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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COREFUNDS, INC.
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
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IMPORTANT SHAREHOLDER INFORMATION
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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 A SINGLE BOX AND VOTING FOR OR AGAINST
ALL OF THE PROPOSALS RELATING TO YOUR FUND(S), OR YOU MAY VOTE ON EACH PROPOSAL
SEPARATELY. 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, WE HAVE TO 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.
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<PAGE>
PRELIMINARY COPY
COREFUNDS, INC.
680 EAST SWEDESFORD ROAD
WAYNE, PENNSYLVANIA 19087
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
MARCH 1, 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 1, 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 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).
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 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).
<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 1, 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 1, 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 1, 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 issued and outstanding for each Fund
of the Company being solicited by this Proxy Statement:
<TABLE>
<CAPTION>
======================================================================================================
FUND SHARES OUTSTANDING AS OF _____ __, 1996
- ------------------------------------------------------------------------------------------------------
<S> <C>
Cash Reserve
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Treasury Reserve
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Tax-Free Reserve
- ------------------------------------------------------------------------------------------------------
Growth Equity Fund
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Equity Index Fund
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Equity Fund (formerly Value Equity Fund)
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International Growth Fund
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Balanced Fund
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Short Intermediate Bond Fund (formerly
Intermediate Bond Fund)
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Government Income Fund
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Intermediate Municipal Bond Fund
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Global Bond Fund
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Pennsylvania Municipal Bond Fund
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New Jersey Municipal Bond Fund
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Fiduciary Reserve
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Fiduciary Treasury Reserve
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Fiduciary Tax-Free Reserve
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Elite Cash Reserve
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Elite Treasury Reserve
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Elite Government Reserve
======================================================================================================
</TABLE>
-1-
<PAGE>
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 1,
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>
1. To consider and act upon a proposal to elect a All Funds As A Whole
Board of Directors
- ------------------------------------------------------------------------------------------------------------------------
2. To consider and vote upon a proposal to approve Each Fund
a new advisory agreement between 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 International Growth Fund
approve the selection of Martin Currie or its
successor as a Sub-Adviser for a portion of the
assets of the International Growth Fund.
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4. To consider and vote upon a proposal to International Growth Fund
approve the selection of Aberdeen Trust 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 Global Bond Fund
Agreement between Alpha Global or its successor
and CoreStates Advisers on behalf of the Global
Bond Fund.
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6. To consider and vote upon a proposal to change Global Bond Fund
the Global Bond Fund from a "diversified"
investment company to a "non-diversified"
investment company.
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7. To consider and vote upon a proposal to change Short Intermediate Bond Fund
the fundamental policy of the Short Intermediate Bond
Fund (formerly 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.
- ------------------------------------------------------------------------------------------------------------------------
8. To consider and vote upon an amended Fiduciary Reserve and Fiduciary Treasury Reserve
investment advisory agreement between CoreStates
Advisers and each of the Fiduciary Treasury
Reserve and Fiduciary Tax-Free Reserve (the
"Fiduciary Funds") which would increase (absent
any fee waivers) the contractual advisory fee paid
to CoreStates Advisers.
========================================================================================================================
</TABLE>
-3-
<PAGE>
I. PROPOSAL 1. TO CONSIDER AND ACT UPON A PROPOSAL TO ELECT A
(ALL FUNDS) BOARD OF DIRECTORS (VOTED ON BY THE SHAREHOLDERS OF THE
COMPANY AS A WHOLE)
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 _________________________. Ms. Anderson is currently a
member of the Board of Directors elected by the Board on _________.
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 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
-4-
<PAGE>
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.
-5-
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
NAME AND POSITION WITH AGE BUSINESS EXPERIENCE SHARES BENEFICIALLY PERCENTAGE
THE FUND DURING THE PAST FIVE OWNED AS OF _____ __,
YEARS 1996
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Erin Anderson, Director 40 Professor of Marketing, 0 0
of the Company since INSEAD, Fountainebleu,
12/16/92 France, since 1994;
Associate Professor,
University of Pennsylvania
Wharton School, 1981-
1994.
- ----------------------------------------------------------------------------------------------------------------------------------
Emil J. Mikity, Director 67 Retired; Senior Vice 0 0
of the Company since President Investments,
12/5/90 Atochem North America,
1979-1989.
- ----------------------------------------------------------------------------------------------------------------------------------
George H. Strong, 69 Financial Consultant since 0 0
Director of the Company 1985; Director and Senior
since _____ Vice President, Universal
Health Services, Inc.,
1979-1984.
- ----------------------------------------------------------------------------------------------------------------------------------
Cheryl H. Wade, 48 Associate General 0 0
Director Nominee Secretary and Treasurer,
American Baptist Churches 1993 -
present; Treasurer, The Ministers
and Missionaries Benefit Board,
American Baptist Churches
1990-1993.
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas J. Taylor, 57 Consultant; Chairman, 0 0
Director Nominee Conestoga Funds since
_______; Trustee of
Community Heritage
Fund since _____.
==================================================================================================================================
</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 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
-6-
<PAGE>
CoreStates Advisers or an affiliated person provides investment advisory
services (collectively, the "Fund Complex") is also set forth in the
compensation table below.
<TABLE>
<CAPTION>
==================================================================================================================================
TOTAL COMPENSATION
AGGREGATE FROM REGISTRANT AND
COMPENSATION FROM FUND COMPLEX PAID
REGISTRANT FOR FISCAL PENSION OR ESTIMATED ANNUAL TO DIRECTORS FOR THE
NAME OF PERSON AND YEAR ENDED JUNE 30, RETIREMENT BENEFITS BENEFITS UPON FISCAL YEAR ENDED
POSITION 1995 ACCRUED AS PART OF RETIREMENT JUNE 30, 1995
FUND EXPENSES
- ----------------------------------------------------------------------------------------------------------------------------------
<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 nomination and
proposed election of 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.
-7-
<PAGE>
II. PROPOSAL 2. APPROVAL OF THE NEW INVESTMENT ADVISORY AGREEMENTS FOR
(ALL FUNDS) THE FUNDS
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.
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, which will create the ___ largest bank holding
company in the United States based on assets. The Merger is expected to be
completed on or about _______ __, 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 _________, more than $15 billion in assets, including
approximately $1.5 billion in mutual fund assets.
In connection with the Merger, CoreFunds and Conestoga entered into an
Agreement and Plan of Reorganization (the "Reorganization") dated ___________
__, 1996.
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. 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:
-8-
<PAGE>
<TABLE>
<S> <C>
========================================================================================================================
Conestoga (Reorganizing Portfolios) Existing CoreFunds Portfolios
- ------------------------------------------------------------------------------------------------------------------------
Cash Management Fund Cash Reserve
- ------------------------------------------------------------------------------------------------------------------------
Tax-Free Fund Tax-Free Reserve
- ------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Securities Fund Treasury Reserve
- ------------------------------------------------------------------------------------------------------------------------
Equity Fund Value 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>
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>
<S> <C>
========================================================================================================================
Conestoga (Continuing Portfolios) New CoreFunds Portfolios
- ------------------------------------------------------------------------------------------------------------------------
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
-9-
<PAGE>
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 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 (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,
Intermediate Municipal Bond Fund, Global Bond Fund, Pennsylvania Municipal Bond
Fund, 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, _____ and _____, respectively.
-10-
<PAGE>
COMPENSATION
Under the Existing Advisory Agreements and New Advisory Agreement,
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, Pennsylvania
Municipal Bond Fund (.01% after fee waiver) and New Jersey Municipal Bond Fund
(.01% 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 and Fiduciary Reserve 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].
For its fiscal year ended June 30, 1995, 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 these waivers 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 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.
-11-
<PAGE>
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
the 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.
-12-
<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's banking
subsidiaries. In that connection, CoreStates Advisers performs certain
investment advisory, research, trading, and fund management functions. It also
provides investment management and advisory services to customers unrelated
to CoreStates. CoreStates Advisers does not currently provide investment
services to any other investment companies having an investment objective
similar to the Funds'.
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 PRINCIPAL OCCUPATION
ADVISERS
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark E. Stalnecker Managing Director, Chairman Chief Investment Officer
and President
- --------------------------------------------------------------------------------------------------------------------------
Dung Vukhae Managing Director and Senior Fixed Income Management
Vice President
- --------------------------------------------------------------------------------------------------------------------------
Charles T. Meisse Managing Director and Senior Director - Equity Management
Vice President Research
- --------------------------------------------------------------------------------------------------------------------------
JoAnne T. Fredericks Managing Director Senior Vice Portfolio Manager
President -- Treasurer
- --------------------------------------------------------------------------------------------------------------------------
Michael F. Malloy Vice President Fixed Income Manager
- --------------------------------------------------------------------------------------------------------------------------
Timothy R. Stives Managing Director and Senior Director - Equity Research
Vice President Management
- --------------------------------------------------------------------------------------------------------------------------
Richard J. Lindsay Director Product Development
Marketing
- --------------------------------------------------------------------------------------------------------------------------
William T. Lawrence Vice President - Secretary Portfolio Management
- --------------------------------------------------------------------------------------------------------------------------
Daniel Aboyan Director Banking
-13-
<PAGE>
- --------------------------------------------------------------------------------------------------------------------------
Larry P. Aasheim Research Analyst Research Analyst
- --------------------------------------------------------------------------------------------------------------------------
Karen G. Bater Portfolio Manager Portfolio Manager
- --------------------------------------------------------------------------------------------------------------------------
Joseph R. Baxter Portfolio Manager Portfolio Manager
- --------------------------------------------------------------------------------------------------------------------------
Rosemary B. Crowley Portfolio Manager Portfolio Manager
- --------------------------------------------------------------------------------------------------------------------------
Stephen M. Dalton Portfolio Manager - Securities Portfolio Manager - Securities
Analyst Analyst
- --------------------------------------------------------------------------------------------------------------------------
Harry G. Dittmann Portfolio Manager Portfolio Manager
- --------------------------------------------------------------------------------------------------------------------------
Janette J. Dziadon Portfolio Manager Portfolio Manager
- --------------------------------------------------------------------------------------------------------------------------
Paul B. Kuper Portfolio Manager Portfolio Manager
- --------------------------------------------------------------------------------------------------------------------------
Joyce A. Lotkowski Portfolio Manager Portfolio Manager
==========================================================================================================================
</TABLE>
DIRECTORS' CONSIDERATIONS
The Board of Directors believes that the terms of the New Advisory
Agreement are fair to, and in the best interest of, the 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.
-14-
<PAGE>
THE DIRECTORS, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, RECOMMEND
THAT SHAREHOLDERS OF THE FUNDS VOTE "FOR" THE NEW ADVISORY AGREEMENT.
III. PROPOSAL 3. TO CONSIDER AND VOTE UPON A PROPOSAL TO APPROVE
(INTERNATIONAL THE SELECTION OF MARTIN CURRIE OR ITS SUCCESSOR
GROWTH FUND) AS A SUB-ADVISER FOR A PORTION OF THE ASSETS OF THE
INTERNATIONAL GROWTH FUND.
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 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 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 Advisory Agreement is dated __________ __, 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 __________ __, 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.
-15-
<PAGE>
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
______ __, 199_.
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 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 fees totaling
$___________.
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
-16-
<PAGE>
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 AMONG SUB-ADVISORS - INTERNATIONAL GROWTH FUND
Prior to _____________, 1996, Martin Currie was 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 wholly-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 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 is 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
Michael W. Thomas Director and Vice President Director and Head of Far East
Investment Department
Timothy J. Hall Director and Investment Investment Management
Manager
Eric D. McCauslan Director and Investment Investment Management
Manager
Tristan M. Clube Investment Manager Investment Management
Lindsay C. Frazer Investment Manager Investment Management
Allan D. Maclead Investment Manager Investment Management
Stewart Higgins Investment Manager Investment Management
-17-
<PAGE>
Nicholas Morse Investment Manager Investment Management
Christopher R. Ruffle Investment Manager Investment Management
James R. Salter Investment Manager Fund Management
William S. Coghill Secretary and Treasurer Secretary
James G. Wilson Director and Vice President Director
Anthony P. Hanlon Director and Vice President Director
Julian M. Livingston Chief Legal and Compliance Legal Officer
Officer
<FN>
- --------------------------
*Saltire Court, 20 Castle Terrace, Edinburgh EH 2ES, Scotland
</FN>
</TABLE>
Martin Currie currently provides investment services to the following
investment company having an investment objective similar to the Fund's
investment objective:
<TABLE>
<CAPTION>
AMOUNT OF ASSETS UNDER
NAME OF INVESTMENT COMPANY MANAGEMENT* RATE OF COMPENSATION
- -------------------------- ---------------------- --------------------
<S> <C> <C>
Opportunistic EAFE Fund $ .70%1
</TABLE>
- -------------------------
*As of _______, 1995.
1 Maximum fee that can be earned is .70%.
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 Sub-Advisory
Agreement will be unchanged under the New Sub-Advisory Agreement except for
different effective and termination dates; (7) the history, reputation,
qualifications and background of Martin Currie, as well as the qualifications of
its 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)
-18-
<PAGE>
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.
IV. PROPOSAL 4. TO CONSIDER AND VOTE UPON A PROPOSAL TO APPROVE THE
(INTERNATIONAL SELECTION OF ABERDEEN TRUST OR ITS SUCCESSOR AS A
GROWTH FUND) SUB-ADVISER FOR A PORTION OF THE ASSETS OF THE
INTERNATIONAL GROWTH FUND.
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.
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 to its obligations or duties thereunder.
-19-
<PAGE>
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 each
Sub-Adviser 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 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 outweighs 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
-20-
<PAGE>
existing sub-advisory agreements; (6) the history, reputation, qualifications
and background of Aberdeen as well as the qualifications of its 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.
ALLOCATION OF ASSETS AMONG SUB-ADVISERS - INTERNATIONAL GROWTH FUND
Prior to _______, 1996, Martin Currie was 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 asset 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 .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.
-21-
<PAGE>
The portion of the International Growth Fund's assets allocated to
Aberdeen will be managed by Bev 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.
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-advisor 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.
V. PROPOSAL 5. TO CONSIDER AND APPROVE THE NEW SUB-ADVISORY AGREEMENT
(GLOBAL BETWEEN ALPHA GLOBAL OR ITS SUCCESSOR AND CORESTATES
BOND FUND) ADVISERS ON BEHALF OF THE GLOBAL BOND FUND.
-22-
<PAGE>
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.
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 ______ __, 199_.
-23-
<PAGE>
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
$__________.
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 Directors 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 manger. 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.
-24-
<PAGE>
<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. Morris Director-Research Member, Investment Policy Committee
- --------------------------------------------------------------------------------------------------------------------------
Peter M. Wilson Director-Operations Member, Investment Policy Committee
==========================================================================================================================
</TABLE>
- -----------------
*25/28 Old Burlington Street, London W1X 1LB.
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,
qualifications and background of Alpha Global, as well as the qualifications of
its 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
-25-
<PAGE>
VI. PROPOSAL 6. TO CONSIDER AND VOTE UPON A PROPOSAL TO CHANGE THE GLOBAL
(GLOBAL BOND FUND FROM A "DIVERSIFIED" INVESTMENT COMPANY TO A "NON
BOND FUND) -DIVERSIFIED" INVESTMENT COMPANY.
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:
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 investment risk. 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
-26-
<PAGE>
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.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
VII. PROPOSAL 7. TO CONSIDER AND VOTE UPON A PROPOSAL TO CHANGE THE
(SHORT FUNDAMENTAL POLICY OF THE SHORT INTERMEDIATE BOND FUND
INTERMEDIATE (FORMERLY INTERMEDIATE BOND FUND) SO THAT THE FUND
BOND MAINTAINS AN AVERAGE WEIGHTED MATURITY OF ONE TO FIVE
FUND) YEARS INSTEAD OF THE EXISTING AVERAGE WEIGHTED
MATURITY OF THREE TO TEN YEARS.
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 one 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.
-27-
<PAGE>
THE BOARD OF DIRECTORS OF THE FUND RECOMMENDS THAT SHAREHOLDERS VOTE FOR
APPROVAL OF THE CHANGE IN THE INVESTMENT OBJECTIVE OF THE FUND.
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
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 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 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.
-28-
<PAGE>
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 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 Reserve and
Fiduciary Treasury 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
Services Corporation ("SFS" or "Distributor") an aggregate distribution fee of
$27,023 and $5,265, respectively, and SEI Financial Management Corporation
(the "Administrator") an aggregate administrative fee of $24,029, after
voluntary fee waivers of $30,578 and $93,316 after voluntary fee waivers of
$118,767, 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.
-29-
<PAGE>
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.
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% 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**
-------- ----------
<C> <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 $9, $29, $50 and $112, respectively.
** Absent fee waivers for the one, three, five and ten year periods, expense
would be $___, $___, $___ and $___, respectively.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
-30-
<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 .09% by the Administrator, total fund operating
expenses would have been .26%.
** Absent CoreStates Advisers intentions to waive its entire advisory fee of
.20% and fee waivers of .09% by the Administrator, total fund operating
expense would be .46%
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**
-------- ----------
<C> <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 $8, $25, $44 and $98, respectively.
** Absent fee waivers for the one, three, five and ten year periods, expenses
would be $___, $___, $___ and $___, 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
-31-
<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 ___________.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Erin Anderson Director See "Information
since 12/16/92. 40 Regarding Nominees"
- -----------------------------------------------------------------------------------------------------------------------------------
Emil J. Mikity Director See "Information
since 12/5/90. 67 Regarding Nominees"
- -----------------------------------------------------------------------------------------------------------------------------------
George H. Strong Director See "Information
since ________. 69 Regarding Nominees"
- -----------------------------------------------------------------------------------------------------------------------------------
David Lee President Senior Vice President of the
since _________. 43 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 - Director, Executive Vice
Assistant President, Chief Financial
Secretary Officer and Treasurer of
since _________. 52 SEI Corporation; Director
and Treasurer of
the Administrator
and Distributor
since 1981;
President, GW
Sierra Trust
Funds prior to
1991.
- -----------------------------------------------------------------------------------------------------------------------------------
James W. Jennings Secretary 59 Partner of the law firm of
since _________. Morgan, Lewis & Bockius
LLP since 1970.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
SHARES OF THE FUND
POSITION WITH THE BENEFICIALLY OWNED AS OF
NAME COMPANY AGE BUSINESS EXPERIENCE ___________.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Kevin P. Robins Vice President - Senior Vice President and
Assistant General Counsel of SEI
Secretary Corporation and the
since _______. 34 Distributor 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.
- -----------------------------------------------------------------------------------------------------------------------------------
Sandra K. Orlow Vice President - Vice President and Assistant
Assistant Secretary of the
Secretary Administrator and
since ________. 42 Distributor since 1983.
- -----------------------------------------------------------------------------------------------------------------------------------
Robert Carroll Vice President - Vice President and Assistant
Assistant Secretary of SEI
Secretary Corporation, the
since ________. 35 Administrator and
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 - Vice President and Assistant
Assistant Secretary of the
Secretary Administrator and
since _______. 37 Distributor since 1994.
Associate,
Morgan, Lewis &
Bockius LLP (law
firm) before
1994.
- -----------------------------------------------------------------------------------------------------------------------------------
Richard J. Shoch Vice President 29 Vice President and
and Assistant Assistant Secretary of SEI
Secretary Corporation since 1995;
Regulatory
Manager of SEI
Corporation
1990-1995.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
===================================================================================================================================
SHARES OF THE FUND
POSITION WITH THE BENEFICIALLY OWNED AS OF
NAME COMPANY AGE BUSINESS EXPERIENCE ___________.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Stephen G. Meyer Controller CPA - 1995 to Present.
since _______. 30 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 own less than 1% of the outstanding shares of
each Fund.
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
accountants 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 ________ __, 198__ between the Company and SFS.
Alfred P. West, Jr. serves as Chairman of the Board and Chief Executive Officer
of SFS and SEI, and Henry H. Greer serves as Director, President and Chief
Operating Officer of SFS and SEI.
PORTFOLIO TRANSACTIONS
For the Company's fiscal year ended June 30, 1995, the Funds paid the
following amounts in brokerage commissions to affiliates.
-34-
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================================
PORTFOLIO TOTAL BROKERAGE AMOUNT PAID TO AFFILIATED % PAID TO AFFILIATED
COMMISSION BROKERS BROKERS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Growth Equity Fund $223,429
- -----------------------------------------------------------------------------------------------------------------------------
Equity Fund $117,625
- -----------------------------------------------------------------------------------------------------------------------------
Equity Index Fund $ 61,625
- -----------------------------------------------------------------------------------------------------------------------------
Intermediate Growth Fund $350,685
- -----------------------------------------------------------------------------------------------------------------------------
Balanced Fund $ 66,243
=============================================================================================================================
</TABLE>
5% SHAREHOLDERS
As of _________ __, 1996 the following persons were the only persons
who were, to the knowledge of the Trust, beneficial owners of 5% or more of
shares of the Portfolios of the Trust voting at this Meeting.
<TABLE>
<CAPTION>
=============================================================================================================================
FUND NAME AND ADDRESS OF NUMBER OF SHARES PERCENTAGE OF FUND'S
BENEFICIAL OWNER SHARES
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
=============================================================================================================================
</TABLE>
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.
-35-
<PAGE>
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.
-36-
<PAGE>
COREFUNDS, INC.
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS
March 1, 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 1,
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.
<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;
<PAGE>
(d) the Company's Notification of Registration on Form N-8A under the 1940
Act as filed with the Securities and Exchange Commission on September 11, 1984
and all amendments thereto;
(e) the Company's Registration Statement on Form N-1A under the Securities
Act of 1933, as amended ("1933 Act") (File No. 2-93214) and under the 1940 Act
as filed with the Securities and Exchange Commission and all amendments thereto;
and
(f) the Company's most recent Prospectuses and Statement of Additional
Information (such Prospectuses and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectuses").
The Company will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Company's Board of
Directors, the Investment Adviser will provide a continuous investment program
for each portfolio of the Company, including investment guidelines and
management with respect to all securities and investments and cash equivalents
held by [INCLUDE ALL FUNDS] 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
-2-
<PAGE>
transactions with the Company. In no instance will portfolio securities be
purchased from or sold to CoreStates Financial Corp or any affiliated person of
either the Fund or CoreStates Financial Corp.
(d) will maintain all books and records with respect to the Company's
portfolio securities transactions and will furnish the Company's Board of
Directors such periodic and special reports as the Board may request;
(e) will treat confidentially and as proprietary information of the Company
all records and other information relative to the Company and prior, present, or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company, which
approval shall not be unreasonably withheld and may not be withheld where the
Investment Adviser may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company;
(f) will provide to the Company and the Company's other service providers,
at such intervals as may be reasonably requested by the Company, information
relating to (i) the performance of services by the Investment Adviser hereunder,
and (ii) market quotations of portfolio securities held by the Company on behalf
of its Portfolios;
(g) will direct and use its best efforts to cause the broker or dealer
involved in any portfolio transaction with the Company to send a written
confirmation of such transaction to the Company's Custodian and Transfer Agent;
and
(h) will not purchase shares of the Company for itself or for accounts with
respect to which it is exercising sole investment discretion in connection with
such transactions.
4. Services Not Exclusive. The investment management services furnished by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to furnish similar services to others so long
as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records which
it maintains for the Company are the property of the Company and further agrees
to surrender promptly to the Company any of such records upon the Company's
request. The Investment Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
-3-
<PAGE>
6. Expenses. During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Company and the cost of obtaining market quotations of
portfolio securities held by the Company.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date of this Agreement, the
Company will pay the Investment Adviser and the Investment Adviser will accept
as full compensation for services rendered to the Portfolios therefor, the fees
detailed in Appendix A attached to this Agreement; provided, however, that if
the total expenses borne by any Portfolio of the Company in any fiscal year of
the Company exceeds any expense limitations imposed by applicable state
securities laws or regulations, the Investment Adviser will reimburse the
Portfolio for a portion of such excess equal to the amount of such excess times
the ratio of the fees otherwise payable to the Investment Adviser hereunder to
the aggregate fees otherwise payable to the Investment Adviser hereunder and SEI
Financial Management Corporation pursuant to an Administration Agreement between
it and the Company. The Investment Adviser's obligation to reimburse the Company
on behalf of its Portfolios hereunder is limited in any fiscal year of the
Company to the amount of the Investment Adviser's fee hereunder for such fiscal
year; provided, however, that notwithstanding the foregoing, the Investment
Adviser shall reimburse the Company for such excess regardless of the fees paid
to it to the extent that the securities laws or regulations of any state having
jurisdiction over the Company so require. Any such expense reimbursements will
be estimated daily and reconciled and paid on a monthly basis.
8. Use of Investment Adviser's Name and Logo. The Company agrees that it
shall furnish to the Investment Adviser, prior to any use or distribution
thereof, copies of all prospectuses, statements of additional information, proxy
statements, reports to shareholders, sales literature, advertisements, and other
material prepared for distribution to shareholders of the Portfolios of the
Company or to the public, which in any way refer to or describe the Investment
Adviser or which include any trade names, trademarks, or logos of the Investment
Adviser or any affiliate of the Investment Adviser. The Company further agrees
that it shall not use or distribute any such material if the Investment Adviser
reasonably objects in writing to such use or distribution within ten business
days after the date such material is furnished to the Investment Adviser. The
provisions of this section shall survive the termination of this Agreement.
9. Limitation of Liability. The Investment Adviser shall not be liable for
any error of judgment or mistake of law or for any loss suffered by the Company
in connection with the performance of this Agreement, except a loss resulting
from a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the
-4-
<PAGE>
Investment Adviser in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement.
10. Duration and Termination. This Agreement will become effective as of
the date first above written, provided that it shall have been approved by
shareholders of the respective Portfolios of the Company in accordance with the
requirements under the 1940 Act, and, unless sooner terminated as provided
herein, shall continue in effect until [______________ ___, _____]. Thereafter,
If not terminated, this Agreement shall continue in effect for successive
periods of twelve months, each ending on [June 30] each year, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Portfolio's Board of Directors who are not
parties to this Agreement or interested persons of any party to this Agreement,
cast in person at a meeting called for the purpose of voting on such approval,
and (b) by the Portfolio's Board of Directors or by vote of a majority of the
Portfolio's outstanding voting securities. Notwithstanding the foregoing, this
Agreement may be terminated at any time on sixty days written notice, without
the payment of any penalty, by the Company (by vote of the Board of Directors or
by vote of a majority of the Portfolio's outstanding voting securities) or by
the Investment Adviser. This Agreement will immediately terminate in the event
of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning of such terms in the 1940 Act.)
11. Name Protection After Termination. In the event this Agreement is
terminated by either party or upon written notice from the Investment Adviser at
any time, the Company hereby agrees that it will eliminate from its corporate
name any references to the name "CoreFunds." The Company shall have the
nonexclusive use of the name "CoreFunds" in whole or in part so long as this
Agreement is effective or until such notice is given.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the Portfolio's outstanding
voting securities.
13. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
COREFUNDS, INC.
By_________________________________
CORESTATES INVESTMENT ADVISERS, INC.
By_________________________________
-6-
<PAGE>
APPENDIX A
<TABLE>
<CAPTION>
======================================================================================================================
Portfolio Advisory Fee as a Percentage
of average daily net assets
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Growth Equity Fund .75%
- ----------------------------------------------------------------------------------------------------------------------
Equity Fund .75%
- ----------------------------------------------------------------------------------------------------------------------
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 .50%
- ----------------------------------------------------------------------------------------------------------------------
Treasury Reserve .50%
- ----------------------------------------------------------------------------------------------------------------------
Tax-Free Reserve .50%
- ----------------------------------------------------------------------------------------------------------------------
Fiduciary Reserve .50%
- ----------------------------------------------------------------------------------------------------------------------
Fiduciary Treasury Reserve .50%
- ----------------------------------------------------------------------------------------------------------------------
Fiduciary Tax-Free Reserve .50%
- ----------------------------------------------------------------------------------------------------------------------
Elite Cash Reserve .20%
- ----------------------------------------------------------------------------------------------------------------------
Elite Government Reserve .20%
- ----------------------------------------------------------------------------------------------------------------------
Elite Treasury Reserve .20%
======================================================================================================================
</TABLE>
-7-
<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
<PAGE>
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 affect and as they shall from time to time be amended, are herein called the
"By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Fund's Notification of Registration on Form N-8A under the 1940 Act
as filed with the Securities and Exchange Commission on September 11, 1984 and
all amendments thereto;
(e) the Fund's Registration Statement on Form N-1A under the Securities Act
of 1933, as amended ("1933 Act") (File No. 2-93214) and under the 1940 Act as
filed with the Securities and Exchange Commission and all amendments thereto;
and
(f) the Fund's most recent Prospectus and Statement of Additional
Information (such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus").
The Fund or the Investment Adviser will furnish the Sub-Adviser from time
to time with copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Fund's Board of Directors
and the Investment Adviser, the Sub-Adviser will provide a continuous investment
program for a portion of the assets of the International Growth Portfolio of the
Fund, as determined by the Investment Adviser, including investment research and
management with respect to that portion of securities and investments and cash
equivalents managed by the Sub-Adviser for the International Growth Portfolio of
the Fund and such other portfolios (hereinafter collectively, the "Portfolios")
offered by the Fund and identified by the Fund as appropriate to use a
sub-investment adviser. The Sub-Adviser will determine from time to time what
securities and other investments will be purchased, retained, or sold by the
Fund. The Sub-Adviser will provide the services under this Agreement in
accordance with the Fund's investment objective, policies, and restrictions as
stated in the Prospectus and resolutions of the Fund's Board of Directors. The
Sub-Adviser acknowledges and agrees that the Fund shall have no responsibility
to pay the Sub-Adviser, and that any compensation to be paid to the Sub-Adviser
shall be paid by the Investment Adviser pursuant to Section 7 of this Agreement.
The Sub-Adviser further agrees that it:
-2-
<PAGE>
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with any regulations of the Comptroller of
the Currency pertaining to the investment advisory activities of national banks;
(b) will not make loans to any person to purchase or carry the Fund shares
or make loans to the Fund;
(c) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers the primary consideration of the Sub-Adviser
will be the prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, brokers or dealers who provide
supplemental research to the Sub-Adviser may receive orders for transactions
with the Fund. In no instance will portfolio securities be purchased from or
sold to 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;
(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.
-3-
<PAGE>
4. Services Not Exclusive. The investment management services furnished by
the Sub-Adviser hereunder are not to be deemed exclusive, and the Sub-Adviser
shall be free to furnish similar services to others so long as its services
under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act.
6. Expenses. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Fund and the cost of obtaining market quotations of
portfolio securities held by the Fund.
7. Compensation. For the services provided and the expenses assumed
pursuant to this Agreement, effective as of the date of this Agreement, the
Investment Adviser will pay the Sub-Adviser and the Sub-Adviser will accept as
full compensation therefor a fee, computed daily and paid monthly, at an annual
rate of .50% of the portion of the Portfolio's average daily net assets
allocated to such Sub-Adviser. The Sub-Adviser may from time to time and at its
discretion voluntarily waive all or a portion of its sub-advisory fees in order
to assist the Fund in maintaining a competitive expense ratio.
8. Limitation of Liability. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
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
-4-
<PAGE>
purpose of voting on such approval, and (b) by the Fund's Board of Directors or
by vote of a majority of the Fund's outstanding voting securities.
Notwithstanding the foregoing, this Agreement may be terminated at anytime on
sixty days' written notice, without the payment of any penalty, by the Fund (by
vote of the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities), by the Investment Advisor or by the Sub-Adviser.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
of such terms in the 1940 Act.)
10. Amendment of This Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the Fund's outstanding voting
securities.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
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:__________________________
-5-
<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
<PAGE>
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 affect and as they shall from time to time be amended, are herein called the
"By-Laws");
(c) resolutions of the Fund's Board of Directors authorizing the
appointment of the Investment Adviser and approving this Agreement;
(d) the Fund's Notification of Registration on Form N-8A under the 1940 Act
as filed with the Securities and Exchange Commission on September 11, 1984 and
all amendments thereto;
(e) the Fund's Registration Statement on Form N-1A under the Securities Act
of 1933, as amended ("1933 Act") (File No. 2-93214) and under the 1940 Act as
filed with the Securities and Exchange Commission and all amendments thereto;
and
(f) the Fund's most recent Prospectus and Statement of Additional
Information (such Prospectus and Statement of Additional Information, as
presently in effect and all amendments and supplements thereto, are herein
called the "Prospectus").
The Fund or the Investment Adviser will furnish the Sub-Adviser from time
to time with copies of all amendments of or supplements to the foregoing.
3. Management. Subject to the supervision of the Fund's Board of Directors
and the Investment Adviser, the Sub-Adviser will provide a continuous investment
program for a portion of the assets of the International Growth Portfolio of the
Fund, as determined by the Investment Adviser, including investment research and
management with respect to that portion of securities and investments and cash
equivalents managed by the Sub-Adviser for the International Growth Portfolio of
the Fund and such other portfolios (hereinafter collectively, the "Portfolios")
offered by the Fund and identified by the Fund as appropriate to use a
sub-investment adviser. The Sub-Adviser will determine from time to time what
securities and other investments will be purchased, retained, or sold by the
Fund. The Sub-Adviser will provide the services under this Agreement in
accordance with the Fund's investment objective, policies, and restrictions as
stated in the Prospectus and resolutions of the Fund's Board of Directors. The
Sub-Adviser acknowledges and agrees that the Fund shall have no responsibility
to pay the Sub-Adviser, and that any compensation to be paid to the Sub-Adviser
shall be paid by the Investment Adviser pursuant to Section 7 of this Agreement.
The Sub-Adviser further agrees that it:
-2-
<PAGE>
(a) will conform with all applicable Rules and Regulations of the
Securities and Exchange Commission and will in addition conduct its activities
under this Agreement in accordance with any regulations of the Comptroller of
the Currency pertaining to the investment advisory activities of national banks;
(b) will not make loans to any person to purchase or carry the Fund shares
or make loans to the Fund;
(c) will place orders pursuant to its investment determinations for the
Fund either directly with the issuer or with any broker or dealer. In placing
orders with brokers and dealers the primary consideration of the Sub-Adviser
will be the prompt execution of orders in an effective manner at the most
favorable price. Subject to this consideration, brokers or dealers who provide
supplemental research to the Sub-Adviser may receive orders for transactions
with the Fund. In no instance will portfolio securities be purchased from or
sold to 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;
(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-
-3-
<PAGE>
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 anytime on sixty
-4-
<PAGE>
days' written notice, without the payment of any penalty, by the Fund (by vote
of the Fund's Board of Directors or by vote of a majority of the Fund's
outstanding voting securities), by the Investment Advisor or by the Sub-Adviser.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested persons" and "assignment" shall have the same meaning
of such terms in the 1940 Act.)
10. Amendment of This Agreement. No provision of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective until approved by vote of a majority of the Fund's outstanding voting
securities.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
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:__________________________
-5-
<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");
<PAGE>
(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;
(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;
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<PAGE>
(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
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.
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<PAGE>
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Fund are the property of the Fund and further agrees to
surrender promptly to the Fund any of such records upon the Fund's request. The
Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 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 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
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<PAGE>
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 insure to the
benefit of the parties hereto and their respective successors and shall be
governed by Pennsylvania law.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
CORESTATES INVESTMENT ADVISERS, INC.
By: _______________________________
Name:__________________________
Title:_________________________
ALPHA GLOBAL FIXED INCOME MANAGERS, INC.
By:________________________________
Name:___________________________
Title:__________________________
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