPERIENCE DURING OWNED AS OF
NAME AND POSITION WITH THE FUND AGE THE PAST FIVE YEARS JANUARY 15, 1996 PERCENTAGE
- ------------------------------- -------- --------------------------- --------------------- -------------
<S> <C> <C> <C> <C>
Erin Anderson, Director of the 40 Professor of Marketing, INSEAD, 0 0
Company since December 1992 Fountainebleu, France, since 1994;
Associate Professor, University of
Pennsylvania Wharton School,
1981-1994.
Emil J. Mikity, Director of the 67 Retired; Senior Vice President 0 0
Company since December 1990 Investments, Atochem North America,
1979-1989.
George H. Strong, Director of the 69 Financial Consultant since 1985; 0 0
Company since April 1992 Director and Senior Vice President,
Universal Health Services, Inc.,
1979-1984.
Cheryl H. Wade, Director Nominee 48 Associate General Secretary and 0 0
Treasurer, American Baptist Churches
1993-present; Treasurer, The
Ministers and Missionaries Benefit
Board, American Baptist Churches
1990-1993.
Thomas J. Taylor, Director Nominee 57 Consultant; Chairman, Conestoga Funds 0 0
since 1995 and a Trustee from
1990-1995; Trustee of Community
Heritage Fund since 1993.
</TABLE>
The Directors of the Company receive fees and expenses for each meeting of
the Board of Directors attended, and an annual retainer. During the fiscal year
ended June 30, 1995, the Company paid a total of $77,831 on behalf of the Funds
to its Directors. No officer or employee of the Administrator or SEI Financial
Service Company ('SFS' or 'Distributor') receives any compensation from the
Company for acting as a Director of the Company, and the officers of the Company
receive no compensation from the Company for performing the duties of their
offices. The Directors and Officers of the Company as a group (except for Mr.
Jennings, see 'General Information About the Company and Other Matters --
Directors and Executive Officers') own less than 1% of the outstanding shares of
each Fund.
The aggregate compensation paid by the Funds to each of the Company's
Directors serving during the fiscal year ended June 30, 1995 is set forth in the
compensation table below. The aggregate compensation paid to such Directors
during this same period by all registered investment companies to which
CoreStates Advisers or an affiliated person provides investment advisory
services (collectively, the 'Fund Complex') is also set forth in the
compensation table below.
5
<PAGE>
<TABLE>
<CAPTION>
TOTAL
COMPENSATION
AGGREGATE FROM REGISTRANT
COMPENSATION FROM AND
REGISTRANT FOR FUND COMPLEX
FISCAL PENSION OR PAID TO
YEAR ENDED JUNE RETIREMENT BENEFITS ESTIMATED ANNUAL DIRECTORS FOR THE
30, ACCRUED AS PART OF BENEFITS UPON FISCAL YEAR ENDED
NAME OF PERSON AND POSITION 1995 FUND EXPENSES RETIREMENT JUNE 30, 1995
- --------------------------- ------------------ ----------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Erin Anderson $ 17,750 $ 0 $ 0 $ 17,750
Director
Emil J. Mikity 19,250 0 0 19,250
Director
George H. Strong 17,750 0 0 17,750
Director
</TABLE>
REQUIRED VOTE
By meeting of the Board of Directors held on December 7, 1995, the Board
approved setting the number of Directors at five and nominated for election both
Ms. Wade and Mr. Taylor. The Board also recommended that Shareholders vote for
each of the nominees for Director named herein. In recommending that
Shareholders elect the nominees as Directors of the Company, the Board
considered the nominees' experience and qualifications.
The election of the Directors requires the favorable vote of a majority of
all votes cast at the Meeting provided that a majority of Shareholders entitled
to vote is present in person or by Proxy at the Meeting. If the Directors are
not approved by the Shareholders of the Company, the Board will consider
alternative nominations.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF THE NOMINEES.
<TABLE>
<S> <C> <C>
II. PROPOSAL 2. APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENTS FOR THE FUNDS
(ALL FUNDS)
</TABLE>
BACKGROUND
One of the purposes of the Meeting is to consider a new advisory agreement
for all Funds of the Company as a result of the proposed merger whereby Meridian
would merge into CoreStates (the 'Merger'). As a result of the combination of
these bank holding companies, the Company ('CoreFunds, Inc.') and the Conestoga
Family of Funds ('Conestoga'), the registered investment companies of CoreStates
and Meridian, respectively, will reorganize 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 Investment Company Act of 1940, as amended (the
'1940 Act') of terminating the existing advisory agreement between the Company,
on behalf of the Funds, and CoreStates Advisers (the 'Existing Advisory
Agreement'). Accordingly, shareholders are being asked to approve a new advisory
agreement embodying exactly 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 each Fund, to become effective
upon the consummation of the Proposed Transaction.
6
<PAGE>
THE REORGANIZATION AGREEMENT
In October 1995, CoreStates announced its intention to enter into a Merger
with Meridian whereby Meridian will merge with and into CoreStates. CoreStates
is to be the surviving corporation and continue under the name 'CoreStates
Financial Corp.' The board of directors of both CoreStates and Meridian approved
the Merger. The merged CoreStates/Meridian organization will rank among the
twenty-five largest bank holding companies in the United States based on assets.
The Merger is subject to approval by the shareholders of both CoreStates and
Meridian as well as various federal and state regulatory authorities. The board
of directors of both CoreStates and Meridian expect the merger to be completed
on or about April 1, 1996.
Meridian is a publicly owned multibank holding company incorporated under
the laws of the Commonwealth of Pennsylvania and registered under the Federal
Bank Holding Company Act of 1956, as amended. Through its subsidiaries, Meridian
managed as of September 30, 1995, more than $15 billion in assets, including
approximately $1.5 billion in mutual fund assets.
In connection with the Merger, CoreFunds and Conestoga propose to enter
into an Agreement and Plan of Reorganization (the 'Reorganization').
The primary reason for the Reorganization is the pending Merger between
Meridian (the parent of Meridian Investment Company ('MIC')(investment adviser
to Conestoga) and CoreStates (the parent of CoreStates Advisers). If completed,
the current investment advisory agreements between the CoreFunds portfolios and
CoreStates Advisers, would be terminated. The Company's Board of Directors at a
meeting held on December 7, 1995, approved the recommendation of CoreStates
Advisors to terminate the services of Cashman Farrell and Associates ('Cashman
Farrell') as investment sub-advisors to the Equity Fund (formerly Value Equity
Fund). CoreStates Advisers will act as the sole investment adviser for the
Equity Fund after the effective date of Cashman Farrell's termination.
In addition, the current sub-advisory agreements for the International
Growth Fund and Global Bond Fund between CoreStates Advisers and Martin Currie
and Alpha Global, respectively, would similarly be terminated. Shareholders of
the Conestoga portfolios will recognize no gain or loss for federal income tax
purposes on their receipt of shares of the CoreFunds portfolios. Shareholders of
the CoreFunds portfolios will have no tax consequences from the Reorganization.
In addition, the Conestoga portfolios will incur no federal income tax on their
issuance of shares in the Reorganization.
The Reorganization provides that each of the following eight investment
portfolios of Conestoga ('Reorganizing Portfolios') will transfer substantially
all its assets and known liabilities to the existing CoreFunds portfolios
('Existing CoreFunds Portfolios') identified below:
<TABLE>
<CAPTION>
CONESTOGA (REORGANIZING PORTFOLIOS) EXISTING COREFUNDS PORTFOLIOS
- ---------------------------------- -----------------------------
<S> <C>
Cash Management Fund Cash Reserve
Tax-Free Fund Tax-Free Reserve
U.S. Treasury Securities Fund Treasury Reserve
Equity Fund Equity Fund
Intermediate Income Fund Short Intermediate Bond Fund
Pennsylvania Tax-Free Bond Fund Pennsylvania Municipal Bond Fund
Balanced Fund Balanced Fund
International Equity Fund International Growth Fund
</TABLE>
7
<PAGE>
The Reorganization also provides 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:
<TABLE>
<CAPTION>
CONESTOGA (CONTINUING PORTFOLIOS) NEW COREFUNDS PORTFOLIOS
- -------------------------------- ------------------------
<S> <C>
Special Equity Fund Special Equity Fund
Bond Fund Bond Fund
Short-Term Income Fund Short-Term Income Fund
</TABLE>
In exchange for the transfer of these assets and liabilities, CoreFunds
will simultaneously issue shares in these eleven CoreFunds portfolios to the
corresponding Conestoga portfolios. Shareholders of each class of shares of the
Conestoga portfolios will receive the class of shares of the corresponding
CoreFunds portfolios based on their respective net asset values. Following this
Reorganization, the former Conestoga shareholders will be shareholders of their
corresponding CoreFunds portfolios.
The Reorganization will occur contemporaneously with, or shortly after, the
consummation of the Merger. Because the Merger is deemed to be a change in
control of CoreFunds, the existing investment advisory and sub-advisory
agreements for CoreFunds will, by their terms, automatically terminate upon the
Merger. If the Merger and Reorganization do not occur contemporaneously, the
Reorganization provides that each former Conestoga portfolio will enter into an
interim investment advisory agreement with MIC, or its successor, for the period
between the date of the Merger and the effective time of the Reorganization. In
addition, the Conestoga International Equity Fund will enter into an interim
sub-advisory agreement with Marvin and Palmer Associates, Inc. for the same
period. The provisions of the interim advisory and sub-advisory agreements,
including the fee rates, will be the same as those of the existing investment
advisory and sub-advisory agreements.
As required by the 1940 Act, the Existing Advisory Agreements provide for
their automatic termination upon 'assignment.' Consummation of the Merger and
Reorganization may be deemed to be an assignment (as defined in the 1940 Act) of
the Existing Advisory Agreements resulting in the termination of the Existing
Advisory Agreements in accordance with their terms. In anticipation of the
Consummation of the Merger and Reorganization, and to provide continuity in
investment advisory services, CoreFunds' 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 a new investment advisory
agreement between CoreFunds and CoreStates Advisers (the 'New Investment
Advisory Agreement') covering all the Funds.
In connection with each Fund's approval of the New Advisory Agreement, the
Board considered that the terms of the Merger and Reorganization do not require
a change in any Fund's investment objective or policies, CoreStates Advisers
investment management or operation of the Funds, the investment personnel
managing the Funds, or the shareholder services or other business activities of
the Funds. CoreStates and Meridian have each informed the Boards of CoreFunds
and Conestoga that the Merger will not at this time 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
8
<PAGE>
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 are contemplated 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 directors must not be 'interested persons' of CoreStates
Advisers or MIC within the meaning of the 1940 Act.
There are a number of conditions precedent to the closing of the
Reorganization. Such conditions include, among other things, that all regulatory
filings, applications and notifications will have been duly and properly made or
obtained. If the conditions for the Proposed Transaction are not met and the
Merger is not completed, the Existing Advisory Agreements will remain in effect.
In the event the Proposed Transaction is completed but the New Advisory
Agreement is not approved by a Fund's shareholders, the Directors and the
Administrator will promptly seek to enter into a new advisory arrangement for
that Fund, subject to approval by that Fund's shareholders.
DESCRIPTION OF THE EXISTING ADVISORY AGREEMENTS AND THE NEW ADVISORY AGREEMENT
CoreStates Advisers currently serves as the investment adviser to each Fund
of the Company pursuant to separate agreements dated June 23, 1987 (Cash
Reserve, Treasury Reserve and Fiduciary Reserve), December 5, 1989 (Equity Fund
(formerly Value Equity Fund) and International Growth Fund), March 25, 1991
(Equity Index Fund, Growth Equity Fund, Short Intermediate Bond Fund, Fiduciary
Tax-Free Reserve, Fiduciary Treasury Reserve), September 15, 1992 (Balanced
Fund, Government Income Fund and Intermediate Municipal Bond Fund), September 9,
1993 (Global Bond Fund), December 2, 1993, (Pennsylvania Municipal Bond Fund and
New Jersey Municipal Bond Fund) and March 25, 1994 (Elite Cash Reserve, Elite
Government Reserve, Elite Treasury Reserve and Elite Tax-Free Reserve)(the
"Existing Advisory Agreements"). The Existing Advisory Agreements were last
submitted to a vote of shareholders for the purpose of their original adoption
on June 22, 1987, April 19, 1990, April 1, 1992, September 15, 1992, September
9, 1993, December 2, 1993 and March 25, 1994, respectively.
COMPENSATION
Under the Existing Advisory Agreements, CoreStates Advisers is entitled to
a fee, which is calculated daily and paid monthly, at an annual rate of .75%
(.72% with fee waiver), .75%, .40% (.12% with fee waiver), .80% and .70% (.67%
with fee waiver) of the average net assets of the Growth Equity Fund, Value
Equity Fund, Equity Index Fund, International Growth Fund and Balanced Fund,
respectively ['Equity Funds']; .50% of each of the Short Intermediate Bond Fund
(.37% after fee waiver), Government Income Fund (.37% after fee waiver),
Intermediate Municipal Bond Fund (3.7% after fee waiver), Pennsylvania Municipal
Bond Fund (.0% after fee waiver) and New Jersey Municipal Bond Fund (.0% after
fee waiver), and .60% of the Global Bond Fund (.52% after fee waiver) ['Fixed
Income Funds']; .50% of each of the Cash Reserve, Treasury Reserve, Tax-Free
Reserve (.29% each after fee waiver) and Fiduciary Reserve (0% after fee waiver)
and 0% of each of the Fiduciary Treasury Reserve and Fiduciary Tax-Free Reserve,
and .20% for the Elite Cash Reserve, Elite Government Reserve and Elite Treasury
Reserve ['Money Market Funds'].
Except for decreases in the advisory fee payable to CoreStates Advisors for
the Equity Fund (formerly Value Equity Fund), Cash Reserve, Treasury Reserve and
Tax-Free Reserve, the advisory fees payable to Core States Advisers under the
New Advisory Agreement will be the same as the Existing Advisory Agreements. The
Board
9
<PAGE>
approved, subject to shareholder approval, a decrease in advisory fees for the
Equity Fund from .75% to .74% of average net assets and from .50% to .40% of
average net assets for each of the Cash Reserve, Treasury Reserve and Tax-Free
Reserve.
For its fiscal year ended June 30, 1995, the aggregate investment advisory
fees paid by the Funds to Corestates Advisers totaled $4,488,590, including fee
waivers of $5,995,442. CoreStates Advisers may terminate this waiver of fees at
any time in its discretion. For the same period, the Funds paid SEI Financial
Services Corporation ('SFS' or 'Distributor') an aggregate distribution fee of
$120,470 for Class A and Class C Shares (formerly Series B Shares) and SFM, as
Administrator, an aggregate administrative fee of $3,050,950, including fee
waivers of $2,123,571.
DUTIES UNDER THE EXISTING ADVISORY AGREEMENTS AND THE NEW ADVISORY AGREEMENT
The Existing Advisory Agreements and New Advisory Agreement provide that
CoreStates Advisers, in return for its fee, will (1) provide a program of
continuous investment management for each of the Funds in accordance with each
Fund's investment objective, policies and limitations, (2) make investment
decisions for each Fund, and (3) place orders to purchase and sell securities
for each Fund, subject to the supervision of the Company's Directors. The
Existing Advisory Agreements 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 Agreements and New Advisory Agreement provide that
each 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 Funds who are not 'interested persons' of CoreStates Advisers
or the Administrator; travel expenses of officers, directors and employees of
the Funds who are officers, directors or employees of CoreStates Advisers or
Administrator related to attendance at meetings of the Funds' Board of Directors
or committees thereof; the cost of the Funds' legally required fidelity bond;
interest expenses; taxes, brokerage fees and commissions; fees and expenses of
registering and qualifying the Company 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 Funds' 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 Agreements 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 Agreements. The form of 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.
10
<PAGE>
DURATION AND TERMINATION
Each of the Existing Advisory Agreements and New Advisory Agreement has an
initial term of two years from its effective date, and thereafter shall continue
for successive annual periods, provided the continuation is approved by each
Fund's Directors or by vote of a majority of its outstanding voting securities,
as well as by a majority of each Fund's Directors who are not 'interested
persons' as defined in the 1940 Act. The Existing Advisory Agreements and the
New Advisory Agreement may be terminated at any time without penalty by each
respective 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 Equity Funds, Fixed Income Funds and Money Market Funds pursuant
to the Existing Advisory Agreements. The contractual rates paid to CoreStates
Advisers for services rendered to each of the Funds are described above in the
Section entitled 'Description of Existing Advisory Agreement and the New
Advisory Agreement.'
CoreStates Advisers performs most investment management and investment
advisory functions for the trust departments of CoreStates 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'.
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 and
President Research
Richard J. Lindsay Director Product Development Marketing
William T. Lawrence Vice President -- Secretary Portfolio Management
Daniel Aboyan Director Banking
</TABLE>
11
<PAGE>
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 Company, the Funds, and
the Shareholders. The Board of Directors, including all of the non-interested
Directors, recommends approval by the Shareholders of the New Advisory Agreement
between CoreStates Advisers and the Company. In making this recommendation, the
Directors carefully evaluated CoreStates Advisers and former MIC key personnel
in institutional investing, 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 Funds since commencement of operations; (3) the
nature and quality of the services expected to be rendered to the Funds by
CoreStates Advisers; (4) the distinct investment objectives and policies of the
Funds; (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 Agreements; (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 and MIC, as well as the qualifications of
their personnel and their respective 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; (9) MIC's
investment performance record; (10) the benefits expected to be realized as 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 Funds as a result of the Reorganization. Accordingly, the Board of
Directors believes that the Funds 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 Funds of the
Company requires the affirmative vote of a majority of the outstanding shares of
each Fund of the Company.
THE DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, RECOMMEND THAT
SHAREHOLDERS OF THE FUNDS VOTE 'FOR' THE NEW ADVISORY AGREEMENT.
<TABLE>
<S> <C> <C>
III. PROPOSAL 3. TO CONSIDER AND VOTE UPON A PROPOSAL TO APPROVE THE SELECTION OF MARTIN CURRIE OR ITS
(INTERNATIONAL SUCCESSOR AS A SUB-ADVISER FOR A PORTION OF THE ASSETS OF THE INTERNATIONAL GROWTH FUND.
GROWTH FUND)
</TABLE>
BACKGROUND
The Meeting has been called for the purpose of considering a new
sub-advisory agreement for the International Growth Fund as a result of the
Merger, described in Proposal 2. The Merger represents a deemed ownership change
of CoreStates Advisers and, as such, has the effect of terminating the existing
sub-advisory agreement between CoreStates Advisers and Martin Currie (the
'Existing Sub-Advisory Agreement'). Accordingly, shareholders of the
International Growth Fund are being asked to approve a New Sub-Advisory
Agreement embodying exactly the same terms and fees, between CoreStates Advisers
(under its new ownership) and Martin Currie. The Fund's Board of Directors,
including a majority of the non-interested Directors (those Directors who are
not a party to the New Sub-Advisory Agreement or interested persons of such a
party), has approved the New
12
<PAGE>
Sub-Advisory Agreement, subject to approval by Shareholders, to become effective
upon the consummation of the Reorganization.
THE REORGANIZATION AGREEMENT
For a description of the Reorganization Agreement, see 'The Reorganization
Agreement' under Proposal 2. If the conditions for the Merger and Reorganization
are not met and the Merger is not completed, the Existing Sub-Advisory Agreement
will remain in effect. In the event the Reorganization is completed but the New
Sub-Advisory Agreement is not approved by the International Growth Fund's
shareholders, the Board of Directors and CoreStates Advisers will promptly seek
to enter into a new sub-advisory arrangement for the Fund, subject to approval
by the Fund's shareholders.
REASONS FOR TERMINATION OF THE EXISTING SUB-ADVISORY AGREEMENT
The existing Sub-Advisory Agreement is dated December 5, 1989. The Board of
Directors proposes to enter into the New Sub-Advisory Agreement reflecting the
fact that Martin Currie will now manage only a portion of the assets of the Fund
which are allocated to it by the Board. There are no other material differences
between the Existing Sub-Advisory Agreement and the New Sub-Advisory Agreement.
The Board of Directors has determined that it is in the best interest of
the Fund to retain Martin Currie as an investment sub-adviser for a portion of
the Fund's assets and to retain other investment advisers to manage the
remainder of the Fund's assets, and for the Board of Directors to allocate the
Fund's assets between the two investment sub-advisers from time to time.
Therefore, the Board is recommending that the Shareholders approve the
Investment Advisory Agreement to be dated on or about March 15, 1996 (the 'New
Sub-Advisory Agreement') between the Company and Martin Currie. On December 7,
1995, the New Sub-Advisory Agreement was approved by unanimous vote of the
Directors who are not 'interested persons' (the 'Non-interested Directors'), as
such term is deemed in the Investment Company Act of 1940, as amended (the '1940
Act'). In accordance with the requirements of the 1940 Act, this matter is being
submitted to the Shareholders for their approval. Approval by such shareholders
requires the affirmative vote of a majority of the outstanding Shares of the
Fund, as defined in the 1940 Act.
DUTIES UNDER THE EXISTING SUB-ADVISORY AGREEMENT
CoreStates Advisers currently serves as the Fund's investment adviser
pursuant to its Existing Advisory Agreement and Martin Currie serves as the
sub-adviser to the International Growth Fund pursuant to its Existing
Sub-Advisory Agreement dated December 5, 1989. The Existing Sub-Advisory
Agreement was approved by shareholders of the International Growth Fund on
December 5, 1989.
Except for the deemed change in the ownership of CoreStates Advisers,
different effective and termination dates and the portion of the Fund's assets
managed by Martin Currie, the terms of the New Sub-Advisory Agreement are
identical in all material respects to the terms of the Existing Sub-Advisory
Agreement. The form of the New Sub-Advisory Agreement is attached to this Proxy
Statement as Exhibit B, and the description of the New Sub-Advisory Agreement
set forth in this Proxy Statement is qualified in its entirety by reference to
Exhibit B.
The Existing Sub-Advisory Agreement and the New Sub-Advisory Agreement
provide that Martin Currie, in return for its fee, will provide a continuous
investment program for the International Growth Fund, including but not limited
to the management of investment operations and composition of the Fund,
including the purchase, retention and disposition thereof, in accordance with
the Fund's investment objectives, policies and restrictions as stated in the
Fund's prospectus. Martin Currie will provide supervision of the Fund's
investments and determine
13
<PAGE>
from time to time what investments and securities will be purchased, retained or
sold by the Fund, and what portion of the assets will be invested or held
uninvested in cash. In the performance of its duties and obligations, Martin
Currie will act subject to the supervision of CoreStates Advisers and the Fund's
Board of Directors.
The Existing Sub-Advisory Agreement and the New Sub-Advisory Agreement
provide that Martin Currie will not be liable for any error of judgment or for
any loss suffered by the Fund or CoreStates Advisers in connection with
performance of its obligations under the Agreement, except a loss resulting from
a breach of a fiduciary duty with respect to the receipt of compensation for
services, or a loss resulting from willful misfeasance, bad faith or gross
negligence on Martin Currie's part in the performance of its duties or from
reckless disregard of its obligations and duties under the Agreement.
COMPENSATION
Under the Existing Sub-Advisory Agreement, Martin Currie is entitled to a
fee from CoreStates Advisers which is calculated daily and paid monthly, at an
annual rate of .50% of the portion of the average daily net assets of the Fund's
average daily net assets under the proposed New Sub-Advisory Agreement, Martin
Currie is entitled to a fee from CoreStates Advisers which is calculated daily
and paid monthly, at an annual rate of .50% of the International Growth Fund's
average daily net assets. Martin Currie may from time to time and at its
discretion voluntarily waive all or a portion of its fees in order to assist the
Fund in maintaining a competitive expense ratio. Martin Currie reserves the
right to terminate any voluntary fee waiver and reimbursement at any time.
As compensation for investment sub-advisory services to the Fund for the
fiscal year ended June 30, 1995, Martin Currie received compensation of
$493,322.
DURATION AND TERMINATION
Each of the Existing Sub-Advisory Agreement and the New Sub-Advisory
Agreement has an initial term of two years from its effective date, and
thereafter shall 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
Sub-Advisory Agreement and the New Sub-Advisory Agreement may be terminated,
without the payment of any penalty (a) by the Fund at any time by the vote of a
majority of Directors of the Fund or by the vote of a majority of the
outstanding voting securities of the Fund, (b) by CoreStates Advisers at any
time on not more than 60 days' nor less than 30 days' written notice to the
other party, or (c) by Martin Currie at any time on 90 days' written notice to
the other party.
ALLOCATION OF ASSETS AMOUNG SUB-ADVISORS -- INTERNATIONAL GROWTH FUND
Martin Currie has been the sole investment sub-adviser and provided the
review, supervision and management of the Fund's investment program and related
reporting and recordkeeping services for all of the Fund's assets. The Board of
Directors voted on December 7, 1995 to appoint Aberdeen as an additional sub-
adviser to the Fund. CoreStates Advisers will allocate the assets of the Fund
among the two Sub-Advisers under the supervision of the Board of Directors.
INFORMATION REGARDING MARTIN CURRIE
Martin Currie, a New York corporation located in Edinburgh, Scotland, is a
majority-owned subsidiary of Martin Currie, Ltd., which is wholly owned by its
full-time working executives and is one of Scotland's largest independent
investment management groups. Martin Currie was founded in order to provide
foreign investment
14
<PAGE>
advisory services to U.S. Funds seeking diversification into international
markets. Although Martin Currie has had extensive experience in managing a
variety of international equity investment companies, International Growth Fund
was the first U.S. registered investment company for which Martin Currie has
acted in an investment advisory capacity. Martin Currie has principal offices at
Saltire Court, 20 Castle Terrace, Edinburgh EH 2ES, Scotland.
Listed below are the names and principal occupations of each of the
directors and principal executive officers of Martin Currie. The principal
business address of each director and principal executive officer, as it relates
to his or her duties at Martin Currie, is also provided. No director of the
Company has purchased or sold shares of or interests in Martin Currie during the
most recent fiscal year.
<TABLE>
<CAPTION>
NAME AND ADDRESS* OFFICE OR TITLE PRINCIPAL OCCUPATION
- ----------------- --------------- --------------------
<S> <C> <C>
William M. Kennedy Director and President Investment Management
Michael J. Gibson Director and Vice President Investment Management
James K. Falconer Director and Vice President Director
Patrick J. Scott Plummer Director and Vice President Director
Charles J. Dawnay Director and Vice President Director
James M. Fairweather Director and Vice President Director
Julian M. Livingston Chief Legal and Compliance Officer Legal Officer
</TABLE>
- ------------------
* Saltire Court, 20 Castle Terrace, Edinburgh EH 2ES, Scotland
Martin Currie currently provides investment services to the following
investment companies having an investment objective similar to the Fund's
investment objective:
<TABLE>
<CAPTION>
NAME OF INVESTMENT COMPANY AMOUNT OF ASSETS UNDER MANAGEMENT* RATE OF COMPENSATION
- -------------------------- ---------------------------------- --------------------
<S> <C> <C>
MCBT Opportunistic EAFE Fund $ 94.3 million .70%
Eagle International Equity Portfolio 11.9 million .70%
PACE International Equity Investments 15.0 million .70%
</TABLE>
- ------------------
* As of December 31, 1995.
DIRECTORS' CONSIDERATIONS
The Board of Directors believes that the terms of the New Sub-Advisory
Agreement are fair to, and in the best interest of, the International Growth
Fund and its Shareholders. The Board of Directors, including all of the
non-interested Directors, recommends approval by the Shareholders of the New
Sub-Advisory Agreement among CoreStates Advisers, the Fund and Martin Currie. In
making this recommendation, the Directors carefully evaluated the experience of
Martin Currie's key personnel in institutional investing, the quality of
services Martin Currie is expected to provide to the International Growth Fund,
including, but not limited to: (1) the fee and expense ratios of comparable
mutual funds; (2) the performance of the International Growth Fund since
commencement of operations; (3) the nature and quality of the services expected
to be rendered to the International Growth Fund by Martin Currie; (4) the
distinct investment objectives and policies of the Fund; (5) that the
compensation payable by the Fund under the proposed New Sub-Advisory Agreement
will be at the same rate as the compensation payable under the Existing
Sub-Advisory Agreement; (6) that the terms of the Existing
15
<PAGE>
Sub-Advisory Agreement will be unchanged under the New Sub-Advisory Agreement
except for different effective and termination dates; (7) the history,
reputation, qualification and background of Martin Currie, as well as the
qualifications of their personnel and their respective financial conditions; (8)
the commitment of the parties to the Merger to pay or reimburse the Fund for the
expenses of the Fund incurred in connection with the Reorganization; (9)
CoreStates Advisers and Martin Currie's investment performance record; and (10)
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 International Growth Fund as a result of the Reorganization Transaction.
Accordingly, the Board of Directors believes that the Fund should receive
investment advisory services under the New Sub-Advisory Agreement equal or
superior to those it currently receives under the Existing Sub-Advisory
Agreement, at the same fee level.
REQUIRED VOTE
Approval of the New Sub-Advisory Agreement with respect to the
International Growth 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 INTERNATIONAL GROWTH FUND VOTE 'FOR' THE NEW SUB-ADVISORY
AGREEMENT.
<TABLE>
<S> <C> <C>
IV. PROPOSAL 4. TO CONSIDER AND VOTE UPON A PROPOSAL TO APPROVE THE SELECTION OF ABERDEEN TRUST OR ITS
(INTERNATIONAL SUCCESSOR AS A SUB-ADVISER FOR A PORTION OF THE ASSETS OF THE INTERNATIONAL GROWTH FUND.
GROWTH FUND)
</TABLE>
GENERAL
The Board of Directors is recommending that Shareholders of the
International Growth Fund approve Aberdeen Trust ('Aberdeen') as an additional
investment sub-adviser to the Fund and approve the form of investment
sub-advisory agreement (the 'Sub-Advisory Agreement') between CoreStates
Advisers and Aberdeen, a copy of which is attached as Exhibit C to this Proxy
Statement. The description of the Sub-Advisory Agreement set forth in this Proxy
Statement is qualified in its entirety by reference to Exhibit C.
16
<PAGE>
In addition to approving a new sub-advisory agreement with Martin Currie as
set forth above in Proposal 3, shareholders are also being asked to approve the
selection of an additional sub-adviser for the Fund in the context of a multiple
manager structure, and accordingly, approve a Sub-Advisory Agreement between
Aberdeen and CoreStates Advisers for the management of a portion of the Fund's
assets. The Fund's Board of Directors, including a majority of the
non-interested Directors (those Directors who are not a party to the New Sub-
Advisory Agreement or interested persons of such party), at a meeting held on
December 7, 1995, approved the selection of Aberdeen as an additional
sub-adviser to the Fund, subject to approval by Shareholders.
DUTIES UNDER THE PROPOSED INVESTMENT SUB-ADVISORY AGREEMENT
Under the proposed Investment Sub-Advisory Agreement, Aberdeen would make
the investment decisions for the assets of the Fund allocated to it by
CoreStates Advisers, and would continuously review, supervise, and administer
the Fund's investment program with respect to these assets. Aberdeen will
discharge its responsibilities subject to the supervision of CoreStates Advisers
and the Directors of the Fund in a manner consistent with the Fund's investment
objectives, policies and limitations. The Investment Sub-Advisory Agreement also
provides that Aberdeen will not be protected against any liability to the Fund,
its shareholders, or CoreStates Advisers by reason of willful misfeasance, bad
faith, or negligence on its part in the performance of its duties or from
reckless disregard by Aberdeen of its obligations or duties thereunder.
Under the multiple manager structure, CoreStates Advisers will have general
oversight responsibility for the investment advisory services provided to the
Fund, including formulating the Fund's investment policies and analyzing
economic trends affecting the Fund. CoreStates Advisers will be responsible for
managing the allocation of assets among the Fund's Sub-Advisers and directing
and evaluating the investment services provided by each Sub-Adviser, including
adherence to the Fund's investment objectives and policies, performance and
specific portfolio security advice. In accordance with the Fund's investment
objectives and policies, and under the supervision of CoreStates Advisers and
the Fund's Board of Directors, each Sub-Adviser will be responsible for the
day-to-day investment management of all or a discrete portion of the assets of a
Fund. The Sub-Advisers are authorized to make investment decisions for the Fund
and place orders on behalf of the Fund to effect the investment decisions made.
CoreStates Advisers will also monitor the compliance of the Fund with
regulatory and tax regulations, such as those relating to portfolio
concentration and diversification. For the most part, compliance with these
requirements by each Sub-Adviser with respect to its portion of the Fund will
assure compliance by the Fund as a whole. In addition, CoreStates Advisers will
monitor positions taken by each Sub-Adviser and will notify such Sub-Adviser of
any developing situations to help ensure that investments do not run afoul of
the short-short test or the wash sale rules. To the extent that having multiple
Sub-Advisers responsible for investing separate portions of the Fund's assets
creates the need for coordination among Sub-Advisers, there is an increased risk
that the Fund will not comply with these regulatory and tax requirements.
It is possible that different Sub-Advisers to the Fund could take opposite
actions within a short period of time with respect to a particular security. For
example, one Sub-Adviser could buy a security for the Funds and shortly
thereafter another Sub-Adviser could sell the same security from the portion of
the Fund's assets allocated to it. If in these circumstances the securities
could be transferred from one Sub-Adviser's portion of the Fund to another, the
Fund could avoid transaction costs and could avoid creating possible wash sales
and short-short gains under the Code. Such transfers are not practicable, but
the Sub-Advisers and CoreStates Advisers do not believe that there will be
material adverse effects on the Fund as a result. First, it does not appear
likely that there will be substantial overlap in the securities acquired for the
Fund by the Sub-Advisers. Moreover, the Sub-Advisers would probably only rarely
engage in the types of offsetting transactions described above, especially
17
<PAGE>
within a short time period. Therefore, it is a matter of speculation whether
offsetting transactions would result in any significant increases in transaction
costs or have significant tax consequences. With respect to the latter,
CoreStates Advisers and the Sub-Advisers will establish procedures with respect
to the short-short test which are designed to prevent realization of short-short
gains in excess of Code limits. It is true that wash sales could occur in spite
of the efforts of CoreStates Advisers, but it is believed that the benefits of
using multiple managers outweigh the consequences of any wash sales.
DIRECTORS' CONSIDERATION
The Directors of the Fund, including all of the Directors who are not
'interested persons' of the Fund, approved the general form of the Sub-Advisory
Agreement with respect to the International Growth Fund at a meeting held on
December 7, 1995. The Directors received written and oral information from both
CoreStates Advisers and Aberdeen. CoreStates Advisers recommended the selection
of Aberdeen as an investment sub-adviser and reviewed the considerations and the
search process that led to such recommendation. The Directors also met with
representatives of Aberdeen and considered, among other factors, information
about key personnel, investment philosophy and process and performance track
record. In recommending that the Shareholders approve the Sub-Advisory
Agreement, the Directors carefully evaluated the investing experience of
Aberdeen's key personnel and the quality of services expected to be provided to
the Fund, including, but not limited to: (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 Aberdeen; (4) the distinct investment objective and policies of
the Fund; (5) the fact that the compensation payable to Aberdeen under the
proposed Sub-Advisory Agreement will be at the same or a lower rate as the
compensation payable to the other Sub-Adviser under existing sub-advisory
agreements; (6) the history, reputation, qualification and background of
Aberdeen as well as the qualifications of their personnel and their respective
financial conditions; (7) their performance records; (8) the benefits expected
to be realized as a result of the multiple manager structure; and (9) other
factors deemed relevant. The Directors also reviewed the fees to be paid to each
Sub-Adviser of the Fund in comparison to those being charged in the relevant
segment of the mutual fund business, including any benefits received by any
Sub-Adviser or its affiliates in connection with soft dollar payments.
DURATION AND TERMINATION
Unless terminated earlier, the Sub-Advisory Agreement shall continue in
effect for a period of two years from the date of effectiveness, and thereafter,
for periods of one year for so long as such continuance is specifically approved
at least annually (i) by the vote of the holders of a majority of the
outstanding shares of the Fund or by the Board of Directors, and (ii) by the
vote of a majority of those Directors who are not parties to the Investment
Advisory Agreement or Investment Sub-Advisory Agreement or who are not
'interested persons' (as that term is defined in the 1940 Act, as amended) of
any party thereto, cast in person at a meeting called for the purpose of voting
on such approval.
The Sub-Advisory Agreement will terminate automatically in the event of its
assignment or in the event that CoreStates Advisers' investment advisory
agreement is terminated. The Sub-Advisory Agreement is also terminable by
CoreStates Advisers or Aberdeen at any time, without penalty, on 60 days'
written notice by the Board of Directors or by vote of a majority of the Fund's
outstanding voting securities.
18
<PAGE>
ALLOCATION OF ASSETS AMONG SUB-ADVISERS -- INTERNATIONAL GROWTH FUND
Martin Currie has been the sole investment sub-adviser and provided the
review, supervision and management of the Fund's investment program and related
reporting and recordkeeping services for all of the Fund's assets. The Board of
Directors voted on December 7, 1995 to appoint Aberdeen as an additional sub-
adviser to the Fund. CoreStates Advisers, as investment adviser, will allocate
the assets of the Fund among the two Sub-Advisers under the supervision of the
Board of Directors.
COMPENSATION
Under the proposed Investment Sub-Advisory Agreement, CoreStates Advisers
will pay Aberdeen a fee, which is calculated and paid monthly, at the rate of
.50% of the average daily net assets of the portion of the assets of the
International Growth Fund managed by Aberdeen. Under an existing investment
sub-advisory agreement between CoreStates Advisers and Martin Currie, CoreStates
Advisers pays Martin Currie a fee, which is calculated and paid monthly, based
on the annual percentage rate of .50% of the average daily net assets of the
International Growth Fund. If Proposal 3 is approved by Shareholders of the
Fund, Martin Currie will also receive a fee, calculated and paid monthly, based
on the annual percentage rate of .50% of the average daily net assets managed by
Martin Currie.
DESCRIPTION OF ABERDEEN
Aberdeen, a Delaware corporation located in Ft. Lauderdale, Florida, is a
wholly-owned subsidiary of Aberdeen Trust PLC ('Aberdeen PLC'), which is owned
by three U.K.-based institutional investors and a subsidiary of CoreStates. In
addition, the shares are listed on the London Street Exchanges. Aberdeen PLC was
formed in 1876 and has been managing investment funds since 1986. It formed
Aberdeen Managers in 1995 in order to, among other things, provide foreign
investment advisory services in the U.S. Although Aberdeen Managers has had
extensive experience in managing a variety of international equity investment
companies, International Growth Fund is the first U.S. registered investment
company for which Aberdeen Managers has acted in an investment advisory
capacity. Aberdeen Managers is located at Nations Bank Tower, 22nd Floor, Ft.
Lauderdale, Florida 33396. Aberdeen does not currently provide investment
services to any other investment companies having an investment objective
similar to the Fund's.
The portion of the International Growth Fund's assets allocated to Aberdeen
will be managed by Beverley Hendry. Mr. Hendry, Director of Aberdeen Managers,
is a graduate of the University of Aberdeen, Scotland. He spent over three years
as the Financial Director of Norten Christensen, a business specializing in oil
exploration. He joined Abtrust Unit Trust Managers Limited in 1987 where he
currently is a Managing Director.
19
<PAGE>
Listed below are the names, principal occupations and addresses of the
directors and principal executive officers of Aberdeen. No Director of the Fund
purchased or sold shares in Aberdeen during the Fund's most recent fiscal year.
<TABLE>
<CAPTION>
NAME AND ADDRESS OFFICE OR TITLE PRINCIPAL OCCUPATION
- ---------------- --------------- --------------------
<S> <C> <C>
Beverley Hendry Chief Executive Officer, Chief Managing Director of Abtrust
Operations Officer and Vice Unit Managers Limited
President
Martin James Gilbert President, Director Chief Executive of Aberdeen
Trust PLC
James Legh Pope Director Managing Director of Philadelphia
International Corporation
Gawaine Lewis Investment Manager Investment Manager of Abtrust Fund
Julia Darell-Barnes Investment Manager Investment Manager of Abtrust
Fund Managers Limited
Radhika Ajmera Investment Manager Investment Manager of Abtrust
Fund Managers Limited
</TABLE>
REQUIRED VOTE
Approval of the selection of Aberdeen as a sub-adviser to the International
Growth Fund and the corresponding Sub-Advisory Agreement requires the
affirmative vote of a majority of the outstanding shares of the Fund. In the
event Shareholders of the International Growth Fund do not approve the adoption
of the Investment Sub-Advisory Agreement at the Special Meeting to which this
Proxy Statement relates, or any adjournment thereof, the Directors will consider
the appropriate course of action.
THE DIRECTORS RECOMMEND THAT THE SHAREHOLDERS OF THE INTERNATIONAL GROWTH
FUND VOTE FOR APPROVAL OF THE SELECTION OF ABERDEEN TRUST AS A 'NEW' SUB-ADVISER
AND THE CORRESPONDING SUB-ADVISORY AGREEMENT.
<TABLE>
<S> <C> <C>
V. PROPOSAL 5. TO CONSIDER AND APPROVE THE NEW SUB-ADVISORY AGREEMENT BETWEEN ALPHA GLOBAL OR ITS
(GLOBAL SUCCESSOR AND CORESTATES ADVISERS ON BEHALF OF THE GLOBAL BOND FUND.
BOND FUND)
</TABLE>
BACKGROUND
The Meeting has been called for the purpose of considering a New
Sub-Advisory Agreement for the Global Bond Fund as a result of the Merger
described in Proposal 2. The Merger represents an ownership change of CoreStates
Advisers and, as such, has the effect of terminating the existing sub-advisory
agreement between CoreStates Advisers and Alpha Global (the 'Existing
Sub-Advisory Agreement'). Accordingly, shareholders of the Global Bond Fund are
being asked to approve a New Sub-Advisory Agreement embodying exactly the same
terms and fees, between CoreStates Advisers (under its new ownership) and Alpha
Global. The Fund's Board of Directors, including a majority of the
non-interested Directors (those Directors who are not parties to the New
Sub-Advisory Agreement, or interested persons of such parties), has approved the
New Sub-Advisory Agreement, subject to approval by Shareholders, to become
effective upon the consummation of the Reorganization.
20
<PAGE>
THE REORGANIZATION AGREEMENT
For a description of the Reorganization, see 'The Reorganization Agreement'
under Proposal 2. If the conditions for the Merger are not met and the
Reorganization is not completed, the Existing Sub-Advisory Agreement will remain
in effect. In the event the Merger is completed but the New Sub-Advisory
Agreement is not approved by the Global Bond Fund's shareholders, the Board of
Directors and CoreStates Advisers will promptly seek to enter a new sub-advisory
arrangement for the Fund, subject to approval by the Fund's shareholders.
DUTIES UNDER THE EXISTING SUB-ADVISORY AGREEMENT AND THE NEW SUB-ADVISORY
AGREEMENT
Except for the ownership change in CoreStates Advisers and different
effective and termination dates, the terms of the New Sub-Advisory Agreement are
identical in all material respects to the terms of the Existing Sub-Advisory
Agreement. The form of this New Sub-Advisory Agreement is attached to this Proxy
Statement as Exhibit E, and the description of the New Sub-Advisory Agreement
set forth in this Proxy Statement is qualified in its entirety by reference to
Exhibit D.
The Existing Sub-Advisory Agreement and the New Sub-Advisory Agreement
provide that Alpha Global, in return for its fee, will provide a continuous
investment program, including but not limited to, the management of investment
operations and composition of the Global Bond Fund, including the purchase,
retention and disposition thereof, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Fund's prospectus. Alpha
Global will provide supervision of the Fund's investments and determine from
time to time what investments and securities will be purchased, retained or sold
by the Fund, and what portion of the assets will be invested or held uninvested
in cash. In the performance of its duties and obligations, Alpha Global will act
subject to the supervision of CoreStates Advisers and the Fund's Board of
Directors.
The Existing Sub-Advisory Agreement and the New Sub-Advisory Agreement
provide that Alpha Global will not be liable for any error of judgment or for
any loss suffered by the Fund or CoreStates Advisers in connection with
performance of its obligations under the Agreement, except a loss resulting from
a breach of a fiduciary duty with respect to the receipt of compensation for
services, or a loss resulting from willful misfeasance, bad faith or gross
negligence on Alpha Global's part in the performance of its duties or from
reckless disregard of its obligations and duties under the Agreement.
CoreStates Advisers currently serves as the Fund's investment adviser
pursuant to its Existing Advisory Agreement and Alpha Global serves as the
sub-adviser to the Global Bond Fund pursuant to its Existing Sub-Advisory
Agreement dated December 15, 1993. The Existing Sub-Advisory Agreement was
approved by shareholders of the International Growth Fund on December 15, 1993.
COMPENSATION
Under the Existing Sub-Advisory Agreement and the New Sub-Advisory
Agreement, Alpha Global is entitled to a fee from the Adviser which is
calculated daily and paid monthly, at an annual rate of .30% of the Global Bond
Fund's average daily net assets. Alpha Global may from time to time and at its
discretion voluntarily waive all or a portion of its fee in order to assist the
Fund in maintaining a competitive expense ratio. Alpha Global reserves the right
to terminate any voluntary fee waiver and reimbursement at any time.
As compensation for investment sub-advisory services to the Fund for the
fiscal year ended June 30, 1995, Alpha Global received fees totaling $77,732.
21
<PAGE>
DURATION AND TERMINATION
Each of the Existing Sub-Advisory Agreement and the New Sub-Advisory
Agreement has an initial term of two years from its effective date, and
thereafter shall 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
Sub-Advisory Agreement and the New Sub-Advisory Agreement may be terminated,
without the payment of any penalty, upon 60 days' written notice, by the Board
of Directors or by vote of a majority of the Fund's outstanding voting
securities, by CoreStates Advisers or Alpha Global. Each Agreement will
immediately terminate in the event of its assignment.
INFORMATION REGARDING ALPHA GLOBAL
Alpha Global is a specialist manager of fixed income securities and cash
for institutional investors. Based in London, England, it is a wholly-owned
subsidiary of United Asset Management Corporation of Boston, Massachusetts,
whose assets under management currently exceed $130 billion. Although Alpha
Global has extensive experience in managing a variety of globally invested bond
funds, Global Bond Fund is the first US-registered investment company for which
Alpha Global has acted in an investment advisory capacity. Alpha Global is a
member of the Investment Management Regulatory Organization, one of the
regulatory bodies approved by the UK Government, and its activities are
regulated accordingly. Alpha Global is located at 25/28 Old Burlington Street,
London W1X 1LB England.
Principal responsibility within Alpha Global for Global Bond Fund will be
assumed by Mr. George McNeill, President and Chief Executive Officer of Alpha
Global. He is a lifelong specialist in fixed income investment. From Edinburgh
University, where he graduated in Political Economy and Economic History, he
joined the investment department of Scottish Equitable Life Assurance Society.
He then moved to London where he joined Wallace Brothers Bank where he spent
nine years including seven as a Director with principal responsibility for the
bank's fixed income investments. Since 1977 he has worked exclusively in fixed
interest markets, first as Managing Director of the investment management
operating company of Gillett Brothers, longstanding members of the LDMA, and for
eight years as Managing Director of Reserve Asset Managers, a specialist fixed
income manager. In 1989 he joined Axe-Houghton, Ltd., the London subsidiary of
USF&G Corporation as Director and Chairman of the Investment Strategy Committee.
Together with United Asset Management Corporation of Boston he founded
Alpha Global Fixed Income Managers, Inc. in London and has overall
responsibility for the company's operations.
Listed below are the names and principal occupations of each of the
directors and principal executive officers of Alpha Global. The principal
business address of each director and principal executive officer, as it relates
to his or her duties at Alpha Global is also provided. No Director of the Fund
has purchased or sold shares of or interests in Alpha Global during the most
recent fiscal year of the Fund.
<TABLE>
<CAPTION>
NAME AND ADDRESS* OFFICE OR TITLE PRINCIPAL OCCUPATION
- ----------------- --------------- --------------------
<S> <C> <C>
George R. McNeill Chief Executive Officer Chairman, Investment Policy Committee
Anthony J. Norris Director--Research Member, Investment Policy Committee
Peter M. Wilson Director--Operations Member, Investment Policy Committee
</TABLE>
- ------------------
* 25/28 Old Burlington Street, London W1X 1LB.
22
<PAGE>
Alpha Global does not currently provide investment services to any other
investment companies having an investment objective similar to the Fund's.
DIRECTORS' CONSIDERATIONS
The Board of Directors believes that the terms of the New Sub-Advisory
Agreement are fair to, and in the best interest of, the Global Bond Fund and its
Shareholders. The Board of Directors, including all of the non-interested
Directors, recommends approval by the Shareholders of the New Sub-Advisory
Agreement between CoreStates Advisers and Alpha Global. In making this
recommendation, the Directors carefully evaluated the experience of Alpha
Global's key personnel in institutional investing and the quality of services
Alpha Global is expected to provide to the Global Bond Fund, including, but not
limited to: (1) the fee and expense ratios of comparable mutual funds; (2) the
performance of the Global Bond Fund since commencement of operations; (3) the
nature and quality of the services expected to be rendered to the Global Bond
Fund by Alpha Global; (4) the distinct investment objectives and policies of the
Fund; (5) that the compensation payable under the proposed New Sub-Advisory
Agreement will be at the same rate as the compensation payable under the
Existing Sub-Advisory Agreement; (6) that the terms of the Existing Sub-Advisory
Agreement will be unchanged under the New Sub-Advisory Agreement except for
different effective and termination dates; (7) the history, reputation,
qualification and background of Alpha Global, as well as the qualifications of
their personnel and financial condition; (8) the commitment of the parties to
the Merger to pay or reimburse the Fund for the expenses of the Fund incurred in
connection with the Reorganization; (9) CoreStates Advisers and Alpha Global's
investment performance record; and (10) 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 Global Bond Fund as a result of the Proposed Transaction. Accordingly,
the Board of Directors believes that the Fund should receive investment advisory
services under the New Sub-Advisory Agreement equal or superior to those it
currently receives under the Existing Sub-Advisory Agreement, at the same fee
level.
REQUIRED VOTE
Approval of the New Sub-Advisory Agreement with respect to the Global Bond
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 GLOBAL BOND FUND VOTE 'FOR' THE NEW SUB-ADVISORY AGREEMENT.
<TABLE>
<S> <C> <C>
VI. PROPOSAL 6. TO CONSIDER AND VOTE UPON A PROPOSAL TO CHANGE THE GLOBAL BOND FUND FROM A 'DIVERSIFIED'
(GLOBAL INVESTMENT COMPANY TO A 'NON-DIVERSIFIED' INVESTMENT COMPANY.
BOND FUND)
</TABLE>
Investment companies such as the Global Bond Fund are classified as either
'diversified' or 'non-diversified' investment companies under Section 5 of the
Investment Company Act of 1940, as amended (the '1940 Act'). Under Section 13 of
the 1940 Act, an investment company may not change its classification from a
diversified to a non-diversified investment company without the approval of the
holders of a majority of its outstanding shares, as described below.
The Global Bond Fund currently is classified as a 'diversified' investment
company as defined in Section 5 of the 1940 Act. This means that the Fund must
meet the following requirement:
23
<PAGE>
At least 75% of the value of its total assets is represented by cash
and cash items (including receivables), Government securities, securities
of other investment companies, and other securities for the purposes of
this calculation limited in respect of any one issuer to an amount not
greater in value than 5% of the value of the total assets of such
management company and to not more than 10% of the outstanding voting
securities of such issuer.
After consideration, the Fund's Board of Directors has determined that
circumstances may arise when it may be advantageous for the Fund to have a
larger position in a single issuer or in a group of issuers than is permitted
for diversified investment companies. The reclassification of the Fund as
non-diversified will provide CoreStates Advisers and Alpha Global with greater
investment flexibility in managing the Fund's portfolio. The Directors believe
that the benefits accruing to the Fund as a consequence of the Fund's conversion
to a non-diversified portfolio will outweigh any increase in risk specific to
the Fund. On December 7, 1995, the Board of Directors, therefore, unanimously
approved a change in the classification of the Fund from a diversified to a
non-diversified investment company and recommended that the proposal to
reclassify the Fund as a non-diversified portfolio be submitted to the Fund's
Shareholders for approval.
If Shareholders approve reclassification of the Fund as a non-diversified
investment company under the 1940 Act, the Fund would still be required to meet
certain diversification requirements in order to qualify as a regulated
investment company for federal income tax purposes. To so qualify, the Fund must
diversify its holdings so that, at the close of each quarter of its taxable
year, (a) at least 50% of the value of its total assets is represented by cash,
cash items, securities issued by the U.S. Government, its agencies and
instrumentalities, the securities of other regulated investment companies, and
other securities limited generally with respect to any one issuer to an amount
not more than 5% of the total assets of the Fund and not more than 10% of the
outstanding voting securities of such issuer, and (b) not more than 25% of the
value of its total assets is invested in the securities of any issuer (other
than securities issued by the U.S. Government, its agencies or instrumentalities
or the securities of other regulated investment companies), or in two or more
issuers that the Fund controls and that are engaged in the same or similar
trades or businesses.
For purposes of the federal income tax test, the identification of the
issuer of any such security depends on the terms and conditions of the
obligation. If the assets and revenues of any agency, authority,
instrumentality, or other political subdivision are separate from those of the
government creating the subdivision, and the obligation is backed only by the
assets and revenues of the subdivision, such subdivision will be regarded as the
sole issuer. Similarly, in the case of a nongovernmental user, such as an
industrial corporation or a privately owned or operated hospital, if the
security is backed only by the assets and revenues of the nongovernmental user
then such nongovernmental user will be deemed to be the sole issuer. If in
either case the creating government or another entity guarantees an obligation,
and the value of all securities issued or guaranteed by the guarantor and owned
by a fund exceeds 10% of the value of such fund's total assets, the guarantee
will be regarded as a separate security and treated as an issue of such
government or entity.
REQUIRED VOTE
Approval of the change from 'diversified' to a 'non-diversified' investment
company with respect to the Global Bond Fund requires the affirmative vote of a
majority of the outstanding shares of the Fund. If approved by Shareholders, the
reclassification of the Fund as a non-diversified investment company would be
effective immediately. Only shareholders of the Global Bond Fund may vote on
this proposal to change the classification of the Fund.
24
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
<TABLE>
<S> <C> <C>
VII. PROPOSAL 7. TO CONSIDER AND VOTE UPON A PROPOSAL TO CHANGE THE FUNDAMENTAL POLICY OF THE SHORT
(SHORT INTERMEDIATE BOND FUND (FORMERLY INTERMEDIATE BOND FUND) SO THAT THE FUND MAINTAINS AN
INTERMEDIATE AVERAGE WEIGHTED MATURITY OF TWO TO FIVE YEARS INSTEAD OF THE EXISTING AVERAGE WEIGHTED
BOND FUND) MATURITY OF THREE TO TEN YEARS.
</TABLE>
The Directors of the Short Intermediate Bond Fund have determined that it
would be in the best interest of the Fund and its Shareholders to restate the
investment objective of the portfolio.
The investment objective of the Short Intermediate Bond Fund is currently
stated as follows: 'Short Intermediate Bond Fund's investment objective is to
provide a moderate level of current income consistent with conservation of
capital, by investing substantially all of its assets in a diversified portfolio
of intermediate-term, fixed income obligations which will have an expected
average weighted maturity of three to ten years.' (Emphasis added)
It is proposed that the investment objective of the Fund be changed to read
as follows:
'Short Intermediate Bond Fund's investment objective is to provide a
moderate level of current income consistent with conservation of capital,
by investing substantially all of its assets in a diversified portfolio of
intermediate-term, fixed income obligations which will have an expected
average weighted maturity of two to five years.' (Emphasis added)
The proposed change in the stated investment objective of the Fund is
intended to accurately reflect the manner in which the Fund is being managed by
CoreStates Advisers, which is consistent with the investment objective to have a
weighted maturity not to exceed five years. If the proposal is approved by
Shareholders, CoreStates Advisers will be required to manage the Fund so that
the average weighted maturity of its portfolio does not exceed five years. If
the Shareholders approve this proposal, CoreStates Advisers does not anticipate
any material changes in the day-to-day management of the Fund's portfolio
securities.
REQUIRED VOTE
The change in investment objective of the Fund requires the affirmative
vote of a majority of the outstanding shares of the Fund. If this proposal is
approved by the Shareholders at the Meeting, the Fund's prospectus and statement
of additional information will be amended or supplemented in due course in order
to reflect the change in the investment objective. If the proposal is not
approved, the investment objective as currently stated will remain in effect.
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE CHANGE IN THE INVESTMENT OBJECTIVE OF THE FUND.
<TABLE>
<S> <C> <C>
VIII. PROPOSAL 8. PROPOSAL TO APPROVE OR DISAPPROVE AN AMENDED INVESTMENT ADVISORY AGREEMENT BETWEEN EACH
OF THE FIDUCIARY TREASURY RESERVE AND FIDUCIARY TAX-FREE RESERVE AND CORESTATES ADVISERS
WHICH WOULD INCREASE THE CONTRACTUAL ADVISORY FEE PAID TO CORESTATES ADVISERS
</TABLE>
GENERAL
On December 7, 1995, the Board of Directors unanimously approved, subject
to the approval of the Shareholders of each of the Fiduciary Treasury Reserve
and Fiduciary Tax-Free Reserve, respectively, an amended investment advisory
agreement (the 'Amended Advisory Agreement') to increase the contractual rate of
fee
25
<PAGE>
payable to CoreStates Advisers for advisory services on behalf of each of
Fiduciary Treasury Reserve and Fiduciary Tax-Free Reserve. Under the investment
advisory agreement currently in effect (the 'Current Advisory Agreement'),
CoreStates Advisers does not receive a fee from each of such Fiduciary Funds.
Under the Amended Advisory Agreement, CoreStates Advisers would be entitled
to receive a fee from Fiduciary Treasury Reserve and Fiduciary Tax-Free Reserve,
calculated daily and paid monthly at the annual rate of .20% of the average
daily net assets of each Fund. CoreStates Advisers has stated its intention to
waive the entire fee for each such Fiduciary Fund so that the Funds remain at
their existing expense ratios. A voluntary waiver is not contractual and is
subject to change, and therefore, in the future, CoreStates Advisers could
terminate such fee waiver and collect its fee.
A copy of the Amended Advisory Agreement, as it is proposed to be approved
by each of the Fiduciary Treasury Reserve and Fiduciary Tax-Free Reserve
Shareholders, is attached as Exhibit A to this Proxy Statement.
DIRECTORS' CONSIDERATION
To assist the Directors in their consideration of the Amended Advisory
Agreement, CoreStates Advisers presented a comparative analysis, under existing
and pro forma advisory fees, of the performance and expenses of such Fiduciary
Funds. The Directors took into account CoreStates Advisers' belief that the
proposed fee structure represents a reasonable return, is in line with
acceptable profitability levels, is still comparable to that of competing funds
and maintains the Fiduciary Funds' competitive performance. In addition, the
Directors carefully reviewed and evaluated the experience of CoreStates
Advisers' key personnel and the quality of services to be delivered to such
Fiduciary Funds. These considerations included, but were not limited to, the
following factors: (1) the nature and quality of the advisory services rendered
and the results achieved by CoreStates Advisers in the management of these
Fiduciary Funds, giving due consideration to the likely impact of the proposed
fee on relative performance; (2) the relationship of the proposed advisory fee
schedule to the fee schedules of comparable mutual funds, the impact of the
proposed increase in advisory fees on each of the Fiduciary Fund's expense ratio
and the relationship of the Fiduciary Fund's pro forma expense ratio to the
expense ratios of comparable mutual funds; (3) the costs borne by CoreStates
Advisers in providing investment advisory services to the Fiduciary Funds; (4)
the profits of CoreStates Advisers in providing services to the Fiduciary Funds;
and (5) the extent to which the economies of scale that CoreStates Advisers
might experience as a result of growth in the Fiduciary Funds' assets would be
shared with the Funds.
DUTIES UNDER THE AMENDED ADVISORY AGREEMENT
Except for a change in contractual compensation to CoreStates Advisers and
the effective and termination dates, the terms of the Amended Advisory Agreement
between CoreStates Advisers and the Fiduciary Treasury Reserve and Fiduciary
Tax-Free Reserve are identical in all material respects to the terms of the
Current Advisory Agreement between the same parties. Moreover, except for
differences regarding fees and compensation, the Amended Advisory Agreement is
identical in all material respects to the Current Advisory Agreement regarding
these Fiduciary Funds.
Under the Amended Advisory Agreement, CoreStates Advisers is responsible
for the investment decisions for each of the Fiduciary Treasury Reserve and
Fiduciary Tax-Free Reserve, and continuously reviews, supervises and administers
each of such Fund's investment program. CoreStates Advisers discharges its
responsibilities subject to the supervision of, and policies established by, the
Board of Directors of such Fiduciary Funds. In addition, the Amended Advisory
Agreement consistent with the Current Advisory Agreement, provides that
CoreStates
26
<PAGE>
Advisers shall not be protected against liability arising from such Adviser's
willful misfeasance, bad faith or gross negligence in the performance of its
duties.
COMPENSATION
Under the Amended Agreement, each of the Fiduciary Treasury Reserve and
Fiduciary Tax-Free Reserve will pay CoreStates Advisers a fee, which is
calculated daily and paid quarterly, at an annual rate of .20% of the average
daily net assets of such Fund. The effect of the proposed change would increase
the contractual rate by .20%, however, the actual rate paid by each such
Fiduciary Fund to CoreStates Advisers will remain unchanged due to the intention
of CoreStates Advisers to waive such fee.
DESCRIPTION OF CORESTATES ADVISERS
For a complete description of CoreStates Advisers, see the discussions in
Proposal 2 entitled 'Description of CoreStates Advisers.'
For the fiscal period ended June 30, 1995, the Fiduciary Treasury Reserve
and Fiduciary Tax-Free Reserve each paid CoreStates Advisers an aggregate fee
(net of voluntary fee waivers) of $0 for advisory services. For this same
period, the Fiduciary Treasury Reserve and Fiduciary Tax-Free Reserve paid SEI
Financial Management Corporation (the 'Administrator') an aggregate
administrative fee of $442,499 and $24,029 (after fee waivers), respectively.
DURATION AND TERMINATION
Once approved by vote of a majority of the outstanding voting securities of
each such Fiduciary Fund in accordance with the requirements of the Act, and
unless sooner terminated, the Amended Advisory Agreement will continue in effect
for an initial period of two years. Thereafter, if not terminated, the Amended
Advisory Agreement will continue in effect for successive periods of 12 months,
provided that such continuation is specifically approved at least annually (a)
by the vote of a majority of those members of such Fund's Board of Directors who
are not interested persons of the Fund or the Adviser, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by the vote
of a majority of the Board of Directors or by the vote of a majority of the
outstanding shares of that Fund. The Amended Advisory Agreement may be
terminated as to each such Fiduciary Fund at any time, without the payment of a
penalty, by the vote of a majority of the Trustees or by the vote of a majority
of the outstanding voting securities of the Portfolio on not less than 30 days'
nor more than 60 days' written notice to CoreStates Advisers, or by CoreStates
Advisers on 90 days' written notice to the Trust. The Amended Advisory Agreement
will immediately terminate in the event of its assignment.
COMPARISON BETWEEN THE AMENDED AGREEMENT AND THE CURRENT ADVISORY AGREEMENT
The following table compares the existing fees and expenses of shares of
the Fiduciary Treasury Reserve and Fiduciary Tax-Free Reserve under the Current
Advisory Agreement and under the Amended Advisory Agreement. The percentages
shown below expressing existing annual fund operating expenses are based on the
actual expenses of each Fund for the fiscal year ended June 30, 1995.
27
<PAGE>
FIDUCIARY TREASURY RESERVE
<TABLE>
<CAPTION>
CURRENT FEES PROPOSED FEES
AND AND
SHAREHOLDER TRANSACTION EXPENSES EXPENSES EXPENSES
- ------------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase............................................. None None
Maximum Sales Charge Imposed on Reinvested Dividends................................. None None
Deferred Sales Charge................................................................ None None
Redemption Fees...................................................................... None None
</TABLE>
<TABLE>
<CAPTION>
CURRENT FEES PROPOSED FEES
AND AND
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) EXPENSES EXPENSES
- ------------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Management/Advisory Fees (after fee waiver and reimbursement)........................ None 0%
12b-1 Fees........................................................................... None None
Other Expenses....................................................................... .21% .21%
Total Fund Operating Expenses (after fee waiver)..................................... .21%* .21%**
</TABLE>
- ------------------
* Absent fee waivers of .14% by the Administrator, total fund operating
expenses would have been .35%.
** Absent CoreStates Advisers' intention to waive its entire advisory fee of
.20% for the current fiscal year and fee waivers of .14% by the
Administrator, total fund operating expenses would be .55%.
EXAMPLE
Assuming a hypothetical investment of $1,000, a 5% annual return and
redemption at the end of each time period, an investor in the shares above would
have paid transaction and operating expenses at the end of each year as follows:
<TABLE>
<CAPTION>
CURRENT* PROPOSED**
----------- ------------
<S> <C> <C>
1 year...................................................................... $ 2 $ 2
3 years..................................................................... 7 7
5 years..................................................................... 12 12
10 years.................................................................... 27 27
</TABLE>
- ------------------
* Absent fee waivers for the one-, three-, five- and ten-year periods, expenses
would be $4, $11, $20 and $44, respectively.
** Absent fee waivers for the one-, three-, five- and ten-year periods, expenses
would be $6, $18, $31 and $69, respectively.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
28
<PAGE>
FIDUCIARY TAX-FREE RESERVE
<TABLE>
<CAPTION>
CURRENT FEES PROPOSED FEES
AND AND
SHAREHOLDER TRANSACTION EXPENSES EXPENSES EXPENSES
- -------------------------------- ------------- ---------------
<S> <C> <C>
Maximum Sales Charge Imposed on Purchase............................................. None None
Maximum Sales Charge Imposed on Reinvested Dividends................................. None None
Redemption fees...................................................................... None None
</TABLE>
<TABLE>
<CAPTION>
CURRENT FEES PROPOSED FEES
AND AND
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS) EXPENSES EXPENSES
- ---------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
Management/Advisory Fees (after fee waiver and reimbursement)........................ None 0%
12b-1 Fees........................................................................... None None
Other Expenses....................................................................... .17% .17%
Total Fund Operating Expenses (after fee waiver)..................................... .17%* .17%**
</TABLE>
- ------------------
* Absent fee waivers of .14% by the Administrator, total fund operating
expenses would have been .31%.
** Absent CoreStates Advisers' intentions to waive its entire advisory fee of
.20% for the current fiscal year and fee waivers of .14% by the
Administrator, total fund operating expense would be .51%.
EXAMPLE
An investor in the shares above would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual return; (2) redemption at the end of
each time period and (3) imposition of the maximum sales charge:
<TABLE>
<CAPTION>
CURRENT* PROPOSED**
------------- -------------
<S> <C> <C>
1 year............................................................................... $ 2 $ 2
3 years.............................................................................. 5 5
5 years.............................................................................. 10 10
10 years............................................................................. 22 22
</TABLE>
- ------------------
* Absent fee waivers for the one, three, five and ten year periods, expenses
would be $3, $10, $17 and $39, respectively.
** Absent fee waivers for the one, three, five and ten year periods, expenses
would be $5, $16, $29 and $64, respectively.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN SHOWN.
REQUIRED VOTE
Approval of the Amended Advisory Agreement requires the affirmative vote of
a majority of the outstanding shares of each of the Fiduciary Reserve and
Fiduciary Treasury Reserve. In the event shareholders of such Funds do not
approve the adoption of the Amended Sub-Advisory Agreements at the Meeting to
which this Proxy Statement relates, or any adjournment thereof, the Directors
will consider other appropriate courses of action.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL
OF THE AMENDED INVESTMENT ADVISORY AGREEMENT FOR THE PORTFOLIO.
29
<PAGE>
GENERAL INFORMATION ABOUT THE COMPANY AND OTHER MATTERS
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
SHARES OF THE FUND
POSITION WITH THE BENEFICIALLY OWNED AS OF
NAME COMPANY AGE BUSINESS EXPERIENCE JANUARY 15, 1996
- ---- ------------------ ------ ------------------- --------------------------
<S> <C> <C> <C> <C>
Erin Anderson Director since 40 See 'Information Regarding 0
December 1992 Nominees'
Emil J. Mikity Director since 67 See 'Information Regarding 0
December 1990 Nominees'
George H. Strong Director since 69 See 'Information Regarding 0
April 1992 Nominees'
David Lee President since 43 Senior Vice President of the 0
June 1994 Administrator and Distributor
since 1993; Vice President of
the Administrator and
Distributor since 1991;
President, GW Sierra Trust
Funds prior to 1991.
Carmen V. Romeo Treasurer -- 52 Director, Executive Vice 0
Assistant President, Chief Financial
Secretary since Officer and Treasurer of SEI
December 1992 Corporation; Director and
Treasurer of the Administrator
and Distributor since 1981;
President, GW Sierra Trust
Funds prior to 1991.
James W. Jennings Secretary since 59 Partner of the law firm of 4,462.8360
January 1986 Morgan, Lewis & Bockius LLP
since 1970.
Kevin P. Robins Vice President -- 34 Senior Vice President and 0
Assistant General Counsel of SEI
Secretary since Corporation and the Distributor
September 1993 since 1994; Vice President and
Assistant Secretary of the
Administrator and the
Distributor, 1992-1994;
Associate, Morgan, Lewis &
Bockius LLP (law firm) prior to
1992.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
SHARES OF THE FUND
POSITION WITH THE BENEFICIALLY OWNED AS OF
NAME COMPANY AGE BUSINESS EXPERIENCE JANUARY 15, 1996
- ---- ------------------ ------ ------------------- --------------------------
<S> <C> <C> <C> <C>
Sandra K. Orlow Vice President -- 42 Vice President and Assistant 0
Assistant Secretary of the Administrator
Secretary since and Distributor since 1983.
September 1992
Robert Carroll Vice President -- 35 Vice President and Assistant 0
Assistant Secretary of SEI Corporation,
Secretary since the Administrator and
September 1994 Distributor since 1994. United
States Securities and Exchange
Commission, Division of
Investment Management,
1990-1994. Associate, McGuire,
Woods, Brattle & Boothe (law
firm) before 1990.
Kate Stanton Vice President -- 37 Vice President and Assistant 0
Assistant Secretary of the Administrator
Secretary since and Distributor since 1994.
September 1994 Associate, Morgan, Lewis &
Bockius LLP (law firm) before
1994.
Richard J. Shoch Vice President and 29 Vice President and Assistant 0
Assistant Secretary of SEI Corporation
Secretary since since 1995; Regulatory Manager
December 1995 of SEI Corporation 1990-1995.
Stephen G. Meyer Controller since 30 CPA -- 1995 to Present. 0
June 1995 Director, Internal Audit and
Risk Management, SEI, 1992 to
1995. Coopers & Lybrand, Senior
Associate, 1990 to 1992.
Vanguard Group of Investments,
Internal Audit Supervisor prior
to 1990.
</TABLE>
The Directors of the Company receive fees and expenses for each meeting of
the Board of Directors attended. During the fiscal year ended June 30, 1995, the
Company paid a total of $77,831 on behalf of the Funds to its Directors. No
officer or employee of the Administrator or Distributor receives any
compensation from the Company for acting as a director of the Company, and the
officers of the Company receive no compensation from the Company for performing
the duties of their offices. Morgan, Lewis & Bockius LLP, of which Mr. Jennings
is a partner, receives legal fees as counsel to the Company. The Directors and
Officers of the Company as a group (except for Mr. Jennings) own less than 1% of
the outstanding shares of each Fund.
31
<PAGE>
There were four meetings of the Board of Directors held during the fiscal
year ended June 30, 1995. In such fiscal year, all Directors attended at least
75% of the meetings of the Board of Directors held during their respective
terms.
INDEPENDENT AUDITORS
A majority of the Company's Board of Directors who are not 'interested
persons' of the Company have selected Ernst & Young LLP as the independent
auditors of the Company for the fiscal year ended June 30, 1995. If requested by
a shareholder either in writing or by telephone in advance of the Meeting, a
representative of Ernst & Young LLP will be present at the Meeting to make a
statement if desired and to be available to respond to appropriate questions
from shareholders. Such request should be directed to the Company by writing to
the Company at 680 East Swedesford Road, Wayne, Pennsylvania 19087.
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 Y 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 fiscal year ended June 30, 1995, the Company paid no brokerage
commissions to affiliated brokers.
5% SHAREHOLDERS
As of January 15, 1996 the following persons were the only persons who
were, to the knowledge of the Company, beneficial owners of 5% or more of
classes of shares of the Portfolios of the Company voting at this Meeting.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER NUMBER OF SHARES CLASS SHARES
- --------------- ------------------- ----------------- -------------
<S> <C> <C> <C>
CASH RESERVE CLASS Y
Patterson & Co. 510,764,460.590 89.23%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101-7618
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER NUMBER OF SHARES CLASS SHARES
- --------------- ------------------- ----------------- -------------
<S> <C> <C> <C>
CASH RESERVE CLASS C
Gloria Levin 1,000,000 5.50%
2401 Pennsylvania Avenue
Apt. 21 B
Philadelphia, PA 19130
Patterson & Co. 10,051,132.820 47.00%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101-7618
Collagenex Inc. 5,592,065.520 26.15%
301 S. State Street
Newtown, PA 18940
TREASURY RESERVE CLASS Y
Patterson & Co. 309,516,297.960 57.88%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101-7618
Hare & Co. 75,132,993.320 14.05%
Bank of New York
Attn STIF/Master Note
One Wall Street, 5th Floor
New York, NY 10286
MAC & Co. 28,737,484.260 5.37%
Mellon Bank NA
Mutual Funds Department
P.O. Box 320
Pittsburgh, PA 15230-0320
TAX-FREE RESERVE CLASS Y
Patterson & Co. 57,051,462.150 88.94%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
TAX-FREE RESERVE CLASS C
Leslie Edelman 804,878.520 35.86%
288 Aquetog Road
New Hope, PA 18938-1119
William H. Simon, MD 235,940.220 10.51%
255 S. 17th Street
11th Floor
Philadelphia, PA 19103
Harold D. McKemy 137,930.450 6.15%
3 Bobolink Drive
Wyomissing, PA 19610
Gary Hickman 125,383.710 5.59%
113 St. Joseph Lane
Downingtown, PA 19335-2836
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER NUMBER OF SHARES CLASS SHARES
- --------------- ------------------- ----------------- -------------
<S> <C> <C> <C>
Keystone Marketing Dist & 112,236.60 5.00%
Mgnt Co. Inc.
550 S. Henderson Road
King of Prussia, PA 19406-3515
GROWTH EQUITY FUND CLASS Y
Patterson & Co. 8,050,782.929 95.69%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
GROWTH EQUITY FUND CLASS A
Patterson & Co. 25,242.0290 13.56%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
EQUITY INDEX FUND CLASS Y
Patterson & Co. 4,464,947.4780 83.56%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
EQUITY FUND CLASS Y
Patterson & Co. 2,221,729.2582 91.03%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
EQUITY FUND CLASS A
Joseph C. & Hilde Krallinger 28,600.5590 13.55%
TTEES
Krallinger Family Trust
UAD 11/17/93
48872 Mariposa Drive
Palm Desert, CA 92260-6810
INTERNATIONAL GROWTH FUND CLASS Y
Patterson & Co. 8,660,611.466 98.43%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
INTERNATIONAL GROWTH FUND CLASS A
Mark E. Stalnecker & 13,654.4120 8.85%
Susan M. Stalnecker JTTEN
9 Briarcrest Drive
Wallingford, PA 19086
BALANCED FUND CLASS Y
Patterson & Co. 5,552,216.426 97.5%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER NUMBER OF SHARES CLASS SHARES
- --------------- ------------------- ----------------- -------------
<S> <C> <C> <C>
BALANCED FUND CLASS A
CoreStates Bank, NA C/F IRA 11,816.0750 5.38%
of James E. Brown
1025 Cross Road
Schwenksville, PA 19473
SHORT INTERMEDIATE BOND FUND CLASS Y
Patterson & Co. 5,080,733.908 91.2%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
SHORT INTERMEDIATE BOND FUND CLASS A
CoreStates Bank NA C/F IRA 10,381.1140 5.06%
of Donald A. Fleck
32 Summit Circle
Churchville, PA 18966
CoreStates Bank NA C/F IRA R/O 10,476.1810 5.10%
of Robert T. Mathie
60 Roselyn Drive
York, PA 17402-3232
GOVERNMENT INCOME FUND CLASS Y
Patterson & Co. 1,352,611.868 99.94%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
GOVERNMENT INCOME FUND CLASS A
Jean Taxin 8,078.6130 5.99%
5005 Woodbine Avenue
Philadelphia, PA 19131
CoreStates Bank NA C/F IRA 7,238.6250 5.36%
of Salvatore M. Reyes
500 Newport Avenue
Ocean Gate, NJ 08740
CoreStates Bank NA C/F IRS 7,212.6860 5.35%
of Donald A. Fleck
32 Summit Circle
Churchville, PA 18966
INTERMEDIATE MUNICIPAL BOND FUND
CLASS Y
Patterson & Co. 21,629.754 91.18%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
Paine Webber FBO 1,536.9730 6.59%
M Tegler A/C# PY01395B3
C/O NSCC New York
55 Water Street
New York, NY 10041
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER NUMBER OF SHARES CLASS SHARES
- --------------- ------------------- ----------------- -------------
<S> <C> <C> <C>
INTERMEDIATE MUNICIPAL BOND FUND
CLASS A
Salvatore J. Alesi Sr. & 8,119.4020 8.02%
Rose P Alesi JTTEN
284 Ellis Road
Havertown, PA 19083
Joseph T. Oprocha & 6,777.6610 6.63%
Theresa E. Oprocha JTTEN
107 Snyder Avenue
Philadelphia, PA 19148
Frank B. Holst & 5,743.7820 5.62%
E. Joan Holst JTTEN
2218 Oak Terrace
Lansdale, PA 19446
Thomas Glenn 5,328.820 5.21%
827 North 63rd Street
Philadelphia, PA 19151
GLOBAL BOND FUND CLASS Y
Patterson & Co. 3,426,417.36 99.96%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
GLOBAL BOND FUND CLASS A
CoreStates Bank N.A. C/F IRA of 5,655.4420 31.79%
A. Gilbert Heebner
2 Etienne Arbordeau
Berwyn Baptist Road
Devon, PA 19333
James W. Jennings 4,462.8360 25.09%
2000 One Logan Square
Philadelphia, PA 19103
CoreStates Bank NA C/F IRA of 2,636.2470 14.82%
Allen Luke
17 Bennett Court
East Brunswick, NJ 08816
CoreStates Bank NA C/F IRA of 1,654.2830 9.30%
Patrick M. Carlomango
3124 Taft Road
Norristown, PA 19403
PENNSYLVANIA MUNICIPAL BOND FUND
CLASS Y
Dr. Vernon F. Alibert & 174,537.6130 64.49%
Dolores V. Alibert
1420 Conchester Highway
Boothwyn, PA 19061
Patterson & Co. 96,069.338 35.50%
PNB Personal Trust Acctg
P.O. Box 7829
Philadelphia, PA 19101
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF PERCENTAGE OF
CLASS OF SHARES BENEFICIAL OWNER NUMBER OF SHARES CLASS SHARES
- --------------- ------------------- ----------------- -------------
<S> <C> <C> <C>
PENNSYLVANIA MUNICIPAL BOND FUND
CLASS A
Salvatore J. Alesi, Sr. & 15,168.0050 73.98%
Rose P. Alesi JTTEN
284 Ellis Road
Havertown, PA 19083
Peter L. Davis & 2,435.5620 11.88%
Kathryn K. Davis JTTEN
509 Manor House Lane
Huntington Valley, PA 19006
Harry S. Walmer & 1,119.4030 5.46%
Margaret Walmer JTTEN
590 Stracks Dam Road
Myerstown, PA 17067
NEW JERSEY MUNICIPAL BOND FUND
CLASS Y
Patterson & Co. 149,015.79 99.99%
PNB Personal Trust Accounting
P.O. Box 7829
Philadelphia, PA 19101-7829
NEW JERSEY MUNICIPAL BOND FUND
CLASS A
Nathan J. Bershanoff 3,760.9480 32.69%
5251 Garden Avenue
Pennsauken, NJ 08109
Mary Manchur & 2,322.0050 20.27%
Jean Kent JTTEN
19 Thatchers Road
Frenchtown, NJ 08225
Almira E. Brinser & 2,287.6660 19.88%
Everett L. Brinser JTTEN
802 Chestnut Avenue
Laurel Springs, NJ 08021
Nelson Martin 1,101.8180 9.58%
59 Hasting Lane
Willingboro, NJ 08046
FIDICUARY RESERVE CLASS Y
Patterson & Co. 350,174,154.2100
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
FIDICUARY TREASURY RESERVE CLASS Y
Patterson & Co. 19,961,523.50 100%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
FIDICUARY TAX-FREE RESERVE CLASS Y
Patterson & Co. 76,664,786.44 100%
P.O. Box 7618 FC9-1-17
Attn: Jim Quinlan
Philadelphia, PA 19101
</TABLE>
37
<PAGE>
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 Proposals with respect to a particular Fund requires the
affirmative vote of a majority of the outstanding shares of a Fund. As defined
in the 1940 Act, 'majority of the outstanding shares' means the vote of (i) 67%
or more of a Fund's or the Company's outstanding shares present at a Meeting, if
the holders of more than 50% of the outstanding shares of a Fund or the Company
are present or represented by proxy, or (ii) more than 50% of a Fund's or the
Company'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.
38
<PAGE>
EXHIBIT A
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of [_________ __, 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;
(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').
A-1
<PAGE>
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 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;
A-2
<PAGE>
(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.
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.
A-3
<PAGE>
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 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 [_________ __, ____].
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.
A-4
<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____________________________________
CORESTATES INVESTMENT ADVISERS, INC.
By____________________________________
A-5
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
ADVISORY FEE
AS A
PERCENTAGE OF
AVERAGE DAILY
PORTFOLIO NET ASSETS
- --------- --------------
<S> <C>
Growth Equity Fund................................................................................ .75%
Equity Fund....................................................................................... .74%
Equity Index Fund................................................................................. .40%
International Growth Fund......................................................................... .80%
Balanced Fund..................................................................................... .70%
Intermediate Bond Fund............................................................................ .50%
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>
A-6
<PAGE>
EXHIBIT B
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
[INTERNATIONAL GROWTH FUND]
AGREEMENT made as of _________ __, 1996 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 _______ __, 1996 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');
(b) the Fund'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 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
B-1
<PAGE>
(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;
(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 Fairfield Group, Inc.,
CoreStates Financial Corp, or any affiliated person of either the Fund,
Fairfield Group, Inc., 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;
B-2
<PAGE>
(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.
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.
9. Duration and Termination. This Agreement will become effective as
of the date first above written, provided that it shall have been approved
by the Fund's shareholders in accordance with the requirements under the
1940 Act, and, unless sooner terminated as provided herein, shall continue
in effect until ______ __, 199_. Thereafter, if not terminated, this
Agreement shall continue in effect for successive periods of twelve months,
each ending on _______ each year, 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 any time 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
B-3
<PAGE>
the Investment Adviser 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 as 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: __________________________
MARTIN CURRIE, INC.
By: __________________________________
Name: ___________________________
Title: __________________________
B-4
<PAGE>
EXHIBIT C
FORM OF SUB-INVESTMENT ADVISORY AGREEMENT
[INTERNATIONAL GROWTH FUND]
AGREEMENT made as of _________ __, 1996 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 _______ __, 1996 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');
(b) the Fund'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 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
C-1
<PAGE>
(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;
(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 Fairfield Group, Inc.,
CoreStates Financial Corp, or any affiliated person of either the Fund,
Fairfield Group, Inc., 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;
C-2
<PAGE>
(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.
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.
9. Duration and Termination. This Agreement will become effective as
of the date first above written, provided that it shall have been approved
by the Fund's shareholders in accordance with the requirements under the
1940 Act, and, unless sooner terminated as provided herein, shall continue
in effect until ______ __, 199_. Thereafter, if not terminated, this
Agreement shall continue in effect for successive periods of twelve months,
each ending on _______ each year, 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 any time 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
C-3
<PAGE>
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.
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: __________________________
C-4
<PAGE>
EXHIBIT D
FORM OF SUB-ADVISORY AGREEMENT
[GLOBAL BOND FUND]
AGREEMENT made as of ________ __, 1996 between CORESTATES INVESTMENT
ADVISERS, INC., a Pennsylvania corporation (the 'Investment Adviser'), and ALPHA
GLOBAL FIXED INCOME MANAGERS, INC. (the 'Sub-Adviser').
WHEREAS, CoreFunds, Inc. (the 'Fund'), a Maryland corporation, 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 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 _______ __, 1996 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 the
sub-investment adviser to the Global Bond Fund 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 promises 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 sub-investment adviser to the Global Bond 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, 1994, 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 Fund'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 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 13, 1984 and all amendments thereto;
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(e) the Fund's Registration Statement on Form N-1A under the
Securities Act of 1933, as amended (the '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 the Global Bond portfolio, including
investment research and management with respect to all securities and
investments and cash equivalents held by the Global Bond portfolio. 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 Global Bond 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 as provided to the
Sub-Adviser by the Investment Adviser, together with any amendments
thereto;
(b) will not make loans to any person to purchase or carry Fund
shares or make loans to the Fund;
(c) will place orders pursuant to its investment determinations
for the Global Bond 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 CoreStates Financial Corp, SEI Financial Management
Corporation, or any affiliated person of either the Fund, CoreStates
Financial Corp, or SEI Financial Management Corporation;
(d) will maintain all books and records with respect to the
Global Bond 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
D-2
<PAGE>
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 Global Bond Fund;
(g) will direct and use its best efforts to cause the broker or
dealer involved in any portfolio transaction with the Global Bond
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 Global Bond 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.
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 31 under the 1940 Act.
6. Expenses. During the term of this Agreement, the Sub-Adviser will
pay all its own expenses in connection with its activities under this
Agreement other than the cost of securities (including brokerage
commissions, if any) purchased for the Global Bond Fund and the cost of
obtaining market quotations of portfolio securities held by such 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 .30% of the Global Bond Fund's average daily net assets. 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 such 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, provided that it shall have been approved
by the Fund's shareholders in accordance with the requirements under the
1940 Act, and, unless sooner terminated as provided herein, shall continue
in effect until ______ __, 1996. Thereafter, if not terminated, this
Agreement shall continue in effect for successive periods of twelve months,
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
D-3
<PAGE>
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 any time 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 Adviser 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 meanings
assigned to 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 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: _____________________________
ALPHA GLOBAL FIXED INCOME MANAGERS, INC.
By: __________________________________
Name: ______________________________
Title: _____________________________
D-4
<PAGE>
COREFUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
March 15, 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 Richard J. Shoch 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 Fund to be held on
March 15, 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 matters:
1. To consider and act upon a proposal to elect a Board of Directors (voted
on by the shareholders of the Company as a whole)
<TABLE>
<S> <C> <C>
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] FOR all nominees
listed below for all nominees listed below listed below except those
whose names have been stricken
</TABLE>
(Instructions: To withhold authority to vote for any or all of the nominees,
strike a line through the names of such nominees(s) below.)
Emil J. Mikity, George H. Strong, Erin Anderson,
Cheryl H. Wade, Thomas J. Taylor
2. To consider and vote upon a proposal to approve a new advisory
agreement between the Company, on behalf of each Fund, and CoreStates
Investment Advisers Corporation ("CoreStates Advisers"), pursuant to
which CoreStates Advisers will act as investment adviser with respect
to the assets of the Funds, effective upon the merger of CoreStates and
Meridian Bancorp, Inc. (the "Merger") (voted on by shareholders of each
Fund)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and vote upon a proposal to approve the selection of Martin
Currie, Inc.("Martin Currie") or its successor as a Sub-Adviser for a
portion of the assets of the International Growth Fund (voted on by the
shareholders of the International Growth Fund)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To consider and vote upon a proposal to approve the selection of Aberdeen
Trust ("Aberdeen") or its successor as a Sub-Adviser for a portion of the
assets of the International Growth Fund (voted on by shareholders of the
International Growth Fund)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To consider and vote upon a proposal to approve the selection of Alpha
Global Investment Advisers, Inc. ("Alpha Global") or its successor as the
Sub-Adviser to the Global Bond Fund (voted on by shareholders of the Global
Bond Fund)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. To consider and vote upon a proposal to change the Global Bond Fund from a
"diversified" investment company to a "non- diversified" investment company
(voted on by shareholders of the Global Bond Fund)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To consider and vote upon a proposal to change the fundamental policy
of the Short Intermediate Bond Fund so that the Fund maintains an
average weighted maturity of one to five years instead of the existing
average weighted maturity of three to ten years (voted on by
shareholders of the Short Intermediate Bond Fund)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
8. To consider and vote upon an amended investment advisory agreement
between CoreStates Advisers and the Fidicuary Treasury Reserve and
Fidicuary Tax-Free Reserve (the "Fidicuary Funds") which would increase
(absent any fee waivers) the
<PAGE>
contractual advisory fee paid to CoreStates Advisers (voted on by
shareholders of each of the Fidicuary Treasury Reserve and Fidicuary
Tax-Free Reserve)
[ ] 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.
/X/
COREFUND
FAMILY OF MUTUAL FUNDS
To CoreFund shareholders:
Enclosed with this letter is a proxy voting ballot, a Proxy Statement, and
related information concerning a Special Meeting of Shareholders for CoreFunds,
Inc. to be held in Wayne, Pennsylvania, on March 15, 1996. The purpose of this
Special Meeting is to submit certain matters to our shareholders for a vote.
All CoreFund shareholders will be asked to vote on: (1) the addition of new
directors to the CoreFund Board of Directors, and (2) new advisory agreements
between CoreFunds and CoreStates Advisers. If approved, these advisory
agreements will become effective upon the merger of CoreStates Financial Corp
and Meridian Bancorp.
At the same time, shareholders who are invested in the Fiduciary Reserve
and Fiduciary Tax-Free Reserve, as well as those who are invested in the
International Growth, Global Bond, and Intermediate Bond Funds are being asked
to vote on specific proposals relating only to these funds. (Please see the
table on page(s) 2 and 3 of the enclosed Proxy Statement for a quick review of
the proposals affecting shareholders in these funds.)
The Board of Directors has approved each proposal in the enclosed Proxy
Statement and recommends them for your approval. I encourage you to vote in
favor of the proposals, and ask that you please return your completed proxy
ballot as soon as possible to help save on the cost of additional solicitations.
We encourage you to read the enclosed Proxy Statement thoroughly. In
addition, we have included on the next page a list of some commonly asked
questions and answers. If you have any additional questions, please call your
account administrator, investment sales representative, or CoreFunds directly at
1-800-355-CORE.
If, on the record date for the Special Meeting, you were a shareholder in
more than one CoreFund, you may receive more than one proxy ballot and related
materials in this package, or in separate packages. It is important that you
sign and return ALL of these proxy ballots. As always, we thank you for your
confidence and support.
Sincerely,
[ SIGNATURE ]
David G. Lee
President
P.S. Remember: It is important that you sign and return ALL your proxy
ballots. Thank you for your prompt action and support in this matter.
<PAGE>
QUESTIONS & ANSWERS
FOR
COREFUNDS'
SHAREHOLDER MEETING
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<S> <C>
Q. WHAT IS HAPPENING THAT IS AFFECTING ME AND ALL OTHER SHAREHOLDERS?
A. CoreFunds is submitting new investment advisory and, in some cases, sub-advisory agreements for you to
approve in anticipation of the merger between the holding companies of CoreStates Financial Corp and
Meridian Bancorp, Inc. New advisory agreements are needed because when the merger between these two
organizations occurs, the resulting change in ownership will cause the existing agreements to be
terminated. (See Section II on page 6 for more complete information.)
At the same time, CoreFunds wishes to propose electing two additional Directors to its Board. (See
Section I on page 3 for more complete details.)
Q. HOW DIFFERENT ARE THE CURRENT ADVISORY AGREEMENTS
FROM THE NEW ONES?
A. Generally speaking for all funds, the terms of the new investment advisory (and sub-advisory)
agreements are identical to the existing advisory agreements with one notable difference. The new
agreements provide for the change in ownership that will happen with the upcoming merger. On the
effective merger date, the new agreements provide for your CoreFund investment to be managed by a
CoreStates investment advisory subsidiary which represents the combined talents of CoreStates Financial
Corp and Meridian Bancorp.
There is another key difference for shareholders of the Fiduciary Treasury Reserve and Fiduciary
Tax-Free Reserve. As a shareholder in either one of these portfolios, you are being asked to consider
and approve a change in the adviser's contractual fee. (See Section VIII on page 24 for more complete
details.)
Also, shareholders in the International Growth Fund are being asked to approve the selection of an
additional sub-adviser. (See Section IV on page 16 for more complete details.)
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Q. DO NEW ADVISORY AGREEMENTS AFFECT THE OBJECTIVES AND POLICIES OF THE FUNDS?
A. No. The new investment advisory and sub-advisory agreements do not change any of the funds' investment
objectives or policies. Shareholders must always be presented with and approve specific proposals,
before any changes can be made to a fund's objectives or policies.
Q. ARE SHAREHOLDERS NOW BEING ASKED TO VOTE ON ANY SUCH CHANGES?
A. Yes. Shareholders in the Global Bond and Intermediate Bond Funds are being asked to approve certain
changes that affect the policies of these funds. (See Section V on page 19 for more complete details.)
Q. WHY ARE WE BEING ASKED TO ADD NEW MEMBERS TO THE
BOARD OF DIRECTORS?
A. Generally, it is desirable to have more than three independent directors in total on the Board. This
way CoreFunds, and the directors, always know that there will be adequate representation and additional
viewpoints at quarterly meetings of the board to review and pass needed measures.
Q. HOW DO THE BOARD MEMBERS SUGGEST THAT I VOTE?
A. After careful consideration, the Board members of the CoreFund Family of Funds, including the
independent members, recommend that you vote 'FOR' all of the items on the enclosed proxy ballot. The
Board also wishes to remind you to vote and return ALL the proxy ballot cards you receive.
</TABLE>
PLEASE VOTE THE ENCLOSED PROXY BALLOT CARD
YOUR VOTE IS IMPORTANT
